29. May 2017 · Comments Off on Christian Parenting: Family Finances Money Saving Guide and Financial Planning · Categories: Finance

Keeping the household budget under control can be difficult for most families, even those that have high incomes. If you have loans, high credit card bills, debts or lack of finances you may be struggling to budget effectively and this may create family conflict as well as lack of ability to plan for future commitments such as your children’s college funds or sufficient investments to keep you in retirement. Financial awareness is important not just in times of recession but also when spending leads to living beyond your means. These can all be causes of stress and anxiety. Being able to spend wisely is a good way of teaching your children skills for living as well as reducing stress making situations within your family.

Here are some financial tips that can help you if you are struggling with sorting out family finances or if you want to reassess what you are doing with your income and expenditure.

Personal Finance

You may be surprised that if you sit down and work out exactly what your outgoing’s are in relation to your income in an honest way you can begin to become clearer about how to budget to meet your needs. Many people go through their adult life not being aware of their real income and expenditure and remain distressed month after month when there is a short fall. Some people stay consistently in debt just because they are too scared to do the math. If you want to lessen this feeling of panic then consider personal financial counseling, it will help you to sort out your concerns and assist you to start getting control without needing to go to the loan sharks. If things are really worrying consider debt consolidation if needs be but do not put your head in the sand. However, If you have money left over after doing budget monitoring then you should consider putting it into a savings account to obtain interest not blowing it all at once. There are also personal finances software and free family budget planners which you can use on line to help you assess your family spends including monitoring over time.

Saving money

Most people will need to save money for big expenditures, such as education fees, the purchase of property or to buy a car for example. The earlier on in life you can start saving the better because of the “law of compound interest”. This states that you make money on the interest your savings gives you as time goes by. But this really only works if you do not touch the money you are saving for some considerable time, usually all your working life and that you invest regularly. Most people unfortunately are not in this position, and you should not do it if it caused strain on your overall budget, but shorter periods of saving and ad hoc amounts when you can afford it will still give you better results than if you did not save at all and had to take out a loan.

Credit cards

Pay off your credit card bills before you consider putting your money in a saving account or in any other investment. In fact if you have money in a savings account and have unpaid credit card bills it doesn’t make sense not to pay your lenders as the interest charged on credit card and store card debt is many times the amount than the interest that you can get from saving your money in the bank or in a savings account. You can always start saving again but if you have debt hanging around over your head this will continue to have an emotional impact on you and your ability to be in control of your finances.

Some people play the credit card swap game of transferring debt from one card to another at zero interest rate for a limited time, and then swap to another just before this cards interest rates rises. There are many benefits of doing this and the credit card companies encourage it by offering cash back, air miles and other rewards but you should do it with caution because as if you are not able to keep track of the time when the interest free only time runs out and swap cards you will have to pay the full rate which as we know, is very high.

Saving accounts

Not all savings accounts are born equal and you should research the best one for your needs, but do not let that stop you from embarking on regular saving. Even if you think you have found the best savings account a new deal may come on the market, however make sure that paying any early penalty withdrawals is worth the effort of swapping accounts.

Family Insurance

The best type of insurance to invest in for your family, over and above the obvious such as house, car and medical insurance should be the kind that meets your family’s unique needs. Dental insurance, pet insurance, musical equipment insurance maybe the types of insurance that without it your family’s crucial day to day wellbeing would suffer, not just as an extravagance but a necessity. But assess all of the insurance covers you have taken out and make sure where some overlap you are not paying out twice for cover such as for payment protection plans on loans credit cards, lost keys, travel insurance.

Discount Finders

Families are really getting wise to the benefits of buying products and services online as there are huge discounts to be made by buying this way. In addition there are online websites and forums where daily discount vouchers can be found. Price comparison sites are also useful to compare prices and get the best deals on line when you are shopping.

As a family you can work together to understand your budgeting needs and how you spend and prioritise what you need. Lessen the stress of financial issues by getting good money advice and seeing what makes the difference for you.

