What is Money Management and Why it is Important

You must have seen a lot of articles on the Internet with titles like “What are the best money management tips,” “How can I manage money better” and felt tempted to read those articles. Ever wondered what money management really is? Here in this article, I will break it down to you.

What is money management

Money offers you options. Having money in your wallet means having the option to do certain things. What these things are going to be depends partly on you and partly on how much money you have. If you have $100 in your wallet, you can buy a pair of jeans but cannot afford a cruise vacation.

Money management means handling money carefully to increase its inflow and stop its outflow. Going on a cruise vacation may seem impossible at this moment, but if you manage money effectively, it won’t remain a distant dream for long. When done right, money management takes you one step closer to fulfilling your goals.

Money management must do’s

Like every other thing, there’s a list of must-dos everyone who takes money management seriously needs to follow. There’s also a list of “don’ts” but we can skip that list as the “dos” list is pretty expansive. Let’s get started with the list.

Diversify your income sources

Would you put all your eggs in one basket? I guess not. Then why are you stuck with just one source of income? It’s best to diversify your sources of earnings. If you are doing a 9 to 5 job, start investing in the stock market. Don’t go for future and options right away. Invest in equity. With time you will acquire enough experience to be a day trader and then your earning will increase tenfold.

Ever invested in real estate? It’s easier than you think and the market is not as cryptic as some other industries are. If you have inherited property or land, consider renting it out for additional income. If you credit score is above 700, take loan at affordable premium rate and start an online business. Keeping track of everything may be difficult, so I recommend personal finance tools to manage your finances.

The safety-first approach

While income diversification is strongly recommended, going overboard is not. Remember that you are not a gambler, you are prudent and sensible. That’s why you need to choose the safety-first approach. Diversify your earning, invest in new fields, own assets for the future but always have the safety net ready just in case.

What does a safety net means in a financial context? It means having an emergency fund which you can use in time of a crisis. An investment may not bring the result you expect or it might backfire and put you in a spot where you owe massive debt to someone or some large corporation. If you plan your workarounds in advance, you can overcome the hardship. A workable plan is one that is based on the safety-first approach. The biggest benefit of this approach is even if you fall back, you can again gain strength and keep going ahead.

Redefine yourself

An important part of money management and personal finance in general is understanding yourself. What kind of person you are and what motivates you are both important when it comes to money matters. For managing money more effectively, you need to reevaluate your needs, wants and priorities.

Love shopping? Spend a huge deal of money every month shopping for clothes and accessories? If yes then maybe it’s time to cut down on your monthly shopping budget. But before doing that, ask yourself how you view shopping. Are you an impulse shopper? If yes then it’s time to change yourself. Grocery is a priority for all of us. Give it more importance than shopping.

The more you understand yourself, the easier it becomes for you to manage money.

Don’t trust banks blindly

This is an important advice and I want you to pay attention here. The cumulative debt in the United States is steadily on the rise. The debt has almost doubled over the last decade. If the debt crisis is not handled properly, it will create a mess and banks will expect you and million others like you to clean it up. In layman’s terms, if a bank ever goes out of business – a not-so-far-fetched possibility in 2019 – customers will see their account balance going down.

Yes reputation matters, but during the 2008 recession some major banks were forced to shut down their business. The safe way to survive a financial apocalypse caused due to mismanagement of funds by banks is to invest in multiple physical assets that you can sell off on a short notice.

Summing up

As discussed in the article, money management is understanding the nature of money, what relationship it has with you and foster that relationship. When you follow the tips shared here in this article, you nurture this relationship and become better at managing money.

5 Smart Tips to Be Money-wise When Buying Your First Car

Buying your first car can be exciting and scary in equal measures. After all, you probably worked hard, saving up all your hard-earned money to buy your first set of wheels. So, it’s only natural that you’ll be a little nervous about making the right decision.

Here’s a step-by-step guide to help you approach the process of buying your first car in a responsible way.

Step 1: Be Sensiblewith Your Choice

Sure, cruising down the road in a convertible will definitely be fun in the summer, but what about the winter months? When picking a car, be very clear on all the practical must-have aspects. For instance, if your student who regularly has to lug around project material and other stuff in your car, you will need a vehicle with more storage space. Similarly, if you’ll often be driving within city limits, look for a car that will give you good value for money as far as fuel costs are concerned.

