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3 Simple Truths To Find Financial Happiness

stack of moneyWhat does financial happiness mean?

Happiness is the key to living a full life. Everything about us is all about striving for this emotion. Our every decisions are usually influenced by the things and events that we know will make us happy. But how does this relate to our finances?

In this day and age, our finances is one of the measurements of our success. There are so many things in our life that can be affected by our current financial condition. When we have credit obligations, we want to achieve debt relief to live a happier life. When we do not have enough money to finance all our expenses, we feel stressed. Our pursuit for a higher income is all because we want to be happy with your financial situation.

Why finding happiness in your personal finances is important

Here are some of the reasons why we encourage you to seek out happiness with your money.

  • Money is a measurement of your success. Like it or not, we live in a materialistic world that is ruled by consumerism. You need to have a certain level of possessions to achieve happiness.

  • Money gives you confidence. There is something about being wealthy that makes you feel confident- especially when you know that you worked hard for it.

  • Money removes the stress from your life. A benefit of being confident is it removes the money stress. You know that you will not fall short in financing your needs and that is important in finding happiness.

  • Money helps you control your future. As a tool, your money will allow you to pursue life goals like a comfortable retirement, proper education and decent living conditions.

It is important to know that financial happiness is actually a state of mind. When you perceive money as a tool that can allow you to reach life goals, then you will know just what it takes to be happy about it. Do not let money dictate how you should be happy. Instead, use it to drive yourself towards the things that you know will make you happy. Remember that you become happy based on the parameters that you have set in your mind.

The truth is, money can buy you happiness but only at a certain extent. An ABC News article mentions that people are made happy by money but only until they are able to provide for their basic needs. But beyond that, any money that you earn will not have a significant contribution to your happiness. In the same way, AARP showed in their infographic that your income matters but it will not guarantee happiness. It is only a resource that you use but when you apply it to the wrong areas in your life, it will not breed you the happiness that you seek.

Although money is evidently not the end all and be all of your life’s happiness, you need to recognize that financial happiness is connected to it. You have to remember that you need to achieve a certain level of finances to be happy. And when you do, that is when you can use it to give your life more joy and contentment.

How to be happy with your financial situation

Being happy with your personal finances is easier than you think. Some people have all the signs of this happiness but they are unable to feel it because they are looking at the wrong things. There are certain qualities that we focus on because we think that it will bring us happiness when in fact, these are not the causes of our distress.

Here are the three truths that you need to know to feel financial happiness.

It’s not about the debt, it’s about money management.

We all look at debt in a very bad way and we have enough reason to do so. With the debt devastation that we felt during the recession, it is enough for us to want to fear this financial situation. But here’s the truth: debt is not the problem. There are people who are in debt but they are perfectly happy with their finances. You know why? Because they know how to manage it. When you realise this truth, you will not be afraid to use debt to propel your finances to greater heights.

You can have loads of debt but if you know money management, you will find happiness regardless of how much you owe. An infographic released by AARP.org revealed that people who feel that they are in control are bound to be 2.5x happier. According to the infographic, this control is usually linked to having a high income, education, healthy life and absence of a major life event. The last one probably refers to a negative event in a person’s life.

When you practice money management, that is one way for you to maintain control over your finances. Even if you put yourself through debt, if you know how to manage your money, you can keep that debt from ruining your life and staining your financial happiness.

It’s not about earning more, it’s about personal fulfillment.

We’ve mentioned previously that having a higher income can help make you happy about your finances but you need to realize that it is not the amount. It is the control that it gives you over your money. That being said, you should know that your happiness is not entirely reliant on how much you are taking home every month. It is more on how you feel fulfilled about your work in general.

Notice how some people have so much income but they are not really content? They work day and night trying to increase their income but they still go home unhappy. That is because they are focused on the money – and not how they earned it. An article published on ABCNews.com last March 2013, it is revealed that when you find meaning in your daily work, that makes you happy. When you know that your work has a purpose, you will feel more satisfied with your money – regardless of how much you are earning. That satisfaction breeds financial happiness.

It’s not about your net worth, it’s about security.

Lastly, we need to break free of our obsession with growing our net worth. It is true that being rich is a good achievement but it is not a prerequisite to happiness. You have to realize that we need to be secure to make happiness more of a reality in our lives.

