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Your Personal Finances in a Downturn

11 Sep

From pensions to mortgages and savings to insurance – difficult economic times impacts on every aspect of personal finances. Now, more than ever is the time to keep a close eye on your money and get the best possible advice.

Here are just a few of the points you should be considering:

Your Mortgage

If you have an existing mortgage, the most obvious change that you will have noticed is the rapid fall in interest rates. As the base rate falls, these changes can have a dramatic impact on the amount that you pay. If you have a tracker mortgage, then this is great news as your monthly payments will be falling. If you are paying a tracker mortgage then the option of overpaying your mortgage is worth considering – saving yourself thousands in interest and protecting the equity in your home as house prices continue to fall.

If you have a standard variable rate mortgage, then chances are you will not have seen such a huge change in your monthly mortgage payments as most banks have not passed on the entire fall in interest rates. If you have a fixed rate mortgage deal then you’re out of luck.

If by chance you are looking for a mortgage, or a remortgage, then it’s a good idea to take professional advice as to what type might be the most suitable for you. As interest rates can’t really go much lower, a fixed rate might be a sound idea. Of course, the real problem at the moment is getting a mortgage to begin with. As the banks are much more hesitant to lend, having access to the whole of the market through an independent financial adviser is key.

Your Pension

Pension funds have been hit by falls in the stock markets – affecting the amount of money that you will have in retirement. Depending on how far away from retirement you are, you might consider moving your pension fund or investing in other kinds of investments. Again, professional advice and sound retirement planning is key.

Your Savings and Investments

If you are a saver rather than a borrower, falling interest rates are obviously bad news. It may be worth looking at alternatives to simple savings accounts as a way of maintaining the value of your savings. Investments in gilts, bonds or even stocks and shares could potentially provide you with better returns – although again, your individual circumstances will have a big part to play.

It is also important that you make the most of any ISA allowances you may have, as even though returns may be low, there’s no reason to pay more tax than you have to.

ASU Insurance

Hard economic times can often lead to unexpected company closures or redundancies. Accident, sickness and unemployment insurance (ASU cover) can help ensure that the bills still get paid even if you are made redundant. It’s certainly something worth considering.

Whatever your own personal situation, the more challenging the economy becomes the more attention you need to be paying to your personal finances. You cannot afford to sit back and assume that your pension fund is on track or that your investment ISA is giving you the best possible returns. However, provided you get the best advice and have access to the whole of the market, you can make simple changes to ensure that your personal finances weather this economic storm.

Gareth Flanagan is a financial adviser with Principle First Financial Services, a firm of Chartered Financial Planners in the UK. He specialises in financial planning and financial advice.

 
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Long Term Personal Financing Needs

10 Sep

Many events occur during life that causes long term personal financing needs to be accessed. People will typically require a method to pay bills each month and the personal financing options available might be that a family establishes a checking and savings account with a land-based bank or online banking institution. With generous interest rates on savings, a family can keep enough money on hand to deal with many long-term personal financing needs. Short-term loans would be one option, but many families prefer to use the money in savings for items purchased out of necessity.


Some long-term personal financing needs could become complicated if a family has not planned for the time when funds are needed. For families with several children at home, the long-term personal financing needs for college could become a nightmare. With the use of college planning guides, however, parents can ensure that college tuition is available for every child. Other financial planning tools will ensure that college funds are available if the parents are no longer living. Financial planning for long term expenses might include insurance policies that provide monthly income while children are in school and for use later in life.


Home mortgage loans can be obtained by credit worthy individuals and this purchase will create many long-term personal financing needs. Money can be set aside in various investment accounts to pay for property taxes each year and the financing costs of a home mortgage loan will provide long-term tax benefits for homeowners. Home mortgage loans can be financed for 15 or 30 years and during this time, many repairs or improvements will need to be made to protect the investment values of the home. Homeowner’s insurance will offer investment protection as well.


Homeowners can control the costs of long-term personal financing needs by obtaining adequate insurance coverage. Through sound investment advice obtain through a financial management specialist at a local bank or an investment firm, the homeowner might select varying amounts on personal liability insurance, and the coverage expected for property damage due to storms and bad weather occurrences such as tornados, hurricanes and hail. These long term personal financing needs can be adjusted as life changes occur and stopped when the home is sold.


Families will require other types of insurance over the years to take care of other long-term personal financing needs. Many families will obtain medical insurance to reduce the out-of-pocket costs for office visits and inoculations for every child. The parents began dealing with the medical costs needed for personal financing by obtaining a medical rider that provided maternity insurance through the employer’s medical benefits. This type of insurance coverage would protect the family from great loss if long term hospital care would be needed and provide families with full service medical treatment from a medical provider that they selected.


