Financial Tips for People That are Broke

This is a guest post by Mike Piper from the Oblivious Investor.  Mike packs a wealth of knowledge so I am sure you’ll enjoy his article. 

Nobody anticipates being financially broke at any point in life. Unfortunately, our financial habits might lead us into this situation without our knowledge. This can be disastrous on many levels: it could lead to serious debt problems, loss of housing, debt collections, and even filing for bankruptcy.

However, running into financial problems is not the end of life. There is room for one to do a lifestyle appraisal and financial audit regarding their expenditure, savings and above all budgeting.

This article is a run-through about the do’s and don’ts of budgeting when you’re in a bad place financially.

Do a lifestyle audit

1. Revisit your entertainment habits

musicians playing

If you are already broke then it means that you can’t continue living the way you used to. It is imperative that you let go some costly habits. Entertainment is one of those.

This may mean cutting back on habitual drinking with buddies, going out for movies, going for ball games, etc. It is utterly impossible to start a budgeting program while financially broke and continue to spend money on entertainment.

You may limit entertainment to those things that don’t cost you anything, for example watching a game with friends or family at home.

2. Cut back on all your expenses

For a successful budgeting journey, you have to get to the point of running through your expenditure habits. Does your budget reflect on things that you really need at the moment? If it doesn’t then strike out the expenditures that you can do without.

3. Seek ways of reducing your utility bills

numbers and a calculator

Monitor your utility bills and seek ways of reducing them. For instance, if you feel that you can cut back on the frequency of doing laundry, please do. If you can be switching off lights when you leave the room, please do.

4. Cut back on travel

Some people who love doing road trips do not realize how much of a toll it puts on gas expenditure. Even if you end up budgeting on travel, most road trips, for example, end up incurring a higher cost on gas than budgeted. Therefore, cut back on road trips or any form of travel you are currently involved in.

5. Pay attention your credit limit

Be honest with your credit habits. Monitor your credit balance and observe payment due dates. In a matter of fact, if you are in the habit of journaling begin to write on the side of a weekly or monthly sheet payment due dates. Improvise ways of getting alert notifications on due dates.

6. Prioritize your life goals

It is of utter importance to learn how to prioritize on life goals. Most big budget allocations are usually directed to where priorities are high. If you prioritize automobile, then most of your budgeting goes to acquiring cars that you don’t need. However, goals such as an education, or anything that might secure you a better job or job promotion should be prioritized by your budget.

7. Eat at home

dinner table with candles

It is understandable that eating outside is convenient, but at the same time it can be costly. To avoid spending more unnecessarily on restaurant food, learn to budget for groceries. Begin to cook and eat at home. It saves money in the long term.

Increase your income

1. Try to work smart not just hard

a woman at her desk

As people like to say, on’t work too hard,’ they are partly right. If you want to help your budgeting habit you work smart not just hard. For example, get a job that pays better to keep up with life’s demands. If one job can’t, then get a second job that is less tiring and leaves you room to rest. That way, you can keep up with important bills and develop a structured budgeting system. Without a stable income, it is hard to sustain a stable budget.

2. Look at your budget in light of income

When penning down a budget, look for ways that you could increase your income to cover for some aspect of the budget. It is no point trying to budget for items that leave you asking yourself, nd how I am going to pay for that?’

3. Track down paydays

Some people receive paychecks bi-weekly while others weekly. Keep track of paydays in a month to enable you to know when to take care of bills. At times when money comes in, it is tempting to spend on items that you hadn’t budgeted on.

Improve Your Credit habits

1. Avoid late fee payments

credit card

Since budgeting does go hand in hand with payment of bills, you cannot afford to make late fee payments. Late fee payments come with a late fee payment penalty. This penalty could range from $25 – $35 charges. These charges will definitely dent your budget significantly. This is because charges are a minus to your budget, they don’t add any value to your finances.

2. Make at least minimum payment per month

Add credit card minimum payment on your budget. It counts! Paying minimum balance on your credit card is better than not making any payment at all. Making that payment helps to reduce the bill each time you do. Let it be reflected on your monthly budget.

3. Make it a goal to clear your credit card bills

Whether financially broke or not, you do not anticipate to live on credit forever. There has to be a time when you will be credit-free! Rather, let your budgeting anticipate a release from credit bills. Pursue financial freedom no matter how long it will take. Eventually you will pay off your credit card bills and open a new page of your financial life.

