Finances: The Importance of Creating a Budget for Yourself Part 1

Are you a debt-ridden woman?  Even if debt may not be an issue for you now, there is a good chance that it will become one in the future if you don’t keep an eye on your income and expenditures with a workable budget.

Whether you are in debt now, or if you are looking to prevent yourself from falling victim to it, you need to put a sound budget in place as soon as possible to start planning better for your financial future.

Before examining how you can go about creating a budget for yourself, it is important to understand why you need a budget.  As previously stated, budgets are a tool that can be used to make sure that debt does not become or remain an issue for you.

By creating a budget, you can track your spending, and make sure that your make it a priority to ensure that all needed expenses, like your car, insurance, rent or your mortgage, all get paid.

A budget also gives you the opportunity to examine how much extra money you have each month, money that you could put towards paying down your debt, or putting into a savings account to start working toward your long-term financial goals.

When it comes to creating a budget for yourself, you should be able to find a number of budget templates online. There are a couple of suggested ones here at the site as well.

While these free resources are nice, you may only want to use them as starting points.  You can get great ideas from them, but you may want to create your own budget. This is important because not all individuals lead the same lives or have the same expenses to take care of.

For instance, a budget template for those in New York City may not necessarily call for car payments or auto insurance, but if you had a vehicle, you will need these sections displayed on your budget.

It is also advised that you take the time to create a budget for each month of the year.  As previously stated, a budget allows you to account for what you spend on a weekly and monthly basis, but not all months are created equal.

For example,  you may have a ton of family birthdays in August, or have to go see your family for Thanksgiving every year, which will mean budgeting for travel expenses. Christmas is always a very expensive time of year, and can get really out of hand if you don’t budget for it.

Creating individual budgets for each month of the year may seem like a complicated process, but it doesn’t have to be.  It may take a few extra minutes, but those few minutes are more than worth it.

 

Continues in Finances:  The Importance of Creating a Budget for Yourself Part 2

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Tips On Understanding Company Asset Management

 

Before you can understand asset management you have to understand what an asset actually is.

Assets include, stocks, bonds, mutual funds and real estate.

Stocks are fractional ownership shares of a company.

Bonds are basically IOU’s that pay an interest rate.

Mutual funds span different classes of investments, between stocks and bonds.

Real estate is usually income generating property, be it privately or commercially owned.

Asset management is basically managing a person’s or corporation’s money by putting it in certain stocks, bonds, or other investments.

Asset management and investing is intended to improve your assets, using some of the money and  maintaining the wealth of the assets as best you can  at the same time.

There are many different strategies used when it comes to asset management and it will all depend on the investment strategies used to try to use the assets to their best advantage.

With many investment portfolios, or types of assets, there can be hidden costs, for example, maintenance, brokerage fees, or different types of insurance.

By being flexible with your asset management strategies, you can add value to your personal portfolio or business, and potentially be able to cut costs in their business.

There are many investment services available now on the internet, so you should research what is available and find three that look right for you. Then you should compare costs, performance, and customer satisfaction.

These aspects are key, because your asset management company will be mainly responsible for your portfolio’s or your  business’s growth and productivity. They will invest your money into many different areas, and will have to keep track of these diversified investments.

Asset management services have a variety of investment objectives, so make sure you know what your own is before you engage their services.

There are many companies that offer similar services, and many which offer different types of investment opportunities; you must make sure you understand that they are before risking any of your money.

Remember, no matter what the strategy, the overall goal of these companies is to produce better investment returns for their clients.

Asset management companies do have risks, but if you look before you leap, the can be the best way to go in order to get rid of all of those expensive individual costs which typically occur within regular business operations to do with investing on your own.

Not only will an asset management company benefit you by reducing the costs of the business, it will also improve the business’s overall profits. Study the companies and the opportunities they offer, and if you choose well, it should be only a short period of time before you will start seeing good  results from using your asset management company in your business.

 

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Industrial Asset Management

Industrial asset management is the trend these days in order for a company to optimize profits. This is done by exploiting assets to the fullest by taking consideration not only the measurement of assets and resources but also analyzing data, current market trends and quickly taking business decisions based on information collected. In short, you take everything into account to ensure productivity.

