Tag Archives: making money

From First Paycheck To Financial Security

By on February 19, 2013 in Credit Cards, Debt, Professional Posts, Quick Money Saving Tips

Financial Security At A Young AgeJust out of university and making some real money for the first time in your life?  Everyone at work is talking about mortgages and investments. What is all this stuff?

This is how I felt when I first started working. Completely overwhelmed by the idea of being financially responsible. In the 8 years since, I’ve figured a few things out and have set myself up with a solid financial base. Enough so I can now afford to take a risk and work on my own tech start-up Pocketbook salary free.

At the same time, I completely understand the temptation of the first paycheck. When it hits, it’s pretty hard not to spend it all on beer and fun. But before you do, I implore you to listen to some of my tips to make sure you’ll on your way to your financial freedom.

Make your saving a disciplined process 

Recent studies have found that one in five Aussies struggle to find $1,000 in an emergency (News – Aussies Have No Emergency Funds). So saving for a rainy day isn’t easy.

The best way to do this is literally set your money aside. Start a savings account with another bank that offers high interest, and set up a regular direct debit to draw money away – “hide it and forget it”. Before you know it, there’ll be a pool of money for emergency situations or a down-payment for a place of your own.

I personally started with an ING account, and ultimately purchased an investment property as a disciplined way to save – mortgage payment equals deposit – as long as the property holds value.

There’s no such thing as a quick buck 

It’s true, there’s no such thing as a quick buck. I remember working on many a lottery syndicate or blackjack schemes while in university. None of these amounted to very much. The reality is that even if you’ve got a great business idea, it’s going to be a five to ten year slog to really make it – even if you’re the one-in-a-million Zuckerberg type.

So work hard, build skills and relationships to be more employable; meanwhile saving and investing wisely to build a good base. My personal philosophy is to focus on low-risk things first (ie cash savings and property) and high-risk things later (branching out to your own business).

Don’t overextend beyond your means 

Next is not letting your “wants” overwhelm you. It’s so easy to flaunt it when suddenly you jump from a student-level poverty to being able to buy brand name clothing, big televisions and flash cars. Many get into situations where they accumulate way too much debt.

In fact, another recent study by CBA says that Australians owe their friends 1.8 billion in total across our country (News – What Friends Owe ) – this doesn’t include credit cards! Two in five don’t even get any of that money back.

So the lesson here is really understand the difference between your “wants” and your “needs”. Spend wisely and spend in moderation on non-essentials.

Pay off debts early and often 

Another rule of thumb is keeping your debt balance as small as possible. Whenever you can, pay credit cards off first and don’t ever get a personal loan just to “make ends meet”.

There are so many young people that pay off one credit card with another and get into this continuous cycle of high interest debt. If you think you’ll be one of those people, try to avoid credit cards altogether. There are plenty of debit cards on the market today to cater for your online shopping needs.

My tip would be to get statements in the email, make a special folder for them and put some reminders into your phone’s diary for the due dates.. This way you will limit the chance of being charged interest and overdue fees.

Tracking tracking tracking

Finally, the best way to building for your future is to understand your past. Understanding what you spend week-to-week and month-to-month means that you can get smarter with cutting back and be creative about how you build that all important pool of money.

There are plenty of online tools available to help you do this too – some require really little work. Pocketbook (the tool I’m building) is one such example. So there’s no excuse.

About Bosco Tan

Bosco Tan is a Co-Founder of Pocketbook, a new Australian company seeking to make personal finance, budgeting and managing money ridiculously simple. He has years of experience working with big corporates to achieve their strategic and budgeting goals. He is now hoping to use these same principles to help individuals. Bosco is also a keen property and angel investor. You can connect with him at http://www.linkedin.com/in/boscotan.

 
photo credit: stuartpilbrow via photopin cc

 

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humble savers – THE NEWSLETTER – 6

By on January 19, 2012 in Newsletter

The Newsletter for humble saversWelcome to the first humble savers – THE NEWSLETTER for 2012.

We finished 2011 with guides to help everyone to reach their ‘money’ goals for 2012. Motivational speaker Anthony Robbins, claims that 95% of New Year Resolutions are all but forgotten by mid January. If you want to see your 2012 goals come true you could benefit from revisiting  How To Set And Achieve Goals For Your Money – Three Step Guide.

Free ‘One Page’ Financial Planner Checklist - In our first major article for 2012 -Financial Planner Checklist – 8 Questions You Must Ask, we included a One Page checklist that can be easily downloaded. The article highlights 7 core questions to ask a financial planner and one big question to ask yourself, before finally selecting a financial planner. The big question for you is all about Trust. It’s a big decision to ask and pay someone to look after your financial future. Trust will need to be at the heart of the relationship for it to be successful.

