The Key to Personal Finance

Additional effort in managing one’s personal finances will result to a more positive usage of personal resources. With attainable, realistic goals, ones financial standing will progress in no time at all. However, for the part of the individual concerned, this calls for proper planning and monitoring. There is also a need to assess at some point to see if the goals set are being met or further intervention is needed to alleviate the financial condition.

Available Income:

  • Regular household cash flow
  • After Budget cash or net flow

Regular household cash flow is what remains after the expected yearly expenses are subtracted from the expected yearly regular income. After budget cash or net flow is simply what one ends up with after subtracting regular household liabilities from the known assets. The part of the regular income that does not go towards normal expenses is a very important resource that can be diverted towards other personal financial goals. A balance sheet should be able to determine the net worth before proceeding to plan further on how to save enough for bigger and more important purchases.

Factors to be considered if 50% net increase is desired:

  • Full liabilities
  • Outstanding debts
  • Investment Instruments
  • Savings yield- savings + interest gained
  • Outstanding student loans

It only goes to say that when liabilities decrease, a person’s net worth increases along with it. The number one advice for people with plans to progress financially is to avoid taking juicy bank loans on offer as they are ever-potent dangers to one’s credit score specially when the interest pile up. Recovery from debts will be a much needed boost to personal finance. The more payables are settled, the fewer the liabilities are and this carries a positive reflection on one’s balance sheet and also his credit standing.

Personal investments make up most of a person’s net worth and thus it is a perpetually good move to gain as much valuable assets as a person possibly can in the course of his lifetime. This is not to say that forethought should not be employed here but the contrary. Investing by buying up profitable assets should always be preceded by careful analysis, so that a purchase will actually add vigor to one’s portfolio. The general trend is that if you are the risk avoidant type of investor high risk investments are avoided. These are properties which have value that changes with the ebb and flow of time like real estate, precious metals like gold and other physical goods that are known to have volatile values.

The riskier among us, those whose mettle are undeniably more resistant to fear easily trade in stocks and other financial instruments of our time. In this type of assets, the rule goes that the higher the risk, the higher the possible gains. This kind of investments no doubt needs to be studied and studied again due to the very nature of it to avoid excessive losses and to catch gains when and where they are likely to fall.

As savings is an important and integral part of a person’s net worth, due research is called for to yield the names of institutions that offer better products or simply better rates for one’s hard earned dollars. For example, American soldiers have the option and the privilege to take advantage of the DOD Savings Deposit program that has very high interest rates at 10%.

Savings accounts and CDs serve you in two ways: firstly by increasing your total net worth and secondly by giving a much needed buffer zone to your personal finance portfolio, as seen by prevailing trends all over. The reason for this is because such instruments are federally insured and grows at a steady, favorable rate every year.

One thing that has perennially damaged net worth are student loans as they can persist a long time after a person has graduated and worked. To counter the negative impact of this, one effective practice is to take advantage of seasonal tax breaks. With American opportunity tax credit alone, an individual can save as much as $2,500 and those who are still studying should altogether shun away from private student loans in favor of federally funded loans as these carry a lower, or fixed rates in general.

Most effective ways to maximize cash flow:

  • Highly informed financial decisions
  • Making and adhering to a budget
  • Controlling impulsive buying
  • Putting Cost cutting measures in place

Smart financial choices can sometimes spell the difference between ruin and progress. For instance, there is a choice between buying a house which becomes unaffordable later on as opposed to renting a modest accommodation. If the sale price of the house is proven to be a figure greater than 20, when the actual sale price is divided by the yearly rental, then you would be wiser if you rent. Managing personal finance need not be a daunting task; it only requires patience and practice.

Where you can cut costs:

  • Cut back on unnecessary expenditure
  • Cooking instead of dining out
  • Look into car insurance cost cutters
  • Collecting and using coupons
  • Buying wholesale instead of retail wherever applicable

There is absolutely no shame in using coupons and the benefits are tremendous, it can even get to be a habit. Why pay the full price when a little vigilance in cutting and saving coupons goes a long way? If no printed material is available from where to glean coupons, the internet is always there, the perfect place to search for printable coupons.

Cook at home and cook in batches. Then freeze for later meals. Have the due diligence to look after leftovers and you will probably save a fortune in take-out budget. There is no shame in keeping eatable food and it does wonders to a family or individual’s food budget.

Cut down on company offers, like phone packages, cable or internet packages, whatever has hidden charges, zero in on them and ask to get only the basic service, pay only for what you actually need and use. The extra features cost and pile up in the long run.

Carpooling is also one way to save, and if you must absolutely drive, drive safely to avoid charges. These small things all contribute towards managing one’s finance in a sane and productive way. And the habits that are changed also stick, so it is best to make sure that you make changes for the better.

How to estimate: Tools in Determining Worth

  • Simple Net worth calculator
  • Retirement calculator- many are downloadable
  • Mortgage rate calculator, again downloadable
  • Spouse or partner income calculator for multiple income households
  • Loan calculator, for free from many sites
  • Currency converter- already in wide use everywhere
  • Home budget calculator- a standard for many housewives
  • FICO score range tool- again available for free online
  • Student loan calculator- for up to date interest rates

These personal finance calculators are absolutely necessary when strategizing and setting up your long and short term goals, tax payments and schedules, mortgage resolutions and other financial steps. The closer the estimates are to real figures, the closer you will be to realizing your plans and these depend heavily on calculators.