When you are focused on increasing your net worth, you sometimes get to obsess about the wrong things. You monitor the money and you tend to tire yourself out trying to reach a higher level of personal wealth. That pursuit can be tiring. What you have to concentrate on instead is to build up your financial security. This includes building up your emergency fund and making sure that your future (e.g. retirement) is taken cared of financially.

An article published in DailyFinance.com discussed the different emotional traps that makes a lot of Americans miserable. Guess what the first trap is? Uncertainty. Being uncertain gives you a feeling of helplessness that is a contradiction with the control that fuels your financial happiness. When people are uncertain, the stress level goes up and we all know what happens when stress enters the picture.

You need to deal with this uncertainty by strengthening your financial security. That is how you increase your happiness meter.

Avoid Bankruptcy: Lessons You Can Learn From Athletes

bankrupt definitionWhile there are many hidden dangers in filing for bankruptcy, there are cases when it is necessary. We cannot say that it is not an effective debt solution. It is – but only for those who are in a real financial crisis and does not have the means to improve their situation anytime soon.

But that also does not mean you cannot avoid it. There are a lot of things that you can do to avoid bankruptcy. There are debt relief options that can serve as better solutions to your credit problems. Not only that, you can implement certain personal finance habits that will keep you from making the mistakes that will lead to bankruptcy.

The bankruptcy statistics in the US

The USCourts.gov released the latest statistics about the bankruptcy situation in the US. Apparently, a lot of people are still filing but there are more people who are able to avoid bankruptcy. The statistics show that:

  • In 2013, the bankruptcy filings decreased 14% to 1.17 million, from 1.36 million in 2012.

  • Bankruptcy terminations also decreased from 1.38 million in 2012 down to 1.24 in 2013.

  • Pending bankruptcies are down by 4% to 1.57 in 2013 – from 1.64 in 2012.

Although the figures are obviously improving, it is still a significant amount. The Department of Justice also tracked how the bankruptcy filing rose from 110,000 in 1960s to 1.6 million in 2003. This was before the recession in 2008. According to statistics compiledby the BankruptcyLawInformation.com, only one third of all filings are discharged successfully in Chapter 13.

On the same site, an article titled “Wrestling with Bankruptcy” is mentioned to reveal that the filings are now greater than double of the filings that happened during the Great Depression. This growth is comparing a year to a decade of that notorious recession.

The website also showed that the people who were unable to avoid bankruptcy blamed credit card debt (63%), mismanagement (50%), job loss/pay cuts (37%) and medical bills (28%). The most alarming part of this information is that 50% blamed mismanagement. It seems that it does not really matter how much you are earning. If you cannot manage your money well, you will really be in trouble.

A perfect example that you may want to look into are professional athletes. They earn millions of dollars every year and that does not even include their endorsements. But despite that, a lot of them are going broke.

3 reasons why professional athletes are going broke

It pays to take a look at the financial plight of our professional athletes to help you avoid bankruptcy. If we can identify why they ended up in financial ruin, then we may be able to keep ourselves from making the mistakes that they did.

It’s like winning the lottery!

One of the most prominent reason for bankruptcy, as mentioned in the statistic is mismanagement. A lot of the athletes who are famous did not come from prominent families. They were not born out of millionaire parents. In fact, a lot of them chose to drop out of a complete education to pursue a professional career in sports because they found more financial promise in playing.

So when they started earning millions of dollars, guess what they felt like? They felt like they won the lottery! And we all know how that ends out. A lot of lottery winners failed to make their money last. According to StatisticBrain.com, 44% of lottery winners take only 5 years to spend their winnings.

Athletes spend most of their income on new homes, luxury cars and a very affluent way of living. Most of them who failed to avoid bankruptcy were those who did not practice smart spending. In the end, the reckless spending cut too deep into their earnings and most of it went to unnecessary expenses and a lot of junk.

Everyone becomes your friend.

While being blessed encourages us to bless others too, you need to keep it in moderation. It is okay to help family and friends but not to the point that they become dependent on what you give them. If you want to give them something, it has to be a one time gift that will help them generate continuous income for themselves.

Some athletes have said that they have had a lot of people coming to them asking for financial help. In one interview, Shaquille O’Neal mentioned how he had to steel his heart to say no to some of the requests that come his way. He had to do it to protect his and his family financial future.

Ignorance is not bliss.