Conclusions..

If you are going through a financial difficulty and are in low waters, realize that you can still keep a budget. A budget will help you order your life in crises so that you do not crush and sink financially.

Therefore, do a lifestyle audit and minimize on expenditures that you don’t need. Look for ways of increasing your income earnings. Watch your credit habits and project on being debt free someday. Lastly, save if you can, if not, it’s still okay. Be real to yourself!

The Financial Behaviors That Keep Us Poor

Our paycheck defines whether we’re rich or poor, right? In reality, true wealth comes less from a pay check and more from your behaviors.

Each financial decision you make or habit you sustain has an impact on your finances, and you’ll be surprised to discover all the financial behaviors that are keeping you poor.

#1 Spending More Than You Earn

a woman with shopping bags

One in five Americans spend more money than they earn. Are you one of them? It’s easy to get overwhelmed by bills and rent, but the extra spending usually comes from spur of the moment purchases, like fast food, when you decide what you want now is more important than your future financial stability.

#2 Not Building a Savings Account

When you get your paycheck you more than likely start right away on the bills and expenses. However, by paying yourself each month, simply 10% of your income, you can build up a sizeable nest egg in no time that will give you peace of mind for a rainy day.

#3 Being Too Generous

We all want to treat our friends and family every once in a while to make us look good. However, if you’re constantly paying for dinner or buying the next round, that debt is going to catch up to you. If you’re really in a pinch, allow others to pitch in instead of spending money you don’t have.

#4 Using Credit Cards Like Cash

a woman with a credit card

Credit is not free money. The average American has over $15,000 in credit card debt, and that’s just the average. By changing your mindset about credit cards and thinking of them more as a debit card that needs to be repaid, you can avoid racking up a total.

#5 Overdrawing From Your Account

The easiest and fastest way to lose money is through unnecessary fees. Over drafting is an automatic $35 fee of hard earned money. Always be aware of your account balance and never try to take out more money than you have.

#6 Not Planning Ahead

Most of us are on top of our monthly expenses. That’s what our monthly paychecks are for. However, other expenses come quarterly or annually that we need to be prepared for. By putting a little money away each month you won’t be caught surprised and empty handed when the payments are due.

#7 Ignoring Debts

When you’re broke, sometimes it’s nice just to curl up under a blanket and hide from those big red numbers. Unfortunately, all debt accumulates interest, and all interest is simply money down the drain. Ignoring debts doesn’t make them go away, it allows a bad situation to get worse.

#8 You Have No Emergency Fund

emergency fund

Emergencies happen, and they always come at the most inopportune moments. Put a few dollars away each month until you have a solid $1,000 set aside specifically for emergencies or unexpected expenses.

#9 Spending Too Much on Housing

Maybe it’s time to consider moving to a smaller place. To be financially responsible, you shouldn’t be spending more than a third of your paycheck on housing. If you’re spending more than that, you’re only setting yourself up for failure

#10 Not Making Adjustments

Maybe you have a routine where you buy donuts every Saturday, or you make large car payments because you’ve always had a nice car. However, when things aren’t working out financially it will take adjustments, such as getting a smaller car, going without donuts, or buying cheaper brands at the grocery store.

#11 You Don’t Budget

If you don’t know exactly where your money is going then you’re losing it. By creating a budget you can track your expenses and move any excess money to the areas of your finances that need it most, like debt.

#12 You Believe Wants are Needs

clothes hanging in a shop

Wants are not needs. Needs are food, clothing, and shelter. Wants are fast
food, high-end brands, and a big house. You can want those cupcakes all you want, but you don’t need them. If you can’t differentiate between wants and needs, you’re losing more money than you know.

#13 Lack of Money Management Skills

If you don’t know how to manage your money, you’re destined to spend more than you should. Research classes, workshops, or websites that will teach you skills and knowledge to manage your money in ways you’ve never considered before.

#14 You Settled for a Job

a man working

How many times have you complained about your paycheck? Have you ever asked for a raise? Have you ever looked for a different job, or considered getting training or education in a different field of work? Don’t get stuck unable to make ends meet. Try to increase your income any way you can.