19. April 2017 · Comments Off on Personal Finance & Money Management Roles & Responsibilities Defined · Categories: Finance

The business of managing personal finances comes with myriad tasks. You earn, you pay bills, you invest, you write checks, you plan, you, you, you…. I think you get the idea. Handing the finances can be a lot of work for you. These tasks involved can be grouped into into three distinct and different roles that are similar to ones you might find in any professional business. I refer to the roles of my personal finance and money management business as the Money Leader, the Money Manager and the Money Handler.

The Roles.

The Money Leader provides the strategic leadership, vision, purpose and goals for your financial operations. He is your business’ chief executive officer. If we make the analogy that successful money management is like a trip in your favorite automobile, the Money Leader decides: Where are you going? What stops along the way should you make? When will you start your journey?

From a personal finance perspective, Money Leader tasks include:

  1. Establishing vision – What is the end state you are trying to achieve? Where are you going?
  2. Developing financial strategy – How do you link your Financial Ends (outcomes/desires), Ways (plans) and Means (resources)?
  3. Setting Goals that enable the strategy- This will drive many of the plans that are developed.
  4. Provide guidance and direction to the Money Manager (more on him in a moment) has he develops the financial plans necessary to ensure the plans achieve the vision.

The Money Leader decides where you are going, when you need to get there and why you’re on this journey.

Middle management is the responsibility of the Money Manager who helps develop financial plans and ensures the processes of money handling are running smoothly. He has a more narrow view than the Money Leader and focuses on the details of the route our financial vehicle will take when we drive it and monitors the systems within it along the way.

The Money Manger is thinking about which highway or streets can I take to avoid traffic? How fast am I going? Do I have enough fuel to get there? How’s the car running? When is the next scheduled engine maintenance? Is there anything wrong with the car that needs to be fixed right now? What kind of gas mileage are we getting? Does the motor need a tune up?

From a personal finance perspective, Money Manger tasks include:

  1. Developing financial plans to achieve your goals – Choosing investments, selecting insurance policies etc.
  2. Guiding, monitoring and assessing the execution of financial plans – Things like monitoring earnings and expenses so you can create and maintain positive cash flow.

The Money Manager develops financial plans and monitors our performance executing the plan. He seeks to improve the efficiency of the processes use to handle the details of your personal finances.

When it comes to finances, many of us wind up getting mired in the details of handling money and will feel most comfortable with our final role.

The Money Handler is the role that most people will find familiar. This role deals with the nitty gritty bits and pieces necessary to keep your financial vehicle running. The Money Handler changes the oil, adds wiper fluid, puts air in the tires, replaces light bulbs etc. To quote an English friend of mine, he “works at the coalface.”

From a personal finance perspective, Money Handler tasks include:

  1. Paying bills – writing checks, stuffing envelopes and licking stamps.
  2. Making investments – filling out paperwork, writing checks or making e-transfers.
  3. Moving money – between accounts as necessary (e.g. on payday, etc.)
  4. Reconciling accounts – balancing checking, savings, etc.

The Money Handler accomplishes the tasks necessary to implement the financial plans that the Money Manger developed and monitors in order to fulfill the Money Leader’s vision and strategy for financial success.

Each role is necessary in order to properly handle your finances. However, the Management and Leadership roles are most important as they determine what success means and how you plan to achieve it. I’ve often said that a “failure to plan is a sure fire plan for failure.”

Unfortunately many of us get mired in the details of being the Money Handler and miss or fail to accomplish the bigger picture vision and planning tasks of the Money Leader and the Money Manager.

04. March 2017 · Comments Off on Know Your Finances – The 1st Step Towards Financial Freedom · Categories: Finance

One of the greatest mistakes you can make in managing money is not knowing where your money is going. About 90% of people who come to see me do not know exactly how they spend their money. Some may have small notebooks where they scrawl their monthly accounts but when they start to put everything down on paper, they are always surprised, if not shocked, to see the real state of their finances.

As obvious as it seems, most people just do not know their finances. This is always the most difficult part of managing money because, invariably, this is often when they realise they are spending more than what they earn. Money matters simply scare people. They are terrified to know how out of control their finances are. Yet, this is precisely what needs to be done before you can start working on a solution.

