Basic Money Management Skills

Money. That which makes the world go round. It all boils down to the money that we have at the end of the day. Money determines the way we live, what we do, and basically every other decision of our lives. Without money, we are basically nothing. And that, I know, is something that no one will want to go through. So it becomes imperative that we earn well. But earning well is not the end all of everything. It actually begins from there. Money which is earned, needs to be managed well, so that we continue to benefit from it for a long time. And therein comes the part where we need to learn some basic money management skills. Because without these, we will not be able to develop effective methods of money management.

Most of us do not have the knowledge of what some of the most simple and effective money management skills are. So to help you out, this article shall provide you with just that.

Money management skills are not difficult to learn once you get the hang of how to go about it. Given below is a step by step plan that you can follow in order to nurture some of these skills.

Take Stock
The first thing you need to do is calculate how much you are earning. Add in all the resources. Once you have this figure, calculate how much money you need to spend every month. To learn how much you spend every month, the best method is to write down each and everything that you spend for a couple of days. The amount will most generally exceed the amount that you had in mind―that’s because we don’t realize how much we end up spending on small things. Keep in mind that you need this spending figure to learn the basic skills. It is also important to note that the figures of two months will never be the same, there will be more expenditures incurred in a particular month and not so many in the next. But an average figure can be definitely arrived at.

Allot Amounts
Now that you know an average amount of the money that you need to spend for a month, it’ll be easier to allot amounts to different things. Make a list of all the things that you need to spend on―rent, tuition, bills (newspaper, Internet etc.) groceries, emergency (very important), and miscellaneous. You can make a long term-short term list as well. Like monthly/weekly/daily, and segregate the items accordingly. Now calculate the amount that you need for each and allot the money accordingly.

Many people use the envelope method for household items and it seems to work for them. For this, use different envelopes and mark them―for example ‘vegetables’, ‘toiletries’, ‘groceries’ etc, and at the beginning of the month fill the envelop with the amount that you need. Stick to that amount no matter what. When you put it down on paper like that, you are constantly reminded of it and the tendency to overspend is curbed.

Take Care of Debts
Never ever keep a debt. Pay a debt off as soon as you can, because if you keep on piling it, it’ll just keep getting bigger and bigger and cut into your regular saving plan. Find out how much you owe and what you need to pay off―that is the first step in managing your debt. Credit cards, surplus bills―everything needs to be paid off. Make a plan for the same. How? Along with the other envelopes, make another one for the debts so that you have a clear segregation made. It might be difficult in the beginning, but once you start physically putting in the money, you’ll deal with the problem head on and with continued efforts, the amount will be paid off.

Plan the Future
Now that the preliminary stage is taken care of, you’ll need to save for the future. The most important thing to do here is draw up a goal. What do you want to save for? Retirement? Children’s education? A house? Car? Or even small plans like a music system, a new phone etc. Calculate the amount you’ll need to save for it. This is your first step. The next steps will be how to get that money in a stipulated period of time.

Budget
Having a budget is really important. One way of budgeting is the envelope way, so that you don’t end up spending more when you have already allotted a fixed amount to yourself. The second method of making a budget, and this is somewhat of a conscious change in attitude, is that you get it in your head to budget things. Consciously decide that you want to budget. Do not spend recklessly. Other than that, planning for the future and drawing up plans of the things you need to save for will help you to budget well. This is because you’ll know what and how much you need to save up on to get that amount.

Invest
After paying all the bills, the surplus amount that lasts needs to be invested well. There is nothing worse than stagnant money. So consult a financial adviser or an investment adviser who will calculate how much you can afford to save per month, after deducting the expenditure and surplus. After this he will draw up a scheme that suits you best. It could be anything from a fixed deposit account to investing in mutual funds or buying property as assets.

