Money Management - Personal Finance Tips For All Ages

Young people get a bad reputation in society these days. Actually, the concept of blaming ills on younger adults is nothing new. Certainly the non-conformist generation of the 1960’s got their fair share of bashing in their day. Nowadays, young adults contend with many stereotypes, some imagined, others that are real and are completely unique to their generation. One of the preconceptions is that they are not responsible with money. In a lot of cases, that notion is true.

Most college graduates leave school with an average of $20,000 worth of school loans saddled to them. Couple that figure with several more thousand from the numerous credit cards they’ve accepted and possibly even a car loan, and some college graduates can feel as though they’ve lost before they’ve even begun. Irresponsibility and indebtedness is common within younger generations, yet that fact doesn’t make the challenges that debt presents easier to deal with. There are, however, some very real ways to manage debt and to prevent falling back into it.

If young adults are already in debt, then the ship has already sailed on preventing themselves from getting into that trap. It is never too late, however to right the ship. Even though a person may be starting in a harder position, they can always learn from their experiences and add those experiences to their money management-personal finance knowledge.

It’s important to note that debt is necessary for most people and that not all debt is bad. For instance, lenders look upon student loans and mortgages favorably as positive debt if the account is in good standing. Credit cards, though useful at times, are the things that get most young people into trouble. Many credit card companies approach people as young as eighteen with credit card offers, often times on college campuses. If a parent or another guardian hasn’t properly taught a young person of the pitfalls of credit card debt, ignorance and irresponsibility could very well be causes that makes a young person indebted. There is no such thing as a free anything!

To prevent young adults from falling into poor money management habits, it’s important to give them money management-personal finance responsibilities early. In addition, an overall financial education is vital to a responsible view of how money flows through our global economy and how it affects their bank account. For instance, opening a low balance checking account, requiring them to get a job and budget and save income can be key learning tools and a good foundation for young people. Fiscal responsibility is essential to understand how money functions as a tool in our society.

Once they’ve reached adulthood, encouraging young adults to continue to educate themselves about money management - personal finance becomes even more important. The doors that open to further indebtedness are just as vast as the doors that open to financial freedom. An understanding of money as a tool and a respect for it will help to make smarter, more financially savvy adults. It's also important to review that how you see money and wealth is a choice. What will happen is that financially savvy adults teach their children to be financially savvy, and it becomes a domino effect. Think of the doors that would open to so many more people if they chose financial freedom versus indebtedness.

Young adults can learn proper money management-personal finance techniques if they are taught early on in life and stay committed to those principles. Once a young person becomes independent, it’s easy for that newfound freedom to turn into irresponsible spending habits. Young people, with help and the proper money management strategies, can become responsible adult consumers and investors.

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How To Nab A Low-Rate Home Loan

On paper it seems like the perfect time to refinance. The average rate on a 30-year fixed mortgage recently hit a 20-year low when it fell below 5% in mid-March. And the Fed has said that it will spend $300 billion to buy back government-backed Treasury bonds; that will probably keep loan rates low for months to come.

Getting a new loan can save you a bundle, but cautious lenders will make you jump through hoops. These strategies can help.

But wade into the mortgage market, and you may quickly feel as if you're trying to grab a dollar in a game-show booth where the money is blowing around: Those ultralow rates are right in front of you, yet maddeningly elusive.

Lenders, grappling with deadbeat homeowners and shifting regulations, have pared back on mortgage products and upped credit requirements. Still, you have a good incentive to try: If you took out a mortgage two years ago, when rates were in the mid-sixes, you stand to drop your rate nearly two percentage points, saving almost $300 a month on a $300,000 loan. Here's how to navigate the roadblocks.

Figure out if you qualify. Nowadays, credit score and equity are king. To land the best rates, you'll probably need a credit score of at least 740, and 20% equity. "Banks are looking for reasons not to lend you money," says Mark Miskiel of Lighthouse Mortgage in Sedona, Ariz.

If you don't have 20% equity, a refi isn't out of the question - President Obama's housing package allows homeowners who owe as much as 105% to receive government-backed loans. To qualify for that program, however, your original mortgage must be held by one of the government-sponsored entities, Freddie Mac or Fannie Mae; you must prove that you can keep up with payments; and you'll get stuck with fees that tack 0.25% to 3% onto your rate.