Having your priorities right will ensure that you don’t end up having buyer’s remorse. In short, avoid getting sucked into temptation and make a practical choice instead. Two of the most important questions to ask yourself when buying a car are:

  1. What is the down payment? The higher your down payment, the lower your monthly payments will be. So, aim to put in a sizeable chunk as a down payment.
  2. What is the monthly payment?  Write down your monthly income and deduct all monthly debts and other expenses from it. The amount you’re left with is how much you can afford to pay every month for your car.

Don’t forget to take into account other associated costs of owning a vehicle, such as taxes, registration, insurance, fuel and maintenance costs. It’s also a good idea to consider the future. So, keep in mind that you will be selling your car sometime down the line. And when that time comes, how easy will it be to find a buyer for your car? Although, it’s not too much of a concern if you think about it. Even if your car is in bad shape after a few years of use, you can sell your scrap car for cash to a car wrecker. So, that’s always an option.

Step 2: Get Your Financing Sorted Out

It’s always a smart idea to get your financing preapproved by a lender before you approach a dealership. Talk to different lenders to find which one offers the best rates. Going into the dealership with your financing sorted out will give you the upper hand when it comes to negotiating the sale price.

If you’re credit history is lacking, that can pose another problem when it comes to financing. Lenders typically rely on your credit history to determine whether or not you’ll be able to repay the loan as stipulated. To build confidence and gain lenders’ trust, it is a good idea to build your credit history six months before you start hunting for a car. That way, you’ll have a good credit history to show to the lenders, and they can conclude that you’re a responsible individual who pays your bills on time and does not default on payments.

Step 3: Don’t Skip Out on The Test Drive

Always test drive the car before signing on the dotted line. Have a checklist handy and make sure you look for each item on the checklist when you take the car for a spin. Make sure you drive for at least ten to fifteen minutes to get a good feel of the car. Check the headlights, wiper and other features to make sure they’re all working properly.

Step 4: Have the Car Inspected by A Mechanic

If you’re buying a used car, then this step is crucial. No matter how good the car looks and how smooth it feels when you drive it, there could be some hidden problems or issues that you just won’t be able to spot. So, have a trusted car mechanic take a look at the vehicle. A mechanic will be able to quickly identify any potential problems that could end up being expensive for you.

Step 5: Negotiate the Sale Price

Car salesmen tend to be charming and know just how to manipulate you. So, be smart and always negotiate the sale price – and don’t lose your head. Just because a car’s monthly payments are affordable, doesn’t automatically mean that you can afford that vehicle. Take your time to make a decision and don’t get pulled in by their tactics. A common tactic that car salesmen employ is to instill a sense of urgency in the deal. They’ll say things like “This car’s hot property. If you don’t buy it now, someone else definitely will.” But resist the urge to jump into the deal without thinking it through. Even if the car does get sold, it’s not the end of the world. There are plenty of good cars out there and you’re bound to find a great deal if you do your research and make an informed decision.Buying your first car can be a nerve wrecking process. But going into it with all the necessary information at hand and being aware of the local car market will help you navigate better and buy a first car that you can be proud of – even if it’s an old one! You can always get Cash for old cars Brisbane by selling it to a Car Removal company when it’s time to let go of it.

Techniques for Picking the Finest Foreign exchange Signal Provider

With a variety of forex signal providers available these days, attempting to become difficult to choose the best provider. Overall success is one factor that can’t be overlooked while choosing a trading signal provider. However, there are several elements which need to be considered before selecting a forex signal provider. Why don’t we look into some of the tips which can help you pick the best forex signal service provider?

Signals have to be profitable:

The chief factor to bear in mind is profitability. You must check whether the forex signals are profitable or not. Most of the forex signal providers claim to provide profitable signals, but with no verified track record, you must not believe them. Bring out thorough research and conduct an in-depth evaluation.

Check for verified trading results:

You must check the trading results. A verified trading result will help to ensure the claimed performance is right. In this manner, you will be able to choose a dependable forex signal provider.