Many people do ask  ’Is there value in seeing a financial planner?’. Our view is quite simple - Yes. A good financial planner should work like a good local Doctor (GP), by giving easy to understand advice and calling on specialist for the more difficult issues that will arise. However, you do need to find a good one and also make sure that you are not getting over charged.

Many people would like to start the year by eliminating their debt – The article Budgeting – How It Can Make It Easier To Pay Off Debt is easy to read and gives some quick tips to get on top of any debts. It does highlight the ‘Snowball’ method of paying debts. You start with the small debts and work your way until you get the big debts paid off.

First Home Buyer – Fastest Way To Save For A Home Deposit is our latest article. We answer a question to help someone save as fast as they can to get that all important deposit for a new home. Fast ‘money saving’ and ‘money making’ tips are given.

Financial Trivia
The Market Capitalisation (the total value) of the 500 US Companies that make up the S+P 500 index  - In US Dollar Millions, is $11,709,614.41 (Jan 17 2012). For Australia’s top 200 companies in the S+P ASX 200 Index – In Aus Dollar Millions is$1,004,253.1 (Jan 18, 2012). Source Standard and Poors. 

Articles of Interest From the Web

Cheers

The humble savers team

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How To Set And Achieve Goals For Your Money – Three Step Guide

By on December 19, 2011 in Quick Money Saving Tips

Set and Achieve Your Goals - humble savers

Setting goals for anything in life is easy, achieving your goals is the difficult part. This three step process will help to clarify your money goals and give you the best opportunity of achieving them for 2012 and beyond.

Step 1 – Start with lot’s of money goals

  • Have a brainstorming session – Simply write down all the goals that you and the family have and do it with ‘enthusiasm and encouragement’
  • Don’t challenge the goals – That comes later
  • Set time frames – Breaking the goals into time frames. For example, Short Term is less than 2 years, Medium Term 2 – 5 years and Long Term 5 years plus
  • Start Prioritising your goals – For every goal in each time frame ask these questions:
    • Why is that goal important to me (and the family)?
    • Does it match my/our family core values and beliefs?
    • How will achieving the goal benefit me and my family?
    • Using your answers from a, b, c  above and start ranking each goal, e.g. give a score out of 10
  • Finalise three to five money goals for each time frame.

Step 2 – Know your starting position – Financially, where are you at right now?

  • List all your current investments and debts (include the credit card)  - You need a Total Net Wealth Picture of your financial situation
  • What is your cash-flow position? – Detail your income and your spending
  • What goals have you set in the past that failed? – Why did they fail?
  • What goals have you previously set and achieved? – Why where these goals achieved?

Step 3 – Review, Plan, Implement. Review, Plan Implement. Review…

  • Revisit your finalised goals from Step 1
  • Calculate how much each will cost in time and money
  • Can you afford the goals today? If you can, the goals are not big enough!
  • Revisit your spending – What spending can you cut out, what can you reduce
  • Revisit your income – Can you make more money?
  • Re –prioritise the goals – You now you have some cold hard facts to rationalise each goal
  • Decide on the Final Goals – One to three goals in each time frame
  • Write each goal down – Carry them with you.  Have them around the house and at work so they continue to motivate you and remind you of your goals!
  • Turn the goals into pictures – A retirement goal can be a postcard of where you want to retire.  Displaying the postcard in a prominent place will focus you on your money goal(s)
  • Celebrate the goals when achieved – Take some time out; give yourself a pat on the back
  • Long term goals should have milestones than can be celebrated
  • Always review and fine tune your goals
  • Learn from your lapses –  Refocus your determination to achieve them
  • Get professional help –  Particularly for the more complex goals such as retirement goals
  • Share the goals with the family and friends – This will hold you more accountable and good friends and family members can encourage you along the way.

And lastly take note from Nike: “Just Do It”

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THE NEWSLETTER – 5

By on December 13, 2011 in Newsletter

To have humble savers – THE NEWSLETTER  sent directly to your inbox simply click here

Welcome to the humble savers newsletter

Christmas and the new year is almost upon us. At this time of year we often look back and wonder what happened to the year.

It has been a difficult year for the global economy and the financial markets continue to be quite worrying. Our article Worried About Your Finances was written with today’s economic events in mind. The article took on a new meaning when the Reserve Bank of Australia (RBA) issued a stern warning as it cut interest rates last week by 0.25%. The warning was simple, the global economy has some serious difficulties and Australia will not be immune to any down turn.

The major Australian banks took a while (seemed like forever), to announce their response to the RBA interest rate cut. Eventually they passed on the full 0.25% reduction which is good news for mortgage owners. However, for people who rely upon bank interest to meet their living expenses, it has a negative effect with their income reduced. The article Interest Rate Cut – What Does It Mean To You? provides practical tips for both mortgage and bank deposit owners.

This is also a time of year when many people will be looking to start their first job. Five Ways To Save Money – Your First Job is a practical guide for anyone who has just started to earn themselves some real money. Parents will also find it useful guide to help family members who are starting new careers. 