Get rid of the HELOC. Home-equity loans and lines have become the enemy of would-be refinancers. Before you can close on a new loan, your home-equity lender must agree to "subordinate" the secondary loan (meaning that your primary lender will get repaid first in the event you run into financial trouble). That can take at least a month, says Bob Moulton of the Americana Mortgage Group in Manhasset, N.Y.

One way to speed up the process is to do a consolidation refi through your home-equity lender. If that's not possible, aim to submit the subordination paperwork as you start shopping for a primary mortgage. And know that other lenders may add up to 0.25% to your rate to cash out the secondary loan.

Know where to look. No matter how stellar your credit, you won't get a great rate without doing some serious shopping. That's because every bank is using different standards for underwriting loans, so while you may look like a risky borrower to one, another may welcome you with open arms. In general, says Keith Gumbinger of mortgage data firm HSH Associates, you're likely to get the best rates from small local banks and credit unions.

Unfortunately, if you need a jumbo loan (typically $417,000, but it can go up to $729,750 in high-cost areas), you can kiss those super-low rates goodbye. While jumbos normally run about half a percentage point higher than smaller ones, today the spread is a point and a half.

Pay a point upfront. A point, which equals 1% of your mortgage amount, typically buys you an eighth to a quarter of a percentage point drop in your rate. Today some overloaded lenders are knocking half a percentage point off for those who pay a point, hoping this extra initial cost will deter serial refinancers.

If you're planning to stay put for about five years, it may be worth it. Conversely, consider adding an eighth of a percentage point to your rate to lock it in for 45 days. Banks and lenders are putting a lot more effort into vetting applications, so it can take up to two months to close a loan, vs. about 30 days in the past; you don't want to risk rates' moving against you while you wait. The payoff for patience: a loan you can live with, for a very long time.

Not so long ago, having a pulse qualified you to take out a mortgage. These days lenders are vetting applicants with the ardor of a Senate committee grilling an AIG executive. Here's a summary of what's changed.

Sources: Carla Fried, Money Magazine

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How Financial Planner can Help you Meet your Goals

Choosing a financial planner can help you meet your financial goals. However, the process is not without pitfalls. Selecting a financial planner is a very personal decision depending upon what you would like to accomplish, but there are broadly applicable criteria as well.

Personal Financial Planning by G. Victor Hallman, Jerry S. Rosenbloom Provides in-depth coverage and analysis of the latest tax law changes. In addition, it features an entirely new chapter on planning and paying for education expenses, including the new 529 plans; ramifications of the GST estate tax repeal; new checklists and questions to tie up each chapter; and more.

The most important thing to remember is that the financial planning industry is unregulated. The majority of planners have not passed any tests to demonstrate their competence. Only about 40,000 of the 250,000 or so planners in the United States are Certified Financial Planners. Chartered Financial Consultants and Personal Financial Specialists, which are certifications offered by the insurance and accounting industries, account for only a small portion of the remaining planners. Selecting a planner with a certification is a critical initial consideration. Finding someone who is also experienced and participates in continuing education is important as well.

In addition to their qualifications, it is important to understand how you will be compensating your financial planner. Many supposed financial planners are really just sales representatives for a particular financial product. Understanding whether your planner subscribes to a code of ethics that includes fiduciary responsibilities can shed light on the degree to which the planner is likely to place your needs ahead of their compensation system.

Two compensation systems are prevalent in the world of financial planning. Most planners get a portion or all of their compensation through commissions on financial products they sell you. These arrangements can create a conflict of interest between you and your planner. Your planner should be forthcoming about how commissions affect their compensation and will influence the products they will recommend to you.

Alternatively, some planners are compensated solely by an annual fee. The fee is typically based on a percentage of your assets under management. One percent per year is typical. Fee-based planners are not subject to the same conflict of interest that exists with commission-based planners. However, you may pay more for their advice than you would by going the commission-based route. They are also more difficult to find.

Another important consideration is the aspects of your financial life that you are seeking advice about. Many financial planners only have adequate knowledge to address a small portion of a client’s financial condition. Those with an insurance background are best at insurance, while those with a brokerage background tend to be better at investing. It is best to find a planner who can understand your entire financial situation and provide comprehensive financial advice. At the very least, try to match your planner’s background with your most important problems or obtain advice from multiple planners with different specialties.

