Sarang Ahuja | Finance

Leader, Financial Expert, Game Changer

Tag: personal finance (Page 2 of 2)

Personal Finance for Children

Kids and MoneyIt has long been discussed at what age people should start learning how to manage personal finance. It was only recently that some high schools began to require personal finance courses for graduation. Also, of course, there is the ever-popular list circulating the internet stating ‘Things I Never Learned in High School,’ most of which is related to personal finance. High schoolers, college students, and recent graduates are almost demanding that some personal finance that will be pertinent to the future is taught in school, yet the question of how early to start teaching it still remains. A new report suggests that the ideal time to start teaching personal finance may be earlier than anyone has thought before.

This Building Blocks Report, by the Consumer Financial Protection Board, makes the assertion that personal finance should start being taught at age 3. That’s right; preschoolers should be encouraged to practice make-believe play in order to develop their executive functioning. Executive functioning is, in part, learning control and how to plan, which is very helpful in budgeting. It gives people the willpower to maintain control over their actions, so, the sooner it is developed the better. Some make-believe activities that may help children to develop this section of mental processes are setting up a pretend supermarket in your home, playing accountant, and giving children calculators.

Of course, preschoolers will not be able to understand more complicated personal finance lessons, but they will understand basic concepts. Some things that should be impressed upon them include exchanging money for goods and saving money to get something better later. Remember that this is only the first phase of personal finance lessons.

Once children reach their pre-teenager stage, allowance can be used to further teach about personal finance. For example, requiring those receiving the allowance to save a portion of it each time it is given will teach how beneficial saving can be. It can also instill in them the sense that impulse buys, while fun at the time, are not always the best choice. When kids reach their teenage years, purchasing decisions can really start being discussed. At this age, it is recommended to discuss spending habits in all family activities, from filling up on gas to eating at a restaurant. Teenagers should be helping the family make spending decisions, which will ultimately prepare them for making spending decisions with their own finances in the future.

While it is great that some high schools are making personal finance courses standard, it is clear from the above report that personal finance learning should begin even soon. For more information, check out this Forbes article.

The One Piece of Advice for all Millennials

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No matter whom you ask, a majority of the general public wants to feel financially secure. The only problem is that there are only a few individuals who are willing to do what is absolutely necessary to create it the necessary steps for a financially healthy future. For most case scenarios, it comes down to that mentality and overall strategy that helps shape not just a person’s professional trajectory, but also an individual’s personal finance. To put it in an even greater context, the lack of drive can be due to a strong ‘subconscious’ disconnect between desire and action. This generally happens because many people feel complacent or apathetic about their overall career or financial situation that they decide not to take action. Whatever is the case, make sure you do not allow this to happen to you. One thing you should always keep in mind is your future. What you do today can have a significant impact on your life tomorrow. To help you on your path, you need to take that action.

Now to take action, it usually requires a strong internal understanding of where you currently are and where you want to be. By creating these tangible goals, you will be able to establish the overarching steps and objectives necessary to keep you on track in the best possible way. Start doing this by evaluating your career. For many millennials, they make the mistake of thinking their first job is just a job. While I can never predict what is in store for your future, you should accumulate the necessary skills and business-oriented mentality to leverage for your next job or future promotion. By developing and fostering your own professional skills, you are paving a path that is essential for your financial success.

As you continue to grow, you want to make sure you are cognizant of the values and importance of money. One of the biggest mistakes millennials and young professionals make is that they lack the strong foundational understanding of saving. Like many millennials today, you probably doubt the idea that you can save, live, and breathe easy with student loan debt and bills piling every minute of the day. While it is true that student debt can restrain you from your financial goals, it does not mean that it is impossible. To start, begin figuring out how to divide your monthly income way. Remember, some things you need, others you want, and the few are just dreams. Know your limitations. That type of mentality will help prevent any chances of overspending on discretionary items or under-saving for important investment purchases. In addition, try to find opportunities where you can increase your savings. While it may be difficult to conceptualize this, especially with an entry-level salary, you need to understand that you will not be in that particular position forever. Knowing that will help you make specific decisions, even educational decisions like graduate school, on your journey for wealth.

Now to fully grasp control of your finances, it is imperative that you create a plan and establish auto payments for your debt and other expenses. In addition, try and utilize this with your savings itself. Having that type of plan will not only control your debt, but also reduce your temptation to spend an entire paycheck. For many young professionals, they have the tendency to spend on lavish and unnecessary items. Having these systems in place will control any urges and put you on the direct path in establishing your financial future.

