In our last post we gave some pointers on how to go about starting a budget and why budgeting is important.
Unfortunately, personal finance is not a subject that you get to learn when you are at school and all too often it is something you have to seek out yourself.
Here are some more simple yet effective nuggets of advice to help you plan for the future and ensure your finances grow over time.
Expand your knowledge – continuous learning is an important element in all factors of life. If you want to get on top of your finances you need to ensure you are willing to seek out knowledge through books/videos. With the internet at your fingertips you really have no excuse in this department.
Budget – as detailed in our last blog post – setting up a budget. This helps to set you on the right path and ensure you understand how you are spending your money.
Put money away for your retirement – The sooner you start saving the better off you will be, this is due to compound interest. You can also benefit if the company you work for matches your pension contributions. Be sure to carry out the proper research around retirement options (remember point 1 “Expand your knowledge”.
Have an Emergency Fund – This was mentioned in the budget post again and is an important point to reiterate. Make sure you pay yourself each month first and having a buffer will keep you out of financial troubles when unforeseen payments pop up.
Protect your Money – make sure you protect yourself appropriately by doing your homework on the correct insurance options. If you need help in this then it’s advised to seek out a financial planner.
The list could go one but these items will set you on the path to managing your money.
One of the most important elements of personal finance is to ensure you are tracking what you are spending and that you have a plan to work towards.
If you are wondering where you should start then the first step is to commit to setting up a budget. This can be a daunting task at first but by committing to setting a budget you will need to analyse what your incoming and outgoing payments are currently. By doing this you will be able to see where any gaps are and if you can cut back on any non-essential payments per month.
If you have a partner and have a joint income then you should ideally sit and go through this together to ensure you are both committing to follow the budget.
You may not get the budget spot on first time but you need to start somewhere and over the months you can refine and adjust as required.
When setting up a budget you need to have several categories you are tracking against. The key is to ensure every dollar is given a job and is assigned to a category that you place the money against. You need to also ensure that you are tracking for future payments also so that you don’t get a surprise. An example of such an item would be Christmas time, you need to set up a monthly payment and ensure you are saving towards this throughout the year. Another example you may save against is for your children’s savings accounts.
Here are some category examples to get you thinking along the right track:
You can get quite granular with the category lists but really we suggest you keep it minimal as possible at first to make a start.
Also don’t forget to set away some money each month for emergency payments, those things you cannot plan for.
So if you are not already working on a budget then schedule some time to sit down and make a start.
In the US today, President Obama’s office promoted a new online tool to help college students understand a raft of financial information that will likely be of interest to them. The tool advises students on student loans, costs for study and how much they might be able to earn when they graduate.
The UK’s Financial Conduct Authority has declared that although seen historically as “dirty”, equity release loans are likely to become a “normal” component in the financial planning of the over 55s.
In many cases where property is owned (or at least mortgaged), the over 55s can have a significant asset (their home) but be cash poor. Equity release loans might be appealing to this demographic as the amount borrowed is only repaid when they die. Of course this places a burden to those left behind and as with all loans the amount borrowed is far lower than the amount eventually repaid, which in this case comes from the borrower’s estate.
A report published by AEGON proposes that homemakers need to buck up their ideas in terms of retirement planning.
AEGON’s Retirement Readiness Survey 2015 (titled “Homemakers Are Not Off the Hook How Should They Be Planning for Retirement?”) found that homemakers are in a potentially worse fix than workers, since approximately 67% of them received a significantly low AEGON Retirement Readiness Index (RRI) score. By comparison, 52% of workers on average had a low RRI score.
The survey concludes that homemakers:
are less likely to be saving for their retirement than workers;
are looking forward to retirement less than their working counterparts;
feel less of a personal responsibility for retirement planning than workers.
Make sure you don’t leave your planning too late. Check out the Investments area of our site to give your retirement plan some focus!
The UK “Start Up Loans” program, a scheme backed by the British Government, appears to be drawing more successful female applicants than other more traditional business start-up loans. According to the UK Office for National Statistics, 37% of all successful applicants for the Government backed scheme are female compared to 18% for other similar loans schemes. Furthermore, in the first two quarters of 2015, 42% of those accessing funds through the scheme were women.
The Start Up Loans program is designed to promote economic growth by assisting entrepreneurs, having an available fund of £250M to create up to 10,000 loans. The maximum amount an applicant can borrow is £25,000.
Chase announced in early August that it was making its jumbo loan product more simple and also lowering the requirements for FICO and downpayment. What this means in real terms today is that buyers with a FICO of 680 or above (previously a minimum of 740) seeking finance to acquire a single-family property can downpayment 15% (previously 20%). This is a big change which reflects Chase’s updated analysis of borrower risk… and one hopes it carries across to Chase personal loans products.
Markus Persson, the creator of the the Minecraft gaming sensation who sold his game to Microsoft for a reported $2.5 billion last year, has declared in a Tweet that although wealthy beyond his wildest dreams, he feels isolated because his wealth has created a situation where “human interaction becomes impossible due to imbalance”.
The Telegraph reports yesterday on Barclays‘ significant legal victory in the US regarding claims it provided preferential investment services to “dark pools” comprised of selected traders. Read the full article here.