King~s Guide To Financial Freedom
Tuesday, July 05, 2005
How to Save Money
The key to learning how to save money is to figure out what you want from your life. Are you satisfied with being able to go out with friends a couple times a week for dinner and a movie, taking a vacation once a year and maybe one large purchase?
Or are you looking for an extravagant lifestyle of the rich and famous? Whatever you’re looking for you can start achieving it through these common-sense tips that are applicable to things like transportation costs, insurance, banking/credit, housing, and utilities.
Tips on How to Save Money
The number one tip is planning; for example if buying airline tickets, buying them for off-peak times or red-eye flights well in advance can save hundreds of dollars on ticket prices. Do your research when making any kind of decision that will affect your money. If you decide to buy a car, buy one at the lowest possible total cost, including maintenance costs and interest rate.
Don’t hesitate to do comparison shopping also; a good rule of thumb is to check at least five different sources (if available) before you buy. Asking questions about hidden costs, additional charges or special offers with a purchase is also recommended. Maintenance is also very important, as many people don’t take these costs into account when making a purchase.
Active conservation of resources can be an effective way to reduce cash outflow through simple methods: try walking or biking to get groceries or to go to work, and turn off the lights in rooms that you are not in. Not only is this cheaper, but these techniques are better for the environment and your health as well. When shopping, go with a list or goal in mind, as it can help save you from buyer’s remorse and impulse purchasing.
Taking time and planning out purchases and expenditures can help make costs and cash flows clear, allowing more effective cash management and contributing to efficient money-saving in both the short- and long-term future, and everyone wants more money available to spend, right?
Creating and Managing a Financial Plan
You wouldn’t take a trip without knowing where you’re going, so why spend money without a plan? A financial plan outlines your financial goals and provides you with the roadmap to achieve those goals. Without planning, you might not have enough cash in reserve to meet unexpected expenses as the result of job loss or death. You might not be able to pay for your child’s college education, put a down payment on a house or save enough money for retirement. No matter what point you are at in your life, it is never too late to create a financial plan. There are several steps to creating a financial plan:
Assess your financial situation. You need to know where you stand. Taking a hard look at your current finances might give you the incentive you need to actually follow through with creating and maintaining your financial plan. Write down and total your yearly household income, assets (including bank accounts, stocks, bonds, retirement plan, property, cars, etc.) and debts (credit cards, mortgage, loans, etc.). Then, subtract your income and assets from your debts. Are you better or worse-off than you thought you were?
Define your financial goals. Create goals for the short-term (one to three years), mid-term (three to ten years) and long-term (10-plus years). Be specific. Write down goals like, “I want to remodel my kitchen in two years,” “I want to buy a vacation home,” or “I want to retire to Paris.” Then, you’ll need to determine how much money you can set aside to meet those goals within those timeframes. How do you do this?
Create a budget. A budget helps you stay on track with your financial goals. Before you create a budget, however, you’ll need to chart your daily spending or your expenses. You need to record every single expense from an ATM withdrawal to the quarter for the paper. This is the only way you’ll get a clear picture of how you spend your money and what you can do to reduce spending so that you can reach your financial goals. After at least a month of charting your spending habits, determine which expenses are wants and which ones are needs. For example, is that three dollar cup of coffee every morning a want or a need? Once you determine your necessary monthly expenses subtract that amount from your monthly income. Any leftover money can be allocated towards reaching your financial goals. If you have no money leftover each month or you’re in the negative, you’ll need to create a plan to reduce your debts so that you can start saving for the future.
Allocate your assets. Financial planning almost always involves making investments. You need to make your money grow and the best way to do this is to invest. You can invest in stocks, mutual funds or bonds. If you’re not comfortable allocating your assets yourself, you can hire a professional who can work with you to create an investment strategy that fits your needs and comfort level.
Managing Your Financial Plan
Creating a financial plan is not the end of the road. Just like you must maintain your car to keep it running, you must maintain your financial plan in order for it to work to your best advantage. On a regular basis, you should evaluate your financial progress and, if necessary, revise your goals and the course you laid down to reach them.