While this may seem overwhelming, as it should be, try and educate yourself on the on-goings of personal finance. Read particular books or articles to keep you up to date on the various products out there. Try and even see if there is anyone at your company to speak about the particular financial options that are offered to you. Remember, knowledge is power. Today’s knowledge has the opportunities you are looking for. Control it and you will be able to gain more opportunities and advancement for your future.

The Millennial Complex of Personal Finance

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In today’s world, millennials are looked as the pioneers of their times. They are better educated than their predecessors, more ethnically diverse, and more economically active. But for many of these exceptional young professionals, they have a troubling grasp of reality and fantasy where ‘what their financial situations actually are’ completely differs to ‘where they want their lives to be.’ In the grand scheme of things, this type of mentality continues to cripple the financial savings of many of these millennial’s personal finance. In fact, with such economical uncertainties, such as under employment, underpay, student debt, this generation’s lack of concern with their financial future continues to higher their current financial health and economical aspirations and security each and everyday.

To examine this further, we of course have to evaluate their social, living, and career situations in order to have a full grasp of the problem that continues to plague young professionals. It is not a surprise that many college graduates want to live a more attractive cities such as San Francisco, New York City, Boston, or Miami. As desirable as these cities are, they, in themselves, are incredibly intangible for many millennials to live in. For many of these cities, the cost of living is astronomical. To just live comfortably, many young professionals will have to be making $65K or $70K annually. And with under employment still above 9 percent in 2015, as well as underpaid wages, this ‘lifestyle’ is clearly unrealistic.

And yet, many college graduates are still willing to risk their financial futures for the taste of the lifestyle. Even with student loans, high living expenses, and low wages, many millennials continue to believe that they are the outlier statistic that can beat the odds year after year. As optimistic as that sounds, we have to live in the world of facts. Today, good jobs are rare and the jobs that are out there are incredibly competitive to get. Even with a strong college degree from one of the best schools in the nation, you are still pinned up against another individual with a Master in Science or Masters in Business Administration with an even stronger work background.

Now these facts are not meant to be grim. Instead they are meant to shed a light on the world that we are living today. For example, with more poorly paid retail and hospitality jobs reporting employment for individuals with college degrees, there clearly needs to be a change in what millennials can and cannot do in these cities. In fact, beyond the wages and necessary debt, cities like New York City and San Francisco are clearly impractical for someone making $45K or lower to live in. Going beyond rent, each city has become more expensive. That is the reality. From food, happy hours, and other social activities, millennials and young professionals are continuously being blinded by what they should do (such as saving), than what they are actually doing (spending).

To help with this situation, make sure you have a strong grasp and understanding of your financial situation. Knowing your personal finances from your total net profit to even your future expenses can help salvage a strong economical future in just a few short months. While this may take some time, and potential sacrifice, it will be worth it in the end.

401k’s, Roth IRA, & the Ladder of Personal Finance

Ask-Ramit has provides a free ultimate guide to personal finance that can help cultivate the necessary foundation and knowledge in preparing your future each and everyday.

 

Financial Tips For Young Professionals

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The best way to prepare for one’s future is to start saving money early in life. Today’s millennials face several obstacles on their path to financial stability, including substantial college loans and an unsteady job market. In a recent study published on Forbes, it’s predicted that 30% of millennials would sell an organ to alleviate their debt for $30,000.

While many young people do not see financial planning as a feasible tool in their early careers, there are simple steps that making planning for the future manageable. Here are four tips that all millennials should consider implementing today.

1. Set Up A Savings Account (Or Two)

Whether you’re just starting out or are launching into your next career opportunity, the number one priority for achieving financial stability is creating an emergency fund. Savings accounts are critical to the health of your bank account and to all aspects of your life. They provide individuals with more flexibility, ease of mind, and most importantly, a nest egg of support for when life throws you a curveball. The easiest way to make this happen? Place a small amount of money from each paycheck directly into your bank account. In time, the fund will grow and offer a stronger net of support.

Once the safety fund is underway, millennials should consider opening up an IRA. This is a great way to prepare for long-term future.

2. Find Ways To Make Budgeting Fun

While creating a budget is not a novel idea; it will absolutely save you money each month. Tech-savvy millennials should capitalize on the inventive nature of online banking apps, like Mint. Mint make budgeting simple by linking the user’s bank account with their credit cards to provide a comprehensive outlook on their current financial state. The application also provides a wealth of tools to help users save money each month, like a free credit check and ways to achieve long-term savings goals. In addition, Mint users can set individual budgets for specific categories, like groceries or dining out. Once users exceed that budget, Mint will send them an alert. Online banking is a great way to stay on top of your money and budget more efficiently.

