What are sub-saving accounts?

These are accounts within your bank account.  If your bank has the feature to have multiple saving account, you can open saving accounts online to save for whatever you want.  Let say you want to buy a new car in two years, you can open an account and call it “New car fund” and have a percentage of your savings automatically sent to that account every month.  This will help you from spending your new car money and give you a little back up if your old car need fixing.

Sub-saving can be use to save for anything and is a great way to help you get in the habit of planning ahead.  This can also help you complete your goals on time, you eliminate one of the main two reasons our goals get side tracked… lack of funds.

There are a couple things to watch out for when setting up these sub-accounts.  I have found it is best to have money routed from you main saving account. Having it taken from your checking account can lead to the risk of being overdrawn.  If you need to, you can increase the amount being sent to your main saving account to accommodate and since more money is being taken out of your accounts be sure to keep a close eye on your checking at first.  Be careful if your bank has fees related to their saving accounts,  some banks still offer free checking and saving accounts.  If you have no idea how to setup these accounts, go talk to you account manager at your branch or call your bank.  You account manager is there to help and most people never utilize there service.  A good account manager should have the answer to all your questions and be able to help you with all your banking needs.

Having these sub-accounts will help reduce over spending and is simply just another great way to help you manage your money.

Well, it is time to write another book review. Since I just finished reading On My Own Two Feet by Manisha Thakor and Sharon Kedar, it only make sense that this book is the subject of my review. Yes, I am aware that it was written for the fairer sex, but I wanted to take a quick look into how women think about finance. What better way than to read a book written by females for females?

This book is a quick, smart read and that is important because it is geared towards women with careers and social lives. It gives them a fast informative look at how to make their money work best for them. The message is super clear and to the point. Amazingly the duo covers all the basics of saving, investing, retiring, understanding and using credit wisely, budgeting, and still find room to give a life strategy in less than 200 pages. I like the chapter on prioritizing your financial plan, where they lay out their seven step process to reaching your financial goals. Their seven steps are all great gems that are cut to perfection. I know I am giving this book a lot of praise, but it is really a good book.

On My Own Two Feet is another 5 star financial book in my opinion. It is a must read for ever one, not just women. Get it at Amazon

Remember when personal finance planners were note pads with a calenders and a calculator? Well, they have come a long way since those days. We have seen them transform into desktop software and now full blown websites that does most of the work for you. Take mint.com for example, this is a personal finance planner on steroids. Mint is only one of the many personal finance managers on the web, but I have to say it is one of the best.

Lets say you have no idea how to invest, budget, or just anything about personal money management period. You basically have three choices when it comes to learning. 1) Just throw your money in a bank and hope you are getting the best rates and hopefully one day you will have enough to retire with. 2) Hire a personal finance manager to guide you in what they think is best for your money. 3) Take the bull by the horn and learn to choose your own savings accounts, make your own investments, manage your own retirement fund and have something to pass on to your children. I don’t know about you, but number 3 has been a life saver for me and financial planners/managers like Mint has been making it easier by the day. It’s like hiring a financial planner that you never have to pay.

You can track your spending, find the best savings and checking accounts for your lifestyle, set up and maintain a budget, follow your investments, get alerts and more, all in one place. It is a one stop financial manager with everything you could possible need to get you started getting your financial life in order. Yes, personal finance planners have come a long way from the days of the note pad with a calculator, now its as easy as clicking a few buttons.

Investing is a scary subject for many, especially young adults. As young adults, we want to enjoy life and saving and investing is usually the last thing on our minds. Ironically, it is the time we should be investing heavily and planning for retirement. A little thing called compound interest can turn $50,000 into over $1.5 million in 30 years time. This is the biggest advantage young adults have when it comes to finances.

Almost any form of long term investments is good for young adults and the amount they have to invest is small compare to older folks. A 25 year old can more than triple their initial investment in 30 years, without adding another dime to it. Imagine if are 25 years old and you invested $20,000 into an account bearing 4 percent interest monthly. In 30 years time you would have somewhere around $65,000 in your account and you don’t have to invest another dollar. Now imagine if you invested another $50 monthly for the next 30 years, that would be somewhere around $100K. Over the 30 years time, you would have only added $18,000 for a total of $38,000 invested and a profit of $62,000.

The reason more young adults fail to take advantage of this powerful technique, is simple lack of knowledge. They do not know it exist and how powerful it is. We usually learn this later in life and try to play catch-up, but time is something we can never get back. I have said before that personal finance should be a mandatory part of every high school, but it is not. It is left up to parents to teach their children about saving and investing, but most parents know just as much as their child. It is an easy subject to grasp and with extensive resources to help you learn and it is available to all young and old.