Lastly, the mismanagement was brought about by professional athletes’ inability to implement proper financial habits. This is simply caused by the lack of knowledge on what to do. Remember that a lot of these athletes failed to complete their studies because they chose to pursue a professional life immediately. The chances of even the college graduates having adequate knowledge on personal financial management is also slim.

Most of them had to rely on financial managers who may be more concerned about their commission than the welfare of their clients.

If you want to make sure that you will avoid bankruptcy, you need to ensure that you will educate yourself about the right way to handle your money. This is easier than before simply because of the presence of the Internet. You can simply Google financial management articles and you can find useful information that can help you make smarter choices about your money.

3 sports principles you can use to stay away from bankruptcy

While looking at the plight of bankrupt athletes will help us avoid the same situation, there are also three principles that you can learn from the whole industry in general. These help athletes win in their sport and it can also help you triumph over your financial difficulties.

Know the game

The first principle is knowing the game. You need to understand what you are doing to be able to make smart choices about your money. Just like an athlete learns the rules and techniques to help them win the game, you need to do the same for your finances. In the end, financial problems can be avoided if you only know the consequences of your actions. And more than that, knowledge will assist you in finding a solution to your problems.

Practice self-control and discipline

Sports is all about self control and discipline. Before a big game, athletes spend months training and following a healthy regimen to ensure success. You need to get your spending under control too if you want to keep yourself from the mistakes that will lead to your financial demise. Practice control by making a “to-buy” list before a shopping errand. You can also discipline yourself by sticking to paying in cash than credit cards.

Always have a plan

The final principle that you need to learn is to always have a plan. An athlete’s training is very organized and under a strict plan. From their diet to their schedules – all of these are meant to keep them from failing. Your finances will need a lot of plans too. You can start with a budget plan that will ensure that all your priority expenses are paid for. A spending plan is also helpful in keeping you from buying things that you do not need. Other plans for your financial goals will also prove to be helpful. For instance, your retirement plan will ensure that you will have enough money when you retire. All of your goals will have a better chance at being met if you take time to plan it.

To avoid bankruptcy, you really need to be always on the lookout. Make sure that you will not put yourself in a financially compromising position that will force you to declare to the world that you failed in your finances.

Here is a video from National Debt Relief that hopes to enlighten you about whether or not you should file for bankruptcy.

Learn All About Personal Finances From … A Board Game?

monopolymanYou’ve probably played Monopoly®, either as a kid or with your children. It’s been a popular board game for more than 110 years. Elizabeth Maggie is credited for having created the game in 1904. However, it was probably in existence as early as 1902.

A little known fact about Monopoly

One of the interesting facts about Monopoly is that every street on its board actually exists (or did exist) in Atlantic City, New Jersey. We say “or did exist” because a few of them have been swallowed up by hotel casinos. One enterprising person created a video consisting of photographs of all the remaining Monopoly streets in Atlantic City.

Learn personal finance from a board game?

You’ve probably never thought of it this way but you can actually learn a lot about personal finances from this game.

First, there is a banker/auctioneer. He or she handles the money and doles it out just as do bankers in real life. The banker handles auctions, again just as a bank would in real life. The banker holds title deeds, pays out salaries and bonuses, sells houses and hotels to the players and when required loans money on mortgages. He or she collects all fines, taxes, loans and interest. In other words, the banker is very powerful just as bankers are in real life.

It’s the same objective

Second, the object of the game is the same as what most people want in life, which is to become wealthy. And the way you do it is by making smart investments. What Monopoly teaches is that it’s important to buy the right properties and in everyday life it’s important to make good investments. Another lesson to be learned from Monopoly is that it’s best to diversify or to buy properties that have different values. You shouldn’t buy only the most expensive Monopoly properties such as Boardwalk or Park Place as this would limit your ability to collect rents and ultimately to buy houses and hotels. In real life, you shouldn’t invest only in high-yield bonds or a few mutual funds as this could limit your ability to have a variety of different investments to protect yourself from economic down turns.

Luck  plays a part in both

While it may not be good to admit this, luck plays a part in Monopoly and in out lives. The dice determine where your piece lands on the board, which governs the properties you can buy. And luck plays a certain part in our lives. People who are born to wealthy parents stand a better chance of being successful than people who are born in poverty. There is even a certain amount of luck involved in when you were born. People who came of age in what’s called the “post war economy” of 1945-1970 found it much easier to get jobs and start their careers because our economy was expanding and there were fewer people competing for jobs.

