It may sound obvious that when you save money by shopping sales, buying generic, clipping coupons, etc., you are saving money, but that doesn’t necessarily mean you actually end up any better off. By actually saving or investing the money you save, you can ensure that your efforts have the desired impact.

The problem is that many of our saving efforts get wasted because we just use the money saved for more spending. Saving money doesn’t do much good if that money is used to buy more things that you don’t really need. If you truly want to see your finances improve, you need to save, not spend, the money you save.

This trick is especially useful when you make a conscious change in a spending habit. If you were trying to cut your grocery spending, for example, you could transfer the difference between what you normally spend and what you did spend into a savings account. Your cash flow would seem to remain the same, but your savings account balance would steadily increase. So if you typically spend $125 a week and decided to try to cut that spending to $100, you would transfer the $25 saved each week over to another account. This could be a traditional savings account, or an investment account such as your Lending Club account. Allowing your saved money to work for you by earning interest, you accelerate the positive effects of your efforts.

Saving money is a great first step, but unless you actually do something with those savings, the benefits are diminished. Only by saving the money you save will the true potential of your actions be realized.

Do you save or spend the difference when you pay lower prices?

Annuities have always been a useful way for investors to guarantee themselves a fixed income in the future, but with some insurance companies on the brink of failure, that guarantee isn’t what it once was. To ensure that investors are aware of this risk, warnings about this type of loss are being more prominently displayed in advertisements.

There are many different types of annuities, but their basic function is to convert an up-front payment to the insurance company into periodic payments back to you. This type of investment can be useful for people who retire and want to guarantee a fixed amount of income for a certain number of years, or until they die. While the process seems to have less risk than other types of investments, the risk of the insurer defaulting seems more likely in today’s financial crisis.

I noted that this point was made clear in all of the annuity advertisements I’ve seen recently. They generally include a caveat like “”All guarantees are based on the claims-paying ability of the issuing company” or “Guaranteed lifetime income is subject to the claims paying ability of the issuing insurance company.” These points, while still generally made in the fine print, were either in bold or appeared in a larger typeface than other fine print.

If the issuer of your annuity were to default, state law governs the outcome. A government agency, the state Guaranty Association, protects annuity holders up to a certain dollar amount, which varies by state. Each annuity is evaluated separately, and will either be paid out, up to the applicable limit, or taken over by a different insurer. So if your issuer defaults, it may not be a total loss, but you could end up with less than you expected.

Before purchasing an annuity, it’s important to both consider the financial health of the issuing company and know the Guaranty Association protection limits for your state. People tend to use annuities for guaranteed income, but without taking these steps, that guarantee may be worth much less than you think.

Has your annuity issuer defaulted?

As consumers, it’s nice to think that collectively we have some authority. While companies may ignore a small group of people, widespread exposure of an issue typically results in swift action.

A recent example was how Microsoft handled improper severance payments to some of the workers it had fired. Initially, it requested that workers who had been overpaid return the excess. Those workers, though angry, may have obliged their former employer. But once word of the repayment request (and the embarrassingly ironic cause of the erroneous payments – a computer glitch) caught media attention and widespread condemnation, Microsoft quickly changed its course of action.

While all the little ways that companies try to exploit their employees and consumers might not generate enough interest to get Techcrunch coverage (as did the Microsoft incident), that doesn’t mean we have to sit back and take it. Smaller issues can be handled by creating petitions, garnering local media attention, or engaging a blogger who covers the relevant topic. Even a Facebook rant could get the ball rolling. Speaking of Facebook, the outcry over the company’s updated terms of service is another recent event that inspired a corporation to reconsider its course of action. The point is that only those who do nothing should expect nothing to happen.

As opposition to, or potential corporate embarrassment from, the issue at hand grows, taking the desired action becomes the path of least resistance for the corporation involved. By continuing their complaints against all but the desired outcome, the public can effectively sway the corporation’s actions in nearly any direction.

With this control, the public also must act in a responsible manner. Wielding power too often would reduce its effectiveness. So be prepared to let some small stuff go, but remember that as a consumer you can influence corporate actions simply by gathering enough people to turn the ears of corporations. If you don’t believe me, just ask Microsoft.

What changes in corporate actions have you helped to cause?

When the major stock indices started hitting 10-year lows in late February, many people started questioning the historical return number they used to make their investment plans. Even getting past the fact that historical returns are no guarantee of future performance, a key factor that is often forgotten is that quoted historical returns of the stock market are based on the long-term.

To an investor whose retirement portfolio has taken a major hit, even a year or two for a recovery may seem like a long time. Anyone who needs their investment proceeds soon probably should have been more conservative and had their portfolios more in fixed income than equities. It’s easy to think of these past ten years of flat performance as a lost decade, but the historical numbers we hold so dear include decades with flat or declining returns.

The trouble is that the historical return numbers used in many retirement calculators and investment plans span a much longer interval than even the decade level. “Long-term” is often thought of as more than five years, but significantly longer periods are much more appropriate. An entire adult lifetime is a more applicable measure of long-term. So investing for retirement during your whole career might allow you to achieve returns near those found historically.

When you invest for the long-term, there will be some ups and downs, with stretches of outstanding performance and others of painful declines. In order for annualized performance to revert to the historical average, it makes sense that periods above that average would have to be counter-balanced with times below. The declines of the past year are certainly disconcerting, but are part of the journey that all investors face. In desperate times, it helps to remind yourself that long-term performance is just that: it’s what we might expect over a very long period of time.

How do you define “long-term” for investments?