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Açai berry is one of the most nutritious and powerful foods in the world… It
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Dr. Nicholas Perricone, author of “the Perricone Promise”
5 Tips For A Personal Finance Spring Clean
by Michael Halls-Moore
It’s that time of the year again when you know you should be
checking over your current personal finance and investing situation.
Is there anyway that it can be given a bit of a clean up? I believe
there is. Here are my 5 tips for a personal finance and investing
1. Personal Finance Long Term Goals
The most important step is to decide what you want out of your
personal finances and investing. My primary aim is not to have $1
million, although that would be very nice. My goal is to have enough
assets to generate a monthly income that exceeds my monthly
outgoings (my liabilities). This will ensure that I do not have to
work. I may choose to work, but I can make that choice. To me that
is being wealthy. I want to achieve this by the time I am 40 years
old, which gives me 15 years!
You may decide that you want to be a millionaire. In order to reach
that goal, you are going to need to figure out how to get there!
Sounds simple and obvious, but most people forget this first step.
Lay out a plan for your finances using the following 9 tips and you
will be well on your way to achieving your personal finance and
investing goals. There is no such thing as a get-rich-quick scheme.
Get rich slowly, but surely. This is my plan.
2. What Is Your Current Situation?
I’ve said it before, and I’ll say it again. If you don’t know where
you’re coming from with your personal finances then you certainly
don’t know where you’re going. You need to be aware of all of your
assets and liabilities, take into account every part of your
spending and lifestyle. Don’t throw away those bank statements every
month. Take the time to look through them. You might be surprised to
learn that banks are “mistakenly” overcharging you for services to
your account that you never even requested. You should not have to
pay any fees for a checking or current account! If you are, then
either get them stopped or change banks. Changing banks is
ridiculously easy - they want your business.
Once you’re more aware of your current status, it is time to get
serious and start budgeting your personal finances, which brings us
to the next tip…
3. Budgeting - Where Is It All Going?
You’ve checked out your bank statements, you’ve got a vague idea of
where all the money is coming from and going to and now you’ve
decided to do something about it. Good, you’ve just taken the first
step that many people will never bother with. One of the first
things you need to do is get hold of some personal finance software.
But that will only cost more money Mike, I hear you cry. Not so.
There are plenty of free/open source money management packages
available on the internet. One of my favourites is SimpleD Budget.
It’s got a great graphical user interface, is highly intuitive, and
has most of the features you’d expect out of a simple package. It
doesn’t tie into your online banking - you would need a package like
MS Money for that. However, I think it’s a great start.
At the end of every month, open up your online banking (if you don’t
have it, why not?) and ask it to categorize your personal finance
transactions. This will show you income from employers, checks and
outgoings via debit cards and cash withdrawals. The card purchases
are particularly handy because it allows you to see where the money
was spent. Put all of this information into SimpleD and it will give
you a pretty good idea of where your money is going and how you can
reduce that spending!
Use that information to try and reduce spending in certain areas.
Did you really need to order a pizza every week last month? Could
you have saved money by making it yourself?
4. Cut Up Those Credit Cards!
Credit Cards are the exact opposite of living within your means.
They are a great little earner…for the banks. I’m sure many of you
have one and use it. I used to use mine frequently and have trouble
paying it off, but I’ve figured out a way to sort it out. It’s
simple - CUT THEM UP! That’s right, take some strong scissors and
cut each and every one of your credit cards up (being careful to
slice through the chip so that nobody can use it, of course!) and
destroy them. Once they’re destroyed it’s time to think about paying
them off. How can you do that?
The best thing to do is pay off the ones with highest interest rates
first. Now that you have a grasp of your current/checking account
you will be able to put some aside to pay off these debts. If you
plan it out in advance you will even know how long it will take to
pay off. It is almost always best to pay off debts first, rather
than save as the interest you get on the savings will usually be
dwarfed by the credit card interest rate (and this is without taking
into account tax). You will also have the added piece of mind that
you are not indebted to anybody.
You can get started on this approach right now!
5. Savings - Are You Putting Enough Away Per Month?
Now that you have your debts under control and know your monthly
position, it is time to think about investing some of the money.
You should be putting approximately 15-30% of your monthly income
away in savings. Ouch! That’s a lot of money. However, if you have
followed the above 3 tips this goal should not be too difficult to
achieve. Let’s say you have reduced your monthly personal finance
spending to such a degree that you can afford to make an investment
of 30% per month. How and where should you put it? I advocate
splitting your savings into two parts. The first 50% (of the 30%)
should go into one savings account that is used for “Rainy Days” or
“Emergencies”. This ensures that if anything should ever arise, you
can quickly get access to your money and pay off the unexpected
expense. The second 50% should be put into an account (or other form
of investment, see below) that is not as liquid (i.e. easy to turn
into cash) but will generate a higher return.
You will find, that is you discipline yourself and stick to “The
Entreblogeur Personal Finance And Investing Plan”, that you will
have a lot in your savings after only a year. This money can now be
put to work for you. Why work when your money can instead?
Your bio/contact information as you\'d like to see it with your
article = Mike Halls-Moore owns The Entreblogeur, a guide to
Personal Finance, Investing and Entrepreneurship. Why not take a
visit and learn to get rich?