“Smarts” are important

In Monopoly it’s important to play “smart.” The game’s primary objective is to get monopolies or to own all the properties in a set (all properties of the same color). When you play Monopoly you have a finite amount of money. You have to make good decisions as to which properties to buy and which to pass on. For example, if you were to land on an inexpensive property such as St. Charles Place you need to decide whether it would be a good investment or you should wait and hope to land on a better one like Marvin Gardens or New York. In real life, you’re often faced with the same type of decisions. For example, if you decide to invest in real estate, should you buy a cheap property and hope to do a “fix and flip” or wait until you can afford something better where you could get a higher return on your investment.

Spend your money wiselystack of cash

In Monopoly if you go on a buying spree early in the game, you may quickly learn that this could be a big problem later on if you land on a property you need for a Monopoly but don’t have the money to buy it. The lesson to be learned here is to keep a cash reserve to tide you over in the event of an emergency or if you suddenly discover a great investment opportunity.

Random elements

What happens in Monopoly if you land on Community Chest or Chance? It will be a random thing that can be either something good or something bad – just like life is full of random events. If it’s bad, it’s probably going to cost you money. The lesson this teaches is that again, it’s important to have an emergency fund in the event something bad happens to you. In Monopoly if you run out of money you’re out of the game. Running out of money in real life won’t necessarily kick you out of the “game of life,” but could force you into bankruptcy, which would have very bad financial consequences.

Spending your salary

In Monopoly every time you are fortunate enough to pass Go, you earn a salary of $200. You then get to decide how you will spend the money. You could use it to buy a house or you might decide to save it. In Monopoly you will soon learn it’s not good to squander your salary on cheap properties or by putting houses on properties that don’t generate much rent. After you’ve played the game several times, you will know how to better manage your money. The same can be true in real life as it nay take you a few years and some hard knocks to learn to be a good money manager

That dreaded income tax

If you land on the Monopoly square labeled Income Tax, you can either estimate your tax at $200 or pay 10% of your total worth. And you must make that choice before you add up your total worth. Of course, today the idea of paying $200 in income taxes is pretty laughable. But if you don’t have enough cash to pay the $200 or 10% of your total worth, you may be forced out of the game. The lesson here is to remember that when April rolls around you may be required to pay income taxes and if you don’t have the cash available, you could end up in big trouble. In fact, the IRS might put lien on your house or garnish your salary.

Half their value

If you get in dire straits in Monopoly, you can sell your houses and hotels back to the banker but at just 50% of their value. You can also mortgage properties but again for far less than what you paid for them. The lesson to be learned here is to never sell your home or an investment property under emergency conditions, as you’re likely to get much less than it’s worth.

The perils of bankruptcyman with a lot of worries

If you reach a point where you cannot pay the bank or another player what you owe, you are bankrupt. In the event you owe another player, you must turn over all your properties of value to that person and leave the game. If you own hotels or houses, you must give them to the bank. In return for this you will get 50% of their value in cash that you must turn over to that other player. In the event that you owe the bank, you must turn over all of your assets to the banker who will immediately sell everything by auction except for buildings. As you can see, if you become bankrupt in Monopoly, you will be finished. While it’s not quite as bad in real life, a bankruptcy will have some very serious consequences on your finances. For example, it will stay in your credit reports for at least seven years. It will also stay in your public record for the rest of your life. In a worst-case scenario you could miss out on a great job 10 years from now when your prospective employer see that you had a bankruptcy and decides to not hire you for this reason. In addition, a bankruptcy will make it very difficult for you to get new credit for two to three years and when you are able to get credit it will cost you money because it will have a very high interest rate.

Interesting Debt Quotes That Teaches You A Lot About Money Management

stack of cashQuotes from famous and successful people have a motivating effect that no financial management theory can provide. Debt quotes, specifically, teach us a lot about credit from people who know what they are talking about simply because they have been there themselves. This is probably why a lot of people research quotes and post them somewhere visible to help them get through tough times.

Learning about personal finance management is both easy and hard. There are two phases in your quest to learn how to manage your money wisely. The first involves the theories that will help you understand the principles behind proper financial management. This is usually the easy part. You just have to possess an open mind to accept what the theories are teaching you.

