Posted tagged ‘personal finance’

Begin 2011 with a Personal Budget

January 7, 2011

A personal budget is absolutely critical for anyone that is committed to taking control of their personal finances.  Why? Because a budget provides us the input we need to manage our income, track our expenses, improve our cash flow to payoff debt and start a savings plan.  A personal budget provides us a tool to work on achieving our financial goals.   It is the first step in taking control of our personal finances.

Therefore, the start of a new year is the perfect time to commit to creating and using a personal budget.   This does not have to be an overwhelming task.  There are countless free personal budget resources and free personal budget software resources online to help you get started.  Don’t get caught up in selecting the perfect budget format.  It is not that important.  What is important is capturing all of your income and expenses.  Pick something that is simple to use.  We use a simple budget worksheet in Excel. Here is a link to a Microsoft personal budget template that has over 3.4 million downloads.  http://bit.ly/gatAnx

It is also very important when creating a personal budget to capture all of your miscellaneous expenses that occur throughout the month.  The only way to accurately capture all of these expenses is to save every receipt for every dollar you spent for a minimum of 30 days.  This information  is essential to preparing an accurate monthly budget.  It will also provide you some great insights into where all of your money goes on a monthly basis.

Once you have completed an accurate monthly budget and have captured all of your expenses you can start looking for creative ways to reduce or eliminate unnecessary expenses and save money.  The monthly savings you create can be used to start paying off consumer debt and funding your savings goals.   

A personal budget is the first step in taking control of our personal finances, controlling our spending and achieving our financial goals for our lives.    Start today and change your life and finances forever.  

 I hope you have benefited from this post on Financial Literacy.  If so, leave a comment.  In addition, please forward this to anyone you think might benefit from this short financial literacy lesson. 

You can follow Fiscal Literacy on Twitter and Facebook

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Top 10 Financial Resolutions for 2011

January 4, 2011

The start of a New Year is always an opportunity for each of us to reflect on our lives, establish new goals and renew our commitment to improving our lives.   One of the most important areas of our lives is our personal finances.  Our personal finances impact every area of our lives.  Therefore, it is essential that we take control of our personal finances.  

Here are some ideas and proven financial concepts that can dramatically impact your personal life and finances.   I hope you will take the time to read through them.   More importantly, I hope you will take the time to implement some of these ideas into your own personal finances.  

10.   Commit Time Everyday to Improving Your Financial Literacy.  How much time will you spend on the internet and watching TV today, this week or this year?  How much time have you invested today, this week or this year improving your financial literacy?   What is more important?   There are countless free resources available on the subject of personal finances and improving your financial literacy.   Remember, we must take full responsibility for our own financial lives.  Simplify this task by working on one subject at a time.  Pick something basic like home budgets, etc. and get started today. Work on this with your spouse, family, friends etc.  Together you will learn more and encourage one another. 

9.    Simplify Your Life – Our worlds are becoming more complex with every passing day.  What is consuming your life, your money and your attention and distracting you from the real things in life that are truly important in your life?  What can you eliminate or give away that will cut your expenses, free up your mind and simplify your life? 

8.   Protect Your Credit  –  Your credit scores are a reflection of how you have handled your credit and the repayment of your debt.  Your credit score is also used by lenders and other institutions to evaluate your risk in a variety of areas.   Your credit score may be used in conjunction with securing employment, renting housing, obtaining auto insurance, etc.   Therefore, it is essential that you do everything possible to protect your credit score.  Since your credit score is a reflection of you it is essential that you take the necessary steps to prevent and protect yourself from identity theft.   

7.   Asset Protection – It is absolutely critical that you have a will or a trust to protect their assets and provide for your family.  You do not have to be wealthy in order to have a will or a trust.  If you own a home, car, IRA / retirement accounts, insurance policies, etc you need a will or a trust.  This is absolutely critical if you have minor children.   A will or a trust allows you to decide who will be the guardian for your kids, who will receive your assets, etc.  Do not risk leaving these critical decisions to be decided by a court appointed representative in probate. 

