06. August 2016 · Comments Off on Your Thoughts On Finance · Categories: Finance

The facilitation of corporate finance and the decisions of management may impact the facilitation of the personal finance decisions of individuals and their families. We do not live in a vacuum. Therefore, the activities and decisions of other people can impact our lives.

Functions of Finance
“The key functions of a financial system are to facilitate household and corporate saving, to allocate those funds to their most productive use, to manage and distribute risk, and to facilitate payments. The financial sector is working well when it performs those functions at a low cost and makes the rest of the economy better off” (Greenwood, & Scharfstein, 2012,104). It is the responsibility of the business or individual managers of finance to locate, design or coordinate a financial system that aligns with the personal, business or group goals of the people they lead and serve.

Household and Corporate Saving
Saving for households or corporations can be facilitated in several ways: (1) by paying less for goods and services purchased, (2) by paying less interest on debt by reducing the amount owed and (3) by investing in saving projects that yield higher interest rates. Researching the project is needed to accomplish the objective whether for an individual, family, small business or corporation. In each case, the purchasing manager should secure at least three or more quotes for the item or service to be purchased. Comparison should be made using other factors in addition to price. Analysis of the information obtained should produce a decision to purchase the best value at the best price.

Productive Use of Funds
In order to allocate funds to their most productive use, thought and planning should happen before each project is assigned a budget. For example, research the purchase of the $400 computer to determine its functionality in relationship to the budget allotted for electronics. If the need is to use it for school work for at least a year, there is an added gain when the same computer can be used by the owner manager of a new small business. The purchase of a dress for $400 that will only be worn once is put in a difference light if the decision is between buying the dress or the computer. When one of the primary income earners no longer has the job that she has had for years, all members of the family have to give serious thought to the best use of funds. The beginning small business corporation can no longer be managed like a hobby. The prom dresses for the junior and senior prom can no longer be major purchases. By determining and planning for the objectives that causes the allocated funds to be used to produce purchases that achieve the desired function, both items can be purchased within the predetermined budget.

With corporations and large business entities, the “net present value” (Ross, Westerfield, Jaffe, & Jordan, 2011, 96) can be used to determine which projects the business should pursue. There are other calculations that could also be used so the senior finance manager needs to determine which method will work best for the finance team, the management, stockholders and any other applicable stakeholders.

Manage and Distribute Risk
Management and distribution of risk can be addressed starting in two areas: (1) a portfolio of insurance products and (2) the diversification of the investment portfolio. Research for purchase of insurance products should include comparison of price, features of policy, claim handling and customer service by the agency’s staff. Research for the elements of an investment portfolio will be far more detailed and time intensive. Each type of investment and the investment product in each type should be considered individually and in relationship to its impact to the overall risk of the portfolio. New investors should take the investing process seriously to ensure that investigation and understanding is obtained before money is involved. Necessary care in planning investment objectives and researching to make sure investment projects meet the desired objectives will help allotted funds for investment be most productive.

Facilitate Payments
Facilitation of payments paid and received has an impact on money saved. Incentive can be given to clients to pay earlier, but the discount to your client will mean less money is received in the payment. Your thoughts on this jester will be paramount to whether you see this as a win or a loss. Generally money managers should thrive to receive money as soon as possible and pay out money as late as possible. This does not mean that any bill should be paid so late that there are late fees and penalties attached to the payments. Within the financial system each financial manager designs, the goal should be to also maintain a good credit report because cost of goods or services can be impacted negatively by a low credit score for personal or business transactions.

Change starts with proactive compliance to the commitment to your process of improvement of your financial system to facilitate household and corporate saving, to allocate those funds to their most productive use, to manage and distribute risk, and to facilitate payments. Some of the same principles or processes used by businesses can be used by individuals and families. After determining the objectives, individuals, families, small businesses and corporations should identify skills that need to be obtained to plan for improvement in the financial system employed. At the very least, realize that thought must be given to finance in order to have any control over change in that area. In the end, it will be your thoughts on finance that invoke the all important call to action.

Greenwood, R. & Scharfstein, D.S. (2012, March). How to make finance work. Harvard Business Review, 104-110.
Ross, S. A., Westerfield, R. W., Jaffe, J., & Jordan, B. D. (2011). Corporate finance: Core principles and applications (3rd ed.). New York: McGraw-Hill. ISBN: 9780077886196

09. July 2016 · Comments Off on Finance, Money and Internet Scams-4 Rules to Keep in Mind · Categories: Finance

When shopping for online work at home, which homebased businesses are real? It sounds like a straightforward question with a straightforward answer: just use common sense. But hold on a second.
Not so fast. Do you think you could separate the scams from the legitimates? Have you seen all the various homebased business offerings on the web?

