January 4, 2009
November 5, 2008
Test your Personal Finances Iq With This Quick Quiz
Managing your spending habits, saving sufficient funds and clearly seeing your personal financial situation are important elements in managing your personal finances correctly. This test will give you an idea whether you need some more help, or if you’re on top of this important part of your life. (The answers are listed at the end of this article.)
Question #1. What does “living within your means” really mean?
Question #2. What damage can only paying the minimum credit card payments each month do to your financial future?
Question #3. What is the most widely advocated and proven method of getting your finances in order?
Question #4. What are the most important financial goals you can set?
Question #5. Why is it not safe to spend all your income each month?
Question #6. What is the recommended percentage of my income that needs to be saved for emergencies and a savings nest egg?
Question #7. In what order should your bills be paid?
How did you fare with these questions? Did you know the answers? If not, or if you wish to check your responses, check out the answers listed below.
Answer to Question #1.
“Living within your means” means spending to live as comfortably as possible, from your income, while saving sufficient funds to adequately cater for emergencies and building your savings nest egg. It also means that you should not rely on external funding such as credit cards and bank finance just to live day-to-day.
Answer to Question #2.
Paying only the minimum credit card payment each month can condemn you to life-long poverty. It is that serious. If you only pay the minimum off your credit card each month you quickly start paying interest on the interest and the debt can spiral out of control. Live within your means, don’t add to your debts, pay cash and pay down that credit card debt as quickly as possible.
Answer to Question #3.
The most widely advocated and proven method to getting your finances in order is to prepare a budget. Please don’t go glassy-eyed and lose interest now. This is an easy task that can finally put you in control of your finances once and for all. There are many resources available on the Internet to help you quickly make a start.
Answer to Question #4.
The most important financial goals you can set are as follows:
a) Set a goal to pay down that credit card debt, both for the amount and the time period. For example, I am going to pay $5,000 off the credit card debt in the next 12 months. Commit to only living off my income starting today. I will always pay cash from today onwards.
b) The second most important goal is to set a savings target. A budget can show you how much you need to set aside for emergencies and that savings nest egg.
c) The third most important goal is to determine to be debt free. This will transform your life. Work out what you need to live and see how much better your life would be if there was no money being applied to debts each month. It’s like giving yourself a pay raise.
Answer to Question #5.
It is not safe to spend all your income each month for the simple reason that life is unpredictable. If you have no savings buffer then how will you afford the bills that occur when you least expect them? Will you pay for them with your credit card? Then how will you pay that bill?
Answer to Question #6. The most common percentage recommended to keep aside from your monthly income is 20%. This is a target of course. Not everyone can manage this immediately. Any amount you put aside will be better than nothing as long as you are shooting for a target.
Answer to Question #7.
If you are struggling with paying all your bills each month, the most vital bills are listed below in order of importance:
a) Housing – rent or house payments. If you don’t pay these you may have no home
b) vehicle
c) groceries
d) power, water, gas etc.
e) credit cards
The costs of shelter, food, clothing and transportation always come ahead of paying the credit cards.
Are you now a little more understanding of this critically important part of your life? Could you do with some help? There are many agencies and websites dedicated to offering advice and tools to help you better manage your finances. Check them out today. Financial success can be yours. Don’t you deserve it?
July 28, 2008
Your Personal Finance Resolutions for 2008
It’s that time of year again – the time when people up and down the country are making resolutions for the year ahead. With so many people likely to be thinking about sorting out their personal finances in 2008, here are some top personal finance resolutions for you to consider from personal finance author and Chartered Financial Planner Martin Bamford.
Work out your budget
It still amazes me how many people I meet with who simply don’t know how much money they spend each month (and what it goes on!). Working out (and sticking to) a monthly budget is all about spending less than you earn. If you achieve this, month on month, you will be in a better financial position at the end of 2008 than you were at the start.
If you reach every pay day with an overdraft or credit card debt to clear from the previous month you are starting the new month on the back foot. Make it your personal finance resolution for 2008 to never spend as much as you earn each month. If you really want to buy something shiny and new but find yourself reaching for that credit card or store card, stop, think – do you really need it now or would you feel much happier if you bought it in a few months time with cash rather than debt?
Get out of the red
If you have short term debt (credit cards, store cards, overdrafts, etc) you will know that debt is a drag. It’s a drag on your ability to save for future objectives. It’s also an emotional drag on your attitude towards money and personal finances. Make clearing your short-term debt a priority before embarking on strategies to save for short-, medium- and long-term plans.
I still meet people with some very funny attitudes towards debt. There are people who prefer to have savings running alongside debt even when they are often getting charged much higher interest rates on the debt than they will ever receive on the savings. Whilst there is a certain comfort factor in knowing you have some savings behind you, it is counterproductive if your short-term debt is holding you back.
