Savings Goals - 6 Things To Do After You’ve Met All Your Savings Goals

You’ve done a lot this year. You have created a nice emergency fund enough to take you over three months of all expenses. That high interest debt you had? You paid it off too, and have started to siphon a nice percentage of your income towards your retirement.

All this is great work, but now what?

In case you are wondering how to save money beyond the basic steps, this article is what you should read.

• Check your budget: Maybe you needed to have a strict budget to pay off a toxic debt. But now, with that over with, you can switch over to a 50/30/20 budget. If you are already using this budget model, reevaluate that and see what are your wants and needs. Thus, you’ll see that more money is available.
  
  
• Take care of the low priority debt: You have paid back the high-interest debt first, and that’s a good thing. In fact, that’s how it should be done. But don’t stop now that it’s paid. Start paying off the low priorities debts.
  
  
• Use your savings: A lot of people keep a significant part of their money in a savings account in the same bank that has a checking account. Perhaps you are doing this too. Now, this earns you maybe .06% interest a year. But this can grow faster. Consider moving your emergency fund or your savings into a different type of account. Consider Certificates of Deposits. These can lock up your money for a certain time while it earns a high interest rate. If you have extra savings, CDs can be a great option. However, these are not so good for your emergency fund since you may need it at any time. For emergency funds, a high-yield savings account is a much better option since these have a higher minimum balance requirement and have high interest rates.
  
  
• Don’t forget to invest: This is a good time to rethink how much you need to save up for your retirement. Perhaps you may need to start saving more for that, or even set up a personal retirement account. If you want to start building up a portfolio, reach out to a broker.
  
  
• Insure yourself: Revisit the basics like homeowner’s insurance and car insurance. Think about in which stage of life you are in, and what things you are preparing how.
  
  
• Think bigger: Till now, you have covered the basics. Now you can finally pay attention to savings goals and projects which you may have put off till now. Whether it is to start a new business, a family vacation, or perusing a new hobby, now is the time to do them all. Just focus on saving cash.

How to Set Financial Goals - 6 Things To Do After You’ve Met All Your Savings Goals

You’ve done a lot this year. You have created a nice emergency fund enough to take you over three months of all expenses. That high interest debt you had? You paid it off too, and have started to siphon a nice percentage of your income towards your retirement.

All this is great work, but now what?

In case you are wondering how to save money beyond the basic steps, this article is what you should read.

• Check your budget: Maybe you needed to have a strict budget to pay off a toxic debt. But now, with that over with, you can switch over to a 50/30/20 budget. If you are already using this budget model, reevaluate that and see what are your wants and needs. Thus, you’ll see that more money is available.
• Take care of the low priority debt: You have paid back the high-interest debt first, and that’s a good thing. In fact, that’s how it should be done. But don’t stop now that it’s paid. Start paying off the low priorities debts.
• Use your savings: A lot of people keep a significant part of their money in a savings account in the same bank that has a checking account. Perhaps you are doing this too. Now, this earns you maybe .06% interest a year. But this can grow faster. Consider moving your emergency fund or your savings into a different type of account. Consider Certificates of Deposits. These can lock up your money for a certain time while it earns a high interest rate. If you have extra savings, CDs can be a great option. However, these are not so good for your emergency fund since you may need it at any time. For emergency funds, a high-yield savings account is a much better option since these have a higher minimum balance requirement and have high interest rates.
• Don’t forget to invest: This is a good time to rethink how much you need to save up for your retirement. Perhaps you may need to start saving more for that, or even set up a personal retirement account. If you want to start building up a portfolio, reach out to a broker.
• Insure yourself: Revisit the basics like homeowner’s insurance and car insurance. Think about in which stage of life you are in, and what things you are preparing how.
• Think bigger: Till now, you have covered the basics. Now you can finally pay attention to savings goals and projects which you may have put off till now. Whether it is to start a new business, a family vacation, or perusing a new hobby, now is the time to do them all. Just focus on saving cash.

3 Ways To Sustain Your Family If Your Emergency Fund Runs Out

Yes, times are bad. The economy is not good. Jobs are drying up, as are people’s savings. There is news of job loss and salary cuts everywhere. Yes, times are bad.

