A Short Guide To Your Financial Assessment - What is financial assessment?

Let's start with the very basics of the matter…

What is financial assessment?

Simply put, it is a check of your financial health. Financial health covers a lot of things like how much savings you have and how far that is towards your long term goals like retirement savings. It includes your credit score as well.

Why should you assess your finances?

When was the last time you started a diet or an exercise regimen? At the very start, you probably measured your weight for having a yardstick, right? Personal finance assessment is similar. You need to have regular check-ins to make sure that you are reaching your goals and that you are well on your way to save for retirement.

Why should you do it?

Experts say that assessing your finances before making big financial decisions like taking out a mortgage and getting married can save your life. Ideally, you should be assessing once a year. Let’s face it. Times, and your needs change. And that means your income and expenses change as well. At times like these, and during times of taking big financial decisions, you need to find out the current position of your personal finances.

You’re not on a budget. So what now?

Maybe you are just going on a day-to-day basis and managing your short term needs. That is fine, but you still need to be prepared for more.
How to do that?

Here are a few ways to do this.

1. Retirement savings: Check your monthly contributions. Take full advantage of your company’s PF match, if it has one.
   
   
2. Meeting debts: Tackle your debts head on. There are debates on which debts to tackle first: ones with the most interest or one with the least interest. Pick one that suits you the best.
   
   
3. Budget based on income: Choose the 50/30/20 budget which says put 50% of income on necessities, 30% on meeting wants, and 20% on contributing to savings and debt repayments.
   
   
4. Building an emergency fund: At a bare minimum, you should have 6 to three months of savings for meeting any emergency.
   
   
5. Having a good credit score: Check your credit score regularly. The healthier it is, the more likely you are to get loans.
6. Insurance: Check that you have minimum coverage to protect yourself against loss.

Protect Your Parents from Cyber Crime - How Do Our Parents Get Affected by Cyber Crime?

We live in a world of technology. Its importance is undeniable, as it has changed our lives immensely and still continues to do so. Most of us consider technology to be a boon, but with the increase in cyber crime, this notion has been put to question time and again. Cyber crime has become one of the most significant global issues as it is found quite difficult to investigate and prosecute, with even eminent and educated individuals falling prey to cybercriminals.

Cyber crime is most commonly related to financial fraud. Evolving rapidly in this century, cyber crime has been affecting India quite significantly. Globally, India ranks third in terms of cyber crime and second in terms of targeted attacks. The USA is the most affected by cyber crime, followed by China.  In India, the number of cases rose 19 times between 2005 and 2014 - from 481 in 2005 to 9,622 in 2014. India ranks second in terms of phishing (manipulating emails and website links) and spam. Phishing is high in India because we are naturally curious to click on the links that show us something attractive. It's a tendency that we can't ignore, but by spreading awareness regarding cyber threats, we could reduce it to some extent. Elderly people are mostly the targets of phishing, as they have less knowledge on cyber crime. Today, let us discuss how to prevent cyber crime.

The truth is that our parents want to understand and use technology to connect to our online life. They want to see the pictures we post, send us emails, and transfer money. The danger arises from the fact that their knowledge of internet security is close to nothing. Common online threats against seniors are phishing schemes, credit card fraud, identity theft, impostor scams, etc.

Some of the elders are very keen on learning and adapting to new technologies, while others still don’t know how to operate a mobile properly. There have been incidents recorded all around India wherein cybercriminals have targeted aged people by making calls and asking them for personal information such as credit/debit card details. Soon after they give the information, they end up losing their money. Such incidents could seriously impact our parents’ finances.

How Do Our Parents Get Affected by Cyber Crime?

There are many ways in which our parents could get affected by cyber crime. Let us take a look at a few of them:

• They tend to give out personal information easily when a person claiming to be from the bank calls them.
• Most elders become victims of cyber crime during investments.
• Also, most of them become victims to healthcare or health insurance-related frauds.
• They might click on an email that makes them believe to have won a cash prize or an amazing deal.

Do You Know Why Our Parents Are Likely to Be Targeted?

