Nov 4th 2006
Personal financial advisors, also called financial planners or financial consultants, use their knowledge of investments, tax laws, and insurance to recommend financial options tailored to your needs to help you achieve your financial goals. If you choose your planner well, he or she will become an important part of your life, and you should be together for a life-time.
In order to help you clarify your financial goals, your financial advisor will need detailed information about you and your financial situation, philosophy and risk tolerance. A financial advisor can help you by:
- Setting financial goals.
- Explanations of investment opportunities and common investment mistakes.
- Guidance in understanding and evaluating risk.
- Develop a plan to help meet your financial goals which addresses your current financial weaknesses and builds on your financial strengths.
Nov 4th 2006
Establishing and sticking to a budget requires realism, motivation, and discipline. The main objective for any budget is for income to meet or exceed expenses. A personal budget helps you keep track of how you spend your money and you’ll be more likely to avoid traps that can undermine your ability to attain your financial goals. You’ll be in a better position to pay off debt and build savings.
Your first step should include establishing what type of income you have. Income includes: allowance, loan refunds, salary (paycheck), bonuses, overtime pay, money earned from hobbies and sale of possessions, monetary gifts, tax refunds, and whatever other income that you may have. After making a list of your incoming money, tally it up and see what you have to work with.
Nov 2nd 2006
Financial planning is a skill you should learn and practice. After all, it’s something you’ll be doing for the rest of your life. We all have financial goals, and a smart way to reach them is by developing a sensible plan. If you are already an avid saver, congratulations; keep doing what you are doing.
The first step of successful planning is to identify your personal financial goals. The only way you can create a financial plan is by knowing what you’re working to achieve. Here’s what your plan should include:
- The goals you hope to achieve.
- Your time frame for reaching each goal.
- The benefits of reaching each goal.
- The obstacles that could prevent you from achieving each goal, and ways to help overcome them.
Oct 18th 2006
Even if you spend a lot of time managing your personal finances, you probably don’t think of your income and spending in terms of cash flow. If they use the term at all, most people think that cash flow is something that businesses have to worry about. But you also have a cash flow, and figuring out whether it’s positive or negative is an important part of managing your money.
Cash flow planning is the foundation of all Financial Planning, because it allows you to:
- Assess your ability to meet your goals.
- Project your future cash flow needs.
- Identify opportunities to increase income and/or decrease expenditures.
- Make portfolio adjustments to meet your investment objectives with less risk.
Oct 11th 2006
You are renting, but you want to be a home owner. For generations, making that move has had to wait until you saved up enough for even a small down payment. But today, the trend is to buy with 100% financing and no money down. Just because the trend is growing, it does not mean it is a good idea for everyone.
When you pay little or nothing down, you increase your monthly mortgage payment because you’re borrowing more money. Also, you’ll pay a monthly private mortgage insurance (PMI) premium, which is folded into your house payment. The purpose of PMI is to protect the lender against the increased risk of losses when buyers pay less than 20% down. That tends to cost 0.5% to 1% of the loan value, up to $3,500 per year on a $350,000 home, or $5,000 on a $500,000 home. It’s money that doesn’t go toward your principal or interest and isn’t tax-deductible.
Oct 9th 2006
Money does buy independence, and independence is one aspect of happiness. But when you’ve covered your basic financial necessities, does more money make you happy?
Much of the research into the field of happiness — to say nothing of simple common sense - suggests that at the level of the individual, happiness is heavily influenced by life events (Did you get the big promotion? Have a fight with your boyfriend?) as well as by psychological traits (self-esteem, optimism, a sense of belonging, the capacity to love, etc.)
The correlation between happiness and family income is very strong indeed - reported happiness rises in a nearly straight line through eight levels of annual family income. At the highest income category — $150,000 and above - fully 50% of respondents report being very happy; by contrast, just 23% of those who have a family income below $20,000 say they are very happy.