The final consideration is the nature of the firm you would be working with. Larger companies and smaller companies will likely provide different degrees of service and fee structures. Understanding whom you will be working with on an ongoing basis to formulate and implement a financial plan is very important. There is little point in interviewing a famous financial planner if you are ultimately going to be assigned to a staff planner that you have never met to actually create your plan.

By interviewing multiple financial planners before you make a selection, you will best be able to find one you are comfortable with. Personality, qualifications, and compensation structure are all important areas to evaluate. Before making a final selection, check into any disciplinary problems your prospective advisor has had by contacting your state’s insurance department, the National Association of Securities Dealers, the Securities and Exchange Commission, and the group overseeing their planning certification. While not guaranteeing you will not encounter problems, applying this approach will greatly reduce your chances of having an unpleasant experience.

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Conveniences of Life can Ruin your Budget

When looking for ways to save money, starting with a budget is the way to go. A budget outlines your various expenses in a given period of time versus the amount of your income, and the balance between the two. A monthly budget is probably the most useful to track your spending habits. In fact about 15% of spending can be lowered without much lifestyle change at all.

Just by writing down a budget you will be better prepared to understand where your money is going. Sometimes it is shocking how much money gets spent on useless items like Starbucks or eating out at lunch. Writing your budget down will help you see where money is being spent and establishes a guideline to look back on at the end of the month. A budget gives you reason to take action and propels you toward a life of financial freedom.

• The Importance Of A Budget
  Budgeting requires you to look ahead and formalize future goals. By establishing a budget, you can set goals for achieving a certain level of income and monitor your expenses. Many home based and small-business owners have remarked that their increase in profit margins did not occur until they had a written revenue goal and a method with which to monitor expenses.

Coming up with your first budget is fairly straightforward. Gather those involved in either income or spending of the budget and first list items that are monthly necessities. List things like: rent or mortgage, groceries, utilities, gas, and car payment. Payments on credit card debt should also be considered a monthly payment and included in your budget. The next step is to tally up the various sources of income for your family. Now you can compare income versus expenses and see how you are doing. Is there a great need for more income? Are there some things on your list that could be reduced or eliminated completely?

• How to Build, Manage & Maintain Wealth
  You’ve tried borrowing and consolidating. You’ve tried some sure-fire quick fixes. You’ve denied the situation and justified it because others are in the same situation or worse. And besides, when the kids move out, go to school, or you give up the house for a condo, there will be more money and you’ll have two incomes again!

Take a good look at the items you purchase each month and classify each as necessary or unnecessary. Now, take a look at the items with the unnecessary label and decide where each fits into the budget, and which items don't belong at all. Ask yourself what you need instead of what you want when sifting through these items. Things like food and shelter are clearly necessities, but what about that impulse bought shirt or that expensive sushi lunch you just had to have? Try to keep items in the entertainment, travel, dining, and impulse purchases category to a minimum in order to meet your budget.

Americans are all about convenience and retailers are setting us up to pay more money for a little more convenience. Fast food restaurants, quick marts, and cell phones are prime examples of conveniences. Credit cards are another convenience that could very well be hurting your budget. You can buy just about anything with a credit card and it seems so easy, until you get the bill. The biggest problem with a credit card is that it is quick and you don't realize how quickly you are spending until it is too late. The majority of credit cards have an APR of around 18%. This means that, unless you are consistently on time with your payments, you are paying an extra 18% for all of the goods you purchase with a credit card. Sure cards can be convenient, but they can also be expensive!

By sitting down and thoroughly planning out a budget you are giving yourself a chance at spending money in a wise manner; the benefits of a budget are far greater than any negatives. Most importantly a budget tells you where you are spending money. This allows you to make more informed decisions when making purchases. You are now able to stretch dollars a bit further, pay bills on time, and eliminate needless spending. Plan out a budget and you just may be surprised at how efficiently you can spend money.

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Government Grants for Single Mothers

Being a single mother at a very young age can be difficult. Not only will you need to worry about the welfare of your child, you also have to worry about continuing your education. So how can a single mother at age of eighteen afford to go to college and take care of her child at the same time? Fortunately, the government can provide you with a financial aid to ease the burden for you.

