Importance Of Personal Finance Management

In today’s world, money is an essential part of our life. In a way, we can say that money is the life blood that lets us live a comfortable life. True, money can’t buy us happiness, but it certainly gives us the assurance of a secured future and freedom to purchase things which make us and our loved ones happy.

But despite all this, most people are either too careless about managing their personal finances or just don’t know how to do it efficiently. As a result, most people start caring about their money only when they have left with very less of it. In the 21st century world, it has almost become a norm.

The so-called double income families love to a life of every luxury possible in the world and they don’t even think twice before digging into their savings or taking loans to get it. As a result, 8 out of 10 people have at least some loans on their head.

Until two years ago, the effects of bad personal finance management was only seen on a small level. But the current recession has turned the demon of badly managed personal finance into a national calamity. The failing banks, closing businesses and cost cuttings left a large number of people without a job.

But the unemployment was just a push to create a whole domino effect on the economy. Devoid of any personal savings and buried under loans, people started losing their homes, cars and even health insurance. So many people defaulted on their insurance payment that many insurance companies declared bankruptcy and many others were on the brink of going out of business.

We can blame so many factors for this – the government, the corporates and most of all the banks who gave easy loans to people who could never afford them. But the truth is that it’s the job of banks to encourage us to take loans. That’s how their business. It’s only up to us to make complete sense of the situation.

Your banker would love to get you the huge loan for your second luxury car or a holiday home because he will benefit from it. He will even convince you that you are making the wisest decision by making a bigger purchase than you could ever afford to.

But you must understand that managing personal finances is extremely important. Make sure that you don’t make any purchase that’s out of your reach. We are not suggesting that you don’t take loan, but take it only when and only as much as essential. Try to create a savings account and keep an equivalent of three months of expenses in it, at all times.

In the end, I would say that bad times come in everybody’s life. We all have to go through our shares of difficulties whether its unemployment, sickness, or injury. All we can do is to make sure that we are prepared for it (at least financially).

Now, just Jet, Set and Go! Zoom up your earnings with these available opportunities of getting personal finance advice in home-based businesses. To get some in-depth help on home business set-ups go to http://www.CiprianGinghina.com.

Importance Of Personal Finance Management

In today’s world, money is an essential part of our life. In a way, we can say that money is the life blood that lets us live a comfortable life. True, money can’t buy us happiness, but it certainly gives us the assurance of a secured future and freedom to purchase things which make us and our loved ones happy.

But despite all this, most people are either too careless about managing their personal finances or just don’t know how to do it efficiently. As a result, most people start caring about their money only when they have left with very less of it. In the 21st century world, it has almost become a norm.

The so-called double income families love to a life of every luxury possible in the world and they don’t even think twice before digging into their savings or taking loans to get it. As a result, 8 out of 10 people have at least some loans on their head.

Until two years ago, the effects of bad personal finance management was only seen on a small level. But the current recession has turned the demon of badly managed personal finance into a national calamity. The failing banks, closing businesses and cost cuttings left a large number of people without a job.

But the unemployment was just a push to create a whole domino effect on the economy. Devoid of any personal savings and buried under loans, people started losing their homes, cars and even health insurance. So many people defaulted on their insurance payment that many insurance companies declared bankruptcy and many others were on the brink of going out of business.

We can blame so many factors for this – the government, the corporates and most of all the banks who gave easy loans to people who could never afford them. But the truth is that it’s the job of banks to encourage us to take loans. That’s how their business. It’s only up to us to make complete sense of the situation.

Your banker would love to get you the huge loan for your second luxury car or a holiday home because he will benefit from it. He will even convince you that you are making the wisest decision by making a bigger purchase than you could ever afford to.

But you must understand that managing personal finances is extremely important. Make sure that you don’t make any purchase that’s out of your reach. We are not suggesting that you don’t take loan, but take it only when and only as much as essential. Try to create a savings account and keep an equivalent of three months of expenses in it, at all times.

In the end, I would say that bad times come in everybody’s life. We all have to go through our shares of difficulties whether its unemployment, sickness, or injury. All we can do is to make sure that we are prepared for it (at least financially).

Now, just Jet, Set and Go! Zoom up your earnings with these available opportunities of getting personal finance advice in home-based businesses. To get some in-depth help on home business set-ups go to http://www.CiprianGinghina.com.

4 Things You Can Do to Control Personal Finance, and not Have it Control You

Personal financial literacy isn’t something taught in school. We often develop personal financial habits from our parents.