6.   Create Clear, Concise Financial Goals – This is one of the most important steps in achieving financial freedom.  It is our clearly stated goals that we have committed to writing that will compel us to take action to achieve financial freedom.  Without clearly stated goals we will abandon our financial commitments for the future and only think of our immediate wants and needs.  We cannot afford to waste our precious time, money and resources consuming our future by our lifestyle choices today.  Therefore, it is absolutely essential that you take some time and write out your vision and goals for your finances and life.   You want goals that will inspire you.  Goals that motivate you to achieve financial freedom and live the life you have always imagined living.  For more information on this subject see my previous post.

5.   Pay Yourself  First – This is not a suggestion, but a key fundamental rule for anyone that has achieved financial freedom.   Have you ever stopped to ask consider how hard you work for your money?  Who are you really working for the bank, the mortgage company, the credit card company?  Stop making someone else rich!  You must always pay yourself first.   Start saving today and learn how to put your money to work for you.

4.   Establish Cash Cushion   A cash cushion is an emergency fund that is created to cover your living expenses for 3-6 months.  It is also used to cover unforeseen expenses, repairs, etc. that come up in everyday life.  The purpose of a cash cushion is to keep you from incurring expenses on your credit card when emergencies arise.  A cash cushion will also provide you peace of mind that you have 3-6 months living expenses in the bank at any time.   I encourage you today to set up a separate bank account and start funding your cash cushion account.

3.   Stop Consuming Your Future – Control Your Spending   When was the last time you reconciled every dollar you spent for the last 30 days?   When was the last time you looked at every charge on your credit card statement?   I challenge you to track every expense for a minimum of 30 days to see where all the money goes every month.   Use this exercise to look for ways to reduce unnecessary expenses, save money, etc.  We live in a consumer driven world.  Our spending habits are consuming our future.  We must take control of our spending habits to start moving towards achieving financial freedom.

2.   Become Debt Free – Debt is consuming the lives of millions of people.   Debt is what keeps us from pursuing our hopes, goals and dreams for our lives.  Debt robs us of our future.  The only way we can take control of our financial lives and our future is by becoming debt free and never going back into debt.  Debt free living must become your passion and your unrelenting goal.  Debt free living can be a reality for anyone that is willing to commit to the goal.  What if you were debt free?  How would it change your life?  What could you do or pursue if you were debt free?

1.   Create & Live Within A Budget    A budget is absolutely critical for anyone that is committed to achieving financial freedom in their lives.  A budget provides us the input we need to manage our income and our expenses.  A budget provides us accountability. A budget provides us a tool to work on achieving our financial goals.  A budget will dramatically impact your personal finances.   It will provide you the roadmap to achieve your financial goals.

 I hope you have benefited from this post on Financial Literacy.  If so, leave a comment.  In addition, please forward this to anyone you think might benefit from this short financial literacy lesson. 

You can follow Fiscal Literacy on Twitter and Facebook.

Fiscal Literacy Friday – Commit to Improving Your Financial Literacy

December 17, 2010

Nothing is more important than each of us taking control of our personal finances.   We cannot rely on someone else to make our decisions for us.   We need to accept the responsibility for our actions and the outcomes of our lives.    I believe this is great news for all of us.  

No one has more vested interest in the outcome of our lives than we do.   This does not mean we do not seek out experts for assistance, help and guidance with our personal finances.    Financial experts play a very valuable role in helping us in a variety of areas.   I have been an invaluable asset and provided expert advice to thousands of clients.

However,  each of us should be committed to increasing our knowledge in a variety of areas relating to our personal finances, debt, assets, real estate, mortgages, investments and our retirement goals, etc.   Our increased financial knowledge will help educate and empower us to make informed financial decisions  that impact every area of our lives.  Our increased financial literacy will help us understand the recommendations of the experts that we seek out for additional advice and input with our personal finances.

Many people never work on improving their financial literacy because they feel that they do not have the knowledge or education to learn or apply financial principles to their lives.  Therefore, they become overwhelmed and never get started.   

However, understanding financial literacy at its simplest form is relatively easy.   We need to spend less and save more!   This is a very simple statement.  However, it is difficult to implement because of the lifestyle and spending choices we make everyday.  We never stop to consider how each purchase or swipe of the credit card is consuming our future.     Therefore, each of us needs to start today to take control of our personal finances with simple things like setting a limit on our spending, saving all our receipts to track our expenses for 30 days, limiting the use of our credit cards and setting aside money very month to fund a cash cushion, etc. 

