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4 Smart Money Tips For The Holiday Season

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With Thanksgiving break coming up, budgeting and planning your finances becomes vital. Here are some quick tips to help you make good financial decisions this festive season.

In order to avoid overspending this festive season, the best decision we can make is to plan ahead and make a budget. By doing this, we will have control of our finances. We have to:

  • Decide and understand how much money we want to spend this break
  • Make a list of all our expenses this season e.g fuel, entertainment
  • Make sure we know where the money is coming from
  • Make a realistic budget to efficiently track our spending
  • Provide for miscellaneous expenses

The way we create our budget is up to us. But I want us to create this budget before the season starts and and make sure we revisit it to know we are on track.

Shop Strategically 

During this season, we should try as much as possible to avoid impulse buying. I know its a festive season and it might be quite difficult, but we should try to develop that self control and avoid regrets.

MAKE SHOPPING LISTS!

There are lots of sales going in festive seasons. Take advantage of those as well as the deals and discounts on the various online platforms, shopping sites and even the offline shops (market).

Avoid Debt and Regrets

This season, we need to avoid debt as much as possible. I understand we all want to have as much fun as there is, but we should not borrow to do so.

We have to constantly remind ourselves that these seasons come and go, but debts are always hard to pay back. Manage what you have this period.

Make it enjoyable in your own little way and spend it with loved ones.

Maintain Your Savings

It is very easy to get caught up in a lot of spending this season. And its hard to maintain our savings option since there’s always the pressure to go all out with the spending.

I want us to maintain whatever saving option we’ve been into and also try to save during this period.

There is nothing like over saving when you have a target to reach.

Remember: Saving is worth it, it’s just that the end result feels so far away.

This article originally appeared on Piggybank.ng. Follow them on Facebook , Twitter , and Instagram

Personal Finance

Securing Credit? Importance Of A Personal Financial Statement

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If you, as an individual, are a salaried employee but now wish to start a business, then your personal financial statement will be the key to avail credit. You may not be entitled for a loan for business, as the eligibility criteria here underlines history and financial position of an existing business. Since, the business in question would be a start-up; you will have to depend on personal finances for the time being, as a means to fund the venture. It is however recommended to keep personal and business finances separate, in the long-run.

When providing monetary support to a new business, it is important for the fund-provider to understand your financial position, which is well-represented by your personal finance statement.

What Does a Personal Financial Statement Contain?

A personal financial statement reflects your financial health. It is a spreadsheet or a document that gives a breakdown of all assets, liabilities, and fiscal details.

  • This document also contains general information such as your name, address, etc.
  • The assets are detailed on the right side, while the liabilities are listed at the left side of the sheet.
  • Liabilities include credit card balance, a personal loan, mortgage, unpaid tax, and more.
  • Assets include amount of balance in bank accounts, trading accounts, retirement account balances, and similar information.
  • If you are married, then you can apply for a joint personal financial statement, which shows details of all debt incurred and owned assets, of both the involved persons.

What is excluded from a Personal Balance Sheet?

There are a few things, which personal financial statements do not show.

  • Business-related liabilities and assets do not surface in a personal financial statement.
  • This spreadsheet also excludes leases and rentals since the rented or leased assets are not under your ownership.
  • A personal balance sheet will exclude personal property such as household goods, furniture, and more, which cannot be sold off to repay a loan.
  • However, property that has significant value such as antiques, jewelry, etc, can be included, if the asset value of these items are verified for appraisal by a certified agency.

Analysis of Net Worth, Possibility of Availing Credit, and More

A personal financial statement thus basically shows your net worth, which is assets minus liabilities, and it holds a great value, when it comes to seeking loans.

  • Net worth translates as what you will have in cash if you sell off all the self-owned assets to repay debts.
  • If the financial statement shows debts as greater than assets, then your net worth will is a negative.
  • For instance, if the sum of your utility and credit bills, auto loan bills, mortgage bills, etc. sum up to be more than the cash of all the investments and real estate property you own, then your net worth is negative.
  • If the net worth shows as negative, you can file for bankruptcy protection to resolve some of the debts. It may prevent creditors from collecting outstanding debt by posing any financial threat or stress on you.
  • However, certain liabilities cannot be discharged, and these include alimony, taxes, child support, and more.