#15 You Want to Get Rich Quick

Not going to happen. People waste thousands of dollars on Get Rich Quick schemes and they never come out on top. The key to wealth is a wise use of time, so stop throwing your hard earned money at sketchy opportunities.

#16 You Want It All

picture of a big house

People want everything too soon. However, once you’ve left your parents and are out on your own, you can’t realistically afford a nice car, a house, or expensive holidays in Hawaii. By saving your paychecks for large purchases one at a time, you’ll be able to achieve your goals in a more practical and financially responsible way.

#17 Not Investing Properly

Buying a fancy house or boat is not investing. Properly investing means putting your money toward yourself in things like your career, education, or savings. All of these will benefit you in the future.

#18 You’re Unwilling to Sacrifice

If you can’t sacrifice, you’ll never get on top of your finances. Going without or “making do” are essential to getting yourself financial security and to a point where you can afford more luxury in life.

..To Summarize

Feeling a little guilty? It’s not too late to make some changes. They say the best time to start something was a year ago, and the next best time is now. By living more responsibly and following some of these steps, you can be sure to have a more secure financial future.

21 Personal Finance Tips That Will Change the Way You Think About Money

Before we share personal finance tips with you, it is important to learn what personal finance really stands for.

Personal finance is an art of handling the money you earn. It involves all money related matters whether it is your own expenses or household expenses. Personal finance is also about making the right decisions about earning, saving, investing and spending your money.

If you are still wondering which matters are directly concerned with Personal finance, let us make it crystal clear for you. In our day to day life, there are many things which are happening around us also involves personal finance such as credit cards life or home insurance policies, mortgages and vehicle instalment plans etc.

If you are planning to take control over your personal finances, then look out for short-term and long-term financial plans like:

  • Cash flow
  • Purchasing Insurance policies
  • Filling taxes
  • Savings account management
  • Retirement plans

Saving money is a hard job especially when you don’t have a solid plan sheet. How to earn, spend and save or invest your money would have a long-lasting impact on your life as well on the lives of others associated with you.

Unfortunately, there are hardly any schools who are teaching personal finance tips to its’ students. All we were taught while growing up was basic math.

Too many people spend half of their lives without knowing how to manage personal finance. They lack the ability to make a plan of their budget, expenses, and savings and have no idea how to invest the remaining finances. Planning for old age or retirement plans are nowhere to be discussed let along planned.

Here we are going to share top 21 tips on how you can manage personal finances easily and proactively.

 

#1 Formulate A Budget

budgeting

First and the foremost tip is to formulate a budget according to your expenses on per week or per month basis. A well-devised budget is all that keeps you on track. It also helps you to track where your money is going and from where you can cut down your expenses etc. it is like a blueprint for achieving your money goals.

#2 Set Priorities

Decide which loan and mortgages you have to pay first. When tuning of your car is due. When are you going to pay for the house rent. Set priorities while managing personal finance. First things should be on the top of the list and catered accordingly.

 

#3 Take Record Of Daily Expenses

Buying a coffee while driving or walking to your office in the morning? Stopped by a McDonalds to catch a quick snack? Beware! These are the expenses which you make daily that eventually disturbs your budget. Cut down unnecessary daily expenses and save every penny you can.

 

#4 Admire Yourself

Save money and spend it wisely is a way of admiring and loving yourself. If you save today, it will help you out tomorrow.

 

#5 Set Smaller Goals

Setting long-term money goals often tend to fail. Setting small term goals helps you to achieve them more easily and quickly and it will also motivate you to save more and finally achieve your bigger goals.

 

#6 Use A Credit Card Wisely

credit card

If you are using credit cards for making purchases online on in the stores, purchase only if you are sure you will pay the complete bill all at once at the end of the month. Never buy anything if it only seems attractive. Buying unwanted things will only pile up your expenses and ultimately disturbs your budget.

 

#7 Find A Good Company

Find friends who are also into saving money and like to manage their personal finances because humans tend to follow habits found in their company.

 

#8 Never Lend Money

Never lend money to someone whom you don’t know personally or who will not be able to pay it back. Never invest in such scenarios except it is for close relations.

 

#9 Get The Right Insurance

It is very important to go for a right insurance policy. It includes medical, life and property and casualty insurance. God forbid if any unexpected situation arises, it would be more devastating if you have invested in the wrong policy

 

#10 Pay off Student Loans Faster

There are many opportunities available for graduates to pay off their student loans. It includes graduated repayments which progressively increase the monthly payments and extended repayments, which stretches the loan period to over 25 years. So choose a plan wisely.