Now, you may have an emergency fund, but what will you do or can do when this fund dries up as well? Be prepared for anything, or at least think these things through. Then financial shocks won’t be much of a problem. Let’s face it, people are getting desperate right now with their savings drying up, which is why loans are a big deal right now.

But if you plan ahead for such financial setbacks, you’ll be a lot better off than most. Here is what you can do if you see your emergency fund drying off.

Find out what resources you have

If you have a home, you can get a home equity credit line, which is one of the cheapest credit lines you can get right now. You can use your home to get a credit if the situation comes to the worst. However, use this option only when there is no other avenue left. Use it if there’s no food on the table and there’s no other way out. In that case, mortgage your home and do your best to find a good job in the meantime to start paying it back, or saving up for repayment.

Think about using your credit cards as well in such dire situations, before mortgage the home. Yes, interest rates for credit card loans are higher, but in tough situations, anything helps. Payday loans are not recommended as their interest rates are too high, often in 3-digits!

Cut down on bills

Before you even tap into your emergency funds, why not cut down on things you don’t need right now? Can you do it with just one mobile phone? Sell the spare. Don’t need some old clothes? How about a garage sale! Can you do without a cable TV connection? Great, do so. Anything you save right now is going to help you out. Use these first, for a bare-bones lifestyle before even getting to the emergency fund.

Your priority is keeping your home and basic utilities like power and water. If you rent a property, paying that rent is your priority because landlords can, in some areas, legally toss you out for even one month’s non-payment of rent.

If you have loans, try to negotiate the lower payments. If that’s not possible, bear with your creditors and don’t miss payments. That can harm your credit score, and spoil your future chances of getting loans.

Keep retirement funds as your last resort

This is another one of your last line of defenses. This can save you for the time being, but in time it can create a problem during tax time as you’ll have to pay income tax and a hefty penalty. Additionally, if you take money from this fund, you lose all the compound interest till now. If you do have a job, withdraw half of your retirement savings or Provident Fund.

Goals Of Financial Management - 4 Personal Financial Goals

Remember those financial goals you make back at the beginning of this year? With the year drawing to an end, and with Fall just ahead, it is a good time to revisit your financial goals. It is also a good time to check if any of those goals have gone awry. Here are some financial must-do things or this Fall.

Create an emergency fund

This September has 5 Fridays, which means an extra week’s worth of paycheck! If you are getting this huge benefit, consider to use this bonus to start building your emergency fund. Even small amounts of emergency fund can help you during times of car repairs, medical expenses, unexpected emergencies, and more. A good place to start doing this from is your high-yield online savings account.

Already have a good enough emergency fund nest? Then use that bonus towards paying your mortgage debt or credit card debt, or even planning to use it next year.

Oh and by the way, this December has 5 Fridays as well!
Increase your retirement savings

Are you maximizing your PF or Provident Fund? If so, this is a good time to consider making an increase to this contribution.

The minimum goal for provident fund should be to contribute enough to get any employer in the future to match your current company’s offer. If it is possible, boost your contribution by 10% or even by 15% by the end of this year.

You can contribute up to a certain amount per year, and this amount is tax-deductible. If you are older than 50, you can add another certain amount to build up your retirement egg nest.

Save something for those shopping splurges

Special days for encouraging shopping sprees and increased consumerism are many. There are days like Black Friday when you are bombarded by huge discounts and price offs. Of course people buy! Even those who are not in the habit of splurging find it hard to stop themselves.

At times like these, what you can do is arrange an automatic weekly transfer of a certain amount to your savings account from the beginning of September. Thus, when Black Friday does come, you’ll have enough funds to buy things.

Understand that the huge discounts only set you up for buying something big or expensive, which mitigates the discount cost for the sellers.

Use technologies to pay off debt faster

Why not let technology help you out? For instance there are tools which let you see when you shall be debt-free based on your current assets and liabilities. Using these can fine-tune your finances in ways would not have imagined possible!

