Wednesday, 16 November 2016
Tuesday, 25 October 2016
9 Money Habits That Can Help You Build Wealth
While a six-figure inheritance or high-paying job can land you in the top 1% of earners, it’s the little things—your money habits—that often make the difference between a life of prosperity and one of constant financial stress.
Taking inventory of your recurring subscriptions and services is just one habit that can get you on the road to better fortune.For example, “I do a periodic review of all the subscriptions I have—the ones that hit my credit cards each month,” says Blaylock. “You’d be surprised at how many subscriptions we all have and how many go unused. You could create some significant savings each month just by looking at those things.”
“If you look at the average amount of money you will earn over your lifetime, and figure out how many years you are working—most people earn more than a million dollars over their working life but very few people become millionaires,” says Nancy Butler, a Certified Financial Planner™. “How they manage what goes through their fingers usually makes the difference.”
So what are these easy changes that can help move you further along the road to prosperity? We asked two financial planners for their favorites.
1. Reverse Your Thinking
We know: After taxes are taken out and the bills are paid, your paycheck can seem a little anemic—which can make the idea of having to save for retirement too seem like a real stretch. But to build wealth, a change in mindset is required. Namely, instead of spending the rest of your take-home pay, you’d actually take another cut of your paycheck and put it toward your biggest financial goals.
“Most people spend some money, pay their bills and save what’s left,” says Butler. “And that’s backwards: You should be saving for your financial goals first, paying your bills and and then consider spending the money you have leftover.” Another trap is putting your good money habits off till “later,” when life will get easier. The thing is, somehow the minute your income increases, the demands on your money seem to as well.
Now, keep in mind, we’re not suggesting you sock all of your money away and live on rice cakes. As Blaylock puts it: “I’m not asking you to put $1,000 away a month, I’m asking you to put away $50, or a small amount that you can afford. We really can’t underestimate the power of starting small, because most of the time that momentum builds, and once we see progress, we tend to repeat behaviors.”
2. Look Where You Want to Go
Just as performance athletes imagine themselves making the shot over and over again—check out this study for how goal setting improves motivation in athletes—knowing what you want your money to do for you gives your goals a better chance of being reached.
To get going on saving for the future, financial experts often suggest having a five-year plan, where you create specific money goals you’d like to achieve in five years and what you need to achieve those goals. For example, saving six months of income for an emergency fund, or saving for a big event, like a down payment on a house.
“Anytime we have a specific goal in mind, that helps us to save,” says Blaylock. “Whether that goal is emergency savings, or saving for a trip, or saving for college, it doesn’t matter.”
3. Adopt Your Own Private Mind Tricks
What if not spending $1,000 on a designer purse or new must-have gadget were as easy as following a rule that dictates you can’t spend more than $300 on something that isn’t essential to your life? The good news is you can create financial rules just like that for yourself; in fact, doing so can be a great habit to get into.
Also known as “heuristics,” these rule-of-thumb strategies we create for ourselves—such as not spending more than $15 on an item of baby clothing, or more than $50 on a pair of shoes—can help simplify the many choices we make in a day. Behavioral economists believe that adopting good heuristics can help one develop good money habits (see this piece for more on how and why they work).
If creating a great heuristic seems like an overwhelming task, Blaylock suggests starting with something simple, such as eating out only twice a week, or “not getting a cart at Target,” a heuristic that helped one of his colleagues save money.
4. Live Like a “Secret” Rich Person
For some, the image of a millionaire conjures visions of sprawling mansions and shiny Bentleys. But most millionaires don’t live large like that—rather, they tend to live well below their “means” and do more saving than spending. In other words, they’re not flashing their money, according to Dr. Thomas J. Stanley, co-author of “The Millionaire Next Door: The Surprising Secrets of America’s Wealthy.” Stanley’s book, which details more than two decades worth of surveys and personal interviews with millionaires, reveals that much of the wealth in America is more often the result of hard work, diligent savings, and living below your means.
Las Vegas–based David Sapper, who owns a successful used car business, and his real-estate broker wife make a combined income of $500,000 per year. Yet they live like “secret” rich people, only spending $2,500 per month on all bills and extracurricular expenses like eating out, unlike many of their peers. By putting 90% of his income into savings and investments, Sapper says he’ll be able to retire early.
One man who owns a successful used car business and his real-estate broker wife make a combined income of $500,000 per year. Yet they live like ‘secret’ rich people.
