As everyone is gearing up for the New Year, you have leave aside the old financial ideas and adopt the new effectives set of financial ideas to keep your personal finances in a state of order. Manage your finances in such a way that you can take the right financial decisions even during the event of a financial crisis. As we’re about to bid 2010 farewell, let’s check out some personal finance tips that can ensure you perfect financial management. Follow the bunch of tips mentioned below to manage your finances.
1. Don’t ever try to foretell the future:
As we are presently in the midst of complex financial challenges, it will be foolish on your part if you foretell the future and plan your expenses in that manner. You cannot decide what’s going to happen in the near future. Therefore, prior financial planning will never help you with effective finance management.
2. Always keep available cash:
If you’re unsecured about your job and you feel that you can lose your job any time, it is always recommended that you must have cash available for use. If you have extra cash at hand, you can easily avoid selling off your investments during emergency. You may not get the tax benefits of your investments if you sell them off.
3. Always diversify your investment:
Investing is not just about stock market investment, you also need to diversify your investments perfectly to minimize the risks. Investing all your money in one stock may be a financial blunder and most investment experts advise investors to diversify their funds in stocks, mutual funds, bonds and cash equivalents equally.
4. Keep on contributing to the 401(k):
If your employer sponsors a 401(k) account and you’re not contributing to it, then that is another big mistake that you’re doing. Even if the markets are down, don’t stop contributing to your employer-sponsored retirement fund. You will get tax benefits and the proceeds of this fund can be easily utilized in paying off debts and other financial obligations.
5. Pay off credit card debts:
One more step towards seeking financial freedom is by paying off credit card debts. If you’ve accumulated a huge amount of credit card debts, it is better that you save money and pay off your debts. Leading a life with credit card debts can often become frustrating. Therefore, take help of debt relief programs or follow the personal finance tips to cut off your debt burden.
Therefore, if you’re looking for ways to handle your finances in a proper manner, you can follow the personal finance tips mentioned above. Control your expenditure and follow your budget to get the desired results.
Twitter: wordpresswb
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Also pay off your house ASAP as the interest on that is just crazy! Imagine having your house paid off and not having to pay any rent….except for bills…That would be great!
When you said “Always diversify your investment” it reminded me that we should also diversify our monetization methods on our blogs!!!
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Thanks for some very useful and practical tips Samuel. I especially like the 3rd one, diversifying is always a good idea, so if one of your investments goes the wrong way, at least you have a few others to lean on. Diversifying is not crucial for when you invest, it also is a great way to deal with your income streams. By having a few different income streams, you can always be sure that if you lose one income, there are other ones supporting you.
It all comes down to this ” Don’t put all of your eggs in one basket”.
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Nice tips indeed – I would put paying debt and credit cards higher in the list, probably No. 1
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Its great!
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Very practical advice, Samuel. I’m sure the one most people will find hard is the one about the credit cards, they have a way of becoming monumental debts!
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You may want to add Variable Universal Life Insurance for #6. You can choose from fixed or variable securities and build cash value with your monthly premiums. It’s tax free in as well as out minus expenses.
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good tips! I also suggest that if people need to take some time to pay off credit cards then it is better to transfer your balance to another card with a 0 APR rate. No one likes paying interest
Also, many people suggest that you have 6 months of cash available on hand – and that is a hard thing to do for MANY people
good post!
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I think the most important thing is that you don’t live above your standards. If you live a luxury life but you can’t pay for it, you’ll end up having large debts. Which in turn cost even more money. Especially CreditCards have high interest rates, so avoid them!
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Managing one’s personal finances sure is a challenging task for some. The tips presented in this article are really helpful. They’re presented in a realistic manner – those that can really be done. I guess the most important thing, if I may add, is to live within your means. That’s the best personal finance management advice I could give.
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My idea : For you to begin to save money you are advised to all your monthly bills and outwards payments to your direct debit account. This is the surest way of not paying late repayments interest and penalties that most accrue with the credit cards.
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Definitely always try to live within your means. If you want to buy something, pay cash – don’t use credit.
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Great point – living within your means is the best way of sorting your life out!
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The best idea would be not to borrow money at all, always make sure you have enough money left on your bank account
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Keeping available cash is what has gotten me through some really tough times. I’ve kept $20 in the ash tray of my car just in case I don’t have any gas money. It’s saved my sorry butt so many times!
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Yes, avoid getting used in borrowing money. Avoid including your next month salary for this month expenses, that is what had been practiced in other countries ordinary employee until it reach to borrowing money. Once you’re drown, it is really hard to recover especially during this time. Plan your finances well!
And don’t live a life higher than your standard!
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I always keep extra cash on my hand for emergency. Thanks for the tips.
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On some of these I agree but I think that one should be more specific since most people who read this are going to have their geo-location glasses/filters on.
