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The One Part of Budgeting That No One Talks About

Personal Note: Budgeting, including household budgeting, is one of the most beneficial practices in personal finance matters. The moment we start experiencing lack of proper control in financial related areas of life, it is very easy to lose our peace of mind, our ability to think constructively and expose ourselves to serious dangers of deteriorating health. As Bern endeavors to make clear in this article, making adequate provision for future earnings, when creating our personal or household budget, is a vital aspect of the all-important budgeting practice; and we cannot afford to do without it if we are truly sincere about experiencing long-term success in our personal finances.

The One Part of Budgeting That No One Talks About
By Bern Walters

The Importance of a Household Budget

No matter if you are a college student, a family of four, just graduated, or you have been in the workforce for any length of time you should have some level of understanding about the importance of money management. The first thing that is considered in the creation of a budget is the present earnings at the time, and secondly, any future earnings. However, in some scenarios this second aspect of the budget process is sometimes overlooked when most people sit down to create a personal or household budget. The reason behind the need to enter a forecast for future earnings is because of possible growth through pay raises and cost of living adjustments sometimes provided by employers.

Furthermore, this second aspect should enter into the future goal category. When building a financial management model, a budget, the present and possible future earnings are only part of the picture. Each financial plan should contain a goal or set of goals with which to set or build the framework and structure of the financial model. The standard entries such as expenses, overhead or liabilities, and earnings equate to cash flow. A budget, therefore, is a roadmap of, and for the direction and amount of cash or earnings, an entity receives and moves. The entity can be any one of the aforementioned to include the possibility of a business.

Large and Small Businesses Do It, So Why Not You

Determining your goals as a family, a postgraduate, or a student means that some thought as to where you see yourself financially in the future takes place. When looking at the big picture, so to speak, this means planning for change and setbacks. The change looked for is the potential of future gains through raises, investments in real estate, buying a home, having a family, retirement, and funding your children's education. This translates into preparing for the bumps along the way or the setbacks by creating savings accounts and retirement funds such as a 401k or a Roth IRA. Life insurance enters into the broader picture of preparing for medical emergencies and even sudden death.

By making a budget and entering a forecast of future earnings, it helps you keep track of both spending and savings and aids in monitoring the path towards the goals you have set. This also helps avoid running into the chance of having to declare bankruptcy. This last item becomes a concern when someone is living beyond his or her means by spending more that they earn. This can happen very quickly and easily where credit is concerned. Which is why budgeting is so important. Having a little debt is healthy where having a lot of debt is detrimental for two major reasons.

Having Too Much Debt

The first reason too much debt is harmful is it creates anxiety and stress to occupy the mind, which in turn can cause a persons health to deteriorate and cause poor judgment in financial matters making things worse. Secondly, the loss of a home and personal possessions can result through having to declare bankruptcy, in a worse case scenario. At present, getting out from under large amounts of debt has become less stressful because more and more people are beginning to realize that setting a budget helps them achieve their financial goals by having a tool to monitor their cash flow.

Yes, having a budget helps diminish debt through the allocation of funds put towards certain areas that need the most attention. This is particularly important where a budget did not exist beforehand, i.e. the debt was realized. This shows the importance of having one in the first place so things will not get out of hand causing in large amounts of debt. However, as a college graduate who is saddled with their student loans, this is the opportune time to sit down and create one. Specifically, after the student enters the workforce full time, seeing the income received and looking at a forecasted scenario that includes debt reduction, cost of living expenses, and investment funding, (retirement and life insurance).

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3 Reasons Why Investing is “Risky”

Personal Note: Robert Kiyosaki is definitely one of my most respected mentors when it comes to personal finance. In his usual straightforward, uncomplicated manner, Robert challenges the prevalent notion that investing is risky. The honest truth is that, as human beings, we are always afraid of the unknown. However, once we gain adequate knowledge and understanding of the unknown, the fear factor is automatically dispelled. Investing is the same: as long as we lack the required training, control and knowledge, we will continue to believe investing is risky.

Written by: Robert Kiyosaki

The importance of training, control, and knowledge

Many people think that investing is risky. When I was growing up, my poor dad believed this. Because he valued comfort and security, he felt that smart people got a good job and saved their money.

My rich dad, on the other hand, felt that my poor dad’s plan was risky. He aspired to own his own businesses and to invest his money rather than save it.

As a young man, I had to decide for myself who was correct, my poor dad or my rich dad. It was not an easy decision. Both men were confident in their opinions, but after much questioning and study—as well as an understanding of what I wanted in life—it was clear that my rich dad’s path was the path for me.