His advice? “Find the point that you get what you need and you’re happy and comfortable, and just stay there,” says Sapper. “I had an ‘aha!’ moment when I was watching MTV, and LL Cool J was saying, ‘I lease a Honda Accord for $399 a month,’ while other rappers are going broke.”
5. Tackle Retirement Now
If you’re in your twenties or thirties, retirement can seem eons away—and saving for it might not seem like a priority. It’s easy to understand: In between paying to attend weddings (which average something like $600 per guest), saving for a down payment on a home, and using anything leftover to put toward “necessities” like vacation, how are you supposed to save anything for retirement?
Unfortunately the later you start saving, the more you’ll have to save. But the sooner you sock money away, the more time it has to compound and grow.
If, for example, you’re 30 and putting $50 a month into a retirement account with a 7% rate of return, that $50 a month would turn into $56,000 in 30 years, says Blaylock. Should you wait to age 40, you would need to contribute $110 per month to get to that same goal. This is because your money has less time to grow which minimizes the impact of compound interest. (For more on compound interest and why losing time on retirement can hurt you, check out “The Secret of Retirement Savings: You Can’t Make up for Lost Time.”)
6. Know What’s Coming in, and What’s Going Out
Most of us have good intentions when it comes to saving money. But if you don’t know what’s coming into your bank account and what’s going out, chances are you don’t know how much you can devote to your goals. And most people generally don’t track their income and spending, says Blaylock. “It really is shocking to me that clients I work with don’t always review their pay stub,” he says.
You can track your expenses for free with an app like LearnVest’s that helps you budget, set goals and save. Remember: Knowledge is the first step to lasting change.
“If I don’t know how much you spend on eating out, how can I expect you to change that?” says Blaylock. “You kind of have to become the chief financial officer of your household.”
7. Getting Out of Debt
Everyone has debt at some point in their life. But if you have bad debt—not student loans and mortgages, but credit card debt, where you’re paying high monthly interest rates—nixing it and getting out of the habit of being a debtor should be priority number one. “I want somebody to develop a plan to have them out of that debt in 36 months or less,” says Blaylock. “It’s hindering you from making progress on your other goals.”
At the same time, emergencies happen—and a $600 car repair can hit anytime. That’s why Blaylock advises putting half the money you could put into paying down debt into an emergency savings account. So, for example, instead of paying $600 toward credit card debt, consider putting $300 toward emergency savings and $300 toward credit card payments. While this means it will take longer to get out of credit card debt, you’ll have money stored up for an emergency.
“Credit card debt is a result of the ‘uh-oh’ moments,” says Blaylock. “We still don’t have any savings built up because we put it all toward our credit card. So while you’re also working to pay your credit card down, you should consider putting an equal amount to an emergency savings account. I often tell clients that their emergency savings are their insurance policy against falling into credit card debt ever again.”
After you get out of debt, Butler suggests only having one credit card, and come to an agreement with yourself (or your significant other) that it will only be used during an emergency. “Let’s say the car broke down and you can’t fix it—that’s an emergency,” says Butler. “Something’s on sale, and I know I’m going to need it in six months—that’s not an emergency.”
8. Increasing Your Earnings
There are two ways to increase your net worth: Spend less or save more money. “And spending less is only part of it – you have to save, and when appropriate invest, the rest,” says Natalie Taylor, a CFP® with LearnVest Planning Services.“Earning more often doesn’t lead to higher net worth because lifestyle expenses grow along with it.”
But if you grow your income, and set some of those earnings aside, you can grow your bottom line. Aside from getting a raise or winning the lottery, there are a few ways to get more money flowing in.
One suggestion: Diversify your income streams by working a second, part-time job doing something you love. As far as earning more, there are a few things one can do. “For those who cannot cut their expenses enough, I love the idea of working part-time,” says Blaylock. “I have a great friend who is an attorney. She has a big travel habit that she is unwilling to pull back on. So, she works at a flower shop on Saturdays during wedding season. It’s a win for everyone: The flower shop has a dependable employee, and my friend loves flowers so she does not think of it as work.”
Another idea: Look for investment opportunities—perhaps with the help of a financial planner—or other ways to get income to come to you. “I think retirement income should come from multiple sources such as rental income, part-time income and retirement assets,” says Blaylock.
9. Consider Consulting an Expert
There are times in life when consulting an expert pays you back in spades. Even if you’re doing everything you can to start good money habits, using a qualified financial planner can help keep you on track—and help you see the big picture.