1) I won’t say what I see trending out here and if I do without charts and graphs I will sound like a fear monger. But if you have municipal bonds, dump them now. In the media there are these constant buzzwords like “states/counties/cities restructuring”. That’s a sneaky way of saying DEFAULT on their debt where if you own bonds in US or European municipalities, you will be lucky to get back 80% of your original investment.
2) Keeping “cash” doesn’t necessarily mean Dollars. If there was another credit crisis and the Fed start massively printing money even faster than it is doing right now (Google Weimar Republic), the Dollar won’t be worth the paper that it is printed on. Silver bullion has gone up from $21 to about $30 in the past 6 months and the demand is vastly outstripping supply. Let’s put it this way….if there was ever a massive series of defaults, your Dollars will be worthless. Get silver bullion, Swiss Franks, Hong Kong Dollars, or Chinese Renmimbi, i.e. currency that is stable and won’t lose value.
3) Not only diversify what you are investing in but also WHERE. Personally I invest in emerging markets where the returns have averaged 30% since 2003.
4) I don’t understand why anybody would want to be in a 401K. Seeing as how the Dollar has been steadily devalued, most 401K’s are worth maybe 50-60% of what they were worth 10 years ago. If you feel the need to stay in the Wall Street casino, be my guest. But the reality is that the smart money is investing in farmland, fresh water suppliers, seed companies, and energy companies. I know several people of retirement age who have cashed out their 401K’s and moved to Asia or South America where they have invested in small family condominiums and are earning about 16% where the cost of living is maybe 20%. So you’d be hard pressed to spend $30,000 per year of the $50,000 in rent you would collect if you took a lump sum.
5) Well it’s not like credit card companies are freely giving out cards like candy anymore are they? Signal number 2 is this: If you have a $10,000 credit line, pay off $3000 if you are near maxed out. I would be willing to bet that they’d cut your limit to $7500 or less.
So while the first advice was fair and practical, hopefully I’ve opened some eyes to other ways to protect yourselves and look past what is been forced down your throats by the mainstream media.
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I agree that keeping some cash available is wise, if you can that is!
Credit cards are the bane of so many lives and I would recommend that people just don’t ever get one….if you need low cost loans join a credit union or if you don’t want to do that, extend your overdraft……the interest on credit card debt is outrageously expensive and so often leads to a road of rising debts.
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Thanks for in practical tips. So often people know what they should do, but have problems actually doing it as far as their money goes.
Habitual spending can be costly. For example, a mocha might cost $4. Not that bad; but doing it daily would be $120 a month. You could save so much by making your own. Saving does require sacrifice.
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I think the most important thing is that you don’t live above your standards. If you live a luxury life but you can’t pay for it, you’ll end up having large debts. Which in turn cost even more money. Especially CreditCards have high interest rates, so avoid them!
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Paying off my credit card was the most amazing feeling ever!! I can now concentrate on the diversifying of my investments (as you suggest) instead of paying the credit card debt each month and seeing the balance never go down!!
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I think it is important to have diversification not only in your portfolio but market based as well. I for one use the Harvard investment strategy and at the same time, forex and precious metals. That way if a market falls, then you have the others to help cut the losses.
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Tip number 5 is something I’ve always known from the first day that I owned a credit but its something that I have not followed and regretted not following it. Now that that my credit card debt is piling up more that I can ever afford to pay, I’d like to kick myself for not heeding a good advice that I’ve known all along.
I’m working hard right now on clearing my credit card debts. I am looking forward to the day that I can have them cut-off and I’m back to zero balance.
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The third one is very good. Actually, Diversifying is not vital for when you invest. It is a great way to deal with your income streams. By having such different income streams, you should always be sure that if you lose one income then there are some other one to support you.
Its a vicious circle we are in, people are scared to spend money, yet if no one spends anything the economy will shrink and more jobs will be lost. However tell that to someone who is living on the breadline and is living in fear of losing their income.
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So many people ignore #4! I swear it seems most people either think that their 401k is just like a normal savings account that they can borrow from at any time when that is not the case. You need to invest, continue to invest and not touch it unless absolutely necessary.
And #5, i swear it seems these younger generations do not want to sacrifice by saving money and paying off debt. I always tell them pick 1, focus on paying it off then move on to the next.
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I like #2. Keeping cash gives you a feeling of control… You don’t worry about things as much when you have a little money set aside.. If you don’t things can become stressful.
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I agree that paying off credit cards should be a very important focus, because this will give you the much needed freedom from the bill collectors if you manage to get behind. They sure are funny calling every day as if something magical has changed. One important thing I learned as well is that you must not cancel the card as you will not have open credit which allows you to be able to get another one at a later date and it shows you have established credit. I closed my card and it was the worst thing I could of done, as I still can’t get a credit card because I dont have an open line of credit. So back to the bank to build up an unsecured credit card. Here I go again.
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