Million Dollar Boy | Free Financial Advice

After working hard for many years, it is important to be sure that when you do retire you get to enjoy your life – or at least live comfortably.  You wouldn’t be able to do so if you find out that your retirement money is not as big as you have expected.

Prepare as early as possible

Do not wait for the time when you are nearing your retirement age before you have a retirement plan in action.  When you are younger, you have more room for mistakes.  You can make risky investments that can generate higher returns.  You can also start putting away money into your savings account.

Before you retire

When you are nearing retirement, talk to a financial advisor.  You may need some advice on how you can prevent your retirement money from being taxed.  By this time, you may have already accumulated a good retirement fund, especially if you have stayed with the same company for many years.

Be scam-free

With retirement period just around the corner, you have to be extra careful with your investments.  Research companies before you invest in them.  Some companies may promise that your retirement money will be put into low interest investments but may end up in very risky investments.

Retirement period

Once you are retired, try to hold off availing your social security.  Once you have started receiving your social security checks, they will come in regularly.  Remember that you will be getting larger checks if you receive the checks on a shorter period of time.  Of course, you have to make sure that you are managing well within the rest of your retirement money.

Maybe you are suffering from the economic crisis, but maybe you are just suffering from a case of not being able to live within your means.  Enjoying a lifestyle beyond what you can afford is dangerous.  Debts can pile up, and the next thing you know you may be filing for bankruptcy.

List down your expenses

What you may be spending on may seem normal to you, and so you many not easily recognize what’s wrong with your spending habits.  All you know is that things are getting very tight and you want to discover the reasons behind this.  What you must do is record every little expense for a month.  Do not cheat; put down even your last bit of cigarette.

Recognizing your vices

After making the list, check which ones are impulse buys.  Also check items that seem to recur several times in your list, so you may just find the culprits.  Another thing you should look out for is the sensibility of the brands that you have chosen; perhaps your vice is going for the high-priced items.

Compare expenses with income

Calculate all fixed income for a month.  This includes your salary and investment returns.  Compare this with your total expenses.  If your income is less than your total expenses, or just a little over, you are spending more than you can afford.

Balance your finances

After confirming that you do spend more than you earn, you have to start putting your finances in order.  Stop using your credit card for awhile. It is difficult to keep up with your spending if you are using the plastic.

Save and invest

Once you have settled to a healthier spending habit, you can start setting aside more money.  You may also decide to invest to make the money grow.

If you are employed, probably, you already have an insurance policy.  Just make sure that even if you are no longer with the company, you still have that policy.  If that is not the case, you have to find another policy as soon as possible.  This is because if you wait for much longer to get an insurance policy, you will have to pay more for it.

Do you really need a life insurance policy

As long as someone is depending on your  income, you will need life insurance.  Even stay-home moms need life insurance.  This is to make sure that her loss will be compensated. The loss of a mom can be expensive as well because it means that the father has to go on looking for a paid nanny.  Even single people need life insurance so that their funeral expenses will be paid for.

Term or permanent life insurance

If you are convinced that you need a life insurance policy, you have to choose between term or permanent life insurance.  If you are still young and healthy, you may consider applying for the less expensive term life insurance.  Term insurance will provide you with death benefits without accompanying cash.  This is probably the best insurance for young, single persons.  If, on the other hand, many people are depending on you, you may go for permanent or whole life insurance.  It provides both death benefits and some cash.  This, however, could be quite expensive. You also have no say as to how your money will be invested.

Studying the costs

Read the small print.  It is important for you to find all hidden costs to see if your payments are worth the benefits promised by the policy.

Student loans may be available, but not having to borrow is still the better way.  You probably know from your own experience how difficult it is to pay off student loans.  Instead of using your money to buy assets or make other investments, you have to pay off your debts first.  So now that you still have an opportunity, you can start saving for your child’s college tuition.

What you should consider

The effort you have to put in and the sacrifices that you have to make depend on how much time you still have before your child goes to college. Find out how much the tuition is today at your chosen colleges and study their annual tuition increase. You will now get an idea of the amount you have to consider later on.