Planning and goal setting are critical to your success if you want to become financially secure. The two key traits of people who do not achieve this are, firstly, they tend to spend all of the money they have and, secondly, they do not know what they spend their money on. The lack of planning and goal setting is the main culprit. This is often referred to as “spending unconsciously”.

Unconscious spending is more prevalent in our society than we realise. The reason why people spend without giving it much thought is they have no goals. Without goals, you live unconsciously from moment to moment, you never plan for the future, you spend all of your money, and as a result, you are unlikely to ever become wealthy.

All good businesses manage their operations by planning and budgeting. They have benchmarks that they budget to and compare their profit and loss results. Major expense items, such as salaries, rent or advertising, are calculated as a percentage of sales and operating performance is analysed according to these percentages. There is no reason why you should not manage your own finances in this way.

The glue that holds all successful business practices together is the master budget. It ties in all facets of the business – marketing, selling, financing, research and development, and personnel management. Without a good master budget that incorporates all activities of a business, an organisation will end up floundering. And a floundering business is rarely profitable.

The budget provides the cohesion between the differing objectives of diverse parts of the business and creates a unified goal for the total organisation to work towards. It enhances motivation, delegates responsibility and provides important feedback on the progress of individuals and the organisation as a whole. Not bad, for a simple system – budgeting – that we all thought someone installed to punish us for our mistakes.

Budgets are not punishment. They are important, useful tools that guide us to where we want to go. They allow us to plan for our future yet control our circumstances along the way. They are not meant to be exact, but rather flexible and accommodating. They should change when we change, yet still be resilient enough to prevent us from going off the rails. They point us in the right direction and correct us when we fail. Without a budget for our finances, we are trying to win the 100-yard dash blindfolded.

In fact, if you use the same principles and apply them to your own personal finances you are well on the way to achieving financial independence.

Whilst it is important to become relaxed and carefree with your financial matters, this does not mean careless. You become carefree with money when you know that it is not a scarce resource, you set your financial goals, you invest a little time on a regular basis to plan and review your finances, and you systemically set aside part of your earnings regularly to build your savings and investments for the future.

You are careless with money when you do not keep track of what you are spending and squander money on things that are wasteful, extravagant and not needed.

Money management is about building a strong financial foundation that cannot be shattered regardless of what you may be faced with in the future. Regrettably, strong foundations take a little time to build. For those who want the instant wins and instant cures, their impatience is often the cause of their turbulent finances. If you are tired of worrying about money, now is the time to change. Take a little time out and start to think about what you really want. Set up a plan, follow a budget and be prepared to give it time to allow your money to grow.

19. February 2017 · Comments Off on This One Habit Shows A Lot About Your Personal Finance · Categories: Finance

Personal finance is very personal and very financial. Money is just a small part of personal finance. A majority of personal finance is about your personal habits. Personal habits on anything (not just money). It permeates into habits on orderliness, discipline, personality, social style, etc.

Also, personal finance is not about how much money you acquire. It is about handling the money that you have already acquired. Most people believe that if they had a “lot” of money then all their financial woes have been solved. Instead of thinking of acquiring more (especially through the lottery), it is best you handle what you are acquiring. You must adapt the habits of those who can handle money properly and successfully.

There is one habit, one very particular habit, that reflects and illustrates your personal finance. This one habit depicts on whether you are succeeding in this money game or not. This is not my opinion but the opinion of many financial experts and financially successful people. Although I do heed to the advice of many financial experts, I definitely adhere to the advice of those individuals who are financially successful. The great thing about this particular advice is that you can acquire this particular habit and start succeeding in your personal finances. It is a great place to start.

What is this particular habit?

Place your bills in an organized way in your wallet or purse.

If I were to look at your wallet or purse now, how would your money be laid out? Will your money be all crumpled up in your purse? Will your money be folded around your wallet? Will there be coins all over your wallet or purse that are all over your wallet or purse?

You can change to start succeeding in your finances.

* Place your bills in an orderly way. Have them all with the portrait right side up.
* Now, organize your bills in such a way that you group the dollar bills as a group, the five dollar bills as group, etc.
* Make sure there are no folded corners in the bills.
* When you have your bills organized, you can now be very particular in spending them. In other words, you will be frugal in spending them.