Financial Trivia
In the article, Interest Rate Cut – What Does It Mean To You? We mentioned that dividends paid by the major Australian banks are now greater than interest rates on bank deposits. What we did not mention is that the dividends carry a tax benefit (Imputation Credit) making them even more lucrative.

Why is there a tax benefit? Australian companies must pay tax on their profits before dividends are paid. The tax paid by the company is 30% of the profit and it is carried through as a tax credit in the hands of the shareholder

For example, at the time of writing, ANZ Bank currently has a dividend yield of 6.67%. When you add back the value of the tax credit, the dividend yield is worth theequivalent bank deposit rate of 9.53%. We will soon publish an article highlighting the full benefit of imputation tax credits in the coming weeks. 

Stories of Interest
Some stories that caught the eye of humble savers:

  • Ask the Readers: How to Help a Homeless friend? Posted by Get Rich Slowly. It does raise some difficult questions particularly at this time of year. The comments are a must read
  • For people with smart phones and tablets (the computer variety) 8 Apps Worth Downloading This Week from Mashable, a great website for anyone wanting to be more tech savvy
  • The Australian Bankers Association (ABA) released a new website ‘Doing It Tough‘. Designed to show that banks want to help people struggling with their finances. They launched in the same week that the banks left their customers down by waiting for what seemed like an eternity to communicate a response to the RBA rate cut. A touch ironic or maybe a plan?
  • Humility, Key to Effective Leadership from Science Daily - Highlights that ‘Humble leaders are more effective and better liked’. Enough said!

We hope you enjoyed THE NEWSLETTER. Feel free to share with family and friends. Thank you for your support

The humble savers team

PS The article Christmas is Coming! 20 Quick Money Saving Tips To Get You Through The Festive Season Has been modified. Tip 1 – Originally stated ‘Don’t Panic’, changed to –  ’Start Panicking’

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Worried About Your Finances?

By on December 5, 2011 in humble savers commentry, Quick Money Saving Tips

Worried about your finances - humble saversGlobal shares and government bond markets continue to react in strange and volatile ways because of the debt crisis in Europe. Many see this current volatility as the ‘new normal’ for the investment markets. Arguably this is a good thing if you are a day trader, but for the humble savers out there, this is a very unsettling time.

What can you do?

We should learn from what troubled governments are trying to do to fix their problems. It comes down to two simple issues:

  1. Reduce spending
  2. Increase revenue (For governments, this means increasing taxes).

The same thinking can easily apply to you. Here’s how:

1.    Reduce Spending

  • Your immediate goal – Make sure you spend less than you earn
  • Reduce debt as a priority – Start with the highest cost of debt, normally the credit card
  • Review your existing spending – Do you know where your money is going? Start writing down where your money is spent. These days there are simple programs and ‘apps’ to help
  • Start cutting out non essential spending – These are things that you ‘want’ as opposed to what you ‘need’
  • Reduce essential spending – Start shopping around for the best price, stop being so wasteful with food and pay more attention to your usage of electric , gas etc
  • Negotiate before you buy – Practice at this and you’ll save a substantial amount just by asking for a better deal.

The easiest way to make a positive start is to Save First, Spend Later (See also: Five Ways To Save – The Golden Rules) Adopting this technique will ensure you only spend what you can afford to spend

2.    Increase Revenue – Start Making More Money

Unfortunately, unlike governments, you can’t demand more revenue through raising taxes! However, you can better position yourself to gain some extra revenue.

  • Make the most of existing investments
    • Shop around to get better interest rates on your savings accounts
    • Seek better rates for your debts – mortgage, car loans and credit cards
    • Seek lower financial advice and product fees This can lead to a massive saving over time. (see also: Financial Adviser Fees – The Cold Hard Facts)
  • Make yourself a valuable commodity at work – Put yourself in the shoes of your boss and ask, “What would I like to see from my employees?” – It often boils down to the boss looking for more support, flexibility and the willingness for his/her employees to learn more skills. Become more valuable in your work place and it’s much easier to get that pay rise
  • Keep educated – Knowledge in your workplace is power. It is not all about getting the latest college qualifications, just simply keeping  abreast of what’s going on in the world will have a positive impact.
  • Be noticed (for the right reasons!) – These days, we are all on show. Whether it be Linked In, facebook, twitter etc. But don’t forget to get noticed more locally with key people and businesses associated with your industry/profession. Just make sure you are noticed for the right reasons, in other words be careful what appears alongside your name.
  • Healthy body leads to a healthy mind – It’s well recorded how the western world has become un-fit and this is costly in so many ways. Keep yourself fit and healthy and you’ll have the energy to do more with your life.

These are difficult times for many people. Being accountable to yourself for your personal finances and your career is not only a great first step, but something you should always strive to be get better at.

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