This is achieved by first identifying what are the current resources. This could be capital investments or the plant itself. Once it has been identified, it is time to come up with policies that preserve them. Some companies keep track of this by using asset management software that makes the information accessible to all departments.

This program is better known as enterprise asset management systems. It was first developed in the 1960ís with improvements being done constantly so it may encompass all the stages of the asset life cycle from planning, designing, purchasing, installing, operating, maintaining and finally disposing. Customized maintenance management software forms the subset of EAM.

With the assets stored in the companyís server, this will ensure that it is not possible for the duplication of resources. This means not having to spend money on new equipment and supplies when they are still available in the companyís inventory.

Another benefit of industrial asset management is that the company can focus their energy on non-productive assets. This will enable the company to convert, for instance, idle land into developed real estate or simply get rid of it and making some money from it.

This is very useful for banks that have confiscated assets which the clients could not pay for and then auction these off to interested buyers so money can be made.

Should there be a surplus after taking everything into account, they may also decide to sell these off and make a few bucks. To compute the selling price, it is best to inspect it, have it appraised then advertise so interested buyers will come over and buy it.

Industrial asset management may also work for those who buy the goods for the company in terms of inspection of the assets for sale, contract reviews, search and comparisons to see if there are any alternatives and the procurement and shipping of the item.

Industrial asset management can do one other thing for the company. If they see that there is something they lack and there is an opportunity to acquire it, they can check if it can be added to their portfolio so the company is able to grow.

Companies that have used the software include aerospace, automobile, mining and service companies because even if they do have assets worth billions of dollars they do not want to see a single penny go to waste.

Will installing a software program to monitor industrial asset management do the trick? The answer is no because you still need management to be involved throughout the whole process. Each company has different needs and these have to be addressed accordingly.

Industrial asset management is a good thing because it helps the company stay productive. You have to remember that it is simply a tool and there is still a lot of work to be done to ensure you get maximum returns on your investment.

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How to Find a Good Asset Management Program

Setting out to find someone who can help you invest your money can oftentimes be nerve-wracking. After all, this person will be handling your finances and in a way will be holding your life in his hands. This is especially true with people who are about to retire and have no other means of income but the money that they have saved over the years. But no matter how frightening it can be, the fact is, you need asset management in your life if you want to remain problem-free for your entire life.

You see, the money kept in the bank is not enough to finance a comfortable retirement. With such a measly interest, all it can give you is small change that can perhaps last you 3 months when you donít have other income. Inflation rates and the rising cost of living are enough to knock down the value of your money in the future.

But finding a good asset management program and personnel is not always the trial that people say it is. When done right, you can actually get yourself a good deal with a trustworthy manager who will help you triple or quadruple your assets. Here are some tips that can help you.

1. Shop for it

Do not just settle for the first one that you see. Look around and compare notes. Get as many as you can and then choose from the line up. That way, you will not be pressured to take one program or hire one person even if you donít really trust it or believe in it.

Looking for a good asset management program is like shopping for a doctor when you have a terminal illness. Think that you are looking for someone who can save your life. And when you come and think about it, finding a good one is actually kind of like saving one’s life. After all, your entire future will depend on the performance of this one person and the effectiveness of the program.

2. Ask around

One way to find a good asset management program is to ask people about it. Believe it or not, it is that simple. You see people who have also gone through the same motions will know where to look and will even have tips on how to look.

You can also ask for recommendations. Have them give you the number of the asset management manager that they hired. Start with your friends and families. They will surely know people who they can refer to you. If you know successful people in business or those whose financial portfolio you admire, go right ahead and ask them for referrals. Their asset manager should be really good.

Once you get their contact numbers, call them. Ask about the personís accomplishments and track record as well as the number of years that he or she is working for your acquaintance. Set up and appointment and get to know the guy (or gal) in person. That way, you can see for yourself what his personality and attitude is in business. Do the same thing with other referrals and then choose the best.

3. Never trust completely

Never put your trust in one person even if he comes with great recommendations. Even if you have hired him or her already, still take an active part in the management of your assets. It is good that you also know what is going on with your money.