Even the expenses occurred after death could be identified and the long term personal financing needs might require the purchase of a family burial plot at a nearby cemetery. Parents can take care of all long-term personal financing needs and leave loved ones with a legacy that is secure and free of debt and other payment responsibilities. Long-term life insurance policies can identify the parent’s last wishes and take care of all burial decisions.

 
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New Rules for Personal Finance, Especially for Older Investors

09 Sep

For many people, that’s as far as their knowledge of asset allocation goes, but in today’s market, that’s not far enough. This begs the question, “What does it mean to be diversified?” It used to mean that you let your financial adviser pick out some growth funds, some income funds, and (if you were bold) a sector fund. The rest was kept in bonds. Individual stocks were frowned upon as posing too much risk.

Now we know that many stocks chosen to provide mutual funds’ stellar performances were risky, but somehow no one noticed. In hindsight we’ve learned that the returns on those trusty funds were no better than the Wall Street companies who were fabricating puffed up returns using artificial financial “tools.” And we thought they were safe. Oops.

John C. Bogle of Vanguard still stands by his products, and rightly so. Vanguard Mutual Funds were some of the best for over 30 years. He still holds by the bond vs stocks rule-of-thumb, but his approach probably won’t right the destruction wreaked on America’s retirement accounts. (Like mine for one!)  And the steep curves of the S &P are still making most investors nervous about how to plan their personal finances in the future

For years retirement planning was the result of mapping out a financial plan of how much you would need to live on once you’ve retired, and then figuring out how to pay for it. A combination of social security, savings, IRAs, or other financial investments once added up to a fairly predictable equation. Unfortunately, it’s been disrupted by the unexpected disclosure that our economy is teetering on disaster. Market globalization is moving the power of equity to those countries that have developing economies and the best-educated students. Hmmm. What are we to do?

First, if you can’t beat ‘em, join ‘em. Investing in foreign stocks may seem very un-American, but that’s where the growth is.

Second, think differently about diversification. Do you own real estate? Foreclosures make attractive investments. Do you own precious metals? Are you aware of the new types of equities that are trading on the stock market? Do you take time to learn about global economic trends and how that might help to enhance your retirement goals in the next 5-10 years?

A year ago, I took a look at my personal finances and realized my investments were hardly diversified. My financial adviser had done well when the market went up. Then it bombed and so did all if the mutual funds in my account. I decided to take back control with the help of information provided through Wealth Masters International (a company that helps people to get their personal finances back on track and provides comprehensive knowledge of global trends for asset decision-making). Since last July 2008 I’ve been allocating my assets differently and seeing real results. I’ve also been taking WMI’s recommendations. I’ve done my own financial research, and put together a diversified group of stocks and EFT’s in my portfolio. Again, with some knowledge, the choices are more obvious than you’d think.

So even though there are new rules when it comes to investing, if you keep an eye on diversification and global trends, you’ll be putting the odds in your favor.

Betsy Shulman is a New York City based artist and dedicated network marketer who believes that a person’s dreams are their most important asset. What she loves most about owning a business is helping others make their dreams come true using WMI’s financial education and lifestyle products. Their revolutionary business model and marketing system plus their world-class investment opportunities are the perfect safety net during this economic downturn. http://www.wealthsystemnetwork.com/?site=VDavidA&t=ezine

To leverage your time and income on the Internet you need a marketing system that monetizes your leads while training you for online success. That’s why Betsy uses a system created by Top Earners at WMI that works for any online business and is available through Carbon Copy Pro. www.wealthsystemnetwork.com/?site=Fire&t=ezine

 
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Personal Finance And Its Management

09 Sep

What does the term personal finance mean? The way we apply the principles of finance to the monetary decisions of individuals or family unit determines the competence of our ability to handle our personal finances. It is the maintenance of a budget, its saving and spending with an eye on the risk of financial crunch and future events. In the broader perspective it includes checking and savings account, credit cards, consumer loans, stock investments, retirement plans, insurance policies and income tax management. As one may take it, this is not an easy task and it involves dynamic planning with regular monitoring and evaluation. Setting up a goal is anybody’s game but executing it needs special skill. Perseverance and discipline is mandatory for accomplishing any goal. For this you need the proficiency of a personal finance manager which is well versed with the nuances of fiscal matters. How about stream lining your personal finances through a personal finance manager? Do you know it is far secure to go for it rather than struggling with dealing with money matters and hectic schedules? Organize your finances with the help of a personal finance manager. Normally if you go for managing it on your own you will be confused and stressed out. Managing personal finances on your own becomes a daunting, tedious experience where as it is a cakewalk if you use a personal finance manager application with deep rooted integrity helps you out with your money blues. The biggest challenge you face while dealing with money matters is that you may be blemished by bad credits and mismanagement of funds which puts you in soup once again. Once a defaulter always a defaulter goes the adage, but you will be redeemed if you choose the right personal finance manager. It helps you by giving a fair chance to recoup what’s been lost. Very often it is not the lack of funds but the mismanagement that creates paucity.