3. Invest In Yourself

Young millennials may feel under qualified to apply for jobs that offer a higher income, but by investing in themselves during their 20’s, they will be able to develop skills that will aid them in their future. Many local colleges or technical schools offer night or weekend classes or workshops. In addition, those looking to earn an additional income can look into secondary jobs. Bartending, babysitting, and freelancing are all excellent supplemental positions that offer flexibility and added income. These jobs may require long nights or weekend work, however, individuals will benefit from the added income and development of professional and creative skills.

4. Seek out Alternative Solutions

Finally, many young professionals crippled with student loans can often lessen their monthly payments or find alternative solutions to paying it off. Refinancing private loans may be a huge help in terms of monthly payments, and many startups are making the process easier and more attainable. Likewise, students with federal loans may also apply for restructuring their payments through the government. The internet offers a vast resource on ways to consolidate debt so young professionals can focus on saving and preparing for the future.

While saving and creating budgets may not be the most exciting activities for young professionals, these habits will offer benefits for years to come.

Personal Finance 101 – 5 Steps to Successful Budgeting

To put it simply, a personal financial budget allows you to itemize your entire finances holistically for any given period of time. This concept helps you determine whether you can grab that bite to eat or whether you should head home for that peanut butter and jelly sandwich. This type of planning and monitoring allows you to identify any wasteful expenditures that you can quickly adapt and alter so that you leverage and optimize your money for your future financial goals. This can only start when you actually break down your expenses. For many, they will be surprised by what they find. Those $5.00 coffees or $15.00 lunches can add up in an incredibly negative way. But recognize those flaws is the first step in optimizing your finances for the better.

In this quick simple video, you will find some helpful hints and tips of how to successfully budget for your future goals. this sense of financial clarity will not only alleviate the stress and anxiety of paying bills, but also track and highlight your financial health in comparison to your financial goals.

The Guide to Investing: Part 2

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When it comes to money, investing can oftentimes be a scary thing. The main thing you can do to best benefit your financial future is to understand, prepare, and strategize various ways to optimize and leverage your financial portfolio each and every month.

In my last article, I went over some of the red flags novice investors do when building up their financial portfolio. As much as we want to focus on the do-not, you also want to make sure you are focusing on the dos, or action plan, when planning your financial investment.

As stated in my previous article, I cannot stress the importance of learning. No matter what the situation is, knowledge is power. The most important thing you can do for your financial portfolio is to never stop learning. Assume the mentality of a student and constantly absorb the information and news around you. When it comes to investing, it can be a long winded and complicated process. That is why I recommend doing your homework and researching the ins-and-outs of every financial opportunity. If there is at any point where you do not understand a particular step, stop and research until you understand it. The biggest risk you can take in compromising your savings is by not understanding what you are getting into.

Once you are able to understand the foundational background of investing, try putting that knowledge into real life situations. This will require you to pick your own personal investments and manage your campaign yourself. While you pick your investments, make sure you are strategic and consistent with your financial plan. The simpler your plan is, the better. The most important thing with your plan comes down to your financial goals. Any miss-targeted-dates, whether it is weekly or monthly, can compromise your long-term goal. To help alleviate this problem, try setting up an automatic investment plan. This will allow you to stay consistent with your savings each and every month.

Now, while investments may take you on a roller coaster of a ride, make sure you stick with it. Yes, this can be stressful, but continuing with your plan in the long run will prevent any unfavorable consequences. For any short-term drops or short-term changes with your financial plan, this can require a large buy-out fee and penalty fees that can set your financial goals back a couple months, or worse, a couple of years. Just be confident in your decision and continuously update yourself with any relevant information that can prove that your investments are safe and secured.

If, however, you are uneasy about how things are going, you can always turn to a professional. Contacting a financial advisor can only benefit than hurt. At some points in our portfolio, we are unsure how to best optimize our campaigns in the most fruitful and lucrative manner. That is when a financial advisor can help you allocate necessary funds for your best interest. Before committing to a financial advisor, be sure to do your homework. Ask a lot of question and research their educational and financial background. To learn more about how to find the best financial advisor for your particular situation, research the qualities here.