Don’t forget that the interest you get on your savings is taxed (10%, 20% or 40% depending on your income tax rate). When you compare your debt and savings interest rates always look at the net (after tax) interest rate you get on your savings to make a fair comparison.
Make a plan.
This ties in closely with your monthly budgeting exercise. When you are working out what you are going to spend your money on each month ensure you prioritise debt over savings. Stop taking on more short-term debt. Mark a debt-freedom day on your calendar and stick to it. Celebrate your personal debt-freedom day; it’s something to be proud of.
Look to the future
Starting a pension is likely to be a big priority for many people in 2008. We recently saw the biggest shake-up of pension rules in many years but this brought a great deal of retirement planning opportunities with it. It is now generally possible to make much larger pension contributions than under the old pre-April 2006 rules. These large pension contributions will still be able to attract tax relief at your highest rate of income tax.
Once you have made contributions to a pension plan you can choose how the money will be invested. Seek professional advice to ensure that your retirement plans are invested in a way that is in line with your attitude towards investment risk, reward and volatility. You can choose from a wide range of investment options within modern personal pensions so there is no need to take unnecessary risk that you feel uncomfortable with.
Pay less Tax
No-one enjoys paying tax but many of us fail to take the simple steps that enable us to pay less tax. Each and every year we waste an average of L132 per taxpayer because we don’t take some simple planning steps and maximise our tax allowances.
There are some very easy tax-saving strategies you can use in 2008 to pay less tax.
If you are a higher rate taxpayer and your spouse is a non-, lower- or basic-rate taxpayer then consider transferring savings into their name. If you have L20,000 in savings in a joint account where one of you is a higher rate taxpayer and the other is a non-taxpayer (assuming a 5% gross interest rate) you can save L200 a year in income tax by switching from a joint account to a savings account in your spouse’s name.
Make sure you use your Individual Savings Account (ISA) allowances for this tax year and the next tax year. You have until April to maximise contributions into an ISA for the 2007/08 tax year. Every adult in the UK can contribute up to L3,000 into a cash mini-ISA (L3,600 from 6th April 2008) and up to L4,000 into a stocks & shares mini ISA each tax-year, or up to L7,000 into a maxi ISA (L7,200 from 6th April 2008). The returns within your ISA are tax-free (with the exception of the 10% tax credit on UK dividend income which can no longer be reclaimed on UK equity income).
Review your mortgage
Now is a good time to consider reviewing your mortgage. If your mortgage is on your lender’s standard variable rate (SVR) you are likely to be able to make a reasonable monthly saving by switching to a more competitive interest rate or product. There are costs associated with re-mortgaging and it makes sense to seek impartial expert advice. This will also save you the time of trawling the high street to locate the best offers. Because mortgages are a dynamic market the rates available are subject to change on a regular basis and some deals will only be available through an independent adviser.
Sort out your financial affairs
If you don’t have a Will, get one. You can write your own Will but there are some major risks involved with this DIY approach. Getting something wrong when writing your own Will could lead to significant legal fees to sort things out after your death. Find a professional to write your Will from the Society of Trust and Estate Practitioners (www.step.org). If you die without a Will, your estate will be distributed according to laws created in 1925. It is no surprise that these laws probably do not reflect modern thinking on inheritance! Don’t risk dying ‘Intestate’.
Whilst we are on this rather morbid subject you should also think about family protection. Run through a number of scenarios. What would happen to your family financially if you were to die? What would happen if you were to suffer a serious illness? What if you suffered an accident or illness and were unable to work for a long-term? Re-run these scenarios but apply them to your spouse as well. The impact of a house person dying or contracting a serious illness can often be as serious (or more so) than if this happens to the main bread-winner.
Check out your existing arrangements to ensure that they remain competitive. The cost of life assurance has generally fallen in the past five years. There are potential savings to be made here. Again, use an independent expert to review the entire market for you and ensure that the cover you are putting in place is suitable for your circumstances and objectives. At the same time make sure that your life assurance is written in trust. Writing these policies in trust can ensure that the proceeds are paid out quickly, to the right person or people and without liability to tax.
Meet with an Independent Financial Adviser
Make 2008 the year that you carry out a comprehensive review of your personal finances and financial objectives with an impartial professional who has access to the tools and knowledge needed to improve your current and future position. Most IFA’s offer a free initial consultation with no obligation they can identify areas that they can help you with and you can grill them about their qualifications, experiences and charges.
Ask lots of questions to ensure that you have found the right IFA for you. Make sure that they hold the appropriate qualifications to deal with your situation. The entry-level qualification for a financial adviser is the Certificate in Financial Planning (also referred to as the Financial Planning Certificate). This level of qualification is really only suitable if you are only seeking basic financial advice. If the advice you require is more complex then look for an adviser who is a Chartered Financial Planner or Certified Financial Planner certificant. These are more stringent tests of knowledge and competence to provide financial advice.