Khurram Zaveri is a well-known personal finance expert and the author of the Free desktop based personal finance software: Spryka Desktop Budget

Go to http://www.DesktopBudget.com to download your FREE copy now!

 
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The Importance of Learning about Personal Finance

08 Sep

There are a number of different reasons as to why a person should learn about personal finance, but it is perhaps understandable that most people can not see these reasons for themselves. Personal finance is a difficult topic to learn about and for that reason a person just naturally tends to shy away from it, making excuses in an attempt to avoid having to learn about it. Well, personal finance is extremely important and here are some reasons why.


Money Flow


If you understand personal finance, then you will understand your money flow a lot better. There are a number of people that muddle through life paying their bills and their mortgage payment with the money that they have and then spending the rest of it or maybe letting it sit in their bank account. These are people that have no idea how personal finance works, so even if they end up making the right decisions they are doing it through luck.


While there is nothing inherently wrong with this particular approach, don’t you think that you would feel much better if you knew exactly what was going on with your money flow? The old saying is that knowledge is power and if you know about your money flow, you arguably have the most important individual power that exists in the world today.


Uncertainty and Fear


Human beings as a species have an irrational fear of uncertainty. In this respect, we are no different from any of the other mammalian species walking the planet, because all of them have been conditioned through thousands of generations of being eaten and killed to be afraid of what they don’t know. Uncertainty and fear therefore go hand in hand and when they do this in relation to something as important to your basic survival as money, the paralyzing effect that fear can have on you is something that is not even pleasant to think about.


Compare this situation however to a situation where somebody knows about how their money flow works and understands their entire personal finance situation. This person is not a person that is likely to be afraid, since there is no uncertainty involved with their financial situation. It is a lot easier to be afraid when you have no idea where your money is coming from and where it is going.


Utilization


If you truly understand personal finance, then another thing that you definitely should understand is utilization. A person that does not understand or appreciate personal finance is a person that is unlikely to save a lot of money, instead spending whatever they happen to have left after monthly expenses on entertainment and impulse purchasing. While there is nothing wrong with being a consumer on this level, it is something that might hamper you later on in life when your income begins to dry up and you realize you have no prospects on the horizon.


If the person does not spend a lot and does not understand personal finance, the same thing could happen. While the money in your bank account is available to you instead of having been spent on something impulsive, it is still not being utilized to its fullest extent.


Only a person with an understanding of personal finance would know that money being saved should at the very minimum be placed in a high interest savings account and later on should also probably be invested in things that yield a much higher interest rate. This difference in understanding and ultimately in utilization comes specifically from an understanding in personal finance.

Canada Financial Guide offering information related to the Canadian Financial industry. Find advice on how to manage your personal finance.

 
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Personal Finance Advice – Where Can you Find One

07 Sep

Good personal finance advice is available to all but what you need is more than just good advice. You need someone with the expertise, experience and the connections to make your financial planning work. Financial planning is not merely putting up a savings plan, it’s all about future financial stability where you stand to gain and enjoy the fruits of your efforts towards a worry-free retirement or a college education for your child. Good personal finance advice should be matched with the ability to assess, evaluate, and strategize.

Where to Head For

Looking for sound personal financial advice? Look for the experts. You’ll know them by their reputation and the feedback you get from friends and colleagues. You can check out the company in the Better Business Bureau. If their record is spotless or not littered with complaints, you have found the place for personal financial advice.

Look at the company’s track record. How long has the company been in the business? Experience matters if you value the importance of personal financial advice to start your way towards a viable financial future. In individual professional can be just as trustworthy as a big company if he has the experience and the foresight.

Personal financial advice coming from a professional who observes professional ethics is the best you can have. He won’t be promising you everything nice to make it appear that you’re in good hands. He must point out the risks you’ll face with Plan A and Plan B. The choice will be yours after hearing both the negative and the positive arguments.

The Right Financial Planner for You

When you’re looking up a professional to help you out with your financial planning, you should check his credentials. He or she must have completed the prescribed course of study and passed the examinations on the basics of financial planning.