Along the way, I learned 3 key reasons why my poor dad really thought investing was risky—and why it was, for him and others like him.

1. Lack of training

Most people go to school to be trained on how to be an employee or self-employed. School teaches us things like reading, writing, and arithmetic, all good things and useful for the work world. It teaches us how to execute on orders from our superiors and be where we’re told to be at the right time – the mindset of an employee.

School doesn’t teach how money works, or how to have it work for you. It doesn’t teach you the skills necessary to become a business owner or an investor. Those are skills that you must seek out and teach yourself.

As a result, most people simply lack the training necessary to know how to invest in a way that isn’t risky. And without training and knowledge, investing is risky.

2. Lack of control

During the last Great Recession, I’m sure that many people came to believe that investing was risky as they watched their stock portfolio’s tumble. The reality is that most people don’t have a true investment plan.

Instead, they work hard and hand over their money to an “expert” who invests it in some mutual funds, stocks, and bonds. The problem is that these types of investments leave you very little control.

You are at the mercy of the markets and managers. That is a position of risk.

Successful investors, on the other hand, strive for as much control as possible when it comes to their investments. That is why I invest in businesses where I have decision-making power, and it is why I love real estate. In both cases, I have a lot of control over what happens with my investment.

3. Lack of knowledge

Most of us know intuitively that if you want a real deal, you need to be on the inside. You often hear someone say, “I have a friend in the business.” It doesn’t matter what the business is. It could be to buy a car, tickets to a play, or a new dress. We all know that “on the inside” is where the deals are made.

The investment world is no different. As Gordon Gekko, the villainous character played by Michael Douglas in the movie Wall Street, said, “If you’re not on the inside, you’re outside.”

Employees and self-employed people generally invest from the outside. They have limited knowledge of what they are actually investing in. Those who operate as business owners and professional investors have detailed knowledge of what’s going on inside of their business or their investments.

They are the drivers of the business or investment, and because they have the insider knowledge that goes with that, their investments are far less risky.

Moving from a position of risk to a position of security when it comes to investing takes financial education and practice. I encourage you today to take an honest look at your investment position and to take the steps necessary to gain training, control, and knowledge. It will be one of the wisest decisions you can make.

Common Mistakes People Make With Their Personal Finances

Personal Note: One striking thing about this article is how Shantel made it clear right from the start that attaining financial security does not have anything to do with our individual levels of income. A lot has to do with our mindset and the in-depth understanding of our current financial situation (where we are), our desired personal finance goal (where we want to be) and the plan and strategy we have, in a well laid out manner, on how we intend to achieve the desired goal. She also reminds us that, if we work toward achieving our financial security goals appropriately, we would always be able to enjoy a certain degree of fun and joy that comes with staying the course.

Common Mistakes People Make With Their Personal Finances
By Shantel Haines

Common Mistakes People Make With Their Personal Finances

Talking about personal finances is not a subject that most people enjoy. The reality is people generally assume that personal money difficulties are from a lack of money to work with. However, money management and handling proves to be more of a challenge than not actually having enough money.

It may surprise you to know there are as many high income earners that have challenges managing their money as there are those in the smaller income categories. Further, happiness and success in dealing with money have little to do with the amount of money but, rather what is expected and wanted from that money in terms of what it brings to your life.

What are the common mistakes that many people make with regard to managing their personal money?

This includes the practical difficulties with:

Organization and Structure

Many people don't have structure in how they manage their personal finances. There needs to be a set direction and plan for how money will be used now and in the future. It sounds good to talk about this, but many individuals do not know how to tangibly have a workable set of activities that will keep them moving forward and having a practical set of good money practices in dealing with their money. Only with structure and organization, can a good money plan be adhered to and the benefits realized. Once these personal money practices are in place and tailored for the individual, then momentum can take over and it becomes part of who you are and in your actions in dealing with your money.

Money inflows and outflows

Knowing exactly what money that you have coming in and leaving your "money reality" is again not something in a tangible sense that people know how to deal with. They may know what that is (or not) but how to do this is something else. Think of it like using a calculator, it is convenient and obviously more efficient, but you still should know HOW it is computing and arriving at its answer. Can you answer why you need to know your cash flows each month? Do you know what your net worth is? These answers are the keys to being able to put together a true understanding of what you have been doing with your money and what behaviours you may need to change.

Money Intention

The realization that money is not meant to be all used at once. Some of it is for your current use, but an amount must be left for near-future use and then a portion for further-future use. Preserving and safekeeping your money for the time ahead together with using money for cultivating strength and fun in your overall life is important and essential for you to be able to work with your money. Having a specific method of understanding what you want from your money and clarity about your intentions for your money, are key.