4. A basic idea

No investor can afford to lose any amount of their principle. ROI (return On Investment) can vary and should never be zero but any investment that puts your principle at risk is a bad one for “The little guy (or gal).” “The big guys” can afford to do the “High Risk, High Gain (or Bigtime Loss)” type of investing (gambling) because they have the wealth to do so. If you are a “little guy”, stay away from that game.

5. General guideline

In looking for asset management, you might be able to find an individual manager who is a genius, completely honest, is devoid of self interest and is extremely lucky. The odds on this are about the same as those for pigs acquiring flight ability. So a general rule is, the bigger the company you have managing your assets, the safer they will be. The smaller, the more risk you will incur.

An actual case in point was a small brokerage firm that had invested their own money in an international monetary fund. They had their account managers call their clients and recommend they get into this fund. For every dollar a client put in, they could take one of their own out. When the fund crashed, investors lost a good percentage of their principle but the brokerage firm had already gotten themselves out at the high point.

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How to do Asset Management Yourself

It’s not enough that you work every day. If you want to become rich, you also need to invest your money so that it will earn for itself. This is the same concept of putting your money in the bank but the low interest rate that banks give is not enough to combat the rising inflation rates. In fact, if you really want to double or triple your money, experts suggest that you put up a business. However, this is not an option for most people, especially those that are afraid of taking risks. Thatís when asset management comes in.

Asset management is the professional management of your money and other assets like stocks, bonds and even real estate for better profit. This is often done by financial advisors and portfolio managers for a fee or most often a percentage of the earnings in a period of time. This fee is what makes most people, especially retirees, shy away from hiring asset management people.

If you know the economic environment and understand investment terms, you can actually take care of your own assets. Here are some tips on how to manage your money and properties yourself.

1. Ask people

Do not be ashamed to ask people for advice or recommendations. Start with the people that you know. Ask friends or colleagues. If you know people who are good in business, approach them. They will be wells of information. This is because they are probably doing their investing themselves and will know business investments that are really good. Plus, these people in the industry are the first to know about stock news and gossips; so you will have first knowledge of the goings on.

Ask them whatís the latest stock that they bought or what investment opportunities do they know that can yield a lot of money. Even if they are not doing asset management themselves, they can probably mention a couple of companies or investment funds that their managers recommended. This way, you are benefitting from asset managersí wisdom and expertise without having to pay for the fee.

2. Do your research

One reason why a lot of people hire mangers and not do the investing themselves is the fact that the world is filled with people who want to rob you of your money. There are a lot of con artists with schemes that seem picture perfect at first glance. Earn money in 6 months with minimum investment, everything will seem too good. One advice, check it out. If something seems to good to be true, it probably is.

Before you invest in something, make sure that you have done some background checks on the company running it. Looking at their websites or visiting their offices are not enough. You need to look thoroughly at every aspect of the company. Check the transactions that it has made over the years. The number of years that the company has been operating is a pretty good clue too. Stay away from new companies as much as you can. They may be operated by con artists.

3. Diversify

This is actually what most people in asset management do. Do you know the old saying “Don’t put all your eggs in one basket.” Heed that. Put your money in different business investments. That way, when something happens with one, you still have the other one.

4. Keep track of your assets

In the broad view, computer progams are in 3 main categories: (1) word Processing (2) Database and (3) Spreadsheet. Of these, Database and Spreadsheets work well for asset management. Database to keep track of what you have. Spreadsheet (recommended) to list what you have and be able to recalculate values, costs, etc.

5. World view

As of the late 1970’s or early 1980’s the world started to break down into two classes of people: (1) those who are computer literate and (2) those who are unemployed.

Think about that and where you stand in “The Big Picture.”

6. Avoid buying “on margin” and leveraging:

A big factor in the stock market crash of 1929 was buying “on margin.” This is a term meaning that a stock is bought on credit, where the buyer might put up 10% of the price and was actually taking out a loan for the other 90%. After the crash, the US Government passed new laws to limit this practice but it still happens.

