The Key to Managing Personal Finance

Personal finance is something many people do not take very seriously. That is why so many people are fighting with debt problems. Personal finance is about keeping a balanced debt to income ratio and ensuring that expenses never exceed income. Personal finance is crucial to keeping a good credit record and maintaining credit worthiness.

Personal finance starts with a budget. Every person should have a budget to track and mange their income and expenses. A simple budget lists all income and all expenses for a month. The bottom line of a budget is that the income should never be less then the expenses. Should the expenses exceed the income the person is going to have to cut back on expenses. They should start by cutting out non-essential expenses. This can be difficult, but for someone wanting to be serious about their personal loans, it is important. Budgeting takes a lot of self control and little sacrifice.

The next step in finance is managing debt. Most people have some debt. Debt is essential for building credit. However debt should never become overwhelming. A person should make a list of all debt. The list should include the name of the creditor, the amount of credit, the amount of debt and the interest rate. If there is any debt problems they should be handled immediately.

Next is credit. If a person is easily handling their budget and their debt then they can consider getting more lines of credit. However, if a person is not handling their debt and budget then getting more credit is out of the question. A person should also make sure they understand all of their credit obligations. This includes all terms and conditions.

After a person has all of their personal loans in order they need to look them over. They should check to see if they are struggling with anything. If they are then they need to manage their finances to get them back in order. This may involve some credit counseling or debt consolidation. A person should be committed to whatever it takes to get their personal finances back in order, so they do not suffer damaged credit or financial difficulties.

Now that a person has organized their personal loans, they need to manage them. Managing personal finance is about sticking to a monthly budget, keeping debt under control and not getting overwhelmed by credit. Management of personal finances is on going. A person has to review every month to ensure they are not over extending themselves or breaking their budget.

Personal finance is an important topic. It is something everyone needs to think about and something everyone needs to control. Too often people let their personal loans get out of control. It is this that leads to debt problems and eventually financial difficulties.

A person that controls their personal finance will be using their monthly budget, keeping up on debt and not over extending themselves credit wise. A good, well managed personal finance is going to produce someone who can afford their lifestyle and who benefits in the form of a good credit record.

The Best Way to Understand Personal Finance

When we are trying to understand Personal Finance, the best thing to do is to understand what Personal Finance is NOT.

Many people think that accounting and personal finance are the same, but Personal Finance is NOT Accounting.

On the surface they may seem the same; they both have something to do with money. However, the definitions will help us better understand the differences.

Merriam-Webster’s definition of accounting is “the system of recording and summarizing business and financial transactions and analyzing, verifying, and reporting the results.”

Based on this definition, we see that accounting is the process of analysing and recording what you have already done with your money.

This is why having an accountant is usually not enough when it comes to your personal finances.

Accountants generally don’t concern themselves with personal finance (there are some exceptions to this rule). Unless your accountant is also a financial advisor or coach, he or she will likely just look at what you have done with your money at the end of the year and provide you with a report of their analysis.

This report is usually your tax return; what you owe the government or what the government owes you.

Very rarely does the accountant provide an individual with a Balance Sheet or Income Statement or a Net worth statement; all very helpful tools that are necessary to effectively manage your personal finances.

Personal Finance is looking at your finances from a more pro-active and goal oriented perspective. This is what provides the accountants with something to record, verify and analyze.

The Merriam-Webster’s (Concise Encyclopedia) definition of “Finance” is the “process of raising funds or capital for any kind of expenditure. Consumers, business firms, and governments often do not have the funds they need to make purchases or conduct their operations, while savers and investors have funds that could earn interest or dividends if put to productive use. Finance is the process of channeling funds from savers to users in the form of credit, loans, or invested capital through agencies including COMMERCIAL BANKS, SAVINGS AND LOAN ASSOCIATIONS, and such nonbank organizations as CREDIT UNIONS and investment companies. Finance can be divided into three broad areas: BUSINESS FINANCE, PERSONAL FINANCE, and public finance. All three involve generating budgets and managing funds for the optimum results”.

Personal Finance Simplified

By understanding the definition of “finance” we can break our “personal finance” down into 3 simple activities:-

1. The process of raising funds or capital for any kind of expenditure = Generating an Income.
A Business gets money through the sale of their products and services. This is labeled “revenue” or “income”. Some businesses will also invest a portion of their revenue to generate more income (interest income).

A Person gets money through a job, or a small business (self employment, sole proprietorship, network marketing or other small business venture). The money coming in can be a salary, hourly wage, or commission, and is also referred to as income.

A Government gets money through taxes that we pay. This is one of the main ways that the government generates an income that is then used to build infrastructure like roads, bridges, schools, hospitals etc for our cities.