Financial Management
The key to success for anyone and or company is financial management and budgeting. As a small business owner developing and managing your business is difficult at most. In order to successfully manage and budget your finances, you will need to demonstrate strong leadership skills, profound business management skills and an in debt knowledge of finances (cash flow). All of these characteristics will play a strong and vital role to good financial management and successful business outcome.
It is extremely important for individuals and businesses to pay close attention to cash flow. The easiest way of doing so is to develop a strict budget. This is a primary factor to financial management. Many individuals find themselves in financial ruins due to lack of prioritizing and budgeting their income. Budgeting requires discipline and patience. In the long run, it will prove to be most efficient to the prospering of your financial stability and business performance.
However, in order to stick to a strict and effective budget you will need to be organized and your company will need to be organized. Going through a year of invoices, payments, sales reports, etc., during year end is not organization. It will be impossible to stick to a budget and prioritize if you are disorganized. You may need to improve your finance management and business management skills, as well. By gaining the knowledge and skills required to keep up with the fast paced and ever changing economy will prove proficient for anyone and or business.
As a small business owner you may find that your best approach to financial management is hiring someone who specializes in the task.
However, if hiring an expert does not fit into your budget, an alternative is to become familiar with the concept of financial management. There are many short courses available on the subject from a community college or an online tutorial. There are several programs online available to download to assist small business and individuals with budgeting and financial management at little or no cost.
You may also purchase software programs that will manage all of your financial activities and give you a broader perspective on your company’s financial stability. When searching for a finance management software program; it should complement your company’s needs. It should be structured to sponsor effective and precise execution of your finances and account activities, in order to provide your company with timely and consistent information, which will result in proficient business production
How to Receive Debt Relief
- Debt relief is a wide term that is related to slowing or stopping of debt growth that an individual owes.
- Credit tools of various kinds are helpful in deterring the effects of surmounting debt. It requires good management and sound judgment to live within your means.
- Living debt free is quite difficult and sometimes you require extra money to give shapes to your plans. There are ways through which you can eliminate debt.
Getting Back On Track Financially
Making a budget to monitor your expenses helps to keep a check on your growing bills. Going for a credit counselor may help you in debt management. If you plunge into negative credit rating, it will create a bad impact on your prospects.
Researchers believe that behavioral pattern of people have much to do with debt management rather than their monthly earning.
It is essential to become debt free at the earliest, as it not only tells upon your financial status but destabilizes your mental composure as well. It is one of the chief causes of stress and sometimes even culminates into familial trouble.
During recent years, it has become easy to fall in the trap of debt because of a higher urge to avail all the comforts. Controlling and paying back debt is equally necessary to ensure a better and satisfied life.
The Benefits of Having a Checking Account
There are many benefits to opening and maintaining a checking account. Having a checking account allows you to write checks to pay bills or buy groceries. Checks are cheaper and more convenient than buying money orders and with the popularity of debit/ATM cards, you don’t even have to go to the bank to withdraw money. In fact, you can use your debit card to make purchases online and in-person. A checking account also gives you the added benefit of having written proof that someone was paid. If there is a dispute, you can produce a cancelled check in your defense - something that carrying cash doesn’t provide. Having a checking account is also safer. Instead of carrying cash, you carry a checkbook. If you lose your checkbook, you can call the bank and it will secure your account so that no one can write checks against your account.
Before opening a checking account, however, you will need to decide what type of account will provide you with the most benefits. Some checking accounts have no minimum balance requirements while others charge you if your account falls below a certain amount. There are checking accounts that allow you to write an unlimited number of checks each month and others that charge you for each check you write. Some checking accounts pay interest, others do not. The key is to find the checking account that best fits your needs and requirements.
How to Manage Your Checking Account Once You Open One
Once you open a checking account, you will need to maintain it. Keeping good records is vital. Use your check register or a computer software program to keep track of deposits, withdrawals and checks written. The key is to make sure you record each action made against your account so that you know exactly how much money is in your account at the end of the day. You’ll also need to balance your account when you receive your monthly statement from the bank. It’s much easier to do this if you’ve kept good records. Sometimes the bank makes mistakes. Sometimes you might have forgotten to subtract a fee from your account. You’ll only discover this by comparing your check register records to your monthly statement.