Now, why is it that more people do not take advantage of free, invaluable information like this? The class could have easily hold 150 people, but only 35 was in attendance and from the question being asked most were well educated in the subject. Only a few did not know about investments and retirement planning. The way I see it, the people that need it are too busy trying to make ends meet and the ones that can do without, have the time to take advantage.

The group teaching the class was from a local business and just gave enough information to make you want to hire them for their services. They did however cover some important topics that the new comers to personal finance can use. The real lesson started after they open up the Q & A portion of the class. One guy that looked like he was in his mid 50′s ask “Do you think it is wise to start investing again?” That was the question of the day and seems as if all the people that knew about investing, wanted an answer to this. “It depends on your portfolio, what type of investments you are talking about and a lot of other financial information. It is always safe to make long term investments, short term investments is always risky.” This was not the answer they were looking for, but in my opinion it was the right answer.

Short term investments are for thrill seekers and companies with deep pockets. If you are young, long term investments is always a sure thing. If you are at retirement age and short on funds you should definitely not consider buying and selling stocks to make a quick buck. The instructor tried to break it down the best he could before time ran out, but it was clear they just want conformation and not sensible advice.

All in all it was fun for me to sit there and listen. I personal did not learn anything new, but did get a few reminders that I will write a few articles about in the future. I do recommend you take a personal finance class if you are new to the subject, it will give you a clear understanding of what it will take to get your finances in order.

Personal Finance For dummies by Eric Tyson is written for beginners trying to get a handle on their finances. It is written so everyone can understand and use the information. It is definitely a good book for starting your financial journey and getting an understanding of investments, saving, and preparing for retirement.

While I am not a personal finance dummy, I did pick up a few gems that I will be putting into action in the near future. It also have some advice that I do not completely agree with, like cutting up all your credit cards. I think having one credit card is good for your credit, but it all depends on the individuals. Eric outlined some very good tips on shopping, that I have been living by for the last 8 years. He suggested thing like, buying in bulk and eating it before it goes bad. There is also advice on travelling, career, investing and just about every other aspect of personal finance.

I recommend Personal Finance For Dummies to beginners and intermediates. It’s not a must read for the seasoned money managers, but does have a few good tips. You can get it Amazon or at your local library.

What is personal finance? Can you define personal finance? What does it mean to you and your family? Personal finance is a huge subject that covers many aspects of personal money management. It is not only about building wealth or paying your bills on time, it is also about the fundamental attitude you have towards money and the lifestyle you want to live.

This is how Wikipidea Defines personal finance “Personal finance is the application of the principles of finance to the monetary decisions of an individual or family unit. It addresses the ways in which individuals or families obtain, budget, save, and spend monetary resources over time, taking into account various financial risks and future life events. Components of personal finance might include checking and savings accounts, credit cards and consumer loans, investments in the stock market, retirement plans, social security benefits, insurance policies, and income tax management.”

While Wikipidea’s definition is correct, I want to know how you define personal finance. Share what it means to you, write it in the comments so others can read it. You might inspire someone to take control of their finances or you might find that others share the same ideas.

You probably found this page looking for an entry level finance job. Well, sorry this is not about finance positions, but this is still something you need to read no matter what your employment status. Personal finance is a subject everyone should strive to gain as much knowledge and practice in as they possible can. I know people making six figure incomes with little knowledge of money management that are in no better situation than my friends earning little over $30,000 yearly. You cannot tell by looking at them and their expensive cars and home, but their accumulated wealth is not enough to sustain their lifestyle for a full year. With their 5 bedrooms 4 bath homes in up scale neighborhoods comes a hefty mortgage payment due monthly like everyone else. So take the time to learn as much as you can about personal finance and when you get that entry level finance position you will know just how to make your money work for you.

Truth is, the amount of money you earn does not indicate your true status in life. People with high income usually have high expenses from all the thing they buy and people with low income usually have high expenses from buying what they see the broke rich people with. They do not realize that many of these people are struggling themselves. What does indicate how well off you are in life financially is the amount you have invested and saved. A Lamborghini cost much more to fix, use much more gas, burn-out tires much faster, and needs a garage is a safer community than a Ford. Most people will not know its a Rolex until you tell them, they will not know your suite cost $4,000 by looking at it and will not care that your draws are made from chinchilla fur. On top of all that everything I’ve mentioned above are extremely horrible investments and shows how bad high earners can be with their money.

Making long term investments early and learning to manage your money is one of the best things you can do for your future. It is a fact that people that practice financial management are least likely to be in debt and most likely to gain financial freedom. If you take a look at the many Personal financial blogs on the web you would see how many of these bloggers are making great progress in becoming debt free. What they have realized is that accumulated wealth is the key to their future, not the most expensive car or the biggest house in and expensive house in an up scale neighborhood.