Guarantee the forex signals match your trading style:

It is imperative to comprehend your requirements. Choose the forex trading signal that suits your trading style. Check the number of trade signals which you can get from the provider in a day. You should know whether the service provider uses a short-term trading approach or long-term trading approach. The time horizon plays a critical factor in choosing a trading signal supplier.

Look for additional trading support:

Go through the forex signal provider’s website and look for the services provided by them. Critically examine for any type of additional support they offer. Several providers send weekly notifications, and some send month-to-month alerts. Choose the supplier based on your specific requirements.

Free vs paid service:

A person needs to choose between free signals and paid signals. Depending on your budget, you can pick the forex signal provider accordingly.

  • Free signals

Some of the providers provide the forex signals free of charge. You need to choose the forex signal provider based on your specific requirements and budget.

  • Paid signal

Most of the forex trading signal providers provide trade alerts on a month-to-month cost basis. Some providers also offer trading signals for a trial period.

Quality over quantity:

The high quality of the trading signals is an important variable which cannot be ignored. Make sure the forex signal provider you choose provide quality signals.

Some firms will need you to own specified permit definitely so you can also work as a financial adviser. Extra skills to propel you to success include being a good communicator, problem-solving skills, structured work processes and the capability to work under pressure.

While it is not required to continue doing your own research, it is essential that a trader is very familiar with their resources before subscribing to binary options signals. This particular allows them to use the tools expertly as well as knowledgeable.These are a number of tips which can help you choose the best forex signal provider.

Best Picks: 11 Personal Finance Books That You Must Add To Your Current Reading List

What are the personal finance books you’ve ever read, is it on the list?

One of the essential skills you need to learn when it comes to money management is personal finance. We all look for guidance to get started, with handling money and look for ways to multiply it.

The real challenge comes when you walk into a book store to pick that ideal book from a heap of personal finance books. Essentially, all the personal finance books would offer a piece (or more) of advice on finance management. But not all would suit your need and get you started with personal finance.

If you’re a beginner with personal finance, then you would be looking at the books that are easy to read and get you through the basics of financing, best ways to save money and clear off debts.

So, we give you a list of best picks, to begin with, your journey on personal finance and get your feet rolling with finance management. This list is not just for beginners but also can be useful to brush up your basics and explore alternate ways with personal finance.

11Personal finance books to get started with personal finance:

 

#1. The Automatic Millionaire

By David Bach

This book is about how a simple step “Plan” can make you a millionaire even when you don’t have a big salary or a carefully organized budget. The author throws light on where you’re spending your money unconsciously and how with little planning you make be financially independent.

#2. Thinking, Fast and Slow

By Daniel Kahneman

This book is about how your decisions influence your finance management. The author takes you through what makes you go with the decision and how things can change.

#3. The Millionaire Next Door

By Thomas J. Stanley and William D. Danko

This book is like a beginner guide with instructions on personal finance and is a good starter for those who’ve just begun with finance management. It highlights the 7 common traits that all millionaires have and how you can adapt those.

#4. I will teach you to be rich

By Ramit Sethi

This book is about the 4 pillars of personal finance and is a 6-week personal finance program for people who are 25 – 35 years old. This is a good read for those who are ambitious but are clueless about finances.

#5. The Total Money Makeover

By Dave Ramsey

This book is a great starter guide that talks about all the basics of personal finance such as how to be debt-free, savings, how to invest, getting out of mortgage and be financially secured.

#6. 7 Money Rules for Life

By Mary Hunt

This book is about how to get control over your money and become financially stable. It highlights the 7 rules with practical application and it works well irrespective of your income and current financial situation.

#7. The Money Book for the Young, Fabulous & Broke

By Suze Orman

This book is for the young people who’re in their 20s and 30s, struggling to balance their finances and deal with financial issues. It offers a set of solutions to everyday problems such as student loan, credit card debt, insurance etc.

#8. Women & Money

By Suze Orman

This book is about empowering women to deal with financial problems, financial security and how to be financially strong.

#9. Think and Grow Rich

By Napoleon Hill

This book is a combination of an inspirational and practical guide to success. It highlights the common principles followed by all successful people.