There are countless resources on the internet from government agencies, non-profits & companies that can help get you started on improving your financial literacy and taking control of your personal finances.    I hope you will get started today.

Here is my closing thought and one simple question.   How much time did you spend on the internet and watching TV today, this week or this year?  How much time have you invested today, this week or this year improving your financial literacy?   What is more important?  

Remember, we must take full responsibility for our own financial lives.  Simplify this task by working on one subject at a time.  Pick something basic like home budgets, etc. and get started today. Work on this with your spouse, family, friends etc.  Together you will learn more and encourage one another. 

I hope you have benefited from this post on Financial Literacy.  If so, leave a comment.  In addition, please forward this to anyone you think might benefit from this short financial literacy lesson. 

You can follow Fiscal Literacy on Twitter and Facebook.

Fiscal Literacy Friday – Concept of Generosity

December 10, 2010

Generosity should be a component of building and applying our knowledge of financial literacy to our own lives.  Why is generosity such an important component of financial literacy?  Because it takes the focus off of our own selfish desires for our lives.  It provides us with a greater purpose for our money that far exceeds our own selfish desires. 

“We make a living by what we get, we make a life by what we give” Duane Hulse

We all need to be reminded that our lives will not be remembered for how much we earned or how hard we worked.  Our lives will be remembered for how we touched and impacted the lives of others. 

  “All of us are born for a reason, but all of us don’t discover why.  Success in life has nothing to do with what you gain in life or accomplish for yourself. It’s what you do for others.” Danny Thomas

Therefore, each of us should look for more meaningful ways to use our money, time and talents to impact others less fortunate than ourselves. 

We don’t have to wait to become millionaires to start practicing the concept of generosity.  We can start today. There is always someone less fortunate than us and we can impact their lives today.

Maybe this holiday season each of us should be asking ourselves this question: 

What is the greatest gift I can give this holiday season?  It is the gift of my time & resources to help others less fortunate than myself.

Here are some questions that may help you get started:

  •  Where can I make a difference this holiday season?
  • Who or what is on my heart? 
  • How can I use my unique gifts and abilities to touch and impact the lives of others less fortunate?  
  • Where can I and or my family get involved? 
  • Where is an unmet need in my community or in the world that I feel passionate about getting involved in?
  • What random acts of kindness can I anonymously perform today? 

 “You have not lived a perfect day, even though you have earned your money, unless you have done something for someone else who will never be able to repay you”  Ruth Smeltzer

 Ralph Waldo Emerson said “It is one of the most beautiful compensations of this life that no man can sincerely try to help another without helping himself”

Therefore, I hope you will use this holiday season to find your purpose and passion in life for helping others.  This new found purpose for you and your money may be the first step towards getting freed up financially.  It may provide the motivation to reduce your expenses, become debt free, set a cap on your lifestyle and use your resources to make a lasting difference in your community and our world.

I hope you have benefited from this post on Financial Literacy.  If so, leave a comment.  In addition, please forward this to anyone you think might benefit from this short lesson on the 10 Keys to Financial Freedom.  

You can follow Fiscal Literacy on Twitter and Facebook.

Fiscal Literacy Friday – Financial Literacy Lessons Principle of the Piggy Bank

November 12, 2010

 How many of you had a piggy bank when you were growing up?  I had one of the classic ceramic piggy banks that you had to break at some point to get out the money.  I always remember how excited I got every time I dropped coins into  the piggy bank through the small slot of top of the piggy bank.   I would pick up the piggy bank to feel the weight of all of the coins and shake it to hear all of my money in the bank.  It was an incredible day when I got to break open my piggy bank and see all  the coins spill out on the table.  My eyes lit up with amazement at all of the money that had accumulated.  I could not wait to take my hard earned money that I had saved and spend it.   It was an incredible feeling to walk into the store with all of my money and pay cash to buy that cool toy I had been dreaming about for months. 