The power of sacrifice

Because college tuition can be steep, you have to make some personal sacrifices.  During the time that you are saving, you still have to allocate money for your daily expenses.  If you have little or none left, you have to further tighten your belt.  You have to make sacrifices such as brown-bagging your lunch or reducing your clothing allowance.

Teaching your child how to save

Educate your child about the importance of good saving habits.  Tell them that it is for their own good if they save a little bit of their allowance at a time.

Monitoring your child’s study habits

Find out what your child’s interests are.  Ask your child if he or she already has a college degree in mind.  If your child is too young, you can stick to observing.  You can base your savings on the course your child seems to be interested in. Remember that some degrees are more expensive than others.  Do monitor your child’s studying habits.  A chance for scholarship will lighten your financial load, of course, but even without a scholarship, a child with good study habits will do well in college.

Some people say that they could no longer eat healthy.  They say that when times get tough, nutritious foods are simply difficult to afford.  However, there are still ways to spend less and eat more healthy foods.  Here are some of them:

Cooking at home

When you cook at home, you get to control your servings.  You do not have to feel bad about not being able to finish your meal in a restaurant that offers huge servings.  At home, you also have control over your ingredients.  There will be no hidden added butter or cheese if you do not want it.  You can choose your oil and your pieces of meat.  With practice, you may be able to save more if you can cook fast.  This way, you are not wasting precious resources, such as electricity or gas.

Forgetting supersized meals

If you do get around to eating in a restaurant once in awhile, do not order supersized meals.  Go for the regular serving.  You do not only save money, you also save yourself from tons of calories.

Planning your dishes

Go shopping for food once a week.  Reserve a budget for your weekly trips to the supermarket and stick to it.  It will help if you have a list of foods to buy ready.  This list is based on what you plan to cook for the week.  If you have children, do not bring them along as much as possible.  They will be picking out candy or plenty of extras that may not be healthy for your bodies and your budget.

Compare prices

Find a supermarket that sells the same items you want to buy for less. Even a few cents savings per item count.

Maybe you are feeling the economic crunch for the first time and cannot get yourself to give up fashionable clothes.  Recycling old clothes is, of course, an option.  But what if you actually need to buy some new clothes?  This is especially true if your designer duds are already threadbare.

Men versus women

Though Women have trendier clothes, men have more expensive ones.  In the long run, however, men can still save more money.  Why?  It’s because their clothes last for more than just one season. Stylish women, on the other hand, tend to go with what is in season.  When in a tight  budget, women must remember to buy more classic pieces instead of trendier ones.  That way, the buy is worth the one-time price.  Designer jeans can prove to be good additions to both men’s and women’s wardrobes; they last long, look good, and go with almost everything.

Using accessories

For women, they can make use of accessories to make a look somewhat different.  The clothes may be the same, but they may look just a little different with some accessorizing.

A little humility

If you were used to buying designer clothes that are in season, you may start hunting for bargains in sales and even in flea markets.  Make sure that you are buying clothes that actually look new despite their cheap prices.  Buying something that looks old will defeat your purpose of being fashionable for less.  You can always swap clothes with friends who share the same build and taste.

Your dollar today may not be equal to the dollar you have a few years from now. That is why there is a financial term called the time value of money. Time changes what your money is worth. Because of this, you have to balance several factors when you are planning to invest or save. These factors include interest and inflation. Note that while you can invest at a fixed interest, you have no hold on inflation.

Importance of money’s time value

Time value of money is the basic principle behind many important and popular financial concepts. When you talk about simple and compound interest, you have to keep money’s time value in mind. Because of the possibility of inflation, you may actually profit through paying on an installment basis. This depends on the interest rate of course. If your total payments exceed the future value of the original price, you may have lost in the bargain. However, if you are paying $20,000 after interest for a product worth $17,000, you may still be at the winning end if the present value of that future $20,000 payment is $17,000.