This could be a very good thing or very bad thing, depending on how well your parents managed their personal finances.

Money however is a very sensitive topic for most people and most culture. The fact that the subject of money isn’t openly discussed means that it is vital for people understand how to better manage their personal finances.

I hope one day money will be discusses in schools just is how sex education is discussed. Their should be a “Safe Spending” class in school.

Millions of young people are in debt because of lack of financial education. Here are some tips on how to keep your personal finances in order:

1) Get a checking account. First off, if you don’t have a checking account, get one. Your checking account will be the hub of your personal financial management system.

Your checking account is the place where most of your money comes in, and goes out. You use it to deposit your work checks, and to pay your bills.

The benefits of having a checking account far outweighs the drawbacks of potential fees if you don’t manage it right.

2) Balance your checking account. Once you have a checking account, you should always know how much you have in there. That way you know what you can spend, and not have to pay banks over-draft fees which could be anywhere between – dollars.

Make sure you know what’s in there and keep it up to date. With the online financial tools available for you today, that shouldn’t be a problem.

You might even think about keeping a buffer. Like a or 0 buffer, so you don’t go over your limit. You do not want to be squatting .00 because you are just one mess up from happening to get hit with banking over-draft fees.

3) Start saving for a rainy day. Do not spend more then you have certainly, but don’t spend more then you make as well. Save up for a rainy day. You should have an emergency savings account, totally at least 3 months of your monthly expenses.

4) Get a credit card. Yes, get a credit card, to build your credit. Make sure the credit card has no membership fees, but if it’s your first card you might have to put up with the fees. If you are a student you can get a lot of student credit cards.

The key with credit cards is to get it, use it for a little, but do not use it habitually. Keep a or a really low balance. If you are using more then 40% of the credit balance you are in trouble. Pay down the balance and stop using it.

Liquidity versus Profitability: The Dilemma of the Finance Manager

LIQUIDITY VERSUS PROFITABILITY: THE DILEMMA OF THE FINANCE MANAGER

Written By: Shafii Ndanusa  Abuja, Nigeria.

The global economic crisis left in its wake a string of corporate failures across the different economies of the world, regardless of the stage of economic and political developments that different nations are faced with. One of the worst industries hit is the financial industry which has led to a plethora of different reform initiatives designed to reduce the undesirable impacts of the crises. From the Americas to Europe, Africa and Asia, the ripple effects are still being felt by individuals, enterprises, industries and nations. This scenario provided an excellent opportunity for most business and corporate analysts to conclude that the business failures were more as a result of the global economic crisis rather than the conventional management mistakes that has often been adduced as the chief reason for corporate failure.

Since the dawn of civilization when businesses became more organized and strategic, when detailed records of financial transactions began to emerge, specifically with the advent of what is known today as the Balance Sheet, finance managers had come face to face with a dilemma. It did not matter whether there was a general economic downturn, each business enterprise needed to survive, grow and prosper well into the future. Each time a major investment decision had to be made, technically there is always a dilemma in choosing between keeping more or less liquidity or desiring less or more profitability.

For organizations that are purely profit-oriented, it is easier to see the interplay of conflicting preferences. While for organizations that are non-profit, the desire for profitability can be equated to the desire for value-for-money in service delivery. The metrics for measuring value-for-money are as varied as their objectives hence a bit more difficult to fully appreciate. However, for all enterprises that wish to operate in perpetuity, such enterprises must manage their financial resources in a way and manner that ensures that they do not go under or become extinct.

The business environment around the world has become increasingly competitive. Just like in any venture, to succeed you have to find a way to have the best of resources in people, strategy, finance, products and market niche. With respect to the management of financial resources, a challenge usually arises in deciding whether to favor liquidity or profitability. It is not possible to favor both in one single decision. The more liquidity you keep, the less profitability you achieve. Likewise, the less liquidity you decide to keep, the more financial resources you are able to channel to fixed capital investments which eventually leads to more profitability. More of both choices are thus desirable, but mutually excluding.

Once a major asset allocation decision is to be made, there is need for the finance manager to strike a balance between liquidity and profitability. Striking this balance is instinctively one of the major roles of the finance manager in any organization. Good practice takes cognizance of the context in which the decision is to be made in addition to the peculiar circumstances of the enterprise as well as the short, medium and long-term objectives of the enterprises’ management.The pattern of investments in fixed assets and current assets is usually a reflection of management’s preference for either profitability or liquidity. 