O.K. Sure. If someone is offering you the Brooklyn Bridge for $1.99–I’t’s a scam. That’s an easy call.
But beyond that, how can you tell? These job opportunities are often counter-intuitive, What seems to
be “too good to be true” often is real, and the legitimate-seeming businesses are a scam. But most
people don’t have the time or money to check them out.

I’ve spent the past five years researching and actually implementing many of these money making schemes on the internet, the ones most people tend to dismiss out-of-hand.
And that’s the problem. Most people dismiss them first, without giving a serious second thought to them. They think they know, but they don’t. It’s not as straightforward as people first assume.

Here I’ve compiled four basic rules to keep in mind when shopping for a homebased business opportunity. This list is by no means comprehensive, but is a good thumbnail starter for those interested in home based businesses.

1. Look for Money-Back Guarantees. Reputable companies will always offer money-back guarantees–most within 60 days–some with no time limits at all. Some companies (I’m thinking
PaidSurveysOnline & Survey Scout) offer money-back guarantees, but must be contacted.

2. Avoid Excessive Join-Up Fees. It’s O.K. to pay for the initial program fee, but avoid
companies that continue to ask for “dues,””bonuses” or “club memberships” after you’ve purchased their program.

3. Do Your Homework. Find out how well the product is selling, and what percentage of people ask for their money back. Go to Clickbank.com for the stats on thousands of products sold online.

4. Expect Some Extravagance and Exaggeration in the Ad Copy. People aren’t stupid. Ad
copy writers know this. They know most intelligent adults can make adjustments for hyperbole in an ad.

Keep these four rules in mind, and use common sense. If you keep an open mind, approach these offers seriously, and implement their strategies, many of them can make money for you.

02. July 2016 · Comments Off on Learning About Budgeting and Money Management is Vital to Avoid Financial Disasters · Categories: Finance

Anyone who has worried and stressed about their finances has probably also had a lot of concern over doing a good job with the budgeting and money management of their personal affairs. It is important to have good money management skills in this day and age so that you are able to enjoy the many things that life has to offer, rather than constantly worrying that you just don’t have enough money to get by.

Learning the ins and outs of personal financial budgeting and management is something that is ideally taught to youngsters at an early age so that they can develop good money management skills right from the start. The later someone begins to take financial management seriously, the more potential there is for them to get into personal money management problems and even into serious financial straits that can be difficult to recover from.

It is always best when children and teens are able to learn about budgeting and money management because this education and turn into a set of money management skills that will be with them for the rest of their lives. When people don’t have the chance to learn how to manage credit and their personal finances, they will most likely waste money and burn through it as soon as they earn it, and they may get themselves into debt way over their heads.

There are many people who enter adulthood without having learned about budgeting and personal financial management. They find themselves exhilarated at the money they make at their first full-time job, and often such exhilaration leads to overspending and a lack of preparing for the future, of not being prepared for emergencies and of overusing credit cards and other credit vehicles that can soon lead to serious debt.

If a person sinks deeply into debt when they are still in their twenties, because of immaturity and poor money management abilities, then they can end up spending the next twenty years, or more, trying to dig out of the hole of consumer debt that they put themselves into. Even worse, poor money management and significant debt can also lead to bankruptcy all too easily and this is a blemish on a person’s credit record that lingers for over a decade.

The ramifications and consequences of bankruptcy are more than just a matter of clearing away excessive debt and having your credit damaged. There are many other underlying issues that arise and filing for bankruptcy can affect your ability to get a good job, affect the insurance rates you pay, affect the interest rate on a mortgage, auto loan, and other types of loans, and can be an embarrassing thing to have to try to explain every time someone needs to pull your credit report.

The fortunate thing is that people who make the effort to learn about budgeting and money management will stand a good chance of averting personal finance money management disasters, such as bankruptcy. Indeed, it is never too late to start improving financial management in your life, yet starting sooner rather than later is always recommended.

25. June 2016 · Comments Off on Saving Your Money: Insanity Vs Sanity – The Step You Must Take to Change Financial Outcomes · Categories: Finance

Getting your financial house in order is always a good idea. If that is your goal, you have a lot of company! The challenge of any financial resolution is to break an old habit, start a new one or both. Failing to change your habits means you will be financially insane.

There has never been a better time to get financially organized, create a rainy day fund, and take control of your money. It may sound challenging, and you may know from past experience that habits are hard to break or create. One thing is certain: the definition of insanity is doing the same thing over and over and expecting different results. Sanity means changing your behavior and doing things differently, so you will get different results-the ones you want.

However, there’s one single thing you can do that will help you create good financial habits, improve your money management and save more. That one thing? Tracking.