A three year experience is mandatory and you’re better off with someone who has more experience in the field of insurance, accounting, and personal financial planning. A certification attesting attendance to trainings relative to chartered financial consultant is necessary. Your money will be involved, your family, and your future.

Be careful in your choice of financial consultant because there are people who pass themselves off as planning experts. The internet is good jump off point in your search for a top rated planner. Still don’t hesitate to ask around. Somebody who knows your financial situation may know somebody who can help you.

What is in the Plan?

The financial consultant breaks down the complexities of the financial aspects and makes it easier for you to understand what you are supposed to do, why you are going to follow a particular process, and what can you expect from your personal financial plan.

Your financial plan will be contained in a spreadsheet. The current assets will be reflected, your desired target, its costs, your desired timeframe to achieve the objective, and how much you are going to save weekly or monthly to achieve your goal.

It is easy to follow up your financial plan on your computer or your ledger but it’s all up to you, whatever your convenience. Software is also available to handle and manage your personal finance plan.

Liza Mathers currently serves as personal finance editor of a popular UK Personal finance comparison site called Seek4finance.


During her 9 years in journalism, Liza has won a series of awards for her personal finance journalism, ranging from awards for campaigning journalism, business scoops, all-round personal finance knowledge and her proven ability to explain personal finance in simple plain English.


In a nutshell, Liza puts the consumer, not the personal finance industry, first.

 
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Your Personal Finance Resolutions for 2008

07 Sep

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 £132 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 £20,000 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 £200 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 £3,000 into a cash mini-ISA (£3,600 from 6th April 2008) and up to £4,000 into a stocks & shares mini ISA each tax-year, or up to £7,000 into a maxi ISA (£7,200 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.

Martin is a Chartered Financial Planner and Certified Financial PlannerCM certificant who runs his own firm of independent financial advisers, Informed Choice (www.informedchoice.ltd.uk). He is one of the youngest and most successful financial planners in the UK. He is the author of several personal finance books, including The Money Tree and How to Retire 10 Years Early (www.martinbamford.co.uk)

 
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Personal Finance Software Makes Funds Administration Easier And Convenient

06 Sep

It is through personal finance that people are able to prepare individual budgets that distribute upcoming incomes towards savings, expenditure and debt repayments.

Keeping up to date personal finance records is very important but many people break the progress when done manually.

The use of personal finance software has thus helped many make their spending lives better and convenient than if they were to do it using books and pens.

The features that any ordinary person cannot come up with especially in normal bookkeeping methods are already incorporated in the software.

With the computers, work is made easier in cases where some files need to be deleted, edited, duplicated over and over again than it is done with books, pens and rubbers.

These is the product household needs to track down the cash inflows and outflows on a daily basis and compare it with the estimations of the budgets.

Personal finance software benefits to look for

Ability to use it for multitasks- good personal finance software does not limit one only to a few tasks.

It should offer you the opportunity to do things like banking and paying bills online, control your investments in stocks, mutual funds, bonds, transfer data to a tax software to save on taxes and so on.

It should offer features on account transactions and reconciliation such that it also gives the users the ability to carry out banking functions like writing and printing checks.

For those who operate international trade, the software should offer users the capability of exchanging currencies among other things electronically.

The features- as technology progresses, software programmers keep updating the versions of a particular product they have made a name for to the target publics.

This one for personal finance is not any different, and if you already are using it, it is advisable to keep knowledge of what the owners are doing to make it more user friendly than before, so you can order the newest and improved version.

Great features allows you to work fast and effortlessly because such actions as transactions needing to be replicated, deleted, edited can easily be done automatically.

Since most people require some of the legal data such as tax updates and reviews from the IRS or stock market reviews for instance, such personal finance software should have this feature.

Easy to use- Firstly, the users must not find it difficult to install in their computers.

It must also be easy to use by any person with the knowledge of basic bookkeeping in the sense that they can understand the help topics and navigate through it.

Must enable financial forecast- people make big investments in buying homes, insurance policies, paying debts, paying collage fees, paying taxes, savings and many other monetary goals before their earning lives can diminish.

They therefore need to keep good records showing how each of these goals is progressing and with personal finance software that allows such actions, they can achieve a lot.

Final reports- after all the transactions are made on a daily basis, an effective software for your individual funds will provide the final information and summaries so you can see how much you deviated from the budget for a given period.

It is by using this kind of software that you can see clearly how your finances has been used in the past, currently and make informed projections for the coming days.

 

An original article  by Esteri Maina on<a onClick=”javascript:pageTracker._trackPageview(‘/outgoing/article_exit_link’);” href=”http://www.popnws.com/?p=38″>PERSONAL FINANCE SOFTWARE</a>

 
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