 Now that I am an adult, I have had a change jar for years where I deposit my loose change at the end of every day.   I am still amazed at how fast and how much money accumulates in my modern day piggy bank.   In today’s high tech world, I take my change to the coin counter at the grocery store.   I pour in the coins and watch the total build up until all of my coins are counted.  I am sure you have a change jar or spot where you deposit your change every day.  

 These memories from my childhood got me thinking about The Principles of the Piggy Bank.   What can we learn from our childhood lessons on money that we can apply to our financial lives today?   Here are some key points that can dramatically impact your personal finances.

 Set-up a Piggy Bank Account – The piggy bank works for kids because it is lockable. It cannot be easily accessed.  Therefore, the money is saved and not spent.   It is essential that you set up a savings account that is separate from your normal bank account.   Do not get a debit card / ATM card or any other way to easily access your piggy bank account.  

 How bad do you want it? – Do you remember how obsessed you were over the latest toy as a kid?  That obsession was your motivation to put as many coins as possible into your piggy bank so you could save up the money you needed as fast as possible.  You need to rekindle that same motivation today for saving money, reducing expenses, paying off debt and achieving your financial goals.  Crystal clear goals will inspire you to take action and remain committed to achieving your goals. 

Change (Coins) Happens. –  Everyday we accumulate change from all of our cash purchases.    We typically never think about spending our change because it is too small to spend.  Once we set our change aside we never think about spending it.  We need to apply this principle to our monthly income.  We need to set aside a portion of our monthly income every month in our piggy bank account.  We need to look for ways to save money each and every day so we can take the dollars we save each day and deposit them into our piggy bank account.    The power of small financial changes can dramatically impact our personal finances.

  Time – As kids we did not fill our piggy bank over night.   We worked hard, saved a portion of our allowance, etc. to fill our piggy banks as fast as possible.  We need to understand that it is going to take some time to fill our piggy bank accounts.   The key to remaining committed is the same today as it was when we were kids.   We need to stay focused on the prize or the goal we set for ourselves just like we remained committed and focused on filling our piggy banks as kids.      

 Compound Interest A Grown-Ups Secret Weapon – As kids we saved our coins in a piggy bank.  We never earned one penny of interest.  We had to save every penny.  However, as grown-ups we can set up our piggy bank account using a variety of savings and investment accounts that earn interest.  It is the power compound interest than can dramatically multiply the results of our piggy bank account over time.  I will devote a separate post to explaining and illustrating the compound interest.  It is a simple financial concept that can have a dramatic impact in our lives.   There is a money quote that states “Those who understand interest earn it, and those who don’t understand interest pay it. 

Cash is King –  One of the most important lessons to be learned from the Principle of the Piggy Bank is the discipline of saving and paying cash as opposed to using a credit card or getting a loan.  This single point has the ability to transform your life and your finances if you are willing to commit to only paying cash and living debt free.   Millions of Americans have consumed their futures as a result of their spending habits.  However, it is never too late to take control of our personal finances.  It may be as simple as implementing our childhood lessons we learned from our piggy bank into our adult lives.  It may also be an excellent opportunity to use a piggy bank to teach our children the principles of the piggy bank. Simple lessons that can have a profound impact on our lives.

I hope you have benefited from this post on Financial Literacy.  If so, leave a comment.  In addition, please forward this to anyone you think might benefit from this short financial literacy lesson. 

You can follow Fiscal Literacy on Twitter and Facebook. 

 

Fiscal Literacy Friday – Financial Literacy Lessons 10 Keys to Financial Freedom

October 15, 2010

 

The financial crisis has impacted the lives of millions of people. Therefore, there has never been a more important time than now to educate and empower yourself to take control of your own personal finances.   Here are some ideas and proven financial concepts that can dramatically impact your personal life and finances.   I hope you will take the time to read through them.   More importantly, I hope you will take the time to implement some of these ideas into your own personal finances.  

 

1.  Our Choices, Have Consequences – We must accept full responsibility for our own financial futures.  We must understand that our financial decisions and choices today will impact our lives tomorrow.  Therefore, we must evaluate all of our financial choices, expenses, purchases within the context of our overall long term financial goals and objectives.      

