Monthly Archives: November 2016

Managing Personal Finance in Times of Crisis

Managing your financial outlook is a challenging task specially during these times of crisis. Many people are asking, “How are we supposed to manage our budgets, when we don’t have anything to budget in the first place?” That may not be an entirely accurate statement. Remember, managing a budget is not simply about managing the money that comes in. It’s also about managing the money that comes out. Personal finance is personal responsibility. If you lost your job and are struggling to make ends meet, then consider downsizing your expenses to the barest minimum possible. Cutting down on luxuries and even daily needs is possible. Most of the time, people say that they’ve done everything that they could to minimize their expenses. So, instead of driving to work using the BMW, they’d use that gas guzzling SUV. Obviously, that is not cutting down on expenses.

Perhaps, the most extreme way of exemplifying cost cutting is by observing the lives of people in third world countries. Life is very different and priorities are drastically dissimilar. In Vietnam for example, people go to their places of work using bicycles. It’s actually a good idea since not only do they save on gasoline, they also protect the environment. If you own a company, you might consider saving on costs by outsourcing. With the advent of Internet telephony and communication, it’s now possible to have a receptionist or even an accountant somewhere in India. Your choice of food is also critical. With the high obesity rate in America, you’d begin to wonder how much of that budget is actually spent on food. Compare that with a delicious mongo meal in the Philippines, which only costs a dollar. It could feed four to five members of your family and at the same time give them their daily requirement for protein.

That’s not to say that you should live like a person who is living in a third world country. Having a broader outlook broadens your horizons, so that you’ll have more options in deciding. The more options you have, the better leverage that you get in managing your personal finance.

Planning Your Personal Finances

When planning your personal finances it is essential to be organised and realistic. You may just wish to balance your monthly or annual budget, but most families have some longer term objectives. These can include a new house, health care, retirement plan or the children’s education costs.

Monthly or Annual Budget

Personally I think an annual budget makes more sense and is easier to organise as it irons out the fluctuations in costs such as heating, car expenses and house insurance.

This is very easy to do, simply make a list of all expected income for the year and another list of expected expenses and hopefully the income will exceed the expenses! If this is not the case, you have two options, either increase your income or reduce your expenses – easier said than done!

You could increase your income by finding extra work or perhaps borrowing against your assets – for instance re-mortgaging your property if you have a lot of equity tied up in it.

You could perhaps reduce your expenses by shopping around and finding better deals for your power supplies, insurance and telecoms. There are a number of comparison sites out there, so it is worth a bit of effort if you can get cheaper deals.

Remember things can change over the course of a year so it is important to revise and amend your budget as and when required.

If you are in the happy position of having more income than expense, the next step is to decide what to do with the money.


There are many different schemes that will be happy to look after your surplus income. These range from the simple easy access deposit account, which has the advantage of getting your savings back to meet an unexpected expense – the return will not be very high – to the various Isis and offset mortgages.

One of the best schemes is the offset mortgage. Under this scheme you link your savings account(s) and current account to your mortgage account and only pay interest on the outstanding amount at any one time. For example if you have a mortgage of £100,000, savings of £8,000 and a current account balance of £2000, you will only be paying interest on £90,000. The added advantage of this scheme is that you can take your savings back at any time.

Personal Finance and Investing Basics and Security

The foundations of the basics of personal finance are security stability and growth and protection as well as management. Investment growth begins with security.

The subject of personal finance is very broad, but as a beginning, I would like to discuss what I consider the foundations of personal finance: Security, Stability, Growth and Protection & Management. This article will discuss security. Investment growth and financial freedom begins with security.

A good question to ask yourself is what is security? For the average individual it means that you have health, disability, auto and home insurance on top of life insurance. These policies will insurance that if something happens to you your family will be taken care of. If you are the head of household and you make most of the financial decisions make sure you leave explicit instructions for your family to follow. These should include the names and locations of all your insurance policies. The names and numbers of your insurance agents. Include all the basic policy information like account numbers and associated costs. Make sure all your important paper is placed in a secure local like a safety deposit box, at work, or at a friend house. Keeping the only copies of your insurance information in the house may be a problem especially if the house is damaged by a fire.

Additionally you should maintain a emergency fund. This is money which is placed into a money market account which checks can be written from. This is money that can be used if there is a financial or natural disaster. Make sure you have at least six months of income saved up, a year would be even better. This can be done by putting a side a little bit of money each month as well as adding gifted money to the account (from birthdays or inheritances). It is also important that you have will which reflects what you want to be done in the case of your death. It should include references to both finances, personal property, and your personal opinion about life support and end of life options.