Financial Aid
There are many types of financial aids that can help a single mother continue her academic pursuits. In order to get these grants, you need to fill out a form from the Free Application For Federal Student Aid or FAFSA. The application process will take around three days to a week, but once you have completed the requirements, you will be able to start college right away. The requirements for applying for this program include:

• Being a valid citizen of the United States
• Social security number
• A high school diploma or a general education development certificate or pass and approved ability-to-benefit test
• Be enrolled or accepted as a regular student working to attain a specific degree.

Aside from these requirements, your eligibility for financial aids also depends on the income tax of your parents or dependents. So if you are a single teenage mother but your family is well-off, then your application for these aids may be denied by the federal government. The amount of funds that the government will provide you will also depend on your income tax. So the single moms with a high income tax who are accepted in the program may be funded a lesser amount of money. Once you have been accepted, you will also need to keep a certain grade point average in order to maintain your aid.

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Bank Overdraft Fees Are Sucking Americans Dry

Overdraft fees, we have all paid them at one point in time in our financial lives. The cost of over-drafting your account keeps climbing. At Sun Trust as of July 1st they raised the fee from $32.00 to $35.00 every time you go in the negative. Most banks will clear the highest item first so that they can charge you a fee on each of the lower items.

The bank is constantly pushing us to set up over-draft protection with one of their credit cards. So when you overdraft they charge your credit card, charge you a $15.00 fee to do this for you, then if you do not pay your bill on time or in full they are going to hit you with interest and late fees. It is a never-ending cycle.

They will link a savings account to your checking account for protection but again, they will charge you $15.00 for transferring the money in your account to prevent an overdraft fee.

According to a recent study by the Center for Responsible Lending the nations 15 largest banks collected $17.5 billion dollars last year from us for over-draft fees.

I love it when they tell you that they are going to give you a “one time courtesy” return of the over-draft fee. No one is perfect and life happens, banks should give us a set amount of “courtesies” per year. I am sure they would attract more customers this way.

There is a bill “gaining moment” that would require banks to tell people at the ATM and possibly at the checkout counter when their accounts run dry, It would also prohibit banks from charging overdraft fees unless customers have agree to pay them and it would prohibit the bank from clearing the highest check first.

Banks have also held and delayed deposits so that an overdraft incurs and they receive the fees.

We should take more responsibility with our money. The only way to not pay these fees is either not letting your account fall in the negative or for example, keep $1000.00 in your account and vow never to fall below that amount and you will not have to worry about being charged a $35.00 fee.

Banks continue to charge these ridiculous over draft while only offering pennies on CD’s, savings accounts, and mutual funds. No wonder there is a new bank popping up on each corner, they are getting rich!

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Getting Your Finances Ready For Baby

So you are having a baby or maybe this is your second baby. While this is definitely one of the biggest changes of your life from an emotional and physical standpoint, it also impacts your finances. As if you don’t have enough to worry about! Just taking a few steps and making some financial preparations will only help you after the baby comes.

Family Finance Handbook: Discovering The Blessings Of Financial Freedom by Frank Damazio, Rich Brott With insights gained from twenty-five years in business and ministry, the authors lead you through the book using biblical principles of stewardship and financial management. They show you how to get out of debt and guide you carefully through the investing process. Family Finance Handbook shows you how to develop a right perspective, especially relating to your value system, priorities, vision, personal goals, and lifestyle.

It’s never too early to start your spending plan and budget. Items are definitely going to cost more than you think they will. Who knew formula would be at least $22 a can and that a baby can go through 2-3 cans a week? Some additional items to think about when redoing your budget: medical insurance, childcare, food, furniture, clothing, and toys. Ask your friends with children what they are spending to get a rough idea of how much things cost in your area. Instead of thinking about how much you are going to give up, think instead about setting priorities on what is important to spend. So maybe you won’t be traveling as much but you still want to get your hair done. If your family is considering a loss of income, this is especially important! Go over your spending plan regularly, at least once a month.

There are a few key financial papers you need to think about, your will and life insurance. Updating (or creating a will) can be one of the toughest decisions you and your family will have to make. It’s not just about changing the beneficiary but deciding who would be the trustee in case anything happens to you. In addition to thinking about who would be the best person to raise your child, you have to decide who the most fiscally responsible person is too!