Thus, personal financial statements have a great impact, when it comes to securing funds to run a new business. The document allows banks/NBFCs to assess your financial situation so that they can take an informed credit decision. If your financial health is not up to the expectation, you may be given an option to provide a personal guarantee, pledge an asset, or co-apply for the loan.

How to Fund Your Start-up Business?

You can either apply for a property loan or a soft loan to arrange capital for the venture, or opt for a small cash loan or a short-term loan, until the business attains enough vintage and financial history, to shift to a business loan suited for only business purposes. Thus, by comparing personal financial statements over a time, you can track your financial health and monitor it closely to improve the same. You should keep a check on this document regularly, especially if you intend to avail credit for business needs.

What is a Business Financial Statement?

A financial statement of your company will list liabilities and assets specific to the business alone. It will depict the net worth of the company, and leave out your personal financial details. The financial statements of an organization, include income statements, profit and loss statements, proof of revenue generation over a specific time period, expenses and debts incurred, cash flow statements (indicated the amount of cash the business has), shareholder equity statements (indicate the performance of the company’s stock).

Thus, a personal and business finance statement are different from each other in lot many ways, though they serve the same purpose, which is to denote the financial position of an entity, be it an individual or a company. An organization’s financial statement comes in use when applying for a traditional business loan, which is the best way to finance your start-up initiative, after it attains at least 3-years vintage.

If you wish to secure a loan for your start-up business, do not hesitate to take support of your personal finance for the moment. And to avail monetary support via this route, you need to keep a regular check on your personal financial statement.

This article originally appeared on ValueWalk. Follow ValueWalk on Twitter, Instagram and Facebook.

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Personal Finance

Video: A “How To” On Being Financially Responsible

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Let’s start the new year right by following these steps to being financially responsible and clinching the formula to build wealth.
 
Some of the philosophies presented in this video come from Robert Kiyosaki, the author of Rich Dad Poor Dad Why do they not teach this in schools?

 

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Personal Finance

How To Invest Your Way To Your First $1M (In 8 Steps)

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While being a millionaire most certainly offers a sense of privilege and extravagance, it also provides comfort.

Despite the idea that many of life’s luxuries can cost you your bank (plus a large chunk of your future earnings), achieving comfortable wealth is possible—if you’ve got a solid investment plan you’ll follow religiously.

Here are eight investment strategies to work your way to your first million dollars.

1. Say No To Fees (Of Any Sort!)

Investing comes packed with hidden and some obvious fees – broker fees, distributor fees, exit and entry fees, maintenance fees, and a string of other service-based fees. If you can manage your own investments and money, you can save hundreds of thousands in fees over the lifetime of your investment.

2.  Don’t Try To Time The Market

This can be one of the biggest blunders one can make—simply because it’s impossible, speculative and you’re gambling with your savings. While there are indicators that show market trends, this does not promise that your investment will most certainly move up or down.

3. Think Long Term And Diversify

If you put all your investments into one asset class, your investment will tank the minute the asset class goes into free fall. How do you beat this? Plan and diversify your investment – it could be debt, treasury bills, equity, real estate, startups, business ideas – anything, as long as you think long-term. This can pay off in the long run.

4. Think Like An Owner

When you buy your stocks or make your investments, think and act like it’s yours – you’ll be doubly careful to make the right checks and invest smart. When you invest in solid, robust companies with this in mind, the returns would also be equally strong. Good companies can pay you high dividends that can up your total income.

5. Invest In Yourself First

Be it education or investing for your retirement, put yourself first and then try to budget for the other frills in life.

6. Borrow If You Can, Don’t Buy

With a growing shared economy, you now have plenty to choose from – co-working spaces, ride-hailing and ride-sharing services, shared rentals and accommodation, and the list goes on. Here’s where you can really cut costs – be it while running your business or as a regular looking to channel the savings elsewhere.

7. Set Goals (And Stick To Them)

Make sure you start saving as early as possible and invest it – even a dollar can compound over time. As time goes, set bigger goals and get excited about them! Once bonuses and income increases come your way, bump up your investments – it can soon touch a quarter of a million.

8. Max Out Early

Your 401K can be one of your biggest retirement funds and maxing out your annual contribution by the end of June can be a great way to boost your retirement savings. How does this help? It gives your money an additional six months to compound.

 

 

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