2. Using our money to make purchases = Spending Money.
How much we spend relative to how much we make is what makes the difference between having optimum results in our personal finances. Making good spending decisions is critical to achieving financial wealth – regardless of how much you make.

3. Getting optimum results = Keeping as much of our money as possible
It’s not how much you MAKE that matters – its how much you KEEP that really matters when it comes to your personal finances.

This is the part of personal finance that virtually everyone finds the most challenging.

Often people who make large incomes (six figures or more) also tend to spend just as much (or more) which means they put themselves in debt and that debt starts to accrue interest. Before long that debt can start to grow exponentially and can destroy any hope they would have had to achieving wealth.

Personal Finance made simple

Personal Finance doesn’t need to be complicated if you keep this simple formula in mind:

INCOME – SPENDING = WHAT YOU KEEP

For Optimal Results you simply have to make more than what you spend and spend less than what you make so you can keep more for you and your family!

If you are not actively working towards an optimal result you will by default get less than optimal results

It really is that simple!

Now that you understand personal finance and WHAT you need to do, the next step is learning HOW to do this!

The best way to start is by following these 3 simple steps:-

1. Know what you want to achieve – “if you don’t know where you are going, any road will take you there” has become a very popular quote, probably because it is so true. One of the habits that Stephen Covey highlights in his book “7 Habits of Highly Successful People”, is to always start with the end in mind. Knowing where you want to go will be a big help in ensuring you get there.

2. Have a plan – that you can follow that will get you to your goals. Knowing how you will achieve your goals in a step by step plan is invaluable. Sometimes this is easier with the help of an advisor or a financial coach.

3. Use tools and resources – that will help you to stick to your plan and not become distracted by the things in life that could limit our incomes and make us spend more than we should. Don’t try and work it all out in your head! You will end up with a massive headache and your finances will become one gigantic dark fog!

A Common Sense Approach To Personal Finance And Debt

Many people are struggling under the burden of debt and are having problems bringing order to their finances. Arguments between spouses increase, as do stress levels. Often, they may feel they are on a treadmill, barely maintaining their current positions but making no progress at all.

If this sounds familiar to you, you might find it interesting that there is a way to apply common sense to your situation and bring both your debt and your personal finances under control. It isn’t an instantaneous fix and it will not be totally pain free, but it will work where other personal finance plans fail. It also isn’t some new idea (although many may find the concept somewhat novel) but a return to how things were done for centuries. Simply put, it is the idea of not spending more than you earn.

You may not like the idea of living within your means, but that may be because you do not truly understand how it relates to personal finance. It is not eschewing all debt, nor does it mean giving up everything you love. It does not mean you must wear rags, make soup out of catsup, or never taste cappuccino again. What it does mean is that you take control of your personal finances and debt.

The first thing you need to do to take control of your personal finances is to establish a workable budget. List all of your normal expenses and how much you spend monthly on them. If you are like most people when they first tackle their personal finances, there are going to be some things you do not know. It is not uncommon for many people to have no clue how much groceries cost each month, for example, or how much is spent on clothing. It may be necessary for you to track your expenses for a few weeks to get a good handle on your personal finances. In the meantime, start with fixed costs, such as your mortgage or car payments, and include your best estimate for flexible expenses. You can always adjust these next month.

Include a line item in your budget for savings, something that is often neglected in money plans. Set some target percentage to save, since even 3% of your income is better than nothing. Over a period of time, gradually increase the percent going into savings until it reaches at least 10%. Savings accounts, when reserved for true emergencies, are an important part of personal finance security. They mean you do not need to pull out a charge card if the hot water heater breaks or your car needs a repair. This in turn means that you are not increasing your debt load.

To examine how you regard personal finance and debt, consider the following scenario. Your net monthly income is $3,000. Your total payments are $2,500. If you make a credit card purchase of $4,000 that requires a monthly minimum payment of $400, you still have $100 before you exceed your income. A lot of people will say that is a true statement. It is not, because you actually went $1,000 over your income and $1,500 over what you had available to spend that month. There will be times when you have no choice but to charge something. Just keep in mind that in personal finance, it is the debt, not the payment that determines the health of your financial situation.

Enlist the support of all family members if you need to bring your personal finances or debt load under control. Each individual needs to consider what is most important-a college education or designer jeans? Keeping your home after retirement or going out for a steak dinner every week? With just a little cooperation, you can make drastic improvements to your personal finances and reduce your debts substantially.

Finance Online Help – How to Manage Your Personal Finances Using Online Services

Finding Finance Online Help is possible if you need help in dealing with money troubles or other financial difficulties. You can find a great deal of financial help for your household finances, online loan applications and even applying for a personal loan online with online finance help sites, without paying the cost of high fees.