Easy Saving Tips
Along with budgeting and drawing up plans, you can also consciously decide to save. Here are some money saving tips that you can use:

Buy things in wholesale.
Instead of buying books, join a library or start a club. Use this same formula for different things.
Car pool to work, that will save on money for gas AND is good for the environment.
Buy things on sale.
Go through your daily expenditure sheet, you will find that there are several things in there that you can easily give up. Like a very expensive brand of hair product.
Turn off the power when you don’t need it.

Earn Extra
It has been found that we never tap the full potential when it comes to expending our talents or finding other means of earning some extra money. This is one of the more indirect money management skills that we need to learn. Here are some of the easiest ways to make money―taking on freelancing jobs, giving tuition, making use of your hobbies and talents like singing or dancing (giving classes, singing in a club) or cooking (providing snacks for a establishment or making a fixed amount for a bakery). Other methods include, selling things for scrap, holding garage sales etc.

Acquiring money management skills allows you to live better. It secures your future and helps you gain control over your life rather than the debts and money problems controlling you. It should therefore be our prerogative to learn and practice the several money management skills to lead a more fulfilling and comfortable life.

How to Plan Financially for the Future

Well, living in today is alright but we also have to think about tomorrow and hence, it is important to plan for the future. Since there is apparently only one thing that seems to control the world, that is money, one has to plan his or her finances wisely to have a secure future after retirement. Though, everything that one needs to ‘live’ cannot be bought with money, certain things that one needs to ‘survive’ have to be bought in exchange for money. So, one has to carry out meticulous financial planning for the future. If you are also of the same opinion, then you must read this article further.

Financial Planning for the Future

Well, there are many things one needs to consider while planning for the future in terms of finances. Given below are some of the factors you need to look into:

Current Economic Status: You must analyze your current economic status including your annual income. It will give you a direction towards financial planning for the future.

Expenses: You must also consider the expenses you make on a yearly basis. It is suggested to make a list of your ‘needs’ and ‘wants’ and determine how you decide your priorities and make expenditures accordingly.

Asset Analysis: Yes, this is one of the important aspects of financial planning. You must know and ascertain the number, or quality, of your assets before you start financial planning.

Liabilities: Liabilities are as good as expenses. So, you must pay attention regarding how you would deal with liabilities, and how you would manage and sustain them.

These were some of the crucial factors one has to consider when it comes to financial planning for the future. Now let’s take a look at some of the ways and ideas that can help you plan well for the future.

Financial Planning Ideas

Given below are some tips cum ideas that would answer how to plan financially for the future, take a look:

Saving is one of the most important steps to ensure a prosperous future, especially when you carry out financial planning for the future. The early you start saving the more time you give to your money to grow. It is never too late, so start saving as early as possible.
Once the significant savings are there in your account, there are many things you can do to invest these savings wisely. You can either buy gold, or invest money in assets that guarantee continuous income in the future as well. You can also think of investing money in stocks and bonds too, for long term benefits.
Learning to plan a budget for daily day-to-day expenses is a key to financial planning for the future. You must try to balance between the income and expenses every month so that you save a certain amount.
Along with a budget, one has to plan one’s lifestyle as it can have a major impact on your financial planning. You must learn to alter your lifestyle according to a stipulated amount every month and save the rest of the extra money for unexpected financial expenses in the future.
Insuring important assets is also an important aspect of financial planning. Health insurance and car insurance are some of the must have insurances for greater security in the future.
Another interesting way of investing in future is working after retirement. Yes, you can think of starting your own small business after retirement that guarantees income even after retirement. It can help you earn not only money but it would also help you kill the boredom and time, which many retirees are faced with.

These were some of the tips and ideas that can help you plan your finances well for the future. Go ahead and implement the aforementioned ideas and tips, and have a financially secure future.

 

Financial Planning for Women

Financial planning – the term in itself refers to making of concrete plans to improve your financial power. Now, unlike what some people may think, financial planning is not at all difficult, all you need is to be aware, think and calculate. After all, financial planning is a mathematics, which is rational and as simple as 2 plus 2 equals 4. So fear not, here are some tips, plans and some do’s, also some don’ts.