Personal finance is simply net worth, cash flow, the relevant planning, savings, investment instruments, budget or allocations and cost cutting. If effort is made to understand the concepts in theory and applied wisely, a personal balance sheet and credit score will improve continuously beyond recovery and go well into growth.

5 Steps To Managing Your Finances When You Have ADHD

Many people with AD/HD have trouble managing their finances. They usually don’t have an effective system for paying bills and acquire an overwhelming amount of debt, due to impulsive spending. Managing finances requires attention to detail, record keeping, timeliness, and organizational skills; all things that are challenging to people with AD/HD.
Here is a simple, yet effective way to manage your money and pay your bills on time:

1. Collect: You need to know what’s coming in and what’s going out in order to effectively manage your money. Collect one month’s worth of pay stubs and bills in one container.

2. Enter: Creating a visual representation of when your money comes in and goes out will give you a clearer picture of your financial situation and make it easier to develop a payment schedule. Print out a blank calendar or use an online calendar such as Yahoo Calendar or Google Calendar. Enter all payment amounts for each bill on its due date. Then enter the amount of your paycheck on the dates you get paid. This is your bill payment calendar for the month.

3. Analyze: Use your bill payment calendar to analyze when you have the money to pay your bills. If you get paid twice a month, then those days should be your bill payment days. Divide your bills into those that will be paid with the first check of the month and those that will be paid with the second check of the month. Schedule a reminder on your paydays to pay your bills and use your calendar to check off payments.

4. Setup: The easiest way to pay bills nowadays is online. Most banks offer free bill payment and even if your bank charges a fee; it may be worth it to avoid late fees. Sign up for online access to your bank if you don’t already have it and setup your bill payment service. Even if your bill can’t be paid electronically, your bank will mail out a paper check. Once you do the initial setup all you have to do is enter who, how much, and when you want your payment scheduled (just make sure to schedule your payments far enough in advance for the bill to be paid on time).

5. Budget: Now that you know how much money is coming in and what your fixed expenses are, you should start tracking your unfixed expenses. For the next month, try to collect all of the receipts where you paid cash. At the end of the month take your cash receipts and your bank statements and categorize your expenses. Where are you spending too much money? Where can you cut back? Now that you know how much you have, where it’s going and what needs to be paid when; you have control over your finances and can determine how much money you can actually afford to spend without breaking the bank.

*For those who find money management too overwhelming, there is help available. Daily Money Managers do everything from paying your bills for you to balancing your checkbook and organizing your records. For more information, check out The American Association of Daily Money Managers.

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This Is The Secret To Getting Great Results With Money

Here’s the common GREAT STARTING POINT that most often precedes GREAT RESULTS.

God’s Word mentions this common GREAT STARTING POINT. So did the great writer James Allen early in the 1900′s. So did the master teacher Earl Nightingale.

Even if you are unaware of this GREAT STARTING POINT “principle” it’s still up, alive, and working in your life every second of every day..

If you are aware of, but choose to disregard this principle, you’re almost certain to be condemning yourself to strife, worry, struggle and more.

You must be “aware” of this principle AND employ this principle to have the best chance to move from where you are to where God would have you to be in your finances and in every other area of your life.

GREAT THOUGHTS precede GREAT RESULTS.

Simple, isn’t it? Or is it? If it’s so easy, then why don’t you do it more often. The fact that you often fail in your finances and relationships (including your relationship with God) should be evidence enough that you don’t spend the time needed to employ the GREAT THOUGHTS = GREAT STARTING POINT principle.

Is there a process you can follow to best employ this GREAT THOUGHTS = GREAT STARTING POINT principle? Yes.

Here it is.

FIRST, start with the end in sight. Think about it. Where do you want to end up? For example, how much income do you want to earn? What’s your target date to be debt free? How much would you like to be able to give, invest, save by this time next year? The idea of starting with the end in sight applies to every area of your life and to every relationship in your life.

SECOND, determine your motive for reaching the end you now have in sight. Prayerfully think about it. Why is your target important? Again from the financial world–your motive may be to get your creditors to stop calling, or to get the IRS off your back. You have to have a great reason “why” or I promise you when the journey gets tough, you’ll fall away. And by the way, this reason has to be yours, it has to belong to you not someone else.

What’s your motivation to improve your finances? Figure it out. Claim it as your own. Keep it in front of you when the path gets tough. If your motive for financial order and stewardship is anything other than desperately wanting to please God, you will never know what it’s like to enjoy debt free living God’s way.

THIRD, obtain the tools you need. If improving your finances is your target, then pray. Think. Evaluate. Where are you right now? What do you lack? What resources do you need to move forward? I’ll tell you from personal experience that in the area of finances you need a relationship with God for motivation, a coach armed with God’s Word and other tools for accountability, and time for consistency.

There you have it. You can best achieve GREAT FINANCIAL RESULTS when you have a GREAT START based on GREAT THOUGHTS.

You must set a target, have the right motivation, and use the right tools.