2.  Stop Consuming Your Future – Control Your Spending   When was the last time you reconciled every dollar you spent for the last 30 days?   When was the last time you looked at every charge on your credit card statement?   I challenge you to track every expense for a minimum of 30 days to see where all the money goes every month.   Use this exercise to look for ways to reduce unnecessary expenses, save money, etc.  We live in a consumer driven world.  Our spending habits are consuming our future.  We must take control of our spending habits to start moving towards achieving financial freedom.  

 3.  Create & Live Within A Budget    A budget is absolutely critical for anyone that is committed to achieving financial freedom in their lives.  A budget provides us the input we need to manage our income and our expenses.  A budget provides us accountability. A budget provides us a tool to work on achieving our financial goals.  A budget will dramatically impact your personal finances.   It will provide you the roadmap to achieve your financial goals. 

4.  Pay Yourself First – This is not a suggestion, but a key fundamental rule for anyone that has achieved financial freedom.   Have you ever stopped to ask consider how hard you work for your money?  Who are you really working for the bank, the mortgage company, the credit card company?  Stop making someone else rich!  You must always pay yourself first.   Start saving today and learn how to put your money to work for you. 

 5.  Become Debt Free – Debt is consuming the lives of millions of people.   Debt is what keeps us from pursuing our hopes, goals and dreams for our lives.  Debt robs us of our future.  The only way we can take control of our financial lives and our future is by becoming debt free and never going back into debt.  Debt free living must become your passion and your unrelenting goal.  Debt free living can be a reality for anyone that is willing to commit to the goal.  What if you were debt free?  How would it change your life?  What could you do or pursue if you were debt free?

 6.  Establish Cash Cushion   A cash cushion is an emergency fund that is created to cover your living expenses for 3-6 months.  It is also used to cover unforeseen expenses, repairs, etc. that come up in everyday life.  The purpose of a cash cushion is to keep you from incurring expenses on your credit card when emergencies arise.  A cash cushion will also provide you peace of mind that you have 3-6 months living expenses in the bank at any time.   I encourage you today to set up a separate bank account and start funding your cash cushion account.      

 7.  Commit Time Everyday to Improving Your Financial Literacy.  How much time will you spend on the internet and watching TV today, this week or this year?  How much time have you invested today, this week or this year improving your financial literacy?   What is more important?   There are countless free resources available on the subject of Financial Literacy.   Remember, we must take full responsibility for our own financial lives.  Simplify this task by working on one subject at a time.  Pick something basic like home budgets, etc. and get started today. Work on this with your spouse, family, friends etc.  Together you will learn more and encourage one another. 

 8.  Create Clear, Concise Financial Goals – This is one of the most important steps in achieving financial freedom.  It is our clearly stated goals that we have committed to writing that will compel us to take action to achieve financial freedom.  Without clearly stated goals we will abandon our financial commitments for the future and only think of our immediate wants and needs.  We cannot afford to waste our precious time, money and resources consuming our future by our lifestyle choices today.  Therefore, it is absolutely essential that you take some time and write out your vision and goals for your finances and life.   You want goals that will inspire you.  Goals that motivate you to achieve financial freedom and live the life you have always imagined living.  For more information on this subject see my previous post.  

 9.   Simplify Your Life – Our worlds are becoming more complex with every passing day.  What is consuming your life, your money and your attention and distracting you from the real things in life that are truly important in your life?  What can you eliminate or give away that will cut your expenses, free up your mind and simplify your life?    

 10.   Practice Generosity – Our lives will not be remembered for how much we earned or how hard we worked.  Our lives will be remembered for how we touched and impacted the lives of others.  Therefore, we should look for more meaningful ways to use our money, time and talents to impact others less fortunate than us.  Generosity creates wealth when we take the focus off our own selfish desires.  It provides us a bigger meaning for our money.  It provides us a purpose that empowers us to take action.   We don’t have to wait to become millionaires to start practicing the concept of generosity.  We can start today. There is always someone less fortunate that us and we can impact their lives.

I hope you have benefited from this post on Financial Literacy.  If so, leave a comment.  In addition, please forward this to anyone you think might benefit from this short lesson on the 10 Keys to Financial Freedom.  

You can follow Fiscal Literacy on Twitter and Facebook.