There are certain things that cyber criminals look for in targets, and our parents often fulfill those requirements, which are as follows:

• Cybercriminals target people who have excellent credit scores. The aged and middle-aged people fall under this category as they are likely to have a good credit history.
• Our parents tend to trust unknown individuals easily.
• If defrauded our parents are likely to not disclose to anyone.
• They lack knowledge regarding the techniques and tools that hackers use.
• They are less likely to change their passwords.
  

Preventive Measures

Here is a quick guide to keep your parents safe online:

• The first thing you need to do is to educate your parents about cyber crime and cyber security.
• Teach them about spam and malicious emails and explain that clicking such links could  corrupt the device or the account.
• Teach them how to organize their inbox.
• Ask them to not download anything from suspicious emails.
• Educate them about the secured sites for money transactions.
• Teach them to be vigilante by advising them to not share their personal/card details to anybody.
• Over 60% of online fraud is through mobile platforms. Try educating them about all the important aspects of mobiles.
  

Hence, it is highly advisable to have a small chat with your parents and help them out before they fall prey to cybercriminals. With an increase in the rate of cyber crime in India, it is our due responsibility to educate not only our parents but also the society at large regarding cyber crime.

How to Plan for Variable Expenses - What are variable expenses?

You may feel like losing control of your finances if expenses are going out of hand, or are something that you feel is behind your control.

There are two types of expenses basically: fixed expenses and variable expenses. Fixed costs or expenses are those that remain the same over time, while variable expenses vary over time. These are not fixed, and therefore can be hard to budget for. These are not predictable, but there is one advantage in them. They do allow for a certain amount of flexibility in your budget that can be invaluable.

In this article, we shall show you how you can plan for variable expenses.

What are variable expenses?
Variable expenses, or variable costs, are those which change over time. These include grocery costs, movie tickets, and the like. Since these costs fluctuate within weeks, months or over years, it can be hard to budget for them or to save up for them.

However, you should remember that some variable costs are vital while others are optional. For instance, groceries are vital while gym membership can be optional and you can workout at home!

Another reason behind the variable expenses is due to a fluctuation in price. For instance, you may suddenly see that your transport costs have risen over just a few days, or even on the very next day! Even a rise of a few rupees can have an impact on some budgets.

Or for instance, let’s say that you like to treat yourself each day after work to Rs. 20 burgers. However, suddenly you see that the price has increased to Rs. 50/burger. In such a case, you may choose to discontinue treating yourself like this, or you may choose to cut down on some other expenses to continue treating yourself like this.

Then again, there are some variable costs or expenses which fit both scenarios. Costs of gasoline and utilities like water and power depends on how much you consume. Want more examples? How about vacation costs, clothing, holiday gifts, eating, and etc.?

Like all expenses, you not only need to keep a track of these, but also need to find out how these variable expenses are affecting your personal finance overall. Here is what you can do:

• Track your month expenses
• Deduct this from your monthly income
  

You’ll most likely get a positive balance. Rarely, and we hope not, will you get a zero balance or a negative balance.

Deduct your variable expenses from your fixed expenses. This shall give you an estimate of how much you’ll have to spend on the former. You can then decide and determine the amount which aligns with your budget.

Find how you can save
The easiest way to find out how much you can and should save, use the 50/30/20 budget. According to this budget strategy, you set aside 50% of your monthly income for your needs, 30% for your wants, and 20% for your savings.

As you can see, this budget gets all elements of your personal finance covered. It’ll be even better if you can automate these tasks. Oh and by the way, the 20% includes contributing to your emergency fund and retirement fund too. In the 30% set aside for wants, this is the place for variable expenses.

Wants are something you can do without if you choose to, and therefore you can save quite a bit here. You can’t control price changes of groceries and of gas, but you can control how to manage how much goes into them and how.

Revisit your spending
It is hard to anticipate for and pay for variable expenses. However, by examining your transaction history, you can get to learn your spending patterns. You can know about the general cost as well, which allows you to adjust your budget when needed.

How to Escape Credit Card Debt - Assess Your Finances

Climbing out of debt is a tedious process. You should know what to do and you should follow the correct approach. Conquering debt requires time, patience, dedication and a strategy. There is no perfect strategy to conquer debt and you must figure out what suits you best. Experts from mymoneykarma are here to share the basic approach to handle debt.

