Posted by admin on October 11, 2010 · Leave a Comment
The most recent financial crisis in our economy should be a wake up call to individuals that failing to plan ahead may lead to detrimental consequences. The stock market decline, the contraction on available credit with mortgages and credit cards combined with job loses provided a significant blow to many consumers that took them by surprise.
For the unprepared, poor investment planning and credit plans was a shock that may very well take years to recover from. One way to help avoid a similar fate in the future is to create a flexible plan today. Most consumers fail to make a plan that involves investing, spending and maximizing resources.
Generally, consumers that have a plan on how to spend and save are more satisfied with their finances. These individual are also often more confident about their decisions, and less worried about being financially secure in the future.
A good financial plan should cover several aspects of spending and saving, including:
An evaluation of monthly income and future expected changes.
Measure current spending limits and how spending may look in the coming years.
Estimates on how much is needed to save for retirement.
Inventory on assets that are currently available for an emergency.
Assets that are currently available for long term retirement.
A review of some appropriate investment and savings options based on your goals.
Strategies that can be used to minimize expenses and conserve income.
A plan regarding resources that are available and how they can be better allocated, including time and physical assets.
Plans that are developed to help perform better on all fronts, saving money, earning more and performing better with what is already at hand.
Developing a plan takes time, but the end result may help put you at ease and enhance your quality of life. Budgeting is often step number one to develop a good plan, a budget that often requires people to address the holes in their plans.
One positive result of the financial crisis is that many consumers now realize that can get by with a lot a less without significant change to their happiness and lifestyle. Common budget problems for consumers that never spend the time to develop a good plan involve irrational spending and waste that can be curtailed and handled far better with a plan and a budget.
The first place to start is take inventory of where are you. What do you have and what do you spend. A lifestyle of knowing and not guessing leads to less conflict and stress. And less unexpected surprises that take years to recover from.
Don’t forget, as your life changes so should your plan. There are many transitions that could occur in our life as we age. One way to deal with them is to have a plan that covers the expected while being flexible enough to deal with the unexpected.
Improve your living standards not by acquiring more but living a simpler more psychologically rewarding lifestyle.
Posted by admin on May 28, 2009 · Leave a Comment
You can teach your children the value of money almost as easily as they can learn to count their pennies and quarters. The fact that they even have pennies and quarters to count is a huge step in the right direction. Teaching your children about personal finance will serve them with a life lesson arguably more valuable than any other.
The Source of Money
Children are often confused as to the source of money. It appears in your wallet or at the ATM machine, so why shouldn’t they wonder if it just appears when you need it. Consider carefully any question you child asks about money as it will be a valuable learning opportunity. If she asks for a dollar, rather than giving her the flip, “Do you think money grows on trees” response, explain to her how you worked to earn those dollars and you don’t know about just giving them away.
Set up a way for your child to earn money. An allowance may be tied to chores, or it may not. But offer your child a chance to make a few dollars by watering the plants or taking on a chore outside of their normal range of household duties. Then pay her for her efforts. It won’t take long to learn that work brings rewards and those rewards pay for the fun stuff in life and can be further used for savings and investing.
Children and Savings
Of course as fun as is it to spend every dollar you make, that is not the best example of wise financial planning. Instead help your children understand the value of saving money for the things they want. When your child asks for a new toy at the store tell her to save her own money. If it’s particularly expensive, offer her a deal to match her funds or pay the bulk of the price when she reaches a certain target savings goal.
To help your child learn to save, start a piggy bank. Put all of the spare change around the house in the bank to give it a satisfying rattle and add to it on a regular basis. Give your child some coins as part of her allowance so she can save those even if she spend the bills. Encourage her to save the bills as well.
When she’s saved enough, take a trip to your bank to see about opening a children’s savings account. She won’t understand the formulas for accruing interest, but she can see the result in a statement every month or as she deposits a bit more over time.
Investing
You can help your child learn about investing by giving her a piece of a favorite company – stocks. Buy her a few shares and when she is old enough to do the math, let her help you figure out their current worth and how much money she’s made. Let her keep the stocks, adding to them over the years to build a nice portfolio to start her adult investing. She will not only have a foundation of stocks and savings, but the knowledge you’ve worked so hard to impart over her childhood.