Emergency Fund - 3 Ways To Sustain Your Family If Your Emergency Fund Runs Out

Yes, times are bad. The economy is not good. Jobs are drying up, as are people’s savings. There is news of job loss and salary cuts everywhere. Yes, times are bad.

Now, you may have an emergency fund, but what will you do or can do when this fund dries up as well? Be prepared for anything, or at least think these things through. Then financial shocks won’t be much of a problem. Let’s face it, people are getting desperate right now with their savings drying up, which is why loans are a big deal right now.

But if you plan ahead for such financial setbacks, you’ll be a lot better off than most. Here is what you can do if you see your emergency fund drying off.
Find out what resources you have

If you have a home, you can get a home equity credit line, which is one of the cheapest credit lines you can get right now. You can use your home to get a credit if the situation comes to the worst. However, use this option only when there is no other avenue left. Use it if there’s no food on the table and there’s no other way out. In that case, mortgage your home and do your best to find a good job in the meantime to start paying it back, or saving up for repayment.

Think about using your credit cards as well in such dire situations, before mortgage the home. Yes, interest rates for credit card loans are higher, but in tough situations, anything helps. Payday loans are not recommended as their interest rates are too high, often in 3-digits!
Cut down on bills

Before you even tap into your emergency funds, why not cut down on things you don’t need right now? Can you do it with just one mobile phone? Sell the spare. Don’t need some old clothes? How about a garage sale! Can you do without a cable TV connection? Great, do so. Anything you save right now is going to help you out. Use these first, for a bare-bones lifestyle before even getting to the emergency fund.

Your priority is keeping your home and basic utilities like power and water. If you rent a property, paying that rent is your priority because landlords can, in some areas, legally toss you out for even one month’s non-payment of rent.

If you have loans, try to negotiate the lower payments. If that’s not possible, bear with your creditors and don’t miss payments. That can harm your credit score, and spoil your future chances of getting loans.
Keep retirement funds as your last resort

This is another one of your last line of defenses. This can save you for the time being, but in time it can create a problem during tax time as you’ll have to pay income tax and a hefty penalty. Additionally, if you take money from this fund, you lose all the compound interest till now. If you do have a job, withdraw half of your retirement savings or Provident Fund.

What are Assets? - Why do your assets matter?

An asset is anything that you own, and that which has monetary value. As you might have guessed already, assets include your house, agricultural land, properties, cars, stocks, checking account, and even investments.

It is important to take stock of, or inventory of, your assets. It helps you to find out what your assets are worth. And remember, the value of assets change over time. The value of your car depreciates with each passing year, while conversely, the value of land increases over time.

That being said, you want to ensure that they are protected. For instance, you want to ensure that your assets are protected from natural disasters, divorce cases, lawsuits, and more. All this helps you to leverage your assets to meet emergency situations on time.

Let’s start by giving you a very basic intro into assets, and how assets can affect you. Your assets can be business-related, or they can be personal things. However, for the purpose of our article here, we shall be focusing on personal assets only.
Let’s look at the type of assets you can have.

Remember, some assets depreciate in value over time.

1. Cash and cash equivalents: These are assets in the form of money which is stored in checking accounts, savings accounts, certificate of deposit, and other account types.
2. Tangible assets: These are physical things which you can touch. This includes business properties, personal properties, boats, cars, art and jewelry.   
3. Intangible assets: These are assets you cannot touch, and thus these are in the form of bonds, stocks, pensions and royalties.
4. Liquid assets: All liquid assets are cash, or can be converted into cash easily. As such, this category includes bonds and stocks which are easily tradable. Price is not affected when you sell these.
5. Fixed assets: These are the opposite of liquid assets, and are also called illiquid assets. These cannot be converted into cash quickly. Additionally, their values change over time. This includes antiques, real estate, furniture, and etc.
6. Fixed income assets: This includes money lent on interest, certificates of deposit, government bonds, securities, and etc.
7. Equity assets: These are the securities and other assets which you own, like mutual funds, stocks, and retirement accounts.

Why do your assets matter?

Your assets are important, not just because of the monetary value, but also because they are essential in determining your financial net worth. Net worth is a fancy word for personal price tag. Over time, your net worth increases.

