Budget Musings

Archive for the ‘Saving for Retirement’ Category

This guest post is contributed by Raine Parker, who writes on the topics of online accounting degrees. She welcomes your comments at her email Id: raine.parker6@gmail.com.

Besides saving money, how can you build up enough assets and wealth to take care of yourself and family in the future? Researching different investment opportunities will help you organize your wealth-building plan so that you can get the most profit out of the money you spend now. Below are five key investments and tips that build wealth over the long-term.

• Home and property: For most Americans, buying a home is the most popular way to build wealth and create assets. Paying a mortgage isn’t like paying rent: you’re not just throwing money at the bank so that you have a roof over your head. When you shop around for a property that you plan to resell in a few years, you should look at qualities beyond the house itself: the location, neighborhood, resale prices of the homes on the same street, school district, and other factors that make the home attractive or unattractive. The more updates, maintenance, and renovations you make to the house will also add to your investment’s value.

• 401(k) (RRSP for Canadians): 401(k)s are designed for retirement, not for short-term saving or paying off debt. Ideally, you will always work for an employer who contributes to your 401(k), although the reality is that not all businesses offer these kinds of benefits. There are also ways to pad your 401(k) like depositing your year-end bonus into the account, and adding what you used to pay in social security taxes if you’ve passed the levy rate.

• Non-trendy investments: FORTUNE recommends sticking with non-trendy investments that have proven to be stable even in shaky economic times. Don’t jump on the stock market bandwagon just because a new company has buzz: do your research and invest in stocks that have a solid track record.

• Stocks: Another tip that FORTUNE suggests for building wealth is to “go heavy on stocks.” According to their proposed formula, you should subtract your age from 120 and put that percentage of your budgeted investments in stocks. The logic is that the younger you are and the more time you have to build wealth, the more likely you’re in the position to withstand risks. [Mutual funds, as opposed to individual stocks, are generally the way to go for the average investor]

• Your credit: While not everyone regards credit as something you actively pursue, it does play a role in your investments. Take care while using your credit cards and always make your monthly and, as much as possible, stay out of debt so that you can establish yourself as a responsible candidate for loans and investments.

On April 28th I attended Finovate Startup 09 as a Startup presenter. We presented on Moday the 27th as a pre-recorded demo, while other presented on the 28th. The demo video is being professionally edited and will be available in about a week. I`ll post it when its available.

The event was a lot of fun, we met a lot of great people, saw what the competition is doing and what our real strengths are. Surprisingly, there are only a few companies who allow for planning future finances. Most only focus on reporting on whats happened in the past. Planning for the future is clearly one of CalendarBudget`s strengths. Also, our calendar format is a clear winner when compared to the other interfaces, most of which just show transactions and planned events in a list. We did glean some ideas for future development, however, we`ll have you the users vote on what we should be doing next.

We have a little bit of clean up surrounding our subcription code to complete this week, then we`ll start posting more `whats next` ideas for you to vote on.

We’re happy to announce that the Business Advisory Center Durham (BACD) has partnered with CalendarBudget to provide our personal finance tool to new and growing entrepreneurs in the Durham region. CalendarBudget can help not only manage peoples personal finances, but can also be used as a forecasting tool to plan for small business expenses and incomes.

Embedded in the BACD web site as the BACD Money Manager, CalendarBudget will enhance the breadth of offerings the BACD makes available to help entrepreneurs succeed.? From the BACD website, click Helpful Links from the top menu and then click the BACD MOney Manager image to access it.

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Business Advisory Center Durham is a government organization which provides resources and coaching to entrepreneurs getting started or growing their business.

CalendarBudget is an online personal finance management tool that helps you organize your money and plan for your future.

I started reading the book, “Think and Grow Rich”, as recommended by a friend (thanks Shawn!). The book was published in 1937, and contains principles that are timeless. In fact, you fans of the film “The Secret” will find the principles, many using the same words and language, contained in this old book by Napolean Hill.

I read part of the introduction. Then found it interesting enough that I read part of the story aloud to my wife. 3 hours later, we had read the first 2 chapters and begun following the advice in the chapters, making plans for our future.

One of the most interesting points the book makes early on is, if you have in intense desire for something, you make it happen, when you are ready for it. We become ready for our desires when we believe we can acquire it. Until then, its just wishing.

He then explains how we can believe in mediocre things, as most people do, and obtain them. Or we can believe in great things and obtain them. The mental effort is no more difficult and the fulfillment of that belief is no more difficult. But, we tend to limit ourselves by what we believe.