Money Came by the House the Other Day: A Guide to Christian Financial Planning and Stories of Stewardship by Robert W. Katz, Jamie Katz "This is a practical, common sense handbook that every Christian should have. I heartily recommend [it]" by Ronald E. Cottle, Ph.D., Ed.D., President, Christian Life School of Theology, Columbus, GA

While life insurance isn’t the most exciting thing to think about it, it has to be done. Having a baby is one of those times to make sure you have enough life insurance. Schedule a few appointments with agents to make sure you getting the right type of life insurance (term or whole life) as well. Visit www.accuquote.com to learn more about life insurance.

Finally, don’t forget about your retirement. With more and more women staying-at-home or working part-time, your retirement plan often gets forgotten with everything else going on. Next thing you know, you haven’t been saving for more than five years and you have been missing out on precious compound interest. You can always use the money for your child’s college education. Remember, children weren’t raised in a day and your finances can take a few months to iron out the kinks as well. Just take it month by month and enjoy the newest member of your household.

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Pension Management - Can We Do It Better?

Everybody wants to be able to afford to retire happily and securely in some wonderful place where great hobbies are available, with a nice respectable community of like-minded residents.

Managing Pension Plans: A Comprehensive Guide to Improving Plan Performance by Dennis E. Logue,Jack S. Rader Managing Pension Plans is essential for anyone who wants to know about pension fund management. Logue and Rader have distilled an complex subject into a comprehensible work. Their excellent book fills a void, providing an accessible, yet complete guide for finance professionals, students, and anyone involved in the pension plan decision.

The unfortunate drawback to this entire plan is, of course, the money. Such luxuries are expensive and if you imagine you have always spent a small fortune each month trying to keep your lifestyle going along a pleasant track, then think what you are going to have to allow for when every day is fundamentally a holiday.

Some people think that retirement is some sort of holding stage just slightly short of actual death, and it therefore might seem silly to stash away a huge amount of money to fund this stage along life’s rich path. Well, they could not be more mistaken.

Many people spend twenty or even thirty years in retirement. Could you fund your living expenses for the next thirty years without working another day? I know I could not. Many pension schemes and life management companies base their policies on standard scenarios, where the man is four or five years older than the woman, both working, expected to retire at the appropriate time, with no contingencies allowed for, such as sudden death of the man and the woman being considerably younger.

My own parents staged their retirement in the worst possible way. My mother was more than ten years younger than my father and he died with a very small pension payable, as he was still working and expected to continue doing so. My mother was unexpectedly left with a tiny pension yet enormous financial commitments and no other source of income. Her final years were spent worrying about bills.

Friends of mine got themselves into a huge problem by deciding to divorce in their later years. Of course their pension covered only a joint payment based on the assumption they would always be together. In an age where divorce is almost more commonplace than successful marriage, that is a startling assumption to make. Not that I have a solution to the problem. As always I prefer to highlight the difficulties and let someone else find the solution to them, it is what I do best!

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5 Reasons Why Index Funds Should Be Part Of Every Portfolio

Index Funds: The 12-Step Program for Active Investors by Mark T Hebner Shows investors how to obtain their optimal rate of return by matching their risk capacity to an appropriate risk exposure.

What is an index fund? An index fund is a mutual fund that duplicates as closely as possible the performance of a stock market index or bond market index that it tracks. A few examples of indices are: S&P 500, Wilshire 5000, Russell 2000 and Dow Jones Industrial Average.