Calculating time value with a financial calculator

Before using your financial calculator, you must thoroughly understand the problem you are set out to solve. Make sure that the calculator is cleared before input anything. Other things you should input are: number of compounding periods in a year, annual interest rate and the number of compounding periods in total. Remember to put a negative sign before numbers that are representative of outgoing money.

There is a right way of using an automatic teller machine (ATM). You have to follow these unsaid rules to make sure that you are safe, that your money is safe, and that you are being fair to other users. You want to make sure that a trip to the ATM remains a pleasant and convenient experience.

Choosing a machine to use

If you are in your own country, choose your own bank’s ATM to save yourself from additional fees. On the other hand, if you are in a foreign country, you can consult your bank beforehand if it has partner banks in your destination. If not, you can research about the amount of fees you have to pay for using certain ATMs abroad. However, whether you are in your own country or in a foreign one, an emergency can set you back to withdraw from the most convenient machine. Just try to avoid having to do so all the time.

Keeping your account and yourself safe

When keying in your PIN at the ATM, make sure nobody can see what numbers you are punching in. Make sure that you have memorized the PIN and have not written it on a piece of paper you keep in your wallet. If you are depositing money, make sure that your envelope has been sealed beforehand. Be constantly aware of your surroundings while you are transacting. A well-lit ATM booth in a safe neighborhood or a booth in your bank’s branch is a safer bet than an ATM booth in a dark alley.

Respecting other users

Even when you are very much concerned about your safety, you still have to follow some ATM etiquette. Respect other users’ need for privacy and safety by distancing yourself from the person transacting if you are next in line. If you are the one using the machine, make sure you throw your receipt inside the bin. Do not take too long especially if there are people waiting to use the machine also.

Having a fixed income, besides having a fixed salary, creates a certain degree of security. At least you are sure that money comes in monthly. Sometimes a person’s salary, even when assisted by additional fixed income, is still not enough. Is your fixed income suffering in the same way?

Benefits of a fixed income

With a fixed income, even retirees can enjoy a simple but secure life. Through pensions, they are receiving fixed amounts regularly. This can help them enjoy a life without always depending on their children. This life may not be as luxurious as the life they were used to when they were still young and working. However, if they have invested in a fixed income-generating stock or bond, they can live more comfortably. Even younger people can boost their income by investing in stocks or bonds. If they do not have time to keep on monitoring the market, they can choose low-interest fixed income stocks or bonds. If their salaries are enough to pay for expenses, fixed income could be set aside for savings.

The problem with fixed income

Fixed income does not allow for much growth. Pensioners have to fit their expenses into the small but regular payments. As for investors, fixed income is not adventurous. With fixed income, investors have to settle for low interest. So, if you invest into a fixed income stock or bond, you may be earning extra money but you won’t really enjoy high returns. If you really want to be a serious investor, a fixed income may not be for you. It could, however, be a stepping stone to riskier but more dynamic incomes.

No matter how hard you try to separate your personal life from your finances, they will eventually meet at some point. Your finances, marriage, and other involvements all belong to your life’s balance. If you fail in one of the aspects of your life, the rest may be affected. Of course, if you can make sure that only one gets affected negatively at one time, the better.

Death and its devastation

Death does exist no matter how you try to deny it. It is especially financially devastating if the family’s breadwinner dies. All deaths should be mourned, of course, but a breadwinner’s death has more negative aftershocks. It is the loss of both a person and a stable income. The total loss could have been prevented with a good life insurance and more importantly, with less financial dependence. If the spouse had his or her own means of making a living, the bereaved family does not have to end up in the poor house.

For love or money

Marriage creates additional responsibilities. Two people who love each other, however, cannot avoid the institution just because of the threat of these responsibilities. They do have to work together to make not just the relationship work but also to make sure their finances are healthy. It is a working relationship. So, if just one person is concerned about the finances while the other is spending frivolously, this could spell trouble for the marriage. The couple should have talked about how they should handle their finances even before they got married.