Why? Because tracking works the way our minds and our behaviors work. First, we use our imagination to create a plan. Next we build goals and steps to our plan. Finally, we watch the implementation of our plans or, in other words, we track our steps toward our goals.

Almost all financial gurus agree that tracking is critical to financial organization, saving, and sound money management. Evidently, even banks understood the value of tracking because the only thing they gave away was a checkbook register. In fact, tracking is critical to making any improvements at all. Golfers track to improve scores; dieters track to monitor weight loss. Tracking is a small change that leads to better outcomes.

Simply put, tracking is the cause and effect of your money in real time: where your money comes from and where it goes. Only with that knowledge can you begin to improve your ability to save and reach your financial goals. The good news is that tracking is a small manageable step, and all behaviors are changed with small steps.

So what happened to this old-school, commonsense approach of tracking? Banking technology happened! The use of debit and credit cards coupled with electronic banking has derailed the old-school approach of personal money management that was based on tracking. Banks have convinced their customers that there’s no longer a need to track. You can get your balance with the click of a mouse, at any ATM, or over the phone. The question is: Is the balance correct? It rarely is correct due to a variety of reasons, and as you may have learned, “real-time banking” doesn’t always occur in real time. One major problem is that bank balances tend to reflect “false positives.” A “false positive” occurs when you’ve spent money that hasn’t yet been taken from your account. For example, if you pay a $100 electric bill at the utility’s site, your bank account balance is overstated by that $100 until the electric company removes the money from your account, so you’re led to believe you have more money than you do… unless of course, you’re accurately tracking your money.

The market realizes that consumers want to have more control over their personal finances, and many possible solutions are trying to fix this hole. There are many ways to track: the old-fashioned checkbook register, a spreadsheet, or a simple notebook. There are also plenty of apps available to help you track your money. And there is a new hand-held electronic checkbook which lets you track all of your accounts.

Ideally, you must know your bank balance or credit card balance before you make a purchase. The only way to know that is to track, for yourself, what you have spent and how much is in your account. Whatever method you choose, you will quickly learn that the easy step of tracking will help you alter your spending behaviors, so you can begin saving more money.

As you begin to track your purchases, you will begin to feel a sense of control over your finances-money sanity. Also, you will have the information you need to begin to effectively budget your money and save for a rainy day fund-money sanity. By taking the small step of tracking where and what you spend, you are taking the necessary step to creating the most important good money habit-the habit that will help you achieve your goal of improving your money management and gain financial control and money sanity.

19. June 2016 · Comments Off on Managing Finances Is Key To Successful Business · Categories: Finance

Good financial management is key to running a successful business. The company needs to be on top of its accounts to ensure they are not spending money they don’t have, and to keep an eye on specific areas that are costing them money so that any problems, potential or realized, can be rectified. Bookkeeping is a way of recording the transactions of a business, and accounting is the overall analysis of the company’s performance.

Every single transaction the business makes should be recorded in a cash book, however seemingly insignificant the amount. Problems can and will occur where records are inaccurate or entirely missing. Businesses need to be able to account for every single penny that passes through their hands, both for their own benefit and that of the law – a yearly government audit will soon highlight any irregularities and the company could be heavily penalized. Cash should be forecasted on a weekly and monthly basis, to help the company set a realistic budget that they should stick to. If they record projected spending/earnings, it is becomes easier to see the areas which aren’t performing up to standard, and to target the reasons why. Business need to plan for any short or long term cash requirements for their various growth projects, rather than planning for the profit figures they hope to achieve.

Deposit accounts can be used by businesses to gain interest over a set amount of time on money that is not needed for the day to day running of a business. For example, a business could put away a lump sum for a year, and gain a higher rate of interest on it than they would in a regular account. There are restrictions on a deposit account, however, such as withdrawal conditions, which will be set when the money is deposited. This means money can only be taken from the account as specified intervals, so this could be risk if the money is likely to be needed in any emergency situations. However, they are seen as a fairly safe place to keep money, as interest rates are often guaranteed not to fluctuate over the duration of the deposit.

Trade finance is the another form of lending other than the traditional banking facilities offered, whereby trade financers will help fund the payments need to pay suppliers for their raw materials, finished goods, etc. Trade finance is considered a cheaper method of lending than typical overdrafts/loans, as the interest rate (payback) is lower than that of the banks. On top of this, it can be notoriously difficult to persuade banks to increase overdraft amounts, which can really leave a business struggling if they have no other way to raise the necessary capital to fund their project. Often business will receive large, potentially very lucrative orders, which on completion will generate a large profit; however they struggle to raise the initial money to be able to actually complete the order, which is where trade financers can step in to help, providing the initial funds needed without demanding an extortionate amount for the profits in return.

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