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!

How Does Savings Account ? - Is A Savings Account Worth It?

Did you know that a savings account is the most common of all bank account types? It is possibly the very first account you have ever made in a bank, as most people do. Savings account comes with many benefits. For instance, it allows you to keep your funds safe with the bank where it earns a bit of interest each month.

These savings accounts are also beneficial as these do not require you to keep a large minimum balance. However, this does depend on the bank and its type of account, as well on the interest rates on savings accounts.

When you put money in a savings account, you are less likely to go on a spending spree. That’s because most such accounts have a rule that you cannot extract funds before a given time, or else you forfeit the future interests. But it is much better than keeping all that money at home. What if your home is robbed one day and all the money's gone? Keeping your funds with the bank means that it is as safe as it can be. Your money is kept in locked, fireproof safes.

Banks insure your money, up to a certain amount through a government body. This means that even in case the bank closes business, which is very rare, your money won’t be lost. Again, when you put money in a bank’s saving account, it gets interest. This interest is given by the bank so that it can use your money for various financial activities.
Here is how it all works:

• You open a savings account.
• The bank gives you interest on your deposited money
• The bank loans your money to other people at a higher rate of interest.
  

So you now see why the bank does so, and why. It earns a lot in the difference of interest.

Interest on your savings account is often compounded either daily, and then paid monthly. Easily the best thing about this is that there is a compound interest or interest compound. The bank will be paying you that on the money paid on interest! Here is how the bank calculates compound interest for you.
How does interest work on a savings account

Daily compounding = principal (1+interest rate/365) = daily compound amount.

Now, we shall see how banks and credit unions manage your savings account, and what happens on opening a new account.

Types of savings accounts

Savings accounts and financial institutions

The amount of interest that you have in your savings account depends on the kind or type of financial institution which you have selected for the account. Credit unions and banks are very different. Banks are commercial entities while credit unions are mostly non-profit cooperative organizations which are organized or developed for servicing a very specific group of people. For instance, state employees have access to a state employee credit union. Loans from such unions are not very expensive, but at the same time you will not get a very high interest either. This is not always how it works though. Right now, some credit union interest rates are higher than many banks. Additionally, credit unions pay interest on accounts which banks do not give interest on, such as checking accounts. However, at the end of the day, you still need to be a member to get these benefits, and to get a savings account.

Typically, banks have two types of savings account-

• Basic savings account: This is also called a passbook savings account. This generally does not have any minimum balance requirement and you can withdraw any time you want, but gives you a very low rate of interest. So, that is a considerable downside unless the benefit is worth more to you. If you invest here, you won’t earn much in interest. At times, the interest is less than 1%.
• Money market accounts: These pay you much more interest, but require you to have more money in the account at all times. Withdrawals are limited as well, along with the number of cheques you can use to withdraw.

What are the prices involved?

There are times when the bank charges you fees just for having a savings account. These may be negligible to a noticeable amount. It all depends on your account balance. Because of this is it important to see what other banks are offering before choosing one. Here are the things to look for:

• Service charges and fees
• Minimum balance requirements
• Interest rate on balance
  

In other words, compare savings accounts before finalizing on one.
What happens when you have a savings account?

When you open a savings account, you get a register. It is a small book in which you write down your starting balance, and subsequently all your future withdrawals and deposits. It helps you to keep track of all these things.

Each month, you get an account statement from your bank. This is a statement of all your transactions, along with any fees incurred by your account. It also tells you about interest earned. To ensure you do not forget to write down deposits and withdrawals, go to each entry in your register or pass book, and then compare the same with the bank’s statement. They need to match up. If not, you can call the bank anytime you want.

How do Savings Accounts Work ? - How Interest Works on Savings Account ?

Did you know that a savings account is the most common of all bank account types? It is possibly the very first account you have ever made in a bank, as most people do. Savings account comes with many benefits. For instance, it allows you to keep your funds safe with the bank where it earns a bit of interest each month.

These savings accounts are also beneficial as these do not require you to keep a large minimum balance. However, this does depend on the bank and its type of account, as well on the interest rates on savings accounts.

When you put money in a savings account, you are less likely to go on a spending spree. That’s because most such accounts have a rule that you cannot extract funds before a given time, or else you forfeit the future interests. But it is much better than keeping all that money at home. What if your home is robbed one day and all the money's gone? Keeping your funds with the bank means that it is as safe as it can be. Your money is kept in locked, fireproof safes.

Banks insure your money, up to a certain amount through a government body. This means that even in case the bank closes business, which is very rare, your money won’t be lost. Again, when you put money in a bank’s saving account, it gets interest. This interest is given by the bank so that it can use your money for various financial activities.

Here is how it all works:

• You open a savings account.
• The bank gives you interest on your deposited money
• The bank loans your money to other people at a higher rate of interest.
  

So you now see why the bank does so, and why. It earns a lot in the difference of interest.

Interest on your savings account is often compounded either daily, and then paid monthly. Easily the best thing about this is that there is a compound interest or interest compound. The bank will be paying you that on the money paid on interest! Here is how the bank calculates compound interest for you.
How does interest work on a savings account

Daily compounding = principal (1+interest rate/365) = daily compound amount.