The second part is hard. It is the application of the theories that you just learned. This is where a lot of people struggle the most. You may have the best education about personal finance but if you fail to make the connection and apply it properly, then all will be lost. The reason why people find it hard to connect it because they cannot relate to its effectiveness. They feel that the theories are difficult to apply and they oftentimes lose the determination that it takes to completely solve their financial troubles.

This is where, personal finance or specifically debt quotes come into play. By hearing actual people say what they think or feel is the solution to debt or other financial situation, the principles and theories become more relatable and thus more sensible to apply.

Satirical quotes about debt

Earl Wilson, a columnist and author divided the American population into three types of consumers. He said, “Today, there are three kinds of people: the haves, the have-nots, and the have-not-paid-for-what-they-haves.” It simply indicates that if your possessions are all purchased on credit and you have not yet paid them off, you are not really as affluent as you think you are.

Of all the personal finance quotes that can be found on the web, this article will be focusing on debt quotes. There is no financial issue that is more prominent today than debt. If you want to cure compulsive buying habits, the underlying reason for that is to avoid debt. If you want to save more, the reason is to build up your emergency fund so you get to prepare for unexpected expenses that would have put you in debt. In the end, proper financial habits are meant not just to make your life convenient, it is also meant to keep you out of debt.

Since curing financial habits is tough, we have compiled some satirical debt quotes that might help you realize just how silly being in debt really is. Sometimes, we need to poke fun at ourselves to make us realize that in most cases, taking on credit is not the best course to take to satisfy our financial needs. The irony and sarcasm will hopefully bring some light to your otherwise desperate situation.

Mad Magazine: The only reason a great many American families don’t own an elephant is that they have never been offered an elephant for a dollar down and easy weekly payments.

Did you know that the American Dream is now referred to as the American Debt? Sad to say, the world perceives us as a nation that cannot reach their goals with our own resources. We always have to borrow money to afford certain transactions. Do we really want that type of reputation?

Bob Hope: A bank is a place that will lend you money if you can prove that you don’t need it.

This really explains the requirements of lenders perfectly. When you apply for a loan, one of the things that lenders will be looking for is your ability to pay it back – with interest. If you think about it, you will end up spending more on the purchase because of the interest. You get the same product – only with debt, you get to possess it earlier. But in truth, you can afford the purchase – you just have to wait until you have saved up enough money for it.

Doug Larson: People are living longer than ever before, a phenomenon undoubtedly made unnecessary by the 30-year mortgage.

Although this is meant to be funny, it is poking fun at the plight of baby boomers. Based on a study released by Securian back in April 2013 titled “Retirement time bomb: Mortgage debt,” 67% of pre-retirees are expecting to carry debt over in retirement. 59% of pre-retirees are sure that they will carry mortgage debt. This is the reason why a lot of them are postponing retirement and some even choosing to work until they drop.

These debt quotes should give you an idea about the credit situation in the country. The amount is still high but the good news is, people seem to be wising up with their credit. For instance, credit card debt is declining and so is the mortgage loans. However, student loans and auto loans are growing and their growth is enough to increase the overall consumer credit of Americans.

Credit quotes from Benjamin Franklin

Let us explore three insightful debt quotes from Benjamin Franklin – one of the Founding Fathers of our country. It should give you a fresh new insight on what it means to be in debt and possibly, the motivation to help you get out of it.

Many a man thinks he is buying pleasure, when he is really selling himself to it. This simply implies that debt, for all intents and purposes, really enslaves you. The fact that it limits your finances and binds your budget is enough proof that it can own you. When you buy unnecessary things, you are not owning them, you are being owned by the credit that you used to purchase them.

Rather go to bed without dinner than to rise in debt. Literally, it is hard to agree because if your kids are hungry, it is difficult to forego debt if it is the only way to feed them. However, Benjamin Franklin probably refers to extreme cutbacks on your spending when he made this statement. It is more acceptable to just live frugally and minimally if that means you get to be debt free.

Content makes poor men rich; discontent makes rich men poor. This is a great debt quote that will help you avoid extravagance. If you think about it, contentment will keep you from trying to have what your neighbors have. It allows you to focus only on what you really need – and not what society expects you to possess. Even if you have a lot of money, if you are not content, you will always aim to have more – and that spending lifestyle can really ruin your finances.