Today there is another term, “Leveraging” which means that people use the equity in stocks they own (but may have bought on margin) as collateral for acquiring more stocks.

This is an extremely dangeous practice, especially for the small investor. If they do this, they are no longer risking “money they don’t need” but everything they have.

A true story: In Florida there was a “small” investor whose portfolio had reached a value of one million dollars. He was an active trader and the brokerage firm he was working through gave him his own office and computer setup. But he was leveraged to the hilt and didn’t really own much of anything. When “Black Monday” hit, the brokerage firm gave him a “margin call” of about $20,000. This meant he had to comeup with $20k to cover the full prices of stocks he had bought on margin. They must have known almost to the dollar how much cash he could get. Once he tapped himself out to pay the margin call, they glommed onto the cash and immediately hit him with another margin call which he couldn’t even begin to pay. So he realized that he was going to lose his entire protfolio and there was nothing he could do about it. He brought a gun into the Brokerage firm’s offices and shot as many of them as he could before he shot and killed himself.

It was discovered later that he had been a criminal and was part of the witness protection program. This illustrates the dangers of buying “on margin” and “leveraging.”

7. A saying:

There is a saying, “You make your money when you buy. Not when you sell.” This means that if you buy something cheap enought, you can’t fail to make money later when it appreciates and you decide to sell it.

Another idea is this: “It’s not money until you sell it. Until then, it is only marks on paper.” This is particularly true of stocks.

8. Stock market, if and when to get out

If the market starts to drop, you have 2 basic choices, get out or ride it out. Remember that if you decide to get out, sell orders are not executed until the end of the trading day. So, say, you see a trend you don’t like at 8:05 AM EST and give the “sell” order. During the day your stocks drop, say, 550 points. You will eat that entire loss because your sell order will be executed at the end of the day at the price of the stock at that time. Not at 8:05 AM EST at the price it was when you first gave the sell order.

A lot depends upon world news and how you think the market will do over a period of weeks or months rather than on a single day’s performance. If you are pretty sure there is going to be a long down trend, it is probably best to get out to stop the bleeding and then get back in when it bottoms out.

9. Watch out for signs of Market Wrecking:

Intentional Market Wrecking is done by rich and super-rich stock owners. It starts with the sale of some huge block of stock or portfolio. Such a sale will automatically start the entire market on a downward spiral. The original seller can stop selling after a 5 or 10 point drop, once momentum has been established. If a long term wrecking is decided upon, as in the 1929 crash, each time the market starts to rally, the rich and super-rich wreckers will sell short on other blocks of stock. Their resources are so great that they can keep doing this for years.

After a while, the frequency of attempted rallies will slow down as the market reaches a point of exhaustion. Margin buyers and those leveraged will be wiped out quite early in this process. Add bank failures, foreclosures on mortgages, massive unemployment and other related financial reverses and you can see how a long term depression can be created.

Why would someone do this? (1) because they can (2) this is a way the rich and super-rich can remind everyone of the power they wield (3) The people who start this will stop selling early and “ride out” the crash they have created. Once the market bottoms out they can start buying assets at bargain basement prices and the big losers in the crash are all the small investors. Think of this as “A harvesting of the turkeys.”

Remember the words of John D. Rockefeller: “There’s no such thing as an accident. If something happens, you can bet that somebody made it happen.”

 

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The Basics Of Asset Management, Part III

 

TYPES OF ACCOUNTING

Cash bases accounting is the management of your current transactions. This way you keep track of any money being taken out of your account or any money that might be deposited, and whether or not it was deposited from you or from someone else.

When any types of transactions take place on your checking account, that is when this type of accounting will come into play. When someone is talking about assets, they are also talking about the cash that you have acquired.

 

WHAT ARE ASSETS?

Of course there are many types of assets but your cash is really the most basic one there is. Any other form of investment that you may have, including, stocks, bonds, Cds, 401ks, 529s and so forth are also a type of asset, and your house and car are as well, but are usually only a real asset if you own them outright. Otherwise your mortgage holder and car finance company own them!

Assets come in all different forms. Start simple, by making sure you keep track of all your transactions, and trying to stick to your budget, so that you gradually pay down any debt you might have. Once you’ve done this, you’ll be in a position to save, and even to invest.