TedTalks Finance: Alexa von Tobel on Personal Finance

Alexa von Tobel is the founder and CEO of LearnVest.com which she has been developing and growing since 2006. LearnVest is the leading personal finance and lifestyle website that brings financial literacy to women. Since launching LearnVest, Alexa has been widely quoted as a personal finance expert and entrepreneur in top tier business and consumer publications including: New York Times, The Wall Street Journal, New York Post, BusinessWeek, Shape, Fast Company, Marie Claire, Forbes Woman, InStyle, People Style Watch, Time Out New York, The Huffington Post, etc. Alexa has been included on Vanity Fair’s 2011 Next Establishment list, featured on Business Insider’s 2010 and 2011 Silicon Alley 100 lists, named “One of the Coolest Young Entrepreneurs” in Inc. Magazine’s 30 Under 30 feature, titled a “Woman to Watch” by Forbes and included on the publication’s 30 Under 30 list, highlighted on BusinessWeek’s annual list of “Best Young Tech Entrepreneurs,” among others. LearnVest has been named one of “25 Women-Run Startups to Watch” by Fast Company, included on Forbes’ list of the “Top 100 Websites for Women” for the second year in a row, featured on Business Insider’s Digital 100 list and included on Time Magazine’s annual list of “50 Best Websites.”

In this TedTalk presentation, Alexa discusses the staggering financial epidemic that is happening between young professionals. While many people can argue against the facts, the constant struggle and lack of foundational knowledge of personal finance has become one of the biggest hurdles in preventing millions of people in reaching the so-called American dream. In Alexa’s TedTalk, she elaborates on the problem with a real life example we see in our day-to-day lives. She follows this up with a five-step money solution and wraps up her presentation with the various financial benefits this can have for our future generation.

The Guide to Investing: Part 1

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When it comes to investing, you need to be practical about your goals and the overall situation. This is not a simple get-rich-quick scheme. Instead, it requires a lot of due diligence in finance and financial management. This type of control with your personal finance is something that can benefit you in the long run. But make no mistake; making smart and strategic investments requires quite a bit of effort and research, especially without the advice of a professional expert.

Now you do not have to be an expert to invest in a company or a stock. While you can hire a professional like a financial advisor to do the grunt work for you, all you truly need to understand is what investing is, what it means, and how time itself is the factor that earns money through compounding. To help you in your efforts, try and buy quick tutorial books on investing or visit sites like Investopedia.com that review the basics and foundations of investment strategy. I would still advise you to seek additional help from a friend or a professional. The more knowledge you are able to amass, the better you are able to reach your personal financial goals.

Now when it comes to investing, there are a couple of things you should try and avoid. First and foremost, you need to be tangible and realistic about the overall timeline in reaching your personal financial goals. Expecting too much or using someone else’s expectations can often times derail both your morale and your financial plan. Like it or not, the simple act of investing cannot immediately solve your problems in a short period of time. As stated above, time will be the sole factor in how lucrative your return will be in the future. To help alleviate this problem, try not to set unrealistic expectations. Instead, base your projects on past investors and their financial returns (and financial loses). This will allow you to holistically view every situation possible in bettering your portfolio for the future.

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Going off of realistic expectations, it is absolutely vital that you have tangible investment goals. For most people, this isn’t an issue. Their goal with investing is to have an overall stable income in their retirement saving account to help aid and supplement their personal savings and additional funding from their Social Security. Most people usually work towards that as a real goal. The tricky portion to investing besides picking their investment opportunity are the actual figures and targeted-date that you want to see your funds grow throughout your portfolio. Start by asking yourself a variety of questions: Are you looking to save $2000.00 a month? Are you looking to have $50,000 saved by the end of the year? Whatever is the case, make sure you are clear about your short-term financial goals. While this may be tedious and downright stressful, setting these small foundational targets will help you view your financial plan in a more strategic and holistic manner. This will, in turn, allow you to strategize the best course of action when moving on with your investments.

Once your goals are set, make sure you are reviewing your investment plans regularly. For many successful investors, they set a time within the month (or week) to talk, discuss, and analyze the performance of their portfolio, especially when there are other moving factors and different investments involved. Make sure you are like one of these investors. Keep track of your portfolio and adjust your contributions to keep things in balance. The worst thing you can do for yourself is to assume everything is great. Be cautious and strategic.

Now to enhance your investment portfolio, you want to make sure you are diversifying enough of your assets in different places. You have probably heard the infamous childhood phrase of “Not putting all your eggs in one basket.” Similar to this statement, you want to make sure you are diversifying your portfolio. Diversification, in investments, simply means spreading your money across a variety of different opportunities. Ideally, you want to spread your assets in the following: cash, bonds, stock, real estate, precious metals, collectables, etc. Whatever is the case, diversification allows you to protect your assets from any changes within the market. This will allow you to keep your financial future intact, while also providing any financial security in case anything goes wrong. As much as you want to be cautious with your money, you also want to take a risk. Remember, it all comes down to the homework you do for each financial opportunity. Nothing is ever a sure thing. But it doesn’t hurt to have the odds in your favor.

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