Financial planning to help cure debt

If you are really burdened with so much debt, we strongly advise that you try to put some order into your financial life. This can only be done if you come up with a financial plan that will help you organize your money. The ConsumerFed.org released a study about the Financial Planning Profiles of American Households in 2013 and it showed that consumers are divided into 4 categories:

  • Comprehensive planners. They make up 19% of the group of respondents. These are the households that go beyond the budget and plan for savings and insurance too.

  • Basic planners. This is the biggest percentage with 38%. It reveals that most Americans have the basic financial goals for retirement and college education but it is not as comprehensive as the first group. Some claim to have a budget in mind but it is not really written down.

  • Limited planners. This comprises 33% of the group. This includes consumers who have only a budget or saving goal. Usually, it is not both.

  • Non-planners. Surprisingly, after everything that we went through financially, there are still 10% who do not have any plan at all. They still live the same way – keeping their finances disorganized.

This statistic is a wake up call for most of us. Regardless of what theories you learn, the application is very important in your quest to fix your finances. You may read all the debt quotes available out there but if you fail to implement your learnings, it will be for nothing. And we all know that you cannot implement if you do not have a plan. So you better start working on your financial plans while it is not yet too late for you.

Here is a video from National Debt Relief about how to get out of debt.

Men Are Better With Money Than Women – Or Are They?

If you ever read the book, “Men are From Mars, Women Are From Venus,” you know there are some significant differences between men and women. But did you know this also holds true when it comes to men and women and money? There are some very substantial differences between the way men and women think about money, how they see money and how they spend money. And this isn’t just our opinion either. There has been a substantial amount of research done that supports these differences. Some are commonsense differences like it doesn’t take much research to determine that women spend more money on clothes then men and that man tend to eat more. But there are other differences that are not quite so obvious.

Men and women handle money differently

It can’t be argued that men and women are different in many ways. And one of them is how they think about money.

One of the ways that women think differently is that for them money is about a lifestyle; while for us guys it’s more about winning and losing. This is a key difference.

Women want to know what to expect. They will monitor their investment returns and need to know how they can achieve their goals. On the other hand, men tend to take a more casual approach and shoot from the hip. In fact, women tend to become better at managing money once they have the necessary financial tools in hand.

As a general rule men feel more confident towards their finances and their money at the rate of 58% versus 44% for women. This could account for the fact that 28% of men who responded to a survey reported they always negotiated their salaries compared to only 19% of women.
Again this won’t come as much of a surprise but men also spend more of their money on electronics and technology at the rate of 54% to 23% for women. On the other hand, women spend more on travel – 43% compared to 33% of men.

Personal finance topics

In terms of topics about personal finances that appeal to men, a survey found they were more interested in investing (83%) and entrepreneurship (54%) while women’s preferred topics had to do with savings (79%) and living frugally (67%).

Lack of financial savvy

A retirement survey done recently by ING Direct and DailyWorth found that 78% of women don’t think they have the necessary financial savvy and are still learning to plan their retirements. In addition, one third of married women admit that they give the power for their retirement planning to their spouse or significant other. This same survey discovered that 49% of all women wish they knew more about the basics of investing such as picking the right funds or stocks and risk management. In addition, 37% of them said that they didn’t have enough time, were put off by complicated Wall Street jargon and had trouble with everyday expenses that stopped them from being savvy investors.

Men and women see money differently

There are a number of ways that men and women see money differently and here are 11 of them.

  • Men are encouraged to learn how to invest and make money grow while women are socialized to save money “just in case” something happens.
  • As a rule, women buy what they want while men buy what they need
  • While men tend to use money to keep score, women use it to take care of others
  • Men use money to prepare for the future while women use it to create a lifestyle right now
  • Men take investment risks but women are cautious about investing money
  • Women spend money on people they care about and on relationships. Men spend money on themselves
  • Men ask for what they want while women ask for what they believe they deserve
  • Men view money objectively; women view it in terms of relationships
  • Men learn how to be savvy investors while women expect other people to know more than they do
  • Women tend to gravitate towards helping professions such as teaching, which doesn’t pay very well, while men look for higher-paying jobs
  • If women have a financial hardship they want to be fair. When men have financial problems they advocate for themselves.