Also, check that the adviser is truly independent. In June 2005 there were a number of changes to the way that the financial services profession works. An adviser can now choose to be tied, multi-tied, whole of market or independent. A whole of market adviser can offer products from every provider but they do not offer the option to pay for their advice with a fee. An Independent Financial Adviser offers a fee charging option and this can sometimes offer greater impartiality that paying for services through commission. In any case, remember that you as the client are paying for financial advice – either through product charges and commissions or an explicit fee. Ensure that you are getting value for money.
March 16, 2008
Managing Personal Finance Has Never Been Easier
Managing personal finance may not be everyone’s cup of tea, especially for those who have no experience in business and management. An accurate financial plan will ease your work and guarantee a successful completion of your financial goals. Here, on our website, we provide helpful information for an accurate finance comparison that will obviously make your work easier.
Managing personal finance may not be the easiest job. If you are one of those who manage their finances themselves, you will surely not find this activity as being the most enjoyable in the whole world. It requires a lot of time and attention, but it is indispensable to your or your family’s financial well being. You can find a helping hand here, on our website, where you have the updated information you need in order to do a realistic finance comparison.
A key component for efficient management of your personal finance is financial planning. This dynamic process requires regular monitoring and reevaluation. Otherwise, you risk missing points of evaluation and this could damage your finance control. You should keep under control this circular process by repeated verifications and intelligent manipulation. The following five steps should organize and make your planning easier.
The first step is an assessment of one’s personal financial situation. You will do it by compiling, onto a piece of paper, all the personal assets, income and outcome. You should use a simplified balance sheet for listing the values of personal assets (for instance, car, house, stocks and bank account) along with the values of liabilities (such as credit card debt, bank loan and mortgage). Moreover, you should make sure you list personal income and expenses, on a personal cash flow statement form.
The second and most enjoyable step is setting the goals. With this stage, one should formulate his or her material desires in a financial language. You can set long-term goals can such as retiring at 65 years old with a significant personal net worth. You can also make short-term plans, for example: buying a house or a car by paying a monthly mortgage for 3 years but no more than 25% of monthly income. You can also establish several goals both long and short-term, in the limit of your financial resources.
After setting the goals, you must develop an efficient plan in order to accomplish them. The plan should detail the exact actions that you need to undertake. This is the third and most difficult part of your personal finance management as it asks for thorough research for the most convenient loan, investment or mortgage deals. An easy way to approach this matter is by using the services we offer here, on our site, where you will find thousands of updated offers available for adequate finance comparison. In this manner, you can avoid or diminish planned financial sacrifices such as reducing expenses or increasing your employment income.
Execution of one’s personal financial plan, monitoring and reassessment are the fourth and, correspondingly, fifth steps in efficient personal finance management. Discipline and perseverance are necessary for accomplishing this part of the plan. As time passes, conscious fulfillment of every action included in the financial plan must associate with continuous monitoring and reassessment until the fulfillment of the financial plan.
Managing your personal finance has never been easier. With access to all the pieces of information you need, you can do a realistic finance comparison and you can develop a more efficient personal financial plan. Here, we offer you the possibility to compare thousands of offers on credit card, loans, insurance and investment deals in UK and not only.
Here, on our website, you will find accurate information on all credit card, loans, insurance and investment deals you can use for an efficient finance comparison. Personal finance management has never been so accessible.
October 25, 2007
Your Personal Finance, How to Consolidate Debt
Have you ever had some one explain to you how they pay for everything on there credit cards and then pay the bill completely each month before the interest is accrued. They might even confess to doing this on several different cards to get different incentives. So many credit cards give you incentives for using them as much as possible. Who doesn’t want gift certificates to theme parks or restaurants? This is not for everyone. Most of us are just not disciplined enough to use credit cards to our advantage. Unfortunately this lesson is learned the hard way with a lot of credit card debt. Sometimes we get hit with more emergencies than we can handle so we stop paying those credit cards with the fun incentives and the ones without. This is when we really start to worry about personal finance how to consolidate debt.
Stop the Harassing Calls
If you have stopped paying your credit card bills or are over limit you will start to get phone calls from the credit card companies. It is true you do owe them money and they have every right to expect it paid back, but the calls are very distressing and can make you dread the phone ringing. So it is time to stop those calls, by getting a credit card consolidating loan.
How the Right Loan Will Help
A good credit card debt consolidating loan will improve your life by letting you pay only one bill every month and should insure that in the end you will pay less in fees and interest. Make sure that you get a loan with the best possible interest rate, which means talking to allot of credit card debt consolidators. So if you want to get your personal finances back then learn how to consolidate debt.