 

#11 Plan For Retirement

elderly people

None of us ever think about getting old and retired. But believe me, it happens with everybody. So start setting some money aside for your retired life.

 

#12 Never Be Allured By Others

If you are shopping with friends, never be tempted or influenced by your mates. After all, it’s you who is going to pay for your shopping, not them.

 

#13 Start Saving Now

Tomorrow never comes. Start saving now. Don’t wait for the perfect time to save money. The right time is now.

 

#14 Depend On More Than One Source Of Income

Warren Buffet said; “Never rely on a single source of income. Make investments to create a second source”. Choose any second source of income whether it is a second job or investing in the stock exchange.

 

#15 Never Overspend On Gifts

gift

No matter how important he or she to you, never spend a fortune on gifts. It will bring you nothing but a huge bump in your budget.

 

#16 Spend Less Than You Earn

Always manage your expenses and spend less than you earn every month. For example, if you earn $13000 per month, spending $15000 would not be wise.

 

#17 Plan Dinner Menus Beforehand

picture of dinner

Plan your monthly dinner or food expenditures at the start of the month. This is how you can reduce as well as save food expenses.

 

#18 Always Pay Bills On Time

This will not only save your time but will also save unnecessary late fees. So pay beforehand or opt for auto payments option.

 

#19 Take Professional Courses

Take professional courses to groom yourself professionally. This could be online or by attending classes. Invest in yourself so that you can grow professionally and can earn more.

 

#20 Use Coupons When Buying

picture of coupons in a pile

Utilize coupons whenever you can. It will save you a lot of money. Take advantage of internet promotional codes and coupons as well.

 

#21 Take An Overview Of Your Personal Finances Every Once In A While

Overlook and review your personal finances after every other month. This way you can increase or decrease certain expenses or realign your priorities.

Remember, no one is in charge of yourself but you. Follow your own rules and make the right financial decisions for yourself and for your family. No one cares about your money but you. So use it to create your own financial future.

The 7 Best Personal Finance Books Out There

Even after working hard at what we do, most people still do not have a lot of money left over. Saving up money is something that most people struggle with.

The size of your income doesn’t really pay that big of a role here. People earning 30K a year could be saving and investing more than those earning a 100K a year and spend most of their income.

The statistics are drastic – only 39% of Americans have money set aside to cover a $1,000 emergency (source). So in essence, if you want to become richer than your friends or coworkers, all you really need to do is start saving and investing.

Below you’ll find a selection of the best books to kick start your early retirement.

1. Multiple streams of income by Robert G. Allen

a book cover

This book shows that the disadvantage is that the flow of only one income is not a good idea, because there is only one-way money that can come to me – through my salary!

Having multiple income streams do not necessarily have a second job or even a third job! Several streams of income generating systems so that that money can flow through your life.

This means that you are investing both time and money to learn how to build these systems. It can be one way to invest in real estate, where you get a “stream” of income from monthly rent to tenants.

Another “stream” may be the receipt of portfolio income, such as “dividends” or “interest” of your equity or investments in bonds. One “flow” may be another of the royalties you get from publishing a book or recording music if you’re a singer.

Having a lot of “flows” where money can come to you is better than relying on your “business” alone to make money. The challenge is how to use your time, skills and money to create these income streams.

Conclusion

This is an essential guide on how to invest our money. This book provides a reasonable explanation of the world of stocks, bonds, and common property. It’s very detailed and easy to use.

2. 4-Hour Workweek by Timothy Ferris

tim ferris book cover

The book tells about the “new rich,” a group of people who have the time, money and traffic to spend only 4 hours a week to create wealth and the life they want.

The rest of the time is spent on what they like to do, like dancing in Buenos Aires, diving in Panama or enjoying the sun in Hawaii.

Who does not want to spend only 4 hours of his time on work instead of the usual 40 hours a week? Who among us does not want to have the luxury of time to do what you like?

Who among us does not want to spend an extended vacation on the beaches of Hawaii, while you care, and your Maltese will still come?

For employees, he offers practical advice on how to negotiate with your boss to organize workers at home.

