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Posts Tagged ‘Savings’

Let me begin by clarifying that these articles of how to invest are not for people who want to make millionaires in a day, nor are the sacred secret of the holy deity. These are practical items that will help you understand a little more how the process of investing in general.

He had previously talked about how the stock market works and an introduction to this world. You should only invest what you can lose, that the performance of your investment is related to the risk you take, and that the stock market is where companies’ shares are traded (trade). Now we’ll talk a little more than the usual options a person has to start investing money in the bag.

Retirement Accounts sponsored by the employer (401 (k), 403 (b))
As a type of benefit, the company they work could offer retirement plans in which you could make money automatically from your salary. These plans have the advantage that your contribution to this account is made before you charge taxes, for example, if you contribute $ 100, it is likely that net income is reduced by only $ 75. There are two types of accounts that are the most common 401 (k) and 403 (b).

The only difference between these accounts is that the 401 (k) is used for private companies and 403 (b) are used for nonprofit organizations. I imagine that other countries have similar systems to this. Another advantage of these accounts is that the employer has an incentive program where the company matches your contribution up to a certain percent of your salary.

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Give priority to the education of our children is something that every good parent should do. That is why financial education needs to be part of growth. An allowance will help them better understand how to manage money and make better financial decisions in the future. This allowance should be based on two parts: the basic allowance and the allowance of commission.

The basic allowance
An allowance makes you think children like to make the best use of their money. Sound familiar? When you receive your salary payment date, you have to decide how you will distribute your money in your needs, your debts and your tastes. A benefit that our children have is that they do not have to worry about the needs, but they have to decide whether to buy an ice cream or candy.

The basis of money management is that this is a scarce resource, and therefore we always have to spend on what gives us more benefits. They will learn has always buy what they give more performance, they take a bad decision, and not learn to take it again with the next counter.

The chores and tasks
Some people incorporate household chores such as justification of the basic allowance, but for me this is a bit trivial. The household chores for children (picking the games, help with cleaning, caring for children) should be taught as a liability and not as part of compensation. At the same time, do homework and attending to the study is part of the primary responsibility for children, and instead of these to be justifications for the allowance should be only part of what they should do as part of the small society is the family. Sure, you can use a little psychology and also use things without monetary value (time to play with friends, watching television) as a tactic to reward (or not) the development of the child.

Go the extra mile (working on commission)
If your child is not only doing what he should do at home / school, but also demonstrates an effort beyond what is required to do their work, this should not be taken as an opportunity to reward their deeds. When the child more than you need help, gets excellent grades and show kindness for others, this should be rewarded for a small financial incentive. Personally, nothing made me study how the expectation that if they took notes over 90 could buy any board game I wanted.

Other things to consider
There are other things you should consider your children when it comes to money, but I also want to read your comment:
* There is NO. Do not do your children understand that if they cry enough will get what they want. If there is a reason I do not want to buy X or Y thing, be firm. But they will know how to get what they want.
* Let them work. If you have the right age to work delivering newspapers, helping neighbors or shop in the family, let them. With the rule that if the grades or chores are not done, no work. Priority.
* If they want something and have an allowance, let them save a certain amount of money to get it. Sacrifice. For example, you save 20% for the game you want and you give 80%, I advise you to use 20% of them to save into your studies.

For many of us it is very difficult to save, either through lack of money for the expenses we have in the house or the need to buy all the things we like. Something we must always keep in mind: “The basis of all wealth is saving.” You have to save for emergencies, for retirement, buying a house, etc.. … It is not as you’re winning that matters, but how much you spend. We are accustomed to living paycheck to paycheck.

We have an anxiety that makes us burn our pockets or bank accounts until there is a penny in it feel the need to spend. And this is not the fault only of us, nor we are not passing through part of the standard, but because the world economy is based on that, consumerism, but they do not consume, or at least save, are those who stay up.

Spend less than you earn
It is important to live below our resources. There will always be bills and receipts, and will be easier for us to spend than save, but if we have to save a percentage of our wages each payment date, learn to adapt to live without that income and only spend what we have. As if our salary decrease for lack of work, possibly spend less than what we have. If you keep spending the same amount that our revenues, we always get used to spend our salary no matter if they are $ 30,000 per year or $ 300,000 if they are, always find a cost.