#10. Rich Dad Poor Dad

By Robert T. Kiyosaki

This book highlights the main difference between how you work for me and how to make money work for you. It highlights what the rich people teach their kids, the poor and middle class doesn’t. It is one of the best books on personal finance which goes on the “must read” list.

#11. The Investment Answer

By Daniel C. Goldie &Gordon S. Murray

This book highlights the 5 important decisions and choices that every investor needs to make for better money management and have a financially secured future.

Summing up:

The List is even longer for you to read, but you will be able to get the results when you start with one. Once you’ve read the book then put it in action and follow the rules. It might be difficult to start noticing immediate results. You will need to follow the routine for a few months to see the difference in your financial situation. Keep tracking your progress to see how it works for you. Pick one out of the personal finance books from the list and add it to your reading list.

How much do I need to retire?

How much do I need to retire? This is the first question that someone asked when I started the discussion about retirement savings. Most of us are unsure on how to start saving for retirement and how much we should stock up for a comfortable retirement. There are a lot of factors that would influence the retirement savings amount such as your current income, your monthly expenses, and your plans after retirement etc.

Investing in your retirement savings is simply circumstantial and it depends on 3 things: time left for your retirement, how much you can save and how much risk you can afford. There are many ways in which you can save better for your retirement. But before you start planning on your retirement savings; let’s figure out the answer to the question: “how much do I need to retire?”

Let’s get to the math!

The expert’s advice is that you should aim for replacing at least 70% (80 to 90% for a safer option) of what you’re earning now (pre-retirement income) through retirement savings and social security. In order to get the exact figure, you can use online retirement savings calculator to do the math.

Now that you know how much you need to retire and have a comfortable retirement; it’s important to look for better ways to boost up your retirement savings fund.

3 ways to boost up your retirement fund:

A lot of people just stop at the point where they are yet to figure out “how much do I need to retire?” and the others stop at “how to reach those savings with this current income?”

It doesn’t matter how many years are left for your retirement or what is your current income, you can still find ways to boost up your retirement savings by following these 3 mentioned ways.

#1. Switch to smart saving option

One of the best ways to boost up your retirement savings is to make the smart investment. There are various options and you choose based on your risk tolerance. There are basically 2 killers that can spoil your investment plans, one obviously making a bad investment and second is the fees. The first one is difficult to predict but the second one depends on your choice of investment and the expense ratio.

For instance, let’s say if you invest $10,000 as initial amount plus $5,000 per year for 30 years with returns 6% annually and has an expense ratio of 0.1%. At the end of 30 years, you will have $443,598 and for an expense ratio of 0.75%, you will have $389,240. And that leaves a difference of $54,358 which is a huge chunk. Higher the expense ratio, lower the returns you get. So, switch to the smart saving option by choosing the investment based on the maintenance fee or expense ratio.

#2. Look for tax reduction wherever possible

Most of the retirement plans that your workplace offers such as 401(k), 403(b), TSP etc. comes with specific tax benefits that you can avail. The traditional 401(k) plan comes with a benefit where your taxable income reduces by a dollar for every dollar you put into the account.

Thus, if you save $19,200 in a 401(k) account then your taxable income will be reduced by $19,200. That implies you stock up all the money you put and have a handful of savings. Simply, it means you don’t have to pay any taxes on the amount you save into the account that year until you withdraw it when you retire. There are other plans (Roth, IRA) as well where you pay taxes every year instead of paying it at the time of your retirement. You can learn about both the options and choose what suits your needs.

#3. Make use of the employer match fund

When you join a workplace, one of the things that wake up the thought of retirement savings is the 401(k) plan offered by your employer. The thing is that you won’t really see the difference when a part of your income goes to your 401(k) every month until you enjoy its benefits in your retirement. The additional incentive that comes along with 401(k) is the employer matching plan. In this, the employer makes a contribution to your account on top of your savings. For instance, if you put $3000 annually in your 401(k) then your employer would contribute $1500 additionally. This would help you to boost your retirement savings in the long run.

Summing up:

And now you would be able to calculate the answer to “how much do I need to retire?” Thus, you can easily move to the next step of boosting your retirement savings fund. One thing you need to remember is to add your retirement savings as a priority when you plan your monthly budget.