Once you know what all your assets are and what they are worth then you will be able to begin with your asset management methods. Once you have started figuring out a record-keeping system that works for you, and savings and investment strategies that start paying dividends, then you will have the ability to earn more money from multiple streams of revenue, and you will be able to watch that money grow and help you achieve your  financial goals.

 

YOUR FUTURE FINANCIAL GOALS

It’s never too early to start saving for the future. Once you are in a position to start thinking about saving and investing, also consider consulting with a financial planner. Be realistic about your goals, do your research, learn about what things cost. If you want to buy a house worth $500k, what is it REALLY going to cost.

What will the difference be in that financial scenario if you were able to put down $150k of it in cash? And is this a worthwhile investment, if all of your capital and income are ‘feeding the beast’ and leaving you cash poor with no chance to save for retirement?

Unfortunately, in our get credit quick, get the American Dream society, people don’t stop to ask these questions. Owning a home is a noble aspiration, but is it a false security blanket at the end of the day? Looking at the current crisis in the housing market, one could argue yes.

The essential problem goes beyond that though, to being constantly encouraged to impulse spend on everything in sight on the TV. And let’s face it, how much are we ever taught about asset management at school?

But a little knowledge can go a long way. Even if you think things are so bad than nothing can make a difference, you’d be surprised at how $5 saved here and there can add up.

It’s like the humble dime. It’s small, light-weight, but you get 10 of them together and it makes a dollar.

And once you learn more about asset management, you can encourage your partner, if you have one, and even your children too.  That way you can all be actively planning and participating in reaching your financial goals, not being hostages to fortune. Asset management means just that, YOU manage your assets, for a brighter financial future.

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The Basics Of Asset Management Part II

WHY NOT USE SOFTWARE?

I know we have not mentioned all the really handy accounting programs out there that can help you with asset management. This is because you don’t usually carry your computer around with you, while a check book register or a small notebook are portable, so you can note down your expenditures any time, anywhere.

As the old saying goes, the dullest pencil is better than the sharpest memory. We would also advise you to make note of what you do with that cash you take out of the ATM. All too often, it can vanish into thin air without you even noticing. You can write the amount you spend right on the slip of paper, and note down what it was for.

Was it an essential, like milk, or was it a luxury like beer? Again, part of asset management is sticking to your budget and trying to cut down on your impulse spending, so writing these things down will help you spot your areas of impulsiveness.

A notebook for all finances is an even better idea than the checkbook register because you can also note down any items you might be putting on your credit card/s.

 

THE GOALS OF ASSET MANAGEMENT

The whole goal of asset management is to make the most of the money you do have. Credit cards, with their fees and interest and other potential penalties, are not the best way to make the most of your money.

Accounting comes in a couple of different forms, including, accrual accounting and cash bases accounting. Accrual accounting will help you keep track of what you owe if you’ve exceeded your income. This should then let you know that you are spending entirely too much money and that you had better begin cutting back here and there where possible, in order to manage your assets more efficiently.

It is a rare person these days who doesn’t have some form of debt, and a credit card CAN be a good thing if you are making your payments on time and more than the minimum on a regular basis. This is how you can boost your credit score. It is also a way to decrease it though, if you are not careful!

It is not always intentional either,”we are all also very busy. And yes, mistakes do happen. Your checkbook register may have a different amount written in it, compared to the amount of money that you have spent.

That’s why we recommend duplicate checks, and pressing down hard when you fill them out. All too often we write a check and can’t recall who it was to, what for, and what amount.

Keeping these kind of detailed records and making a habit of keeping all your little bank slips and receipts will also be handy at tax time. Especially if you start thinking about running your own small home based business, you will need to keep track of everything you spend, supplies, corporate hospitality (which you can deduct at 50%), and so  on.

In another article we will talk about the risks as well as rewards of tying your personal finances to your own business, but for now, the main thing to remember is that effective asset management is all about keeping track, and staying within budget and on target for your short term and long term financial goals.

 

The Basics Of Asset Management Part III

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