Another key to good checking account management is to never write checks if you don’t have money in your account to cover the check written. Even if you think you’ll deposit money before the check is presented to the bank, don’t do it. If the money isn’t there to cover the check, your check “bounces” which means it is returned to the presenting bank. You’ll be charged a fee not only by your bank but by the presenting bank as well. More importantly, your bank may close your checking account or you may lose your check writing privileges with certain merchants
Tips on Saving Money
Saving money is that aspect of your finances, which you wish to adopt but often fail to make up. More than 75% of Americans feel that their saving is insufficient to serve retirement purpose. Recent researches have revealed that savings have not much to do with your final asset.
How to Save Money
It is astonishing to note that while the middle-income folks had an asset amounting about $45,000, the lowest income group had an impressive asset of about $150,000 per household. It is paradoxical to note that the low-income groups save more than their better of counterparts do. To save substantially, you need to retrain your brain that will show you the way, how to live while spending less.
It requires a different mind-set where you do not focus on what you need but concentrate on things without which you can do. You have to inculcate the characteristic of frugality and learn to spend less where you can manage to do so.
Bargain Hunting to Save Money
Bargain to the last limit and help yourself buy things cheaper. Reevaluate the expenditure incurred during a dinner outside and the money you could have saved if you cook it at home.
Advertisements often create false needs and tempt you to buy things that are not essential. If you check your nerves perfectly, you can be a large and impressive money saver. While saving money does not necessarily means that, you are rich but it ensures a sufficient future where you save for the time when you are no longer working.
Work at Home Business Opportunities
You may often find that income from a single source is not able to satisfy your financial requirements. In such a case, looking for an alternative where you can generate money while operating from home is a good option.
Some of the easiest works that you can undertake for making money from home are telecommuting and freelancing. Working from home has other advantages as well like fewer out-of-pocket expenses and less wear and tear on a vehicle. When you work from home, you need to have commitment, creativity and courage to carry on the business.Besides, working from home gives you an opportunity to look after your children, which would otherwise require a baby-sitter meaning extra expenses.
Home business also serves as an ultimate tax shelter as you can pay wages to the other members of your family helping you in the business and divert the taxable income. This is referred as income splitting and it is an effective way of saving your income. You should choose your home business according to your leanings. It could be anything from selling of antiques to computer specializing and distributorship.
You need to have a strong sense of determination as well to operate from home as many times homely involvement may mar your efficiency.
Some of the easiest works that you can undertake for making money from home are telecommuting and freelancing. Working from home has other advantages as well like fewer out-of-pocket expenses and less wear and tear on a vehicle. When you work from home, you need to have commitment, creativity and courage to carry on the business.Besides, working from home gives you an opportunity to look after your children, which would otherwise require a baby-sitter meaning extra expenses.
Home business also serves as an ultimate tax shelter as you can pay wages to the other members of your family helping you in the business and divert the taxable income. This is referred as income splitting and it is an effective way of saving your income. You should choose your home business according to your leanings. It could be anything from selling of antiques to computer specializing and distributorship.
You need to have a strong sense of determination as well to operate from home as many times homely involvement may mar your efficiency.
Interest Rate Effects and You
What interest rates usually effect in your life are primarily the things that you buy on credit like a house, car, and stocks and bonds. For example, if you go to buy a house the interest rate is going to determine 'how much house' you can buy.
When interest rates are high you buy less house because the payments would be prohibitive to buying a bigger house. When the interest rates are low, you get more house for your money, due to the lower payments.
Interest Rate Effects- An Overview
The definition of an interest rate is the cost of borrowing money from a lender, applied on an outstanding balance, paid at regular intervals and expressed as a percentage of fixed or variable rate of the total amount of credit owed.
There are two types of interest rates: real and nominal. The expected increase in real income, relative to the amount owed, is the real interest rate. In order to take inflation into account the actual rate charged, which is the nominal interest rate, is adjusted through a formula.