Now, we shall see how banks and credit unions manage your savings account, and what happens on opening a new account.
Types of savings accounts
Savings accounts and financial institutions

The amount of interest that you have in your savings account depends on the kind or type of financial institution which you have selected for the account. Credit unions and banks are very different. Banks are commercial entities while credit unions are mostly non-profit cooperative organizations which are organized or developed for servicing a very specific group of people. For instance, state employees have access to a state employee credit union. Loans from such unions are not very expensive, but at the same time you will not get a very high interest either. This is not always how it works though. Right now, some credit union interest rates are higher than many banks. Additionally, credit unions pay interest on accounts which banks do not give interest on, such as checking accounts. However, at the end of the day, you still need to be a member to get these benefits, and to get a savings account.

Typically, banks have two types of savings account-

• Basic savings account: This is also called a passbook savings account. This generally does not have any minimum balance requirement and you can withdraw any time you want, but gives you a very low rate of interest. So, that is a considerable downside unless the benefit is worth more to you. If you invest here, you won’t earn much in interest. At times, the interest is less than 1%.
• Money market accounts: These pay you much more interest, but require you to have more money in the account at all times. Withdrawals are limited as well, along with the number of cheques you can use to withdraw.

What are the prices involved?

There are times when the bank charges you fees just for having a savings account. These may be negligible to a noticeable amount. It all depends on your account balance. Because of this is it important to see what other banks are offering before choosing one. Here are the things to look for:

• Service charges and fees
• Minimum balance requirements
• Interest rate on balance
  

In other words, compare savings accounts before finalizing on one.
What happens when you have a savings account?

When you open a savings account, you get a register. It is a small book in which you write down your starting balance, and subsequently all your future withdrawals and deposits. It helps you to keep track of all these things.

Each month, you get an account statement from your bank. This is a statement of all your transactions, along with any fees incurred by your account. It also tells you about interest earned. To ensure you do not forget to write down deposits and withdrawals, go to each entry in your register or pass book, and then compare the same with the bank’s statement. They need to match up. If not, you can call the bank anytime you want.

The last thing you want to remember is to make routine deposits in your savings account, and watch your money grow!

How to Manage Money in Your 30s - Open a savings account

Your 30s is perhaps the best time of your life to think seriously about your retirement goals along with repayment of college funds and down payments.

The 30s can be quite an exciting time of your life. It can be even your best decade ever. This is the time when you are advancing in your career and are starting to reach your income goals. However, it is also the time when you have new financial responsibilities, children, buying a new home, etc.

Of course, building a budget is essential. But that is not all. People in their 30s need to take extra steps to successfully manage their money.

Open a savings account: If you have not opened a savings account yet, now is a good time to do it. In fact, this is not something you would want to delay. The sooner you start saving, the easier it shall be when you retire.

Savings account is only one of the several ways to save up. Another good option is your company’s Employee Provident Fund. Contribute to it as much as you can. Your company shall possibly match your contributions or give a certain percentage of it. At the end of the day, all this is free money! So why not take its benefits?

When you get increments or raise, increase your contributions by 10% to 15%. Again, you are saving all this for your retirement, so that you won’t have to scrounge for money after your retirement.

Make your financial priorities concrete: Your spending patterns in your 30s won’t be the same as in your 20s. For one, your focus now is saving for retirement, disability, LIC, and the like. Never thought about all this in your 20s, did you? That is why you need to make some changes now! Apart from paying more attention to your retirement savings, you need to keep track of your spending.

It is very easy, and may even seem natural, to spend more when you are earning more. But that’s not right. What you need to do is to have a budget model. To be really effective, take the 50/30/20 budget model. Under this model, from your yearly or monthly take-home income, give 50% towards meeting needs, 30% towards wants, and the remaining 20% on savings and debt repayments.
If you are having problems with this, it is never wrong or late to take the help of a professional certified financial planner.
Now that you know about the 50/30/20 budget and know how important it is to budget and save up for different things, it is important to know about saving for emergencies. To save for the future should be your top priority. This does not just mean your retirement fund, but your emergency fund too. Take this Covid-19 pandemic and lockdown for example. No one planned for this financially nor expected it. This is why finances of both companies as well as individuals are in shambles. Situations like this tell us that it is so important to save up for meeting any emergency situation.

Get LIC and disability insurance: Remember where to put the 20% of your yearly or monthly income? In savings, right? Good. Well, here are two important places where to park your savings for the future. And look, having LIC and disability insurance is important. No one wants to plan or even think about facing the worst-case scenarios in their lives. However, if you do plan for it, it makes your life easier. This is when you need insurance.
Disability insurance helps you when you get career-threatening injuries and disabilities. Nowadays, people are actively insuring things which they feel are central to earning a paycheck. For instance, people who spend most of the day in front of their computer insure their eyesight. So in case they do lose their eyesight, they’ll get a lump sum or monthly coverage from the insurance company. Some companies give disability insurance too.