8 Family Budgeting Misconceptions demystified

Let’s put on our thinking cap:

Depositing our pay cheques in bank and using the credit and ATM card for spending seems easy. However keeping the track of your income and expenses, to get full value for your money is possible only with budgeting. Budgeting helps most of us to keep track of our income and spending and not overspend.

In practice 10 budgeting myths retard the savings of a lifetime. They are:

1) I earn a lot and need not budget:

This requires a change of perspective. Michel Jackson lived like a king but died awash in $400 million debt. Budgeting by watching your spending pattern helps trace unnecessary expenses on clothes or eating out, and help you save for a future or for a much wanted dream holiday. So how much you earn has got less relevance. What is more important is budgeting. Proper budgeting can make a low income earner to retire richer and overspending can make a high income earner a pauper.

2) I hold a secure job and see no reason to save:

This does not hold well today with large corporations going in for labor layoff to save costs during recession. Small corporations also put you at a risk with the death of the owner or the company going into losses.

This insecurity demands caution to save for spending during such periods when you are caught unaware, with an emergency fund coming handy.

3) I am poor in calculations and cannot budget:

With useful tools like spreadsheet that help account for expenses and income earned make the budgeting much easier. A look at the spending helps avoid unnecessary expenses to budget and save in future. If you are interested one can easily learn budgeting. So if you say ‘I don’t know how to make a budget’, it shows your level of interest and willingness to save for a secured future.

4) I am lucky; I will never be short of money:

However your ability in meeting high bills and other unpredictable expensive events like life threatening accidents, or a major surgery without experiencing shortage of money may not be always true.

So better save and be prepared to face unpredicted contingencies and then use the savings for something else that you may consider desirable.

5) I pay my bills promptly and do not need budgeting:

Congratulations I appreciate your credit worthiness, but going into negative balance is also quite easy. You may be self disciplined. It doesn’t mean that you need not make a budget. Preparing a budget makes you much more disciplined and spend consciously. So budgeting with saving helps avoid going into negative balance or overdraft.

6) Budgeting could lead to deprivation:

Budgeting is not frugal living and foregoing all pleasures like a movie a month and an eat out once a week, but it just not allowing your earnings to be not overtaken by your expense. Everyone is planning to save, planning to invest, but do we have a well thought out plan for spending. A smart spending plan only can lead you to save more.

There is no need to feel deprived with budgeting; it just means saving a percentage of your income spent unnecessarily to have a secured future.

7) I have small wants and find no need to save:

This need not be a stable attitude in human nature, with you wanting to take advantage of certain financial trends in the market like buying house or land at cheaper rates, or investing at higher rates towards building a bigger retirement corpus. Hence budgeting helps to save when you do not want money for a time when you could profitably use it.

Your wants may be small but basic needs like food, shelter, and clothing are becoming costlier with inflation. Also you need to take into account your health care needs of the future.

8) I get rises, bonus and tax refunds and find no need to budget:

I think you have been lucky all these years, however these benefits are highly unpredictable and placing ones hopes fully on them is futile. It is better to budget and save than depend on unpredictable benefits like bonus, raise and tax refunds. The recent recession has taught us a lesson to all of us which we should not forget easily.

Budgeting and your future

Take charge of your future now. Budgeting is the first step towards controlling your financial destiny. Don’t let your unconscious spending habits decide your financial destiny.

The author is Ramalingam K, an MBA (Finance) and Certified Financial Planner. He is the Founder and Director of Holistic Investment Planners (www.holisticinvestment.in) a firm that offers Financial Planning and Wealth Management. He can be reached at ramalingam@holisticinvestment.in.

Best Practice Guide: Marketing on Facebook – by Facebook

Five guiding principles to create a Facebook strategy that is social by design, increases traffic and sales by amplifying the most powerful type of marketing – word of mouth.

At Facebook, everything they do is about making the world more open and connected. This has a profound impact on the way people communicate and interact. They are continually developing authentic ways for people to connect with one another as well as with the businesses, brands and institutions they care about, both on Facebook and across the web.

Facebook allows marketers to stay connected with people throughout their day whether they are on their computers or mobile devices, at home or at work, watching TV or shopping with friends. This allows businesses to create rich social experiences, build lasting relationships and amplify the most powerful type of marketing – word of mouth.

Connecting with people is just the beginning. In the Guide you will find best practices for reaching your businesses objectives on Facebook

To Download the guide – please CLICK HERE

How to Get out and Stay out of Debt? 11 ways to get out of debt and stay out of debt

In spite of steady, regular income there are so many individuals who live paycheque to paycheque, carry their credit card outstanding, and fail to save anything for retirement. If you are one of them, now is the right time to take action to come out of debt and stay out of debt. It is not only possible; it is unbelievably achievable.

List down all your debts

You need to take stock of all your loans. It could be credit card due, personal loan, car loan, housing loan, education loan, loan from FD, loan from insurance policies, loan from your employer, hand loan and so on. For each and every loan you need to note down how much you owe, the present interest rate, EMI, Number of months to be paid.

Negotiate for lower interest rates

If you could negotiate the interest rate and bring it down then you can come out of debt faster. Most of the credit card companies come forward for negotiation if you really show interest in repaying. They need not run after you to collect the debt. It will reduce their expenses. So they will be happy to negotiate. Balance transfer offers from credit cards are also a way to reduce your interest rate.