The point of fluctuating interest rates is to affect peoples' and firms' demand for goods and services. Interest rates react to fundamental factors of supply and demand as well.
For example, the price of interest rate futures are affected by the supply and demand for credit. The credit offered is in turn, affected by the economic forces of the Federal Reserve Board monetary policy, legislative and executive fiscal policies, and business activity. Interest rates are directly or indirectly responsible for much of what drives the financial market, probably more than any other factor, and as such, it is important to anyone involved in finance to stay aware of the interest that affects them.
Debt Consolidation is an Option
Debt consolidation can be the key to your financial freedom. No one plans on being if financial ruins. It seem to sneak up on you when you least expect it. You work hard everyday to pay your bills and to live a comfortable lifestyle. However, it seems that the harder you work the more bills you have to pay. No matter how much money you dish out to creditors, the bills never seem to decrease. Instead, every time you open your mail box there are more and more bills, with outrages interest rates, late fees, enrollment fees and any other fees creditors can legally come up with. Before you know it, you’re living pay check to pay check
Why is it the more money we make the more money we spend?
In today’s economy, everyone wants to live beyond their means. If you have satisfactory credit, you can. Creditors will harass you with catchy ads and flyers, stating all the benefits they have to offer. You’re human so of course you’re tempted. Eventually, one credit card turns into two, two into three, and so on. It is a fact that most young Americans own at the least 7 credit cards. It is also a fact that 90% of them will end up in debt. It’s a materialistic world. There is no denying it. Millions of Americans suffer from financial stress, primarily due to overwhelming credit card bills, high interest rates and lack of budgeting.
Nevertheless, you shouldn’t be punished for making a few financial mistakes. You deserve a second chance. Debt consolidation or a debt consolidation loan may be the solution you seek.
Personal Finance - Can you afford NOT to look after your Finances?
- Investing is a subject a lot of people don’t want to think about. And there is good reason for that. Investing seems scary. It either sounds like something only the rich do or something that only a skilled professional can do. But the truth is that investing is something that everyone can and should do—as soon as possible.
- Why should you start now? Think about this. There are two ways to make money. You can exchange your time for money or you can make your money work for you. Most of us work 40 hours a week. In this case, you are trading your time for money. But wouldn’t you rather earn more than you are making? If you are making $1,000, wouldn’t you rather be earning $5,000? Most people think the only way to earn more is to work more. Work overtime is their motto! But there is more to life than working. Investing gives you the chance to let your money work for you—saving you time and earning you money.
- But is the purpose of investing to get rich? Some people don’t invest because they think that investing is something you do to get rich. They figure they’ll never earn enough to get rich, so why bother. But that’s not what investing is for. Investing is a way for you to be able to maintain your current lifestyle.
- Think about this: what if the company you worked for suddenly closed down? What are you going to do when you get to retirement? Sometimes working more is not a viable option. Investing gives you another source of savings and earning income. You don’t invest to become a multi-millionaire (of course no one would stop you if that happens); you invest so that you can provide for yourself in the way you are accustomed to both before and after retirement.
But, there are some misconceptions people have about investing that prevents them from actually doing it. These misconceptions are that:
Investing is too hard
You may think that investing is just too hard. But a lot of that has to do with the terminology of the investment industry. I mean who knows what Fed Fund rates, mutual funds, indexes, or blue chip stocks are? But you don’t need to be scared off by a bunch of words—in the end they are just words. Just like you probably didn’t know what PMI was before you bought your first house or what APR was before you got your first credit card, you can learn what these things are. And you will find that they aren’t so hard to learn. And if you seek the advice of a professional, they can explain it to you.
Investing is too risky
Some people have the idea that investing is risky. Movies such as “Wall Street”, no doubt, lead people to think that. But the fact is that investing is only as risky as you want it to be. Do you want to take huge risks? You can invest in international stocks. Want to play it safe? Go with bonds. The risk level is up to you and only you.
You need a lot of money to invest
Many people think they can’t afford to invest. But when you look at the alternatives (social security may not be there, job security is not 100%), you really have to ask yourself how can you afford not to invest. And the earlier you start, the more money you will earn. Even if it’s only a small amount, the money you invest today will earn you big in the future
Let’s look at each one of these misconceptions.