Confidence

Building your money confidence is at the center of actually working with it. Becoming grounded with your relationship with money and knowing how to approach the whole question of money is rooted in how confident that you are. You must build your confidence about money through enhancing your money mindset and character. This is achieved with allowing yourself to think differently and to adjust your thinking that will free you to the point of building confidence with your money.

Keeping the Fun

Your personal money is not just about earning money and paying bills! There is supposed to be a certain degree of fun and joy that comes from achieving and having what you want for the money that you earn. Coming to terms with what that is, how to obtain this and organizing yourself to have what you want will help you to work towards what you believe will make you happy. Often times, people work for things they don't want while ignoring or not being truthful to what they really do want. Making decisions, being in tune to your desires and having a plan will greatly help you to stay true to your purpose and eliminate that which you don't want with your money and your life.

Dealing with your personal money can be one of the most intimidating and frightening subjects for people to deal with.

However, it need not be if you learn how to:

• Work with your personal money inflows and outflows
• Preserve and safe keep your money for the future
• Create your money intention for strength and for fun
• Enhance your money mindset and character
• Build your money confidence

To your personal money confidence...

By coming face-to-face with your money, you can look forward to starting fresh - cleaning up old habits and embarking on a new path for yourself, with renewed hope and optimism. http://goo.gl/IuojZO

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Setting Realistic Financial Goals

Personal Note: Personally, the wisdom Dan shared in this article is coming at an appropriate time. While a number of us have often succeeded at being disciplined as regards our personal finances – specifically in the area of spending less than our incomes and paying ourselves first – once in a while, certain “essential” demands challenge that healthy habit. This article helps us in maintaining our focus and serves as a reminder that, with determination and continuous learning, we can steady our gaits and keep ourselves firmly on our individual paths to financial security.

Setting Realistic Financial Goals
By Dan Annweiler

Money is one of the greatest concerns for the vast majority of people. We all need money to survive, to eat, dress ourselves, pay the bills and have some fun. When money is not enough, it's very easy to slide on the descendant path of debt, without too many possibilities to escape the trap once we are caught inside. Few people who are in financial trouble know that there is a way out, but it requires a good personal discipline and the understanding of the personal finance management principles and rules. This article contains a few tips that might prove useful, so keep on reading.

The first step in seeing yourself out of trouble is to estimate how big the trouble is in the first place. You need to create a spreadsheet containing your monthly net income and your expenditures. Be as detailed as you can, because it is important to see exactly why you can't make ends meet and where you could possibly cut from in order to be able to recover.

The main rule of a healthy family budget is to always spend less money than you make. You should setup a savings account and direct 5%-10% of your earnings into it prior to paying any bills. Even 2% of your monthly income could be something if you stick to this habit long enough. The key thing here is to set this money aside before spending on everything else, otherwise your best laid plans won't work, especially if you are already in trouble.

Entertainment is good, but it shouldn't throw you into even bigger debt. Budget for some inexpensive entertainment every month, but consider cooking with friends rather than going to expensive restaurants, for instance.

When you make your family budget, don't forget to include expenses that occur only once or a few times a year. Insurance, car maintenance or medical expenses may fall into this category. Don't overlook them, because they are important and they will ruin your budget if you don't expect and plan for them.

If you don't make enough money to cover all your current expenses, consider what you could be cutting without suffering too much. You may be able to take the bus instead of driving your car, for instance, or maybe you could ride your bicycle. When shopping for groceries, you could watch and take advantage of special discounts, promotions or coupons. When you are at home, maybe you have the habit of keeping the lights on in all rooms, even if nobody stays there. Consider switching off what you don't need. It's good for your finances, as well as for the environment.

Be careful with your money and you'll see getting rid of problems is not an impossible task.

We offer personal finance tips and ideas that will help you improve your finances, manage your debt, increase your credit scores and save money on TV and telephone services.

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People Don't Plan To Fail, They Fail To Plan

Personal Note: This is one of those articles that sort of jolt you from financial slumber. In a very pragmatic and candid manner, Ken reminds us that the future is certain and it approaches without caring whether we are prepared for it or not. The statistics of individuals that fail to plan is just staggering, but it is a wake-up call that we need to take the bull by the horns and start, or remain persistent in, taking those necessary steps toward our financial security.