Making sure your family is safe and secure can give you the piece of mind to invest fully in the stock market. Often times investors are held back by the fear of risks and losing money. No can predict your success in the stock market. The one thing that all investors know is that sometimes you will fail and lose money. This is less devastating if you do not have all your money wrapped up into your stock portfolio. Having an emergency fund means losing money in the stock market is not the end of the world. It also means that for unexpected bills and expenses can be paid without having to sell of stocks which are mean to be long term investments. Especially in the case of mutual funds and IRAs where they are severe penalties for withdrawing money before retirement. Security is your first step to starting your investment portfolio.

Three Essential Personal Finance Tips

Personal finance is extremely important in today’s society. Whether you are looking to purchase a new home, pay for college or take a trip of a lifetime, personal finance can help you achieve these goals. While there are many ways to benefit from good money management, here are three essential personal finance tips that can truly help you achieve your goals.

Save and Invest

It is absolutely essential that you save as much money as possible and then invest it so that it can work hard for you. Saving money is vital to having a nest egg in the future for the purchases you desire. Saving requires a plan and usually lots of time. One of things that you should do once you receive your paycheck is to pay yourself first. Take a set amount of your pay check and put it away. Once you have money saved, the next step is to invest it and make it work hard for you. Over the years, you can earn hundreds of thousands of dollars off of just $30K to 50K in savings using the power of compound interest. There is no magic involved. In order to create a nest egg in 10, 20 or 30 years save money and invest it.

Create a Budget

Creating a budget is essential for anyone that has an income and expenses. Many of us are usually carefree and do not keep a record of all our purchases, however if we knew just how much we spent each year on junk or impulse purchases we would be aghast. Creating a budget is a great way to understand what we spend our income on, reduce spending on non essential items and discipline ourselves to save and invest our money for the long term. Creating a budget is extremely simple and requires only a few hours of time each month. A simple budget can literally save you thousands of dollars a year and give you true piece of mind.

Use Credit Wisely

Credit cards can be extremely convenient, but many times they are equally destructive. A credit card is not a license to spend; it is in effect a loan. Understanding how credit works and how to use it responsibly can make your life much easier. Credit cards can be a great option in certain situations, however using them properly is essential to proper money management.

Proper Personal Finance Management

Rising consumerism and easy access to credit has given rise to overspending, even by an average income earner. The result has been an increasing number of people caught in a growing debt burden. The problem is worsened simply because most people care very little about managing their finances, or about proper personal finance management. The fact is, you’d get more benefits if you take your personal financial management seriously. Here are some ideas which could help you

Wisely Use Credit Cards

Credit cards are the most popular method of getting credit. They are easier to secure, and easier to make use of – just select an item, carry it to the cashier and swipe your card. Not needing to carry cash around encourages many people to simply swipe their cards on the ever-present credit card terminals, not realizing or not caring that everything ultimately goes on their tab. Please remember that the more you swipe your card, the more debt you are building up.

Proper financial management means taking precautions so one can minimize credit card debts. For one, use your credit card only when there is no other alternative. Two, spend on your credit card only the amount of money you have to spend. Bear in mind, the credit card company will start charging penalties if you are not able to settle your dues on time – which will only add to your debts and will worsen your problem.

When applying for a credit card, shop around first. Look for the company that charges the most favorable interest rate. Keep in mind that paying a low interest rate means saving some money for other expenses.

Consider Debit Cards

Another approach is to avail of debit – not credit – cards. The advantage here is that your spending is limited by the amount you have in your account. As such, debit cards have inbuilt protection against overspending and the ensuing loss of financial control.

Go with Secured Personal Loans

Personal loans are another source of finance. Personal loans will make you financially stronger and more secure – if you use the loan constructively, that is. If you are taking out a personal loan just so you can spend some more money you don’t have, taking out a personal loan is just going to speed up your financial decline.

If you decide on this approach, your priority should be minimizing loan costs as much as possible. As such, you should avail of personal loans that charge the most favorable rates of interest so you can save up on interest charges that will only add to your indebtedness.

When taking out a personal loan, opt for the secured personal loan – that which puts up any of your properties as collateral. With a secured or collateralized loan, lenders will be more willing to lower their interest rates and offer you a more favorable payment schedule.

Save First

To have more financial control, you need to exchange your habit of expenditure for a habit of saving. If you save enough money, you won’t need to take out a loan or a credit card for sudden and unexpected expenses. You can just use your own savings and as such, you’re not going to have to pay interest.

Wise financial management encompasses spending only on what’s necessary and what’s within budget. Never borrow money so you can spend more. This will never work and you will be just digging your financial grave when you do this.