“Often times most of us are too emotionally involved in our finances to make really good decisions,” says Blaylock. “So what you’re looking for when you’re getting a professional is accountability and an outside view of what you’re doing. I look at your finances very objectively, where you can’t because you’re that person.”
LearnVest Planning Services is a registered investment adviser and subsidiary of LearnVest, Inc. that provides financial plans for its clients. Information shown is for illustrative purposes only and is not intended as investment, legal or tax planning advice. Please consult a financial adviser, attorney or tax specialist for advice specific to your financial situation. Unless specifically identified as such, the people interviewed in this piece are neither clients, employees nor affiliates of LearnVest Planning Services, and the views expressed are their own. LearnVest Planning Services and any third parties listed in this message are separate and unaffiliated and are not responsible for each other’s products, services or policies.9 Money Habits
Sunday, 23 October 2016
Tuesday, 19 August 2014
10 easy ways to make money in 2014
You’ve heard it before: Resolutions are for quitters. So don’t burden yourself with a list of useless declarations about not spending money in 2014.
You’re not likely to keep them anyway, according to the University of Scranton, which has found that of the 45% of Americans who make New Year’s resolutions, a mere 8% actually achieve them.
Shutterstock.com
Instead, embrace tiny habits that may not necessarily help you lose weight, learn Mandarin or get organized but, with little to no effort, will fatten your bank account.
Track your spending. It’s easy if somewhat arduous to jot notes on a smartphone or tablet every time you put gas in the car or stop for a coffee, but if you do, you will be amazed at how quickly money can slip through your hands. There are sites you can turn to for help, like Mint.com, Quicken or Geezeo, that will do the math for you. Most banks offer tracking and budgeting services through sites like these too.
Once you really see where the cash — and credit card transactions — are going, it will be easier for you to identify and cut wasteful spending.
Balance cash in, cash out. Now that you’re seeing where the money is going, chart it against your other expenses. We’re talking about everything from housing, food and clothing to movie-going, dining out and getting manicures and pedicures. It’s pretty simple to calculate if you’re spending more than you’re bringing in. Now you can see just how, where and why you’re doing it. Acknowledging the problem is the first step to solving it.
Top three financial resolutions for 2014
New Year’s is a good time to recommit to financial goals that keep you and your family on sound financial ground. Daniel Lippman joins Lunch Break with a look at money resolutions for 2014.
Be realistic. If you absolutely don’t see yourself brewing your own coffee every day — despite the estimated $2,400 in annual savings — limit the java stop to once a day, rather than twice, or to a less-expensive coffee shop.
Do the same with savings and paying off debt. Socking away $50 a week is psychologically easier than $200 a month, though the result is the same. Paying off a $2,500 credit-card bill can be done in $500 increments.
Automate it all. Raise your hand if you promised yourself that you’d transfer money from one account to a savings account and, oops, just forgot. Or planned on paying that bill by the due date but that too slipped your mind. Automate those duties so you don’t end up making excuses when you don’t get to it yourself.
Aim to be fee-less. Interest fees, late fees, ATM withdrawal fees, checking-account fees — heck, any banking fees can be avoided by choosing the right financial institution and products, and automating bill payments. And if you’re lousy at balancing your accounts and don’t have a cushion account to cover you, make sure you have overdraft protection on your accounts.
Cut the cord. Cable TV can be a costly proposition and there are a number of ways you can cut the cord without missing out on “Homeland” or replays of “Breaking Bad,” though live sports can be an issue. But you don’t even have to give up the cable to cut the bills. Cable companies, which are losing customers to the likes of Hulu and Roku, are willing to negotiate to retain customers. Just take the time to call them, or send them a tweet.
Negotiate other bills. Follow the cable lead and make some calls to rework other monthly tabs like credit-card interest rates, auto and home insurance costs, even cell phone bills.
“Carve out an hour or two at the beginning of this year to check the rates you are paying on all your bills,” says Gerri Detweiler, director of consumer education for Credit.com. “That time can pay off handsomely all year long.”
Chances are there are untapped discounts or new offers available. And if they can’t slash some of your costs, you might get more bells and whistles, which makes the dollars spent a better value. Check out competitor’s promotions too and ask your provider to match the prices.
And an extra bonus, if you can cut the interest rates on your credit-card bills, you can get out of debt that much quicker. That’s assuming, of course, you aren’t running the bills up as you pay them off.