Now, here, I shall be taking you through some great investment and planning channels, plus some tips for planning your expenses well in advance. Financial planning for women involves handling two primary aspects related to personal finance, expenses and investment. When you receive your paycheck, there are two things that you can potentially do: one, use the money for essential expenses; and two, investment the money. Note that common savings is also included in expenditure.

Planning for Expenses

Personally, guys no offense, I believe that since women are capable and do manage one of the most difficult institutions in society, that is their family; they are better at handling expenses (not through credit cards), than most men. This was not a compliment, but a fact.

So, principally, about 20% to 40% of your income is going to be spent on essential expenses, food, clothes, make-up and cosmetics, rent and commutation. Now before the month starts, calculate and estimate how much you would spend on each item. Also you would need to include some expenditures such as a couple of parties, sleepover and hangouts while doing so. Some of you may have medical expenses hence consider those too. Listing these out was the first step, next analyze and make a list for identifying the expenses which you can cut down. If you look, observe and think properly, you will notice that, except for things such as food, rent and medication, you can cut down on almost everything.

The third step is to make a table of budget with 22-30-31 columns (covering days of a month), whichever is appropriate. In this table, write down the expenses that you have estimated and throughout the month try to stick to them. This can be quite difficult and also quite easy. Since sticking to the budget is not always possible and some unexpected expenses tend to come up, one can always put away certain amount of money as a backup fund.

Planning for Investments

After you have paid off all your expenses, you can turn your attention to investments. Again this can take about 30-40% of your income. The following are some excellent options which you can use.

Life Insurance: If you have a family, then this is the most important investment for you, as a life insurance not only pays off all the returns on investment, but there is a death benefit which is available which ensures your family’s financial security and well-being. You can invest up to about 10-15% of your income in such an insurance policy.
Funds and Securities: Mutual funds, variable annuities, Systematic Investment Plans (SIP), Collective Investment Schemes (CIS) and other mutually invested funds are medium risk investments. Here you have a 5-7% return on investment along with the total amount that you invested initially. This facility is termed as guaranteed minimum returns facility. Apart from the minimum returns in such schemes, you also receive the bonus and portfolio performance returns, which chiefly depend upon the portfolio performance and also economic conditions. Again this can take up about 10-15% of your income.
Government Provided Investments: These are the most secure of all as investment options. Channels such as IRA, 401(k), government bonds and certificates tend to provide a good rate of return that accounts to about 5%. Such investments will take up even lesser than 5% of your income.

You can also consider some options such as real estate, direct share investments, gold, silver and bullion and futures and options. However, such investments are quite risky and worst of all you have to invest a lot of time in them. Apart from that it is also recommended that you maintain a 30% balance in your bank account as a safety precaution. Now, all you have to do is plan accordingly and choose the right expenditure and investment.

 

Career As a Financial Planner

With more and more people investing in the stock market, the demand for financial planners is increasing by the day. There is a lot of competition for jobs, with security brokers and dealers paying top dollar, for skilled financial planners. This profile is recognized by several names like financial planner, financial advisor and personal finance consultant, but it is rarely referred to by its ideal name: Financial Product Sales Representative.

Every small occurrence in our life has an effect on our financial planning, be it a thought to buy a car or start a new business. It is a famous misconception that financial planners are important only for businessmen, actors or other wealthy people, but in reality even the most average earner makes investments and takes the help of a financial planner for it.

Duties of a Financial Planner

These professionals make recommendations and give guidance to individual investors regarding financial planning. Financial planners have knowledge of tax laws and use it to provide tax advice.

Financial planners also help in estate planning. They use their knowledge to gauge the need for expansion of the estate or merger with another business entity. Every investment or expense goes through the hands of financial planners before the final approval.