How men and women handle money

Studies have shown that men and women handle money much differently from one another. While this is not always the case, it is true that both sexes’ spending habits relate closely to their financial plans for the future and their lifestyles. Here are five of those major differences.

The need to eat versus the need to wear

In the same world where men spend money to eat, women spend it on clothes. In fact, many women engage in what’s called “retail therapy.” A survey recently done by eBates and TNS Global found that 64% of women agree that their mood is lightened when they shop with the emphasis on cosmetics and clothing. Conversely, men tend to focus their shopping on food, movies, music and electronics.

Being well-dressed vs. alcohol

As you might guess, alcohol is a staple of male spending. The Bureau of Labor Statistics recently reported this. Its report suggested that a single male of drinking age will spend an average of $507 a year on alcohol. In comparison a woman will typically spend $216. On the other hand, women spent an average of $524 annually to look and feel good as opposed to $194 for men.

Giving more

The Center on Philanthropy reported in 2010 that women donated money at a much higher rate to charitable causes, than contributions made by men. Specifically, women-led households that had incomes above $100,000 annually donated almost twice as much to charities as households that were led by men.

Money and special occasions

This probably won’t come as any surprise but Valentine’s Day seems to be the big spending occasion for men. According to reports, 64% of males hand over big bucks for flowers and candy. In fact, they spend an average of $175.61, which is nearly twice the $88.78 that women spend.

From sales to retirement to being broke

Men save 28.8% more money towards their retirements than women. This is especially true in 401(k) s and it’s about the same for IRAs and other investments where men maintain balances that are 72% higher. On the other hand, women take 40% longer to make a purchase and are more likely to comparison shop for better prices than men. Interestingly enough, men either go broke or have the potential to go broke when there are no women around.

Men and women spend money differently

How do men and women spend money? Given all of this, you shouldn’t be surprised to learn that men and women spend money differently. As noted above, women give more to charity and men spend more on booze. Single ladies spend more to look right and men spend the most on Valentine’s Day. As noted above, men tend to save more for retirement. Men spend a bit more on nightlife while women are more patient for online deals. And this may surprise you but women may be better at paying back loans.

Here’s an infographic that illustrates the differences.

How Men & Women Spend Money DIfferently

Who’s the best at handling money?

Historically men have been better at handling money in many cases because they did all the handling. But things are different these days. Today, women are about half of the US workforce and control 50% of the wealth. They’re getting better about handling money and many of them do even better than men. So men may be better at it today but the gap is definitely narrowing.

How To Win The Super Bowl Of Retirement Saving

Elderly coupleWhen you envision your retirement what do you see? Do you see yourself living in a house near a beach somewhere? Is it spending more time with your grandchildren? Maybe it’s a lot of golf or sharpening your photography skills. But here’s the not-so-good news. You might not be able to retire at all unless you attack retirement as if you were playing in the Super Bowl.

You need to set a goal

Every NFL teams’ goal is to win the Super Bowl. Similarly, when it comes to saving for retirement your only goal should be to save enough to live comfortably. How much will that be? Many experts say that your retirement income should equal 80% of your preretirement income. For example, if you earned $60,000 the year before you retired, you should have enough saved to generate $48,000 a year. Of course, that’s an ideal. You may not be able to do quite this good but it’s important to have a plan and a goal and to keep working to achieve it

Keep moving forward

You don’t win the Super Bowl all at once. You win it a few yards at a time with the objective of always moving the chains forward. The same is true of saving for retirement. You need to make sure that you’re putting money away every month even if it’s not in big chunks.

It takes more than just a good quarterback

Winning the Super Bowl requires more than just a good quarterback. It takes an entire team. The same is true of planning for retirement. This is true even if you’re a do-it-yourself investor. In this case, your team could be comprised of some very surprising players such as the IRS. This is because the tax code offers benefits through various retirement accounts including 401(k)s, 401(b)s and IRAs. You should then add low-cost mutual fund companies to this, free investment tracking tools and retirement calculators – to assemble a very good team at very little cost.

There is a definite time constraint

Super Bowl football games last just 60 minutes – assuming there’s no overtime. And your retirement planning should be just as finite. Do you want to retire at age 55 or 65 or do you plan on working a bit later? The important thing is to have a timeline so that you can track your progress and know what you have to do to win the retirement game.