It is not how much to save what matters, but you save.
We must focus not save a high amount or too ambitious, but a number that allows us to save the same amount religiously every week (fortnights, months, etc). One way to make this happen is to make a personal budget that includes saving as a priority, such as rent or mortgage on your home.

The ideal amount to save is 10% of everything you earn, as many finance textbooks say, but you can start with 5%. The key is to save time.

Other tips for saving power.
* Contributes to retirement plans in which your employer will automatically deducted from your paycheck a certain amount.
* Divide the direct deposit of your paycheck in two different accounts, a current and a savings.
* Use the automatic transfers from your bank (eg my bank, Bank of America, you have one) to be able to automatically transfer a portion of your direct deposit to your savings account.
* Control your vices. If you smoke two packs of cigarettes a week, smoking is only one and saves money not spent. This will help your health too.
* Bring your lunch from home. One of the largest expenses that people have a part of buildings and transportation are the lunches at work. You can reduce the food you buy at work in half and save the rest to go on vacation.

I always receive messages and comments asking for a list of books I recommend on personal finance. Here is a list of books for people who want to read more about this fascinating world of personal finance. Note that these are books that have particularly interested me and I learned a lot from them but does not mean you’re going to have the same conclusion.

The Richest Man in Babylon by George S. Clason
This book is about applying knowledge about things that seem common sense but not all use them. The author entertains and teaches techniques on how to build wealth with your income and how to be successful with your money through anecdotes.

Rich Dad Poor Dad by Robert T. Kiyosaki
This is a very good book I’ve read several times. The book may seem a bit extreme in the examples but lets take a look the ways of how “rich people” and “poor” have their finances. The examples given in the book can be impractical but it teaches you the importance of saving and investment. Learn how money works for the rich and the poor work to earn money.

The Money Makeover by Dave Ramsey
The author of this book speaks also talks about how to manage money more efficiently, but still does an excellent job in the area of debt. Here you will find many tips on how to reduce or eliminate your debts and start to live a prosperous life without them.

The Only Investment Guide You Will Need by Andrew Tobias
An essential guide for how to invest your money. This book explains very well the world of stocks, bonds and mutual estates. I read the book in English and was very detailed and easy to follow. According to criticize the Spanish translation is a bit difficult but the essence is there.

How to Win Friends by Dale Carnegie
This book is not necessarily about personal finances, but it is essential for self-improvement and personal development. This book will help you implement things in your daily life that lead to success in interpersonal relationships. It helps you understand better how to deal with people and get what you want from them.

One of the greatest curiosities in the world of finance we have is the stock market. This has always been the icon up to the possibilities of earning money and become a millionaire. In this introduction to the investments I will try to explain in a simple way how this system would work for an ordinary individual. This article is not about making money and become a millionaire but to explain some terms about this phenomenon.

What is an investment?
“… It is the act of having money or capital in an enterprise with the expectation of profit” according to Princeton University.

When you make an investment this money is likely to gain or lose money, but there is always the expectation that you won. The biggest mistake people make when they start investing in stocks is investing more than it should. You have to keep in mind that you should only invest what you’re willing to lose. The investment is only one legal gambling.

Savings become investment
As you’ve read several times in articles and on the page about who we are, my duty as CFO and as a friend is to teach different forms the basis of all financial health, savings. When mobilization should have several funds to better identify who could invest money. Remember that the first thing you should save it for an emergency fund. After you have enough money for any unforeseen event could start an investment fund.

What is an action?
Imagine that a company is divided like a cake (cake, biscuit) in many equal pieces. These pieces are called shares and if you have a piece you own a part of the company or shareholder. The majority of companies that are in the stock market are split into thousands of pieces, it means that although you own the company did not have no say (unless you have many pieces). If the value of the company rises, your piece will be worth more and if it falls less. Here’s an example:

If you buy an action that is now worth $ 10, this becomes an action regardless of the price. If the stock is worth $ 20 tomorrow, you will have $ 20. If the action has $ 1 dollar lost 90% of your initial investment.

The relationship between risk and performance (what you earn)
The most important thing to know about investing is the positive relationship between the risk you take and the gain you get from your investment (performance). The more risk you have of losing money, the more money you could win (or lose).

What happens in the stock market?
In the stock market is where companies and individuals have the opportunity to buy and sell these pieces (shares) of the company. Ordinary people usually do not buy the shares of the company through the company if not a third party (broker). The value of this company changed regarding how well the company is doing and also do in the future. If the company does poorly, the chances are that your actions fall in price.