A financial planner has to advise many clients in order to be considered successful. There is a difference between financial analysts and planners. Financial planners work with personal investors while financial analysts work with organizations.

If you want to know how to save money for a college education, you will need the services of this financial planning professional. If you want to write a will, or plan for a secure and comfortable retirement, you will need a financial manager.

They also sell life insurance to their customers. Private bankers also fall into this category, since they help rich people manage their money.

Educational Qualifications

To become a financial planner, you have to get a degree in economics, business or mathematics fields. It is even better if you have a Master’s degree in Business Administration (MBA). You can also take courses in taxes, estate planning or risk management. There are certain colleges and universities, too, that offer a degree in financial planning.

Before working as a financial planner, he may work as an accountant, auditor or even a lawyer. There are also certifications available such as Certified Financial Planner (CFP), Chartered Financial Analyst (CFA), or Chartered Financial Consultant (ChFC).

You can also get a license by taking the Series 6 exam, to become an Investment Company Products/Variable Contracts Limited Representative. You can take the Series 7 exam, to become a General Securities Representative. You can also take the Series 63 exam, which is the Uniform Securities Agent State Law Examination.

All three of these exams have been developed by the Financial Industry Regulatory Authority (FINRA), which was previously known as National Association Of Securities Dealers (NASD).

Skill Set

Apart from the qualifications mentioned above there is a requirement for a basic skill set as follows:

Analytical Skills- A financial planner has to advise his clients on investments they need to make for which the client should be able to acknowledge a profitable investment.

Interpersonal Skills- The major aspect of his job is to make the customers feel comfortable. They should be able to trust you with information they are providing you; for this having excellent interpersonal skills is a must.

Math Skills- You should also be able to work with numbers, because they need to use math to analyze data.

Speaking Skills- To convince clients and to explain complex financial aspects in simple words you need to have a good command over English or whichever is your local language and communicate well.

Selling Skills- Marketing strategy and sales techniques are required to get more customers and clients at events such as seminars, lectures or conferences.

Acquiring a New Deal

If you wish to gain success in this field then a broad social network is a “must have”. The key principle is to build a strong customer base because satisfied customers’ referral is an important source of expanding business.

There is no portal over the Internet which will find for you your next customer. Whether you opt for giving seminars and lectures or using social and business contacts, you have to hunt them yourself.

Workplace
More than 50% of the financial planners work for insurance and finance companies, it can be a bank, broker, insurance carrier or a financial investment firm. Even so, 4 out of 10 are self-employed having an independent advisory firm. Such cases are more common in urban areas than in rural areas.

Advancement Opportunities

With time and experience, a financial planner can climb up to the position of a manager. In general, most of them build up to establish their own advisory or security firm.

Earnings and Job Outlook

According to the statistics of 2010 provided by the Bureau of Labor Statistics, the median salary of financial planners in 2010 was $64,750 per year, with half of the total employed earning below this level and half above it. This does not include self-employed and the bonuses. A fresher may earn anywhere around $32,660 per year.

This sector is believed to accelerate 32% by 2020, increasing job opportunities by 66,400.

A Day in a Financial Planner’s Life

The tasks in hand during a typical day at work includes:

Gathering new clients via marketing and channel building
Meeting with the existing clientèle to assess their financial requirements and future goals
Updating clients with the current scenario and scope for investments
Conforming clients’ financial plans in line with their life changes such as marriage, childbirth, divorce, disability and death of spouse, etc.

 

Financial Planning Tips When Expecting a Baby

First time parents are expected to go overboard with preparations once their baby is on the way, be it expenses on baby clothes, accessories, nursery decorations, baby showers, etc. Shortly afterwards, the initial excitement wears down and the nine-month gestation clock starts ticking until D-day. This is when the realization of the extra cost of having a baby sinks in. This is the time when would-be parents start thinking about all the prenatal medical expenditure, expenses towards hospitalization and delivery, pediatric medical expenses, baby food expenses and money spent towards buying clothes, toys and education. I know the list is long and might seem like a money monster which will take away all the excitement of fine dining and shopping that you experienced before the baby came into picture, however, I wish to assure you that some of the financial planning tips listed below will surely ease your journey.
How to Save Money When Expecting a Baby
One of the biggest expenditures for children generally happen to be towards their education. But even before your baby is born, there are heaps of expenses to be dealt with. Here are some ideas to help you deal with these expenses.

