Oct 08 2010

Putting Yourself in the Picture – The Common Sense Money Guide to Effective Budget Planning

Category: Financial Planning — admin @ 4:43 pm

How often have you heard the phrase, “I don’t know where my money goes?”. You may have even said it yourselves!! Most people who say this have never tried to understand where their money goes, and this is where budget planning is an incredibly useful exercise and is the first step in the road to having control over your money. It is a simple, straightforward, effective tool and is designed to hold up a mirror to your finances and clarify the changes you need to make in your financial affairs so that you are able to meet your financial goals.

Why budget plan?

To use an old adage, failing to plan is planning to fail. Although this may sound cliched, it is undeniably true!! Budget planning is about you understanding whether you a living within your means, and if not the changes you can make to improve your financial health. Without budget planning it is tough to understand the changes you need to make. Budget planning is effective for individuals who find themselves in a position where they are short of money, but is also an incredibly useful exercise if you are financially comfortable. It is designed to focus financial thinking and understand where you could use your money in the most effective way possible. Professional financial planners conduct this exercise as a matter of course and is always the first step in ensuring they understand their clients financial situation.

How to Budget plan

The first step is easy, Complete a budget plan. There are a number of online tools, including the FSA Budget Calculator, and complete it fully. Start on the date your main income starts ( for most people this is when they receive their monthly salary ). Be open and honest when you complete it, if you don’t you are only fooling yourself!! Include all sources of income including salaries, self employed income, state benefits, investment income and savings income. The next step is to calculate your expenditure. Include all your expenditure from the larger bills like your mortgage, loans, car insurance, and council tax. Don’t forget to include the smaller amounts of spending like your morning coffee, lunches at work, newspapers, leisure costs and meals out. The smaller amounts tend to be more regular than the larger amounts and can be harder to track, however it’s valuable working these out so that you have a complete understanding of where your money is going.

I’ve done my budget plan, what now?

Once you have completed this you will have a picture of how much money you overspend per month, or alternatively, how much you have spare on a monthly basis. Then you have decisions to make….If your expenditure is more than your income each month, the question you need to ask yourselves is “How can I reduce my expenditure?”, “What can I save money on?” or “What changes can I make to reduce my monthly expenditure?”. This may range from trying to get a better deal on your mortgage, consolidating debts, cutting out the purchase of the daily paper, reducing the amount you eat out or try shopping for shoes or suits less often!! If looked at logically, there is normally always something you can do to reduce your expenditure.

However, there are occasions when your expenditure is as lean as it can be…what do you do then? Logically, if your spending cannot be reduced, the only option you have is to increase your income. Firstly, look at whether you are entitled to state benefits you are not currently receiving. Billions of pounds of benefits go unclaimed each year –

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Sep 15 2010

Checking Accounts – Joint Or Separate?

Category: Banking / Loans — admin @ 1:34 pm



Getting married requires lots of lifestyle combining and some of this can be difficult to do. Newly married individuals have to get accustomed to sharing things that they might have never had to when they were single such as the bathroom, furniture, and finances. One issue is whether or not to keep separate checking accounts or to form a joint one.

In the past, people always established joint checking accounts. Modern feelings have changed, however, since many people have become much more concerned about making good choices for their own financial health.

This basically means that if a husband and wife have dramatically different habits when it comes to spending money, they can wind up in serious financial problems. Keeping separate checking accounts can help prevent such problems. Each person would need to agree to deposit the money they earn at work into their own account. Of course, if a couple decides to use separate accounts they also need to decide which account will pay for the monthly bills.

Separate accounts can also be a source of problems between the couple if one of the people is less punctual when it comes to bill payment and thus incur extra charges. If the bills can’t be split between spouses exactly fifty-fifty, one person might get stuck with a larger amount of the month’s expenses and a resulting lower balance in their account. Bad decisions on the part of on the two will affect the financial status of both people.

Joint checking accounts can work well for couples who agree on spending habits. This plan would mean that both spouses deposit their paychecks into just one single account from which money is taken out to care for the couple’s monthly bills and expenses. Since there is just one checkbook for such an account, one of the two people should be assigned the task of managing monthly bill payment from the account.

Problems can arise with joint accounts for a variety of reasons. For example, if both the husband and wife receive a debit card to use with the account, that would mean that both debit cards plus the checkbook could all be used to withdraw money from the checking account. This could potentially lead to a situation where the account is carelessly overdrawn from. For the couple to keep this from happening, they would need to communicate about withdrawals from their joint checking account.

Some couples opt to have a joint account as well as their own separate checking accounts. This lets each person manage their own finances in the way in which they would like to and gives them a measure of financial independence.

In this situation, the joint account would be supplied with money from each individual’s personal account. The money in the joint account would then be used to pay exclusively for shared bills. The amount that each person deposits would be determined based off of their salary and can be taken out of their paycheck automatically.

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Sep 03 2010

Clear Debt – Good Vs The Bad

Category: Credit / Debt Management — admin @ 11:44 am



In modern America, it is difficult to get through life without taking on some kind of debt. Most people cannot afford large purchases such as a house or education early in their lives, and so they take out loans to help them acquire these things earlier. Not all debt is harmful to your financial health, but it is important to make good decisions early in your life about what kind of debt to take on and what kind to avoid. Taking on too much debt with high interest rates can permanently destroy your hopes for a rich life and good retirement.

Good Debt

Loans which help you to invest in yourself or develop assets that don’t depreciate are good debt. Student loans, mortgages and loans for necessary medical procedures are all examples of debt that provides future returns in heightened income or lowered expenses. Loans for these items can usually be found with low interest rates, and when used wisely, can help secure your future wealth. Of course, you should always make sure that you will be able to afford the payments when they come due before taking out any loan.

Bad Debt

Consumer debt with high interest rates and no future return is the kind of debt that you should avoid. A good rule of thumb is that if you can eat it or wear it, you will not have any future return to show for it. Some credit card interest rates run as high as 25%, and if you only make minimum payments, you might end up paying more interest than principal over the decade it may take you to repay the card.

Try to evaluate debts as you would any other investment. Make your money work for you, and you will have a comfortable retirement to look forward to. But if you fail to carefully consider the kinds of debt you take on, your hard work will go towards paying credit card companies rather than yourself.

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