Refinancing and consolidation

Replacing a loan with another is known as Refinancing. By doing a refinance it should reduce your interest rate and it should bring down the time you are in debt. But most often people go for refinance that provide them lower EMI but increasing the time they stay in debt.

Categorise your debt

Housing loan can increase your net worth over a period of time. Housing loan gives you tax benefit also. For a business man car loan provides some tax benefit. Based on these factors a debt needs to be categorized. This will help us in comparing different loans.

Prioritize your debts

After sorting out various loans, now we can comfortably prioritize the loans. Obviously this will be based on the interest rates and tax benefits. At times paying off a small loan first can give you a lot of motivation to get out of debt.

Creating and Executing a Debt payoff plan

You need to create a debt pay off plan with different scenarios. So that you can find out how some more savings or a different repayment order will help you to get out of debt faster. When creating a plan, you need to choose one which is comfortable to your attitude. Otherwise, you may not execute it properly.

Refrain yourselves from applying for fresh loans

You need to make a vow that you will not be adding any fresh loans, till you come out of all your debts completely. Think for a moment, how you will feel when you become debt free. This will give you a lot of positive energy to come out and stay out of debt.

Postpone buying major assets

Buying a property or any other assets need to be postponed till you get out of debt. With your new ownership comes the new, probably large and unpredictable expense. This can make you deviate from your debt pay off plans and at times the consequences could be uncontrollable.

You stop using your credit card

There are two groups. One group of people uses the credit cards responsibly. That is they will repay the credit card dues in full when they receive the bill. The other group will pay the minimum amount due and carry forward the balance amount due. If you belong to the second group, you need to stop using credit cards temporarily. Take out and keep your credit cards in the locker. Once your financial situation and buying habits improve, then you can start using your credit cards again.

Change your spending habits.

Being in debt obviously means that you have been living beyond your means. The solution is very simple. Spend less than you earn and you will get out of debt soon. You need to change your spending habits. Then only this simple solution will be achievable. If you buy things you don't need, you’ll soon sell things you need. Don't save what is left after spending; spend what is left after saving.

Involve all your family members

You need to inform all your family members and dependents about your debt status. Then you will be able to take decisions with much more clarity. Moreover, if your family members know about your debt, they will also change their spending habits and support you in getting out of debt faster.

Consider the postage stamp: Its usefulness consists in the ability to stick to one thing till it gets there. Similarly, you need to stick to your debt pay off plan till you get out of it.

The author is Ramalingam K, an MBA (Finance) and Certified Financial Planner. He is the Founder and Director of Holistic Investment Planners (www.holisticinvestment.in) a firm that offers Financial Planning and Wealth Management. He can be reached at ramalingam@holisticinvestment.in.

From The Classroom To The Boardroom: 8 Simple Rules

A Great piece of simple articulation by Business Is Childs Play. Of course while conducting our daily business we tend to forget some of the most simple “humanly” courtesy. This also forces me to wonder that why we have become so unhuman or machine like. One example of machine like behavior could be observed in out daily email…With my most slowest of typing speed it takes me not more than 2 seconds each to write “Hi or Dear XXX”…and ending it with “Thanks or Best Regards XXX”….but yet it seems that while working with machines or surrounded by machines we have given up what we called as basic humanly etiquettes…. We love dressing serious…we love acting busy or serious…Then I tend to think that why we have created these walls around us. The only time I believe people have “real” walls is either they are in coffin or are in jail. So why to jail yourself with such walls. You don’t need to act serious to do a serious job. Equally, you need to enjoy your work….your work doesn’t need to enjoy you :) 

Conflict is inevitable.  When you have different personalities working together, varying ideas competing, and increasing time spent in conference rooms turmoil is bound to occur.  I’ve been a part of arguments at work that are eerily similar to arguments I’ve witnessed on the playground.  After a recent work place conflict I was compelled to ask my daughter’s preschool teacher what rules they enforce in the classroom.  She wisely explained that the rules change with each class.  Her class identifies the rules they think are important.  “If I tell them what to do they won’t listen.  If they contribute to the development of the rules they better understand why they need to follow them.” she said.  That made perfect sense.

When I set out to write this piece I thought that I could easily identify rules that any team could follow.  After my discussion with the preschool sage I realized that the rules should be developed by the team.  Using the rules developed by preschoolers, and after reviewing with some team members, I suggest the following rules for the workplace.

1.  Use your inside voice: Most likely you work in an office with cubicles.  Be respectful of your neighbors and keep conversations at a reasonable tone.  Use headphones when listening to music and take group conversations into a conference room.

2.  Be kind to each other:  You don’t have to like everyone but you do need to be respectful.  Exercise common courtesy.

3.  Don’t lean back in your chair:  Trust me, if you lean back in your chair you’ll fall and everyone will laugh.

4.  Use your words: When faced with conflict don’t use email.  Conversations are much more effective when looking for resolution.

5.  Don’t eat stuff off the floor:  Don’t put anything in your mouth that was on the floor, left over from last week’s carry-in, or touched my manager’s desk.

6.  Be active listeners:  Give your undivided attention to the person speaking.  Criss-cross applesauce, hands in the lap, laptops and smartphones put away.

7.  Be the best you can be:  Work hard at what you do, be the best you can be, and recognize the best in your coworkers.

8.  Keep your hands and feet to yourself:  You don’t want a lecture from Human Resources on sexual harassment.  That’s uncomfortable for everyone.

What rules would you suggest adding?