Overall, some of the factors affecting managers’ preference for either liquidity or profitability include the individual managers’ attitude to risk, the industry peculiarities, the general investment climate, cost of borrowing both long and short-tem funds and the current levels of return on the various classes of fixed capital investment in the firms’ portfolio, amongst others.

It is obvious that excessively high levels of liquidity will not do any organization any good, particularly in the long run as such an organization may be losing out on worthwhile investment opportunities. Low liquidity levels may limit an organizations’ ability to respond to business emergencies. Low profitability levels may lead to slow speed of corporate growth and may even affect a firms’ market rating. One of the probable dangers of high profitability levels is that it can create a false impression that an organization has fully matured and reached a comfort zone. The resultant effect is that the management of such enterprises ends up becoming less strategic, less proactive and thus prone to corporate drift.  Corporate drift itself may end up leading to corporate failure.

In summary, a proactive, vigilant and purposeful approach to the management of enterprises’ financial resources is the key to corporate survival, growth and prosperity in the long run.

What is Personal Finance and What is the Best Way to Make it Work for You?

Personal finance is basically the implementation of the idea of finance onto you and your family’s monetary decisions. It will help you address the processes by which you can budget, save and spend cash over time. It also takes in account various financial risks and probable and possible future events. Personal finance pretty much covers any area where your money is saved or spent and any possible future savings and expenditure. As such it covers all or some of the following: current and savings accounts, credit cards, loans, stocks and shares, retirement and pension arrangements, benefits, insurance and assurance policies tax management as well as day to day expenditure.

The basic aspect of financial planning is the self-assessment of your finances. Anyone can do this but depending on your resources you can elect this to be done by your financial adviser.  If you do chose this route ensure that you thoroughly check your agent’s background and make confirm that he or his company are regulated and compliant with FSA (Financial Services Authority) regulations.

If you decide to assess your own finances then you will need to draw up a balance sheet and income statement. The balance sheet lists the values of your assets (house, car, jewellery, accounts, savings, etc.) as well as liabilities (credit cards, loans and mortgage).  The income statement is just a list of your earnings from all sources – regular, irregular, etc.

Having done this basic work you should then set yourself a realistic goal – pay off all credit cards in 2 years; arrange a http://www.firstmortgage.co.uk/”> mortgage that costs no more than 30% of your post tax income; invest 5% of income in an ISA every year etc. The goals can be long term or short term and you can elect to have more than one goal at a time.

The next step is implementation – the targets you have set should have been realistic and thus the steps needed to reach them should be manageable. Perhaps a minor reduction in expenditure – say only go out once a week – can save you enough money to pay off a small loan. At the other end of the scale you may set yourself the goal of getting a new job or moving house to release equity.

The most important thing to remember here is that once the plan is set you will need to be disciplined and stick to it – if you did set yourself realistic targets this will be achievable. If your situation changes however you may want to change the plan – it is thus vital that you monitor it and make readjustments as the situation requires.

Magnifying Your Money: Tips in Business Finance Management

In putting up any kind of business, the end goals are primarily profitability and progress. Magnifying your money is the target endpoint. To be able to do such, you ought to focus on a very important aspect of your business- Business Finance Management. Below are some tips that you can follow not just to ensure the sustainability of your company, but to probably maximize its potentials.

1. Raise Money- Lots and lots of it. Businesses need more than sufficient funding. They need funds for the expected expenses, more funds for unexpected problems, and reserved funds for possible beneficial ventures. As such, when you are attempting to look for funds and possible investors, maximize the opportunity. Prepare big time but feasible business propositions. When opportunities for investment and profit knock on your doors, take chances and welcome the chance. However, you ought to grab the risks only after you have carefully examined the possible consequences of your business venture.

2. Acquisition is not always the answer. During business ventures, there is always plenty of room for additional expenses. Your first budget allocation for a certain expense may not be enough. You may need additional equipment and materials that require you to make unexpected expenditures. In such cases, note that buying what you need is not the only option. Look for alternatives such as renting or leasing the equipment you need. However, do take note of the rental or leasing fee versus the acquisition expenses, in accordance to your time frame for equipment usage.

3. Inform the concerned. In business ventures, you ought to keep pertinent parties aware of whatever is happening in your business. Pertinent parties refer to those who will be affected by the profitability or fund inadequacy in your business. These parties include your bank, your investors, your suppliers, your customers, and even your inland revenue representative. Realize that keeping them informed maintains good business relationships. It may also heighten their concern for your business needs such as additional funds and/or more profitable business deals.