Assess Your Finances

When you are striving to get out of debt, you need to know your finances in and out. Critically evaluate your finances. List all your financial obligations (the amounts you owe along with their respective APRs) and monthly expenditure.

Being in debt means paying a high APR. Check out each card's APR to understand the amount you owe and accordingly chalk out a plan to reduce the debt. You could pay off the high-interest debt first to save some money on APR, or you could also pay off lower balance debts first for stress relief. Consolidate your debt and expenses and compare the amount with your total income.

Create a Budget

Create a basic budget for yourself after you have listed all your financial obligations and monthly expenditures. If you have loans or outstanding debts to repay, never stall those payments. At the same time, start building an emergency fund - a backup plan for emergencies.

Save a small amount like Rs.2,500 or Rs.3,000 every month till you have enough to support a livelihood for a few months in case of a financial crisis. Having saved enough for emergencies, channelize the rest of your money towards settling debts or adding to your long-term savings. Drawing up a budget will keep you on track and you will make steady progress towards reducing your debts.

Limit Your Expenses

Make a list of your expenses. You must have some constant expenses like rent, utilities, food, fuel, etc., and some variable expenses too. Variable expenses refer to non-essential expenses that are not mandatory for survival, such as restaurant bills, movie tickets, other forms of entertainment, gifts, etc.

If you cut down the costs of these expenses, you will be able to free up a considerable amount of funds for repaying debt. Find out ways to trim expenses and generate more income. Learn to separate necessities from luxuries - try to live on necessities and cut down the luxuries till you have pulled yourself out of debt.

You could look for sources of extra income to help settle your debt. A part-time job or a freelance assignment could help. If you receive extra cash from IT returns, year-end bonus, incentives, or as a gift, channelize it towards settling your debt before you spend the money on something inessential.

Prioritize

When you are deep in debt, you must know how to handle them. You should have a financial plan. Never default on secured debts. Pay at least the minimum amount. These debts are secured by an asset or collateral. If you fail to pay on time, you could lose the asset.

Your next priority should be your credit card debts - these are the ones that have hefty APRs. The earlier you pay off, the more money you save on interests. Focus on your unsecured loans next - whether it is a student loan or a personal loan, you must make the minimum monthly payments without fail.

Refrain from using your credit card while you are already in heavy debt; don't add to your debt burden when you are already struggling to clear off existing debt. If you have a considerably huge debt, you could opt for a balance transfer card to help you tackle the load.

Strategize

There are three types of debt reduction strategies: the snowball method, the avalanche method and the blizzard method. Follow the one that suits your purpose.

1. The Avalanche Method: This method follows a top-down approach and focuses on wiping out the highest interest debt as quickly as possible. You must make minimum payments on all outstanding balances, and then pay whatever more you can afford to the debt with the highest APR. Repeating this for a few months will surely settle the concerned debt. When the highest APR debt is paid off, use the same process on the next one with the highest APR. This strategy can help you save a lot of money on interest charges.
   
   
2. The Snowball Method: The Snowball method is a bottom-up approach where you first pay off the minimum balance debt and then move up from there. Just like the Avalanche method, you must make minimum payments on all outstanding balances and you will be left with some extra money. Unlike the Avalanche method, the Snowball method asks you to use the extra money to pay off the debt with the least balance. When the smallest debt is paid off, use the same process on the next one with the least balance. This strategy builds positive repayment habits and gives you the confidence to conquer all your debt.
   
   
3. The Blizzard Method: This method is a combination of the Avalanche and Snowball methods. You pay off the least balance debt and get a huge emotional boost and then focus on tackling the highest APR debt to save money on the high interest.

Develop Good Financial Habits

If you have landed in debt, your own poor financial choices were responsible for it. You need to rethink and carefully evaluate your past financial move to understand where you went wrong. Alter the behavior that landed you in debt to ensure that you don't repeat the same mistake.

Stick to your budget; don't spend more than what you can afford; prioritize your expenses. Once you manage to crawl out of debt, you should maintain responsible financial habits so that you don't sink into debt again.

Getting Your Finances Back On Track If You Overspend On A Vacation

Who does not like vacations?

Vacations refresh you. Vacations are blissful.