• Index Fund Introduction
• MUCH LOWER FEES AND EXPENSES. Who wouldn't want to save money on their investments? Because index mutual funds are passively managed, they charge lower fees resulting in some of the lowest expense ratios in the mutual fund market. Vanguard, one of the leading index fund providers, has an average expense ratio of 0.27% versus the market average for all mutual funds of 1.50%!
• BETTER PERFORMANCE. Most non-index funds do not outperform their relative index. Only 35% of active fund managers beat their index [according to Ibbotson Associates]. Why not go directly to the index?
• TAX EFFICIENT. For your taxable investments, you could have much lower capital gains tax due to less stock turnover - which will save you money on your taxes. Because the mutual fund is mirroring the investments in the index, the manager is trading much less - which means fewer capital gains or losses. Mutual funds with a high turnover ratio are hit with higher capital gains taxes in an up market, even if the investor didn't sell her/his mutual fund shares. For people that have a high investment income tax bill, this is especially important.
• LESS STRESS. Index funds are usually easier to monitor and check performance. For example, if you invest in an S&P 500 index fund, you can easily check the Year-to-Date performance each week by just reading the front page of the New York Times Data Bank section on Sunday. Much easier than reading your statements, wouldn't you agree?
• EASIER TO FIX YOUR ASSET ALLOCATION. You just finished your financial checkup and found that you are lacking small-cap value stocks. The easiest way to remedy this, assuming other characteristics meet your standards is to find an index fund of small-cap value stocks.

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How to Build, Manage & Maintain Wealth

You’ve tried making more money. You’ve tried cutting back on expenses. You’ve tried borrowing and consolidating. You’ve tried some sure-fire quick fixes. You’ve denied the situation and justified it because others are in the same situation or worse. And besides, when the kids move out, go to school, or you give up the house for a condo, there will be more money and you’ll have two incomes again!

Retire Sooner, Retire Richer : How to Build and Manage Wealth to Last a Lifetime by Frank L. Netti This book answer important concerns on these matters, including: Is a financial planner necessary? How can I design an effective, personal pension plan? How can I be certain that my savings will last my lifetime? What kinds of insurance options do I have?

If you have more debt, not including your mortgage, than you could pay off in three months—yes, three months!! If you have refinanced or consolidated once already and think it’s time again, or you have lived in your house longer than five years and your mortgage balance is still the same or larger, you know it’s time to do something different. But what? You have already tried everything you can think of and your lifestyle can’t squeeze anymore out. There are no magic bullets, but there are some solid steps you can take to create lasting solutions and to move away from financial struggle, overwhelm, and guilt towards freedom, security and significance.

There are three phases of our financial lives: wealth creation, wealth management and wealth distribution. These are not age driven or dollar driven phases. They are also not mutually exclusive. You don’t suddenly say “I’m moving into wealth management now.” And just because you’re working primarily in wealth creation doesn’t mean you ignore the aspects of wealth management and wealth distribution. The foundational principles, habits and knowledge all begin with wealth creation. So when you’ve tried everything you can think of, or when you feel stuck, you go to these foundational skills and principles—regardless of your age or acquired wealth. The number might have more zeros and the impact might extend beyond simply you and your immediate family—but the principles are the same.

Phase One: Wealth Accumulation
First: You need to enlist the help of a professional. However, that’s not as easy as making an appointment at the bank; or arranging a meeting with an investment advisor, insurance agent, accountant or lawyer. Your professional advisor needs to be able to provide you with advice on your entire financial picture and make suggestions based on a variety of reference points (lending, tax, cash flow, investing, business, insurance, etc.). Furthermore, they need to be able to work with you over a period of three to twelve months—perhaps with weekly, semi-monthly or monthly contact as you implement some changes into your finances and your lifestyle. You need to be prepared to pay someone for their help and their professional, unbiased expertise.

Second: You need to commit to a program that will take some work and will take some time. It will involve doing some things that might seem tedious and insignificant, but you must be able to commit to a process that will build a solid foundation, develop new skills and expand your knowledge of wealthy habits. How long this process takes will depend on you, but to implement this phase of financial planning is likely a year-long process—maybe more. Beyond building your foundation, you then need to commit to learning how to build wealth and that might take a few years to get started, and obviously maintenance is a lifelong process.

The third step to moving towards significance and away from overwhelm is to begin to implement strategies according to a logical sequence. The sequence starts with baby steps in the first phase, which is to develop habits, skills and strategies to effectively build a financial plan from which you can maintain, develop and sustain. The following process assumes you are starting from scratch in phase one, but it is important to review even if you feel like your questions are all about passing on your wealth and using if for a higher purpose:

• There is no judgment, remorse or blame—where you are is where you start!
• You need written goals and you need to know why they are important to you. Get a journal and start writing. If you would like an assisted journal contact us at www.moneyminding.com for more information.
• You need to document where you are today, with emphasis on the specific details of your income and expenses by tracking:
  
  a. Every item you spend money on for three months or more. How? Carry a notebook, ask for a receipt or get creative, but you need to be specific—no judging—just the facts.
  
  b. Learn to balance your cheque book. Even if you don’t write cheques you will have transactions from your account. Balancing your books is a skill that you will use throughout your financial life with business accounting, investment statements and personal financial statements. It might seem tedious, but you can’t expect to begin the habit when you have millions of dollars to manage. It’s something that starts small and builds.
  