4. Welcome Renegotiations. There are some cases when your investors, suppliers, and customers ask you for renegotiations on your transactions. Be open for such possibilities and options. Avoid limiting yourself to uniform business deals. Recognize that suggestions made by the people you are working with are worth your attention. This will not only help you maintain good business relations with them. Instead, it can open your doors to business opportunities which may prove to be beneficial in the long run.

5. Stick to strict payment and debt procedures. Renegotiation starts and ends with business deals. They should not extend to your payment procedures and debt accountability. When allowing your customers to go on credit, do a thorough financial check first. Set clear procedures for payment and be sure to follow them, without exceptions. You should also set a specific deadline for each debt. Realize that a service or product on credit is a potential loss for your business finances.

6. List everything. This may be a tedious task but such may prove to be very beneficial for you in the end. Realize that no matter how big or small your business deals are, all of these mirror how you manage your finances and all of these affect the overall outcome of your business venture. As such, you ought to practice proper bookkeeping and accounting.

5 ways to Better Personal Finance Management

Personal Financial Management is not easy and you have to learn what it means to better manage your finance.

Here are 5 tips to better Personal Finance Management:

Teaching children about money management

Do you find your children often want things that are expensive and out of your range for any budget? If you find that you don’t have the money to buy your children everything they want, you need to teach your children a little more about money. Children should be given an allowance, but only for the chores and things, they help you do around the house. Simple things like folding the clothes, sweeping the floor, doing the dishes and feeding the pets. As your child earns money, and receives money for their birthday or special occasions, they can then buy their own things they want. As they realize how long it takes to save that money they will treat it better, and they will appreciate it more. Money management can start at a young age, and children will learn easily, taking their habits to their older years.

Money management and your home

Do you need to save money in the home? Managing your money is all about saving money, finding more money to do things you want, and to create savings accounts for rainy days. If you need to save a little more money and to spend less on household things, you can start with your utilities. Shut off the lights when you are not using them, and shut down that computer when you are not working on it. This will lower your bill a little. Look at the lights you are using in the house, if you have forty or sixty watt bulbs you are using less energy than seventy five and one hundred watt bulbs in all the lamps in your home. Cut costs by starting with the electric bill. Manage your budget; manage your money by adding more to your monthly household budget.

Saving for a rainy day

The basic thoughts behind any type of savings plan is that you should have at least three months savings in the bank, or at least have access to three month of your pay in case of major disaster or problems in the home. Right now, if you were unable to get to work for three months, how would you survive? Prepare for the future and start now. Your personal finances demand that you prepare to protect yourself. You can start by putting just ten dollars a week in a savings account. If you find this is easy, up that to twenty dollars per week. If you have the money taken out before you get your paycheck, you won’t even miss the money. When you are putting, at least 0 a month away you are preparing yourself for a great savings and in the long run, you will find it easier and easier. Yes, it is going to be difficult to start, but after a few weeks, you will adjust and your household budget will as well.

Spend less on entertainment

Are you finding it difficult to pay your bills on time all the time? If you are not paying your bills, your heat, your credit cards, and your utilities on time, you are putting yourself at risk for bad credit, and a lower credit rating. To keep your personal finances on track you should sit down and write out a list of all the bills you have every month. Next, you are going to write down everything that you spend other money on. If you are not able to pay all the bills every month, you need to find where you can cut back on money spent. Generally, this is going to be in gifts, gas, going out to the bar, to the movies, renting movies, your television channels, the subscriptions for your cell phone, and the long distance bills you pay for your landline. Review your budgets, cut back on expenses so you can afford your bills, and when they are paid off, you can get back out there, and have a bit of fun!

Personal money management and your future

Your personal life involves more than the job you are working at, but also the welfare of your family. If you were unable to work, or if you died, how would your family continue on, paying the bills and getting groceries? If you don’t have an answer, you should look to personal lines of insurance. Insurance policies are a form of money management that will protect your family in case of emergencies or in case of death. Many families find that disability insurance comes in very handy when someone breaks their legs, or perhaps needs an operation and can’t get back to work for a few months. Insurance in the case of an accident, for a disability or in case of death is going to protect your family and everyone’s financial future. Get some amount of insurance and protection for the future.

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.