It also presents ideas on how to plan your “mini” retirement benefits so that money is still available without you. He even discusses how you can “redirect” your life!

Easy-to-read work week, which takes 4 hours. Ideas are presented in a simple and uncomplicated way that you think you are reading a comic. The book is talkative and funny. Reading is like a face-to-face conversation with the author. Sometimes you can laugh at his jokes.

 

3. The Wealthy Barber by David Chilton

book cover

Some people have noticed that this book is one of the most beloved financial books of all time. A rich hairdresser offers reasonable advice and tips on how this affects our lives.

It’s very easy to take it by writing a book as a short story or novel, and easy.

The book is always recommended to those who risk understanding the management of personal money because even if you do not have a lot of experience in finance and accounting, you can easily understand.

The book guides the reader to take measures to manage his money, thinking about what we really want in life, and how we can get it.

He also has a great difference in getting rid of material thinking, receiving costs under our control and reducing our debts

 

 

 

 

 

4. The Millionaire next door by Thomas J. Stanley, Ph.D. William D. Danko, Ph.D.

book cover

The book is based on a comprehensive study of the financial habits of millionaires. The results are surprising in the sense that most of these millionaires are not what we usually expect them to be, as accurately described in the book,

“These people cannot be millionaires! They do not look like millionaires. They do not wear the same clothes as millionaires. They do not eat like millionaires, and they do not act like millionaires – they did not even have millionaire names.

Many “close” millionaires are the first generation. They did not inherit their wealth. They built it. Few of them spend more than $ 100 an hour. Others do not wear a jumpsuit to work!

They engage in types of work that can be classified as dull – ordinary. Some are welding contractors. Some of them are rice farmers. Some of them are pest controllers. Other traders of coins and stamps.

What separates the millionaires from the rest is their habit of money. They are modest by nature. They value money. They invest at least 20% of their income. They even have a “go to hell” box that can save their expenses for at least ten years without work at all.

Conclusion

A valuable lesson of the book is not that we know who the real millionaires are, but also the realization that it can be you! If they can, you can! It’s time to build your rich cash habit and become a “millionaire in the neighborhood”!

 

5. Your Money or Your Life by Vicky Robin and Joe Dominguez

cover of ymorl

The book tells you about managing your money and even looking at it in a very different way. Your money is only an integral part of your life.

There is also time. There is also your dream! What do you like the most? How to spend your money? What do you do in your time? Do you still do what you do, even if you have all the money in the world?

The book emphasizes the management of resources that you have like money and time. It offers unique tips to monitor your spending and whether each contributes to your goals.

It also has some ideas on how to accurately define what you want to do and manage your money and time so that you can do more of what you love to do and less than you do not like doing.

He even has some charts to help you understand and talk where you are, and when your day of freedom.

Conclusion

The central message of the book is not to choose money for life or vice versa

 

6. Rich Dad, Poor Dad by Robert T. Kiyosaki

r. kyosaki book

The book is a story about how to develop knowledge about the funds of two fathers: the first rich, the other poor. The story unfolds to describe the different customs of the wealthy and impoverished father’s money, each of which produces a different financial result.

The book makes a very complicated world of money and business sounds simple. It is merely that ideas can be interpreted as a child using only superficial graphics.

The figures show how cash flows from your pocket to the bank when you pay your bills and how they come from your company when you receive your salary.

What you do with the money after you get it, it determines whether you are rich or poor. Do you use the money to buy assets such as real estate investing or business creation? Or you can use it to purchase commitments, such as the new LCD TV in 12 single monthly payments with zero percent!

Conclusion

The book inspires you to become the best and watch business and money in a completely different way. Expands as money works!

 

7. Think and Grow Rich by Napoleon Hill

napoleon hill book

The central message of the book is that you have to “think” about money before it becomes real. This is a direct translation of the phrase “what your mind can understand, your body can achieve.” When you think about money, and you have this “urgent desire” to make it a reality, the whole universe conspires to build the means to bring it to you.

Money is, above all, just an idea. This is unrealistic. The money you keep when you buy a bag with a product is as real as a “mutual” agreement with other people that the paper you own deserves what you buy.

The book does not say “hard work and richer.” Hard work means different things to different people. For an employee who does not like what he does and receives a little salary, he is “hard work.” For someone who loves what he does, “hard work” is not in his vocabulary.