A poet described this in the following lines:

“I bargained with Life for a penny,
And Life would pay no more,
However I begged at evening
When I counted my scanty store.

“For life is a just employer,
He gives you what you ask,
But once you have set the wages,
Why, you must bear the task.

“I worked for a menial’s hire,
Only to learn, dismayed,
That any wage I had asked of Life
Life would have willingly paid.”

by Jessie B. Rittenhouse

Under that poem are the words, “DESIRE OUTWITS MOTHER NATURE”, meaning that what we believe and resolutely desire can overcome what we consider barriers. We can make wealth materialize from nothingness with desire and associated planning and action.

So far I recommend this book to all – its a great read. But don’t just read it. Believe it, follow the advice and reap the rewards. Its only when great risk is taken that great reward is reaped.

We are excited to announce that CalendarBudget will be participating in Finovate Startup, a conference showcasing the best and brightest of financial software startups.

With participants announced just yesterday, we are excited to be included in the line up. See the announcement at NetBanker.

We are very much hoping to get a chance to demo CalendarBudget to the captive audience. Stay tuned for more news on this front.

I heard a story with a meaning about a year ago. It goes like this:
A man started walking home from work and walked by a bunch of houses, each seeming to have a dog. As he walked by each dog would bark at him, except for one dog. One house had a dog that just whimpered and moans all the time, the kind of sound like it was in pain from something. He dismissed it and continued walking. The next day the same thing – all the dogs barked at him except this one dog who whimpered, howled and moaned. This continued for a week. Finally the man became very concerned and knocked on the door of the whimpering dog to find out what was wrong.
He asked the man who answered, “What’s wrong with your dog?”.
The man replied, “What do you mean?”.
“He keeps moaning and whimpering while all the other dogs are barking. Why doesn’t your dog bark like the others?”
“Oh, well he’s actually sitting on a nail.”
“What? You’re dog is sitting on a nail?! Why doesn’t he get off?”
“I guess it doesn’t hurt enough”.

How many of us are like that? Whining and complaining about things in our life, but not willing to do anything about it. How many of us complain about not enough money, but are unwilling to upgrade our skills, look for a new job, look for a part-time job, or otherwise?

I’m guilty of this too. I complained about my job for almost a year before it finally became so painful I got off the nail and started working for myself. My happiness has been MUCH improved since, even though I am currently earning less than I did before in Corporate America. Even now, I am sitting here, knowing that I should make an uncomfortable phone call to clear up some misunderstanding about some money deal I’m making, but putting it off until the last moment… while I could just make the call, clear things up and deal with the outcome rather than stressing about it.

In fact, I think I’ll cut this blog entry short and make that phone call – sitting on a nail is stupid.

We all know time is a fixed resource we all have. However there is a way to increase the amount of time you have. No, not by sleeping less and not by messing with the Special Theory of Relativity and time travel.

Think about how much time it takes to do a routine task. What if you could reduce the amount of time it took to do that routine task and cut the time in half by being more efficient, or by using a tool or technology. You would have effectively doubled your time. The time resource hasn’t changed, but the act of being more efficient by organizing or using a tool/technology has effectively doubled your time (for the period of that task).

Take stock of what routine tasks take up time in your day and how can you perform those tasks more efficiently in order to “increase” your time. Think of all the things you could get done with just a little more time. Its definitely worth the effort.

What is a financial goal?

Typically these include things like:

• What is important to you financially?
• What age would you like to retire?
• What do you want to do when your retire and how much will it cost?
• How often would you like to vacation, and what will you do on vacations?

Then you can figure out, based on what your goals are and how much money will be needed to accomplish them, how much you’ll need to save or how much money you’ll need on hand.

There are many online calculators that can help with some of these calculations, but I recommend seeking out a financial adviser to help get a complete and clean results. My experience is, get a professional to help you set goals and understand their implications. It usually doesn’t cost any money for an evaluation, and the results of the analysis will require some action anyway – and a Certified Financial Planner (CFP) can help you implement the plan.

The first step in planning your finances is to figure our where you really are today.

One of the best ways to get started is to complete a Net Worth analysis for yourself. A Net Worth analysis is a snapshot of how much you are worth financially right now. To do this, you should list all of your assets and liabilities with their associated, realistic values.

Assets are anything that when turned into cash gives you some money. Common items are: your home, vehicle, bank accounts, retirement savings (401K/RRSP), investments.

Liabilities are things that take money away from you (anything you owe). Common items are: mortgage, loan, credit card debt, spousal/child support. Read the rest of this entry »