Lowering the Fear Factor on Finances
One of the major reasons why a lot of people are averse to the idea of managing their personal finances is because they find it complicated and cumbersome. However, this state is just indicative of your failure to perform the necessary housecleaning. Your efforts are actually wasted on tasks that could have been avoided in the first place. You have multiple accounts with several banks and overlapping investment portfolio and several brokerage accounts. If your finances are in this kind of situation, then the first thing that you must to is to simplify and get rid of the “excess” fat in your personal finances. Once you are able to simplify your personal finances, managing them will not be very complicated.
How can you simplify your personal finances?
1. Get Rid of Excess Bank Accounts
If you try to analyze your requirements, you will find out that there is no need in having more than one bank account. If you currently have several bank accounts, consider closing those accounts that are deemed unnecessary. If you are married, then you may have a joint account to pay for your household expenses and two separate bank accounts for you and your spouse. You will be able to manage and monitor your cash flow once you are able to reduce the number of your bank accounts.
2. Go for Paperless Transactions
There are a lot of transactions that allow paperless billing. Take advantage of this opportunity since this is will reduce the paperwork. The record of your paperless transactions is stored on your PC and you can access them for future reference anytime and anywhere. This is also a more convenient way of doing transactions since you can perform the task at your most convenient time.
3. Automate the payment of your monthly bills
You can also set up a standard payment arrangement for all your monthly bills through your credit card. In this way, you can just make a lump sum payment for a specific set of monthly bills. You will no longer have to remember and follow up your payments for individual bills that fall due every month. This makes it also easier for you to monitor and manage your monthly expenses.
4. Streamline your Brokerage Accounts
Like your bank accounts, you will have to review your existing broker accounts and explore the possibility of consolidating them so that you can simplify the monitoring and management your investment portfolio. You can avoid having overlapping investments if you are able to reduce the number of your broker accounts to the ones you feel most comfortable doing business with. With a reduced brokerage portfolio, you can also enjoy certain benefits such as reduced fees when your investment reaches a certain threshold level.
5. Perform a monthly financial review
In most instances, people start off on a high note in their budgeting only to taper off after a few months. The next thing they knew is that their finances have turned into a complex jumble. They are left with no choice but to start all over again. You must be consistent in keeping track of your cash flow and net worth. You must perform a periodic review of your personal finances. You can easily manage your finances if you consistently perform monthly review. This set up also allows you to spot potential financial problems before they become serious and unmanageable.
There is no magic formula when it comes to effective personal finance management. You only have to keep things simple so that you will be able to manage them more effectively. If you are able to develop this mindset, you are well on your way to becoming a financially independent person.
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Personal Finances FAQ:
Question: Is their a personal finance site on the internet that can help me budget?
Answer: If you know how to use excel, they have a great personal/family budget application. Just open up Excel, go to the search bar in the upper right hand corner and type “family budget” and samples you can download will pop up. It’s a very easy fill in the blank form with all the categories you probably need already there.
Question: Does the study of economics help a person to manage their personal finances better?
or I should ask if this study should help a person to manage their finances better or if what is learned has nothing to do with a person’s financial situation.
Answer: Economics has nothing to do with personal finances. Actually an entry level finance class would be more appropriate for that. Economics is more of a study of rational behavior and the allocation of scarce economic resources like time and money. An understanding of economics does allow a person to realize and seize upon opportunities to save or make money.
Question: What is the best money management program out for personal finance?
To help get a plan to reduce debt, balance checkbook, and reminds you to pay your bills.
Answer: My personal favorite is Quicken. I’ve used it since 2001 and can’t imagine managing my personal finances without it. There are others out there though. Obviously different people will have different preferences.
Question: Can state of Mississippi garnish my wife’s paycheck for a personal finance loan?
Answer: Is the state her employer? Is the state the creditor?
If the state is the employer and the loan was granted through the state then yes. Otherwise they will have to follow the procedures of collecting debt. In order for them to garnish wages, a judgment must be entered against her. The creditor will have to sue to get this.
Question: Personal Finance Question. Please help, I’m desperate.
I am a young adult. My parents are disabled so we live in public housing. I am trying really hard to move out but I can’t work out the numbers. Lets say for example I work for $10/hour, 5 days a week, from 9-5 pm. Annually I can make about $19,200. But the problem with public housing is that I need to pay 30% of my income for rent and my income tax is 10%. So when is all said and done I still don’t have enough money to move out. Any ideas on how I can solve this problem?
Answer: Most people who are just starting out can’t afford their own place. They usually get roommates. I knew 4 guys who shared a nice 2 bedroom apartment once. Get the job first. See how much you can save per month (put it in a bank account) — if you commit to a rent that you can’t afford it won’t make anybody happy. Don’t try to spend more than 1/3 of your total income on rent, because there are always other expenses that come up.
Question: What kind of jobs deal with personal finances?
I have a Bachelor’s Degree in Economics, with a major in Banks and Finances. I currently work for a credit union but I am really interested in personal finances, credit issues, stuff like that. What are some jobs related to these things?
Answer: Today most “financial advisors” are loan officers, branch managers or investment counselors. Unfortunately, the industry has gotten so sales driven, that those are really your options. There is not a way to only advise and not sell, it’s not really profitable for a firm. You could do not-for-profit work, and city/government work, but there is little room for advancement and you will typically end up being tasked with other things. If you think about it though, the best people to give advice are those working in the field and understand how things work. Once you have established enough retail experience you could (in commercial banking or investment firms) move to a “wealth management” where you are doing financial counseling and advising for the affluent.
Question: Can creditors go after my LLC if my personal finances are in ruin?
My personal finances are in ruin. I cannot pay my credit cards and am currently trying to find a solution. Can a creditor attach a claim on my LLC’s bank account that we use for our store? I have 2 employees and the store basically just breaks even. All credit card debts are in my personal name and not the name of my LLC.
Answer: No they can not. If you are a registered corporation under an LLC guidelines and registered with your state attorney general office (you didn’t just use some online legal scam to incorporate), then your personal finances do not affect the corporation. That is why they call it a Limited Liability Corporation, to protect the officers assets.
Question: Personal finances?
I’m 22 and am just out of school. I’ve never had a very good control over my finances and would like any tips to help with budgeting, lowering spending habits, easy ways to keep track of spending habits, etc. I don’t want to have to pay for any of it though. I want to know how to get myself out of debt so when I start paying college loans in June I’ll have a better grip on covering my expenses and being able to save up so I can move out of my parents’ house.
Answer: Yes, you CAN take control of your finances. A little dedication and self-control can transform your financial situation, if you’re willing to stick to it.
Look at your expenses from the past year and create a budget that realistically reflects how you spend. Then see what you can cut out, and focus on long-term goals. Make debt repayment a top priority, since the interest will play havoc with your finances as long as you have the debt. Starting today, never spend more than you make – use your credit card only if you are 100% sure you will pay off the entire amount every month. Track all your spending, in a computer program or even just scribbling down the amount in a handwritten budget list.
You can do it. Just stick to it and remind yourself of the goal.