Rethink 2013 offers. There’s probably a few “free trial” or “0% one-year interest-rate” offers you grabbed in 2012 and 2013 that have now lost their luster. You can find another credit-card promotion like that and transfer your balance or make sure that you never carry a balance month to month since that 0% is probably now about 15% or higher.
Improve your health. Every year, losing weight takes the top spot on most American’s New Year’s list, followed closely by vows to quit smoking or drinking too much. It’s no wonder, considering that not only can it improve your disposition and physical well-being, it will make an impression on your wallet.
“Studies show that being overweight or smoking translates to thousands of dollars in additional medical costs over the course of your lifetime,” says Odysseas Papadimitriou, chief executive of CardHub.com. “And that doesn’t even speak to lost productivity due to a lack of energy, the added insurance burden, or money wasted on quick-fix health-improvement schemes.”
Nor does it speak to that big chunk of money, estimated at upwards of $3,600 a year for a one-pack-a-day smoker, that you’ll keep in your pocket.
Find ways to stay motivated. Making a plan to cut spending and save money is easier said than done, so it’s important to make yourself accountable. Start by telling your family and friends what your goals are and ask them to help you keep it up. Heck, announce it to the masses on Facebook, Twitter and Instagram for crowd-sourcing encouragement. There’s nothing like a thumbs up or smiley face to keep you going.
http://www.marketwatch.com/story/10-easy-ways-to-make-money-in-2014-2014-01-02Tuesday, 5 August 2014
How To Increase YOUR Personal Performance
“It is not only by the questions we have answered that progress may be measured, but also by those we are still asking. …knowledge alters what we seek as well as what we find.” – Freda Adler
This is ONE of the most IMPORTANT tools you may EVER use!!!
I recommend you spend time each month questioning YOUR LIFE. Take an honest appraisal of what’s REALLY going on with the help of the 7 P’s Personal Performance Process. It will give you clarity, insight, solutions and priorities which you can begin to take conscious action.
Time to make sure your ship is steering the right course. I recommend about 1 hour per month and 4 hours per quarter to really review, reflect, re-orient, re-plan, recommit and realize rewards. Ideally take a weekend and have a mini retreat which gives you uninterrupted time. This can be such a powerful, enlightening and rewarding session.
Please do not procrastinate it away. You are the only one who can do it.
Spend at least 30 minutes and answer all of the questions below. Be brutally honest with yourself. These questions catch your blind spots, keep you on track and help improve your habits. When you ask them regularly, you will become more focused, clear, creative, purposeful, aware and balanced.
The 7 P’s Personal Performance Process:
Patterns, processes, procrastination – habits
- Where can I be more effective in what I am doing?
- What 5 things have I been procrastinating?
- What are my time wasters?
- How can I enhance my inter-personal skills?
Problems, past, pain
- Where am I vulnerable?
- Where do I hold myself back?
- What am I afraid of?
- Where do I not like myself?
- What stresses me?
- For what problems must I ask for solutions?
Perceptions and perspectives of myself and others
- What are the hidden agendas of my boss or partner or family?
- What contacts or friends do I want to develop more?
- What negative or limiting thoughts keep jumping into my mind?
- What key choices must I make?
Prosperity
- How can I increase my abundance?
- In what areas should I obtain more learning?
- What specific actions should I take to be more productive at work?
- What important project have I been putting off?
Principles and values
- What 3 areas in my life must I recommit to?
- Where must I clarify my stand or position?
- What deeds or actions must I forgive or accept?
- What must I do to bring more balance into my life?
- What value is most important for me to master now?
Purpose, potential, passion, power, possibilities, path
- What are my deepest heart-felt desires, dreams and visions?
- Where am I unclear of my life purpose and goals?
- How can I experience a greater sense of meaning in life?
- Where are some opportunities for me to give?
Peace of mind, play, pleasure, pamper
- When do I feel greatest happiness in my life?
- What activities do I find fun, and how can I do more of them?
- What new ideas are teasing me these days?
When you have completed the answers, ask yourself, “What am I missing? Is there anything else?” Use questions often. The subconscious mind is always answering. We must only practice asking and then listening.
INSPIRATION
“Questions focus our thinking. Ask empowering questions like: What’s good about this? What’s not perfect about it yet? What am I going to do next time? How can I do this and have fun doing it?” — Charles Connolly
From http://bit.ly/1p6ZIES
Subscribe to:
Posts (Atom)