Many believe that more income will be the answer their problems, but in most cases it is a lack of management and the unwillingness to Change that is to problem. If you keep doing the same things you will continue to have the same results. I think I have spent enough of my time telling you why you need to make your life better, the rest is up to you. If you need more convincing just ask yourself this. Are you becoming Rich?

]]> http://www.jinij.com/entry-level-finance/feed/ 6 http://www.jinij.com/personal-financial-planning/ http://www.jinij.com/personal-financial-planning/#comments Mon, 31 Aug 2009 01:49:50 +0000 Daniel http://www.jinij.com/?p=163

I am a planner, I plan every little move I make. I am so good at it I only write down my mid term goals and long term goals. This has help me to complete almost every thing I have done through out my life financially and other wise.  If you take a look around you everything you see was planned in one way or another. It was the plan of Sony, Compaq, Gateway, Dell, Apple, or which ever brand of computer you are using to get you to buy it. If Apple had failed to plan its design, manufacturing, advertising, and distribution you would be using another brand right now.

Everyone needs to have a personal financial plan, without it you will be flying blind, you would not know where your money needs to be or where it is going, but amazingly almost everyone I know has a stupid look on their face when the subject arise. Yes, it will take time and research to put together a good financial plan and yes it is just as boring as watching a box of printing paper, but take a minute and think of the alternative. Think about how much planning it takes to put together a decent birthday party, and think what would happen if you did not take the time to plan said party. Your little sister might end up being the DJ, Pizza Hut would be the caterer, your living room would be the dance floor and only the people that feel obligated to celebrate your B-day would drop what they are doing for your last minute invitations. Well, finances are far more important than any birthday party, but most people spend more time planning a party then they do their financial future.

The #1 answer I get when I ask why don’t you have a Personal financial plan is “I don’t know where to start.” In his book I will teach you to be rich Ramit Sethi makes two unarguably point. He states that you don’t need to be a financial expert and starting making your financial mistakes early is better than not starting at all (Not his exact words but I’m feeling too lazy to go and get the book right now). The odds of you making a catastrophic mistake is pretty much the same as not having a personal financial plan at all. So, my answer to everyone that gives me the “I don’t know where to start excuse” is “$1,000 in a Roth IRA will earn you no less that $3000 in profit you never have to worked for In 40 years. If you add another $1,000 a year you will earn over $100,000; now thats a pretty expensive excuse.”

I do not think personal financial planning should be an option, it should be taken out of people salaries along with taxes, but it is an option. It is left up to you to prepare for your future and you can make all the excuses you want because your not cheating anyone but yourself and your children.

It is a part of our genetic make-up to feel a sense of urgency when we get motivated. When most people realize the need to do something to fix their financial situation, they usually want to take action immediately. Since most of us are not educated about managing personal finance, we seek to get educated when the motivation hits us. They usually head to Google, the book store or find a financial manager if we can still afford one. It does not take long for motivation to fade and by the time they finish reading the book and doing research, they tend to be less motivate than when they started. I have put together a small quick start list to get you moving when your motivation is peaking.

1. Go and get a book on managing personal finance. I was not saying not to read or do research. This is just a list of things you can do to get the ball rolling now, you will need to learn as much as you can about managing your personal finance and as the saying goes… education is fundamental.
2. Gather all the information you can. How much debt you have, your monthly and yearly income, investments, bills, credit debts, Church tides and offerings and especially the money you spend on miscellaneous things. List them by category and be honest. You will only be cheating yourself.
3. Make a list of everything you buy for at least a month (three months is better). It will surprise you what you spend you hard earned money on. This will confirm where every cent of your money goes and where you can start to cut back.
4. Start saving now. Make positive that you put at least %10 of your income in a saving account of some kind. This might seems impossible, but think of the alternative. Not having anything saved at all leaves you wide open to falling right back down. If you get sick, you will have something to fall back on until you are well. Live for today an plan for the future!
5. Saving sooner rather than later is extremely important. Say you just had a child or are planning on having one soon; you’ll want to start putting money away for their education as soon as possible. Open an account like an RESP (a Canadian tax-free savings account that can be used to contribute funds for a child’s post-secondary education) as soon as possible – you’ll definitely thank yourself later.

Get started with this quick list, while you read and do research to gain knowledge. Learning to Manage personal finance will not happen over night. Stay consistent and apply what you learn when it fits your circumstances. Like I have said before, the best tip I can give is to stick with it and it will pay off.