Monday, July 04, 2005
Time + Money = Lifestyle
The formula for Wealth Creation is relatively simple.
- In order to increase your wealth, you need to increase your wealth generating activities.Most of us start out trading our time, for money.
- We get paid an hourly rate for doing a certain job. The problem with this is that in order to increase your income, you usually need to increase the amount of hours you give to your employer or clients.
- Which in turn reduces the amount of time you have to spend on yourself, your family and doing the things you enjoy.In order to increase your quality of life, the only realistic strategy is to increase your income, and reduce the amount of hours you work.
- Time + Money = Lifestyle
- There are basically two methods most people can use to make money, you can either trade your time for money, or you can trade your money for more money.
- The investment techniques outlined in this website will help give you a general understanding of some different ways you can get your money working for you.
- This is the true essence of any effective wealth creation strategy.
- Maximum return for minimum effort.
Sunday, July 03, 2005
The Richest Man In Babylon by George S. Clason
There are a few books of basic wisdom that endure for generations. One of these books is The Richest Man In Babylon, first published in 1926.
We have heard, again and again, the critical importance of putting aside a share of our income for investment.
- There are a lot of ways to build wealth, but there is a simple, sure way that can always work. It is simply to develop the habit from a young age of saving a share of your income, say 10%.
- Paying this amount to your investment account must become the same as paying your monthly rent or mortgage payment.
- Developing the habit of saving money should be developed the same as the habits of bathing, washing hands before a meal, or shaving.
- If you can't have certain luxuries now and maintain your savings ritual, postpone the luxuries now so you can enjoy them and financial security later.
- I said this method is simple, I didn't say it was easy.
- These are the lessons that George S. Clason drives home again and again in the parables of The Richest Man In Babylon.
- Here is an excellent graduation gift for your child or grandchild.
And if you haven't heard of or read The Richest Man In Babylon yet, maybe this is a good time to get a copy for yourself and read it.
Saving For Retirement
I'm writing about what type of savings program is required in order to provide for an adequate retirement.
Here are schedules of amounts to be saved monthly with interest compounded in order to accumulate $1 million by age 65. Note that taxes are not considered, so the interest would have to be accumulated in a tax-deferred account.
- Interest rate 6% ;7% ;8%
- Starting age 25 $ 502.13 ; $ 380.98 ; $ 286.45
- Starting age 35 $995.51 ; $ 819.69 ; $670.98
- Starting age 45 $2,164.31 ; $1,919.65 ; $1,697.73
- Starting age 55 $6,102.05 ; $5,777.52 ; $5,466.10
- Monthly annuity $7,164.22 ; $7,753.00 ; $8,364.39
A few thoughts come to mind when reviewing this information.
- Starting a savings program at an early age makes a dramatic difference. It can also be very difficult to save at an early age because of the financial requirements to establish oneself, including buying a home, a car, etc. The old maxim of "pay yourself first" seems to hold true.
- The interest rate assumption is important. Rates of return aren't usually constant. These rates may be high or low depending on the investments that we're considering. They are certainly higher than banks are paying for regular savings accounts. Higher rates of return usually indicate the investments carry a higher risk of loss.
- Most so-called middle-aged people should be planning to accumulate at least $1 million by age 65. With inflation (increases in the cost of living), they will probably need that amount of assets in order to maintain a decent standard of living.
- Contemplating this information could lead to despair. "It looks impossible, so why even bother?" Or, "The only way I can make it is to hit the lottery!" Most of us need to seek other ways to build value for our net worth. Some ways include building a business, increasing the value of real estate investments, or finding a growing employer that offers incentive stock options.
- Probably most of us should plan on working at least part time during our retirement years. We need to take care of our health now in order to be in condition to do so. We also need to maintain current skills in order to be employable.
Share this information with your children and grandchildren. They need to know how important it is to set and achieve financial goals. Most of us believe that we can't rely on the Social Security system for the long term. We must provide for our own financial future.