• As best as you can, use CASH! Studies show that using plastic, even if paid off monthly, will produce an average of 35% higher expenses. Why? Because it’s easy. Individual expenditures fall within comfortable limits and you don’t have to pre-calculate your expected needs when you’re trying to determine your cash requirements. Withdrawing cash in advance will have the advantage of forcing a mini-budget calculation. Furthermore, using cash will enable you to set up specific savings programs that you can’t do with plastic purchases (see below).
• Establish banking that enables you to transfer money easily to meet specific needs. The type of bank accounts need not necessarily be with a bank, they can be short-term investment accounts, or special places for saving cash as mentioned above.
  
  a. At a minimum you will need one chequing account and one savings account. A savings account is not the same as an investment account. Savings are for specific purposes, investments are for longer term needs, where your money is expected to be working for you. You might also consider a dedicated account specifically for plastic, electronic transactions.
  
  b. Whenever a deposit is made, your first two transactions (and entries into your cheque book) are an amount for savings and an amount for giving. I recommend immediately transferring 10% of the deposit to your savings account and withdrawing 10% in cash for giving. Giving can be for gifts, causes you believe in, charities, churches, etc. The key is to take this money in cash. If you find that you get to the end of the month and you need some extra money to pay the bills, the first amount to come back into your chequing account is the necessary amount from savings. If you still need more, you will have to take some of your cash and deposit it back into the bank – a much harder task. If you consistently develop these habits, you may find that after a few months the amount transferring back isn’t the full amount transferred to savings in the first place. You can learn more about these cash management strategies from a variety of articles and programs at www.moneyminding.com.
  
• Assign categories to your spending and begin to make informed decisions that will help you come up with a budget that is designed to meet your planned expenditures. A budget will let you feel spontaneous in your spending because you will know that the funds are available. There won’t be any questions, guilt, or uncertainty about your spending because you can pre-plan to facilitate unplanned expenses.
• Establish a regular routine and schedule for you to handle financial matters. This involves not only taking time to plan, track, budget, analyze and monitor; but also, to discuss situations with your spouse or partner. Businesses have regular board meetings, they have dedicated functions to handle these tasks; and they would surely not function efficiently without giving finances and planning a key role in the business. How can we expect to operate our homes giving only minimal attention to these important tasks? We need to value the tasks, habits and skills necessary to produce and manage millions of dollars before we actually have the money.

Phase Two: Wealth Management
The skills learned in Phase One are expanded because savings has accumulated and investment decisions are necessary. Perhaps budget planning has expanded options for income generation, and you are earning more. The key to this phase is that it isn’t something you necessarily do after all the steps in Phase One of wealth management. They have to be learned along the way at the same time. The essential components here are a focus on income effectiveness and efficiency, managing risks, investing for regular, stable income; and then adding a growth component and increasing risks as your overall financial situation and personal comfort grow. Throughout this stage a focus on minimizing taxes and implementing loss protection plans is fundamental.

Phase Three: Wealth Distribution
Again, this isn’t something that happens after the other phases. Distribution expands on the skills, and strategies that have been put in place in the previous two areas with a focus now on ensuring that your wealth is helping you focus on your top priorities, and is being used to fulfill purposes and causes for which you believe. This phase also ensures that your legacy is planned and not left hap-hazard. It’s about pulling everything together into a tidy package so your wealth can now benefit others as well as it has yourself. Insurance strategies, planned chartable giving, corporate tax structures, trusts, wills and estate planning programs are all integrated in the wealth distribution phase.

This entire three-phase program might sound overly simple – and it is, sort of. It all starts with a vision and some written goals and a commitment to do whatever it takes to see it through. Believe ~ Begin ~ Become all that you can. Don’t let your questions and uncertainty with how and what to do stop you from living your life!

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