Prenatal Medication
As soon as the pregnancy test is declared positive, would-be parents need to start shelling out money towards medical tests, ultrasounds, fees of gynecologists, nutrition supplements and so on. The uphill burden of expenditure can be reduced by opting for a health insurance policy right from the time you get married or start planning your baby. The health insurance company generally expects policyholders to pay a minimum amount towards each medical bill while the rest of the medical expenses are borne by the health insurance company. As a thumb rule, check if your hospitals, gynecologists and pharmacies accept the insurance policy that you have. If not, then I recommend that you search for medical services that have a tie-up with your health insurance company before you set up an appointment. This will help save a lot of money.
Preparation for Baby
It is delightful to go shopping for baby clothes, cribs, car seats, strollers, baby monitors, etc. Some of you might even redo an entire room, converting it into a nursery. As exciting as it seems, babies tend to grow very quickly and it is therefore futile to spend a huge sum on new and expensive baby clothes. Even doctors recommend usage of soft, tender and used baby clothing on babies.
Personally I suggest that you may opt for borrowing baby clothes, cribs, strollers, etc., that have been previously used by your friends for their babies. And if you are lucky enough, you might receive some new accessories for your nursery as baby shower gifts. I can’t help mentioning a noteworthy fact about pregnancy in advanced stages. The recommended restrictions of movement and food consumption for a pregnant woman are likely leave a considerable surplus of money in your kitty.
Delivery
As previously mentioned, couples might have to be careful while selecting hospitals for the upcoming childbirth. It is ideal to get confirmation about the hospital’s tie-up with your health insurance company way before the due date. It is also recommended to get similar confirmations from the obstetrician and anesthesiologist before you appoint them for the delivery. This will help you save a huge sum towards delivery and hospitalization expenses. The arrival of a baby is a wonderful moment. But it is suggested that you find some time to check with the health insurance company for possible addition of your newborn child under health benefits. This might mean an additional expenditure towards premium, but trust me, it is well worth the expenditure. After all, there might be – god forbid – some unforeseen health expenses for your baby.
Baby Arrival
It is quite common for both partners to be working professionals. As soon as the baby arrives, the maternity leave and paternity leave begins. This means that the family income decreases considerably as long as one parent stays at home as a caregiver. It is ideal to refer to the policies of your organization to make sure if they have an option of paid maternity or paternity leaves. At times, organization offer a maternity leave allowance instead of a full salary payment. This stage also marks a steep rise in expenses towards baby food, diapers, pediatrician visits, toys, day care charges or baby sitter charges. These expenses could range anywhere between $1000 to $1200 each month. Accordingly, money needs to be religiously set aside for such payments by both the partners. If you happen to be a single mother, then you have the option of applying for single mother financial aid too.
As the Baby Grows
Before you even realize it, your baby will become a toddler ready for play school. Personally, I suggest that this is the best time to invest in a good education plan for your child that will help secure his or her higher education needs. Such plans are designed keeping in mind the growing inflation rate of the economy. If you love to plan about your every penny, then it is best bet to start saving at a slow rate right from the time you get married. By the time your child is ready for school, you will be surprised at the huge amount you will have saved by then.
Financial planning is a must at all times. At the prospect of arrival of a baby, even the most spendthrift partners start getting calculative. Early planning and budgeting can help couples avoid a lot of mental stress over finances after the baby arrives. This financial security can help you delve wholeheartedly in the realms of your newborn child.