Of course, you should refrain from using credit cards. Thus, the only way you can spend is by spending these neatly organized bills.

Now, some people may say that they do not have any bills to place in an organized way in their purse or wallet. Well, it is about organizing those bills that you do acquire so that you will start attracting more money into your life.

When you handle properly the money that you have now, you will attract more money from other sources.

22. January 2017 · Comments Off on Family & Marriage Finances 101 – The 14 Essentials Everyone Must Know · Categories: Finance

There are two words that are very closely synonymous with the two words ‘family happiness’ – those two words are ‘family finances’! Notice I did not say ‘family wealth’ – happiness in a home, marriage, and family is most often directly correlated with the ability of the parents to properly manage (not necessarily accumulate) and budget their finances. It is unfortunately true that over 80% of all divorces result, in some way or another, because of finances. More tragic than the divorce is the fact that families are torn apart, children suffer, and society is feeling the negative ramifications of this all too common reality. 

At the outset, it is absolutely important to note that the 14 essential principles described below are not designed to teach people how to accumulate wealth through the application of the principles described. The sole objective in revealing and explaining these principles if for one purpose – to help marriages and people everywhere experience the family happiness that results from the application of simple financial principles. Will applying these principles require effort and a change? Certainly! But does not everything good and worth while in life also require change and consistent effort? 

Fortunately, with a little education, self-discipline, and effort, we truly can ensure that our ‘family finances’ result in ‘family happiness.’ May I suggest 14 ways on how to accomplish this: 

1) Establish a budget and live within your means: First, do you even have a budget? If so, do you actually live by it? Do you actually record every expenditure, so that at the end of the month (when you sit down and go over finances … right) you know where every penny has gone? At the end of the month as you look over the finances, did you purchase something you did not need? Stick to the budget and live within your means!

2) Never accumulate consumer debt: Do you know the difference between Good Debt vs. Consumer Debt? Good debt is when you have to borrow money for some type of an investment: a house, your education, or to start a business, etc. Consumer debt is simply purchasing anything on credit outside of these three areas. If you don’t have the money to buy it – don’t buy it!

3) Credit cards are NOT bad: Now, above on point 2 I mentioned to never purchase anything on credit you don’t need or have money for. That does not mean you can’t purchase your groceries or other expenditures on a credit card (in fact, I encourage you to do that). Using credit cards, properly, is essential to your financial success. What is the proper way to use a credit card? It is simple: never use more than 25% of the credit limit, make your payments on time, and pay off the entire balance at the end of the month.

4) Understand the importance of building and protecting your credit: In my opinion, protecting your credit is just as important as protecting your social security number. Your financial future and success hinges upon that report/score. Do you want lower rates, better jobs, larger loans, better pay, etc.? Than you better protect your credit. I tell people all the time that investing in Identity Theft Protection is just as important as any Life Insurance program in our day and age. Now, do you know how to build and improve you score/report? It really is simple: never use more than 25% of the credit limit, make your payments on time, and pay off the entire balance at the end of the month (sound familiar)!

5) ‘Wealth’ is not the accumulation of money, it is the proper management of it: Our culture and society certainly has a skewed perception of what true wealth is. If, for example, an individual makes 1 million dollars a year, we assume they are wealthy. Well, if that person spent 1.2 million dollars that same year, that certainly is not wealth is it? In fact, the promotions and pay raises we all seek in our jobs will do little if we increase our spending as our income increases. Robert Kiyosaki refers to this habit as the ‘rat race.’ We need to learn how to properly budget, manage, save, and invest our money – not just spend it. Thus, true ‘Wealth’ is getting out of this ‘rat race,’ it is financial independence, it is passive income, and it is time freedom. Learn now how to manage your money before it manages you! Both men and women would do well to change their perception from ‘how much can my spouse make’ to ‘how well do they manage their finances.’

6) Self-Discipline and Self-Restraint are essential: Self-discipline in regards to money is far more important than any advanced course in accounting or financial management. Parents would do well to develop this ability, and they would be wise to teach this to their children. However, please don’t mis-understand – ‘self-discipline’ does not translate into self-denial or impoverishment. There is nothing wrong with buying ‘things’ that are fun, entertaining, or that the kids would enjoy. Where the line must be drawn is in the questions ‘can we afford this’ or ‘is this in our budget’ or ‘do we actually need this’ etc. And, ironically, self-discipline in financial matters will translate into self-discipline in other areas and aspects of life.