But unfortunately, vacations can be quite expensive. It is easy to go on a splurge when going on one of these trips. In fact, travel companies depend on your taking expensive packages.

When going on vacations, it is easy to overspend. Since it is a pleasure trip, everything that you do or think of doing, you tell yourself that you totally deserve it. We’re not saying you don’t, but it is not prudent to waste a lot of money on room upgrade, on drinks, on meals outside the hotel, and so on.

These costs add up fast, and can break the spell of your dream vacation. All the strict budgeting done back home won’t help if you splurge beyond your budget while on the trip.

The first step to do at times like this is to be honest. What is the extent of the damage? How much did you overspend, and from where did all that money come? Maybe you used your credit card, or almost emptied your bank account. Once done, make a concrete plan to refill that depleted or affected account.

Repay yourself and stop spending

Here’s what you need to do. You have to set a realistic goal for repairing your personal finance. The goal needs to say how much you overspend or spend during the trip, and how much and how you shall repair the damage. If the money was taken from an account or by using a credit card, say how you shall refill the account or pay back the credit card loan.

If your credit card was affected, pay attention to that first. Even if this expenditure gets you cash-back and spending points, these benefits are offset by the accrued interest when you cannot pay the balance back on time.

Do this: cut back and skip all optional expenses for the next few weeks, or even a few months. But don’t worry! This financial state of affairs won’t last forever.

Plan and set spending limits

When you have recovered your financial debacle created from your previous vacation, and if you are already dreaming about the next trip, don’t make the same mistakes again. Your financial situation depends on it.

Apply what you have learnt from this article. Pay attention to all expected and unexpected costs. Write down how much you are overspending and on what. Before going on the trip, plan everything and have a strict budget.

Keep the budget clear and reasonable. Don’t keep it too low either, or else you may return to overspending once more.

7 Ways to Supercharge your Personal Finances - Personal Finances

Everyone has financial goals. What’s yours? Is it to buy a nice condo, or just to manage your personal finance better? In this article, we are going to help you out in getting you back on track to financial health.

Establish a baseline: In this fitness industry, there is something called a baseline. So what is a Baseline? It is a set of few exercises given to determine where you are in your fitness journey. Based on that, you get a new fitness plan, diet plan, etc. For the purpose of this article though, it will refer to where you are in your financial state.

Check your credit score for errors: You know that you can get a free credit report a year, right? Well, why not check your credit report for errors. Get the help of a professional if you don’t know how it works. Check for errors, and yes there may be errors, is important because these can cause some problems. Errors here won’t affect the score, but the same errors will tell you why your credit score is the way it is.

See where the money is moving: If you always have money problems at month end, it is never too late to see where you are spending the most. Once you know what is taking up so much of your money, you can find ways to save.

Here’s some quick fixes

Here are a few, small and easy fixes which can make a big difference in your financial life.

Think about lowering your interest rates: If you are paying a lot by way of interest rate, or credit card interest rates, think about getting a balance transfer credit card. This allows you to move over to a credit card which has 0% APR for some months. You can use this time to pay the debt without worrying about the time.

Set up over-the-limit alerts and low-balance alerts: Missed payments and using up too much of your credit facility will come to haunt you later. To ensure that you always have enough money in your account, think about setting up alerts. Also think of setting up warnings for when you are nearing 30% credit utilization ratio.

Improve your stamina

These are ways to maintain your financial health without stress.

Set up automatic bill payments: If you pay for things regularly, for instance subscriptions, memberships and EMIs for loans, why not set up automatic payments when possible? It is easy to make mistakes without this. Automatic payment leaves one thing less to worry about.

Make money transfers to accounts that are only dedicated to debt payoff: If you are a serial shopper and splurger, think about opening your separate checking account which is dedicated to that goal only. As soon as you get your salary, automatic transfers send the money over to that account. This way, you’ll always have money to pay your bills, you’ll pay off debts, and will have less money to splurge.

Have small payments with less-used credit cards: If you have old credit cards you don’t use anymore, don’t throw them off. Use them. Use these to make small transactions to keep the cards active. Shutting down old credit cards affects your credit score.

And so, there you have it! 7 ways to supercharge your personal finance.