People Don't Plan To Fail, They Fail To Plan
By Ken Moraif

Check out these statistics: Seventy-two percent of Americans, once they reach the age of sixty-five, depend on Social Security, charity and family for income. Seventy-two percent! Twenty-three percent have to continue working. Only four percent are financially secure, and one percent are wealthy. That means ninety-five percent of people in the United States, the richest country that has ever existed, either have to continue working or rely on charity, Social Security and family for their income once they hit sixty-five. That's mind-boggling!

I don't think those people planned to fail; many of them just failed to plan. If you don't want to be in that ninety-five percent, I suggest you start making your plan today, beginning with these five steps:

Step 1 - Determine your goals. Ask yourself where you want to be in five years. Then write it down. A goal is a dream you put into writing. There is amazing power in writing something down.

Step 2 - Gather up all of your investment information. You may have accounts spread all over the place. Figure out where everything is. Get all your records together. Get organized so you can determine where you are financially right now.

Step 3 - Consult with a professional. There are some things in life that are way too important for you to do by yourself. You don't perform surgery on yourself, right? Professionals can tell you where you're weak, where you're strong. Seek advice from financial advisors, tax professionals, and people in the legal profession. Even the best athletes in the world have coaches that help them. The same principle should apply when it comes to your finances.

Step 4 - Decide to pay yourself first. If you're still working, you should be maxing out all the opportunities you have to save money. Do it. Take that money away from yourself before you get your greedy paws on it. You'll start to see your account grow, and as it does, you'll be motivated to save more. It's a wonderful thing and you should do it. Now.

Step 5 - Review your plan once a year. Look at where you are, not only based on where you were a year ago, but in regards to the five-year goal you made in Step 1.

If you start planning now, I think there's a better chance you'll be in the five percent of people who are financially secure after sixty-five. And that's where I want everyone to be. I'd like to convert the whole country to the idea of planning to increase their chances of being financially secure.

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Is Saving Your Money Really The Way To Build Your Wealth?

Is Saving Your Money Really The Way To Build Your Wealth?
By Omar Best

Many people, including myself, were trained to believe there is only one way to live our life. Many of us were led to believe that you should:

• Go to college so you can secure a good job.
• Once you secure that good job you should make your supervisor happy so you can get a bigger paycheck.
• Save your money.
• Then retire.
• Receive your retirement check.
• Die.

If people choose to follow this path, then that is their decision. The major issue here is that many people were only taught one way to live their life. Ironically, some individuals will say that the so-called elite or top 1% intended for it to be that way. The strange thing is most of the super wealthy have decided to go about their life in a way that goes against the grain.

Of course, as much as they may want to, the rich have not uncovered a way to live forever. But you better believe they are trying to figure it out.

Continuing on, as a youngster in high school we were not told to become entrepreneurs, invest in stock, or invest in real estate. We did not have any investment classes or business classes available to us in high school. As a result, you have many people who have no idea of how to start a business or the different investment opportunities available to them.

So what is it that the rich do that is so different?

The wealthy do many things differently from the average person, but the significant difference is that wealthy individuals choose to invest money versus saving it. The rich recognize that they can make more investing their money instead of putting it in a bank account. In spite of all that, if there are not any good investments out there, then they will most likely consider putting their money in a low interest savings account. However, the wealthy are always searching for investment opportunities that will earn them the best return for their money. When they uncover that money making investment, the cash in that low interest account is coming out.

Here is the difference in the thinking of a wealthy individual and the average individual.

The average individual would rather save $100 a month in a retirement account for 25 to 30 years and then start collecting their pension check of $3000 month at 67 years old when they retire.

The rich also views investing as a risk, but they look at investing as an opportunity to make more money versus losing money. Rich people would rather invest $6,000 in a venture that will earn them $100 a month in cash flow for the next 10 years. In addition to that, they realize that the venture or investment will be increasing in value.

If you truly want to be wealthy, then shouldn't you try to do what the wealthy do? If you wanted to be a good football player, you would not emulate Micheal Jordan.

With that said, you should consider learning about your investment alternatives outside of your pension plan and bank savings account. You really need to understand that there are other investment alternatives other than a simple bank savings account like real estate and stock investing.

Lastly, when you begin to discover these alternative investment vehicles your family and friends will try to discourage you. Many people will advise you that these investments are dangerous and that you will lose your money. These same people will tell you that you should continue to live the way that you are living and that money is not everything.

Ultimately, you have to make the choice on whether you will find out about other types of investment vehicles or not. However, you need to recognize that in order to change your financial status you will have to change the way you think about finances.

Learn more ways to invest your money at http://howtobeastockmarketplayer.com/2012/03/stop-letting-the-banks-have-all-the-fun/

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