Dealing with financial planning is not something most of us enjoy, particularly if there is not so much coming in to actually plan with. However, it is necessary to properly manage our personal finances otherwise it could be too late once a downturn or emergency hits us.

Most of us turn to credit and bank institutions to help us through, which can compound the problems. Seeking out help from online financial help sites, blogs and services is a good place to start to discover valuable ideas to consolidate debts in order to lessen your payments or how to manage your tight budget as well as how to bring in some extra money from other sources.

If you want to seek out free finance online help websites you will be surprised to find you can organize your household finances and personal money issues for wealth building without paying a cent. It has never been easier to get help online and there are a ton of tools and articles that can help guide you to success.

The type of help you can expect to find with online finance sites will come in the from informative articles on managing your personal loan online, household budgeting, free personal accounting software downloads, to advice on debt consolidation, refinancing and getting financial aid, household finances and online loan applications. You’ll even find budgeting spreadsheets as well as free software to download as well.

Let us cover a few of the best online help services for managing your personal finances:

• First is YouTube. There are plenty of resourceful people giving so much advice and how tools on all sorts of money issues.

• Second is the Mint.com. It is a completely free website to help with personal finances, budgeting and expense tracking that includes a number of helpful tools and suggestions for reducing your expenses and tracking you’re spending.

• And of course there is always Google Search: This search engine contains millions of sites that give a wealth of information on just about anything from experts covering on topics from investing in gold to bad credit repair.

The benefits of getting online financial help means you don’t have to sit through presentations, waste your gas, pay for parking, or worst, waste your time and money, getting the wrong type of advice.

Improving your personal finances is a lifelong and rewarding journey. With all the completely free personal finance online help resources available today you can take hold of your financial life back from your creditors.

Personal Finance Guide – The Secrets Revealed Good Financial Planning

Having a good personal finance guide is very necessary in connection with the financial sector as we know it today. There are many online guides, books and videos on YouTube to help consumers address the current economic instability. Here are some useful tips to guide you a healthy financial situation.

First, a well-planned budget is the beginning of any financial plan. You need something to help consumption and personal finances stay on track to reach your financial goals. A budget outlining expenditures, payments and ideally would include savings and loan plan to return the facilities that are required a.

Second, your budget will help cut unnecessary costs is the next step to good financial management. This may mean eating less and for others it could mean getting rid of that extra motor vehicle. Whatever the case, everyone has an area or two where you can save money by reducing some expenses.

Thirdly, maintaining a savings account where they pay themselves first. Want to start saving where possible, with 10% of everything you earn. If you can not do that at this point what is best to start the habit of putting something aside each time the money arrives, even if only $ 1.

Fourth, cut up store cards. The interest is very high and encourages unnecessary consumerism. Consolidate your credit card interest only two credit cards if necessary. Keep one for regular use and the other a clear case of emergency.

Being efficient and rich will require the use of personal finance services and professional help to manage their finances effectively at some stage in their life. Managing your savings and investment plans, debt management, taxes and money are part of financial management can be overwhelming. There are moments when using the services rather than managing their finances on their own is a wise idea.

There are situations where people are dealing with mountain of debt and financial problems that could not be cured in the course of spending cuts and additional jobs, but require the use of a service or agency to help manage what you have. These scenarios such as divorce, a prolonged period of unemployment, medical bills unexpectedly large, mortgage companies are threatening to seize your house, etc. require the assistance of experts, not only to navigate out of trouble, but they also have some stress his life.

These are problems no one liked horrible involved with and no matter how hard they have tried, has done little development in search of better solutions to it. Before you get stressed, a service of personal finance can lend a hand for you.

Financial services are able to work with your creditors and ensure that the reduction of interest, cycle counts to get under way, and, incredibly, to receive their payments reduced. Teachers available at these relevant agencies is knowledgeable in all areas of finance, and that they can find better solutions to their debt problems that are 99% not involved in bankruptcy.

Below are playlists on how to find personal financial services at its best.

First, contact a company through a network of professional help. All companies have already reached the state of the art of the results are shown in these networks. Hence, stop wasting time searching the Internet. Personal finance companies take advantage of the recessionary conditions. To compare debt settlement companies, it would be to visit a network of debt relief without seeking growth companies in your area for free.

Second, look at the advantages and disadvantages of each and see which will help you more. So how can a firm ensure legal and illegal? The document focuses on the legal word. If the business you have chosen does not appear with a particular network, is illegal. This is a very important way to identify the scams and will save you money.

Third, suites If none of these bodies to their taste in managing their personal finances may be time to consult with a professional personal finance expert. He or she offers a free initial consultation. However, as a client you need to bring resources and relevant information and remember not to hide any record debts. The personal finance expert will review your information and advise on how best to proceed.