7) Saving Saves: That’s it – just save! Learn now to discipline yourselves and budget 10% of all earnings. Save for a rainy day, for retirement, for kid’s college funds, vacations, investments, etc. Avoid consumer debt, prepare for disasters or unemployment, and save 10% of all earnings – ALWAYS!

8) The importance of Insurance: Do you have proper and adequate home insurance, life insurance, health insurance, and car insurance? If not, you are potentially setting yourself up for financial disaster. And, in our day and age, do you have Identity Theft Protection? This type of insurance is just as, if not more important.

9) Wants vs. Needs: Wise is the wife, husband, parent, or child who can discipline themselves financially. The ability to sacrifice, go without, save, be patient, and determine wants compared to needs is an absolutely necessary attribute to develop; ironically, this attribute is not only necessary for finance-related issues, but every aspect of our lives!

10) Money is NOT Evil: Unfortunately, the majority of people have engrained into their minds that money is evil. Money is NOT evil; it is the pride people develop from possessing and accumulating money that causes others to perceive money as being ‘evil.’ A wealthy person’s snobbish attitude, condescending comments, assumed superiority, and arrogant actions are what is ‘evil’ – not the money! ‘But the money created the pride,’ some may wrongfully say; no, the choice to become prideful is what created the pride. Money is absolutely necessary for our daily survival; and if we choose, our excess money can also free up our time and create opportunities and resources that help and bless other people’s lives. We need more people who choose to acquire wealth for charitable purposes, and less people who develop the strength to financially suffer because they ignorantly believe ‘money is evil.’

11) Communication & Involvement is Essential: If you are married, are both of you involved in, informed about, and joint decision makers in the financial affairs of the family? If not, the very question should reveal the necessary changes needing to be made. Are children simply given money, or are they expected to work for and earn it? Grateful will be the child, and wise would be the parent for teaching their child this reality of life in the real world. And perhaps just as important, are children taught the very principles described in this article – saving, compound interest, credit, insurance, wants vs. needs, etc.? The fact that this article even needs to be written should suggest that our educational system fails to teach these important principles, which should suggest that if any parent is dependent upon others to teach their children these necessary financial principles – they will pay for it, literally!

12) Investing in Appreciating Assets, Not Depreciating Liabilities: How often are we personally guilty of ensuring that our car is loaded with the best features, our clothes are updated with the latest fashions, or our sheds and garages are filled with all the fun toys and tools? There is nothing necessarily wrong with having these (see point #13 below); however, how unfortunate it is when excess funds (or what’s worse – funds/debt obtained from credit) goes to obtain more toys, cars, and clothes rather than assets that will appreciate over time. The key to financial independence is not obtained through pay-raises, promotions, 401(k)’s, or even the lottery – it is obtained by applying the principles discussed in this article, and more importantly, buying appreciating assets rather than depreciating liabilities.

13) Be balanced and enjoy life also: Sometimes I read articles of couples who save every penny (literally) so they can retire at age 40. Some are able to do this, and good for them. But, let’s be realistic and also enjoy life as well. Perhaps it is setting aside a few hundred dollars a month, or just $20 – but take your wife on a date, treat your kids to pizza, go out to a movie, etc. Have fun and be balanced!

14) Give and you shall receive: Ironic that this is on the list – but it is not last suggesting it’s least important. In fact, it should be number one on this list! Learn now the great truth that when you give, you will receive. The ‘giving’ will be different for everyone. For some, it may mean giving to a charity, giving to a neighbor, to a church, to a family member, etc. But, give with no expectation or thought of reward or return, and you will receive much more in return, somehow in someway, but it will happen!

In conclusion, never forget that this is not about saving, budgeting, or investing properly – this is about happiness in your marriage and family life. A great credit score, a large bank account, an excellent insurance policy, and even a healthy retirement account are comparatively insignificant compared to the marital and family happiness, which can be achieved by applying the principles above.

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