Net worth helps you monitor your progress in reaching personal financial goals.

Here are some scenarios in which you have to know your asset value.

1. Net worth- Net worth, as we said before, helps in shaping your financial health. How can you calculate your net worth? Just subtract your liabilities from your assets?
2. Insurance- Want to insure your jewelry or your house? You need to know how much they are worth before doing that. Insurance helps you to deal with many things which may affect or impact these assets, such as flood, fire, robbery, liability, and even court cases. Assets can earn you an income too; you may want to consider protecting your livelihood from these assets with disability insurance.
3. Loan applications- When you apply for loans, lenders check what liquid assets you have. In case you default, these shall be sold to give them a cover for their loss. If you have assets, you can negotiate a lower interest rate. Besides, having these ensure that you have funds enough to fall back on in times of emergencies.
4. Collateral- Depending on what loan you are taking, you may have to give your car and home as collateral. As with all loans, in case you default, these go to the lender.
5. Divorce- During divorce, your assets, money and possessions get divided between you and your spouse.
6. Bankruptcy- If you file for bankruptcy, your assets can be sold.
7. Retirement- When you retire, it is important to have assets to fall back on. What if you need money quickly after retirement, and a whole lot of it? You can sell some assets to meet such a situation.
   

Emergency Fund Myths - 3 Emergency Fund Myths Debunked

One of the most essential parts of personal finance planning is to be prepared for any eventuality. It means to be prepared for all emergency situations, no matter what. It does not matter if the economy is devastated by the current Covid-19 pandemic, or whether you are facing a job loss. It does not mean much whether there is a medical emergency or whether your business is going on a loss. Do you know why these won’t matter you or trouble you? Because you would have prepared for them over time? Your emergency funds shall carry you through any problems whatsoever.

The rule of thumb is to have an emergency fund worth 6 months of savings. This means you can go through 6 months without needing funds from anywhere else. Remember, anything can happen during this time: medical emergency, job loss, loss in business, and more. That’s why it pays to be ready for such circumstances. You should save 6 month’s worth of basic living expenses at the very least. With such a fund, you won’t have to use credit cards to cover sudden expenses.

However, there are many emergency fund myths that need to be debunked. In this article, we are going to debunk them one by one.

Myth 1: To grow an emergency fund, it is important to put it into investments

Here’s the truth: your emergency fund is for one separate purpose and your investments are for a separate reason. Don’t mix up the two. Here’s the difference between the two.

Your emergency fund should be your last resort in case of any unexpected circumstance. Whether it is a financial emergency or a sudden job loss, this is the one you should be using. As such, this should be easy to access and should not be for investing purposes. The funds in your investments are for the long term. These are not to be withdrawn during emergencies unless you really need these of course.

So, these are for the long term and give you higher returns over time. If you withdraw from your investments, you lose income growth by that much amount. It does not matter if you withdraw Rs. 100 or Rs. 1000, you lose if you withdraw. There can be penalties to be paid as well if you are withdrawing from a retirement account.

If you look at your recent history, you can see what the risk is if you use your investment accounts in place of your emergency funds.

Myth 2: One needs to put as much money possible in emergency funds

The truth is that you’ll lose some serious net worth growth potential if all you do is put money in your emergency fund.

As of now, saving accounts interest rates is close to 0%. The national average APR just for a normal savings account is 0.5%. High-yield savings accounts money markets are giving interests between 0.75% and 1%. Pretty scary, huh?

You can grow your net worth considerably still if you put a part of your money in an investment account. These give 7% on an average in returns per year!

Look, it is not of much use to have too much cash in a low-rate environment, or to put a lot of your month in an emergency fund. You just need to be efficient and keep adequate money in the right account types.

Myth 3: One needs to save 3 to 6 months of current spending level

The truth is that you need to save 3 to 6 months of basic expenses. It is not much use of having an unnecessarily huge emergency fund.

To find out how much you should have in your emergency fund, find out what your core expenses are. This represents the amount you absolutely need to have without going down a debt spiral. There is no need to add discretionary spending here.

At the end of the day, you get great peace of mind to know that you have an emergency fund to act as a cushion in rough times.