You can’t control everything

Coaches whose teams reach the Super Bowl might want to control every aspect of the game but they know it’s not possible. The quarterback could fumble at a crucial moment, the star running back could be injured or a wide receiver could fail to make a critical catch. The same is true of saving for retirement. There are some things that just can’t be controlled. You can’t control inflation, the stock market or the tax code. The important thing is to control the things that you can control. For example, you can control how much you save, how long you work and how you allocate your assets. In other words, you need to accept those things you cannot change but do your best to change the things you can.

It’s not easy but it’s simple

When it comes right down to it football is not complicated. It’s blocking, tackling, throwing and catching. But, of course, that doesn’t make it easy. The same is true of saving for retirement. All you have to do is save 15% of your income then invest it in low-cost index funds and presto! You can retire at age 65. While that sounds simple, it’s not so easy. Just as a Super Bowl football team practices constantly, you need to practice consistently to spend less than you make, invest the difference and ride out any decreases in the market. As the old saying goes, practice makes perfect.

Consistency wins

We might all remember that 60-yard pass that resulted in a touchdown in the game’s first quarter. But whether it’s the Super Bowl or saving for retirement, it’s consistency that wins the game. This means consistency in spending modestly and making regular contributions to your retirement accounts. Consistency is the key to having a comfortable retirement in your golden years as it is to winning football games.

You need both a good offense and a good defense

Football teams don’t get to the Super Bowl unless they have both a good offense and defense. The same is true of saving for retirement. You should invest aggressively when you can but then play defense – and invest more conservatively – when times get tough.

Don’t be afraid to call an audiblebudgeting money to conquer debt

Quarterbacks often call audibles when they get to the line of scrimmage and see what the other team’s defense is doing. You need to be just as flexible. Interest rates, inflation and rates of return can be very volatile. Be sure to watch what’s happening and make adjustments accordingly.

It’s not over until it’s over

The Super Bowl isn’t over until it’s over. Teams have actually come from behind and won in the last few seconds. If you’re in your 40s or 50s and behind in your retirement savings or haven’t even started, don’t despair. You will have some hard work ahead just as would a football team that’s three points down with one minute left to play. But it’s still possible to have a decent retirement. The key is to start right now even if you can invest only a small amount of money.

If you have a problem saving money

It can take a fair amount of self-discipline to put money away every month. If you have a problem with this, there are things you could do. For example, you could have an automatic withdrawal made from every paycheck with the money then deposited into a savings or brokerage account. This can make saving easier because it’s totally passive – you don’t have to do anything. If you would like additional tips on saving money consistently, here’s a helpful video.

10 Books That Could Turn You Into A Wizard Of Money Management

Man fanning money next to earIs you’re typical your parents probably didn’t teach you much about personal finances. And the odds are neither your middle school nor your high school had classes in personal finances. We’ve always thought it was strange that schools have classes with titles such as “Dreams of Flight” but none titled “Smart Money Management 101.”

Again, if you’re typical, you’ve probably sort of stumbled around and learned some things about personal finances through trial and error. But you may still be in the dark when it comes to terms like the time value of money or loan to value ratio. You may also be totally adrift when it comes to investing and how to grow your money and become financially independent. Fortunately, there are 10 books that could teach you everything you need to know to become a true wizard of money management. They are:

1. Total Money Makeover – Dave Ramsey

If you’ve ever heard Dave’s radio show, you know that he’s all about using common sense, avoiding purchasing anything on credit, paying cash for everything possible, getting yourself out of debt and building an emergency fund. This book is not full of lightweight promises and feel-good anecdotes but instead offers solid basic advice for every man and every woman. It includes information about using the snowball strategy for paying off debt, which Dave is credited for having invented. This has received some criticism but his methods work. In fact, if you’re having a problem with debt, there’s probably no better a `starting place than this book.

2. How To Get Out Of Debt, Stay Out Of That, And Live Prosperously – Jerrold Mundis

This book is built around the principles of Debtors Anonymous. If you’re not familiar with it, DA is a 12-step program that was created in 1971 to help those who were having a problem with compulsive debt. You won’t find purely theoretical information here from some Wall Street financial whiz kid. It contains real stories and real tips from real people. The book is 20 years old but the information it contains is timeless.

If you’re struggling with debt, here’s a video that offers several strategies for dealing with it.

3. Rich Dad, Poor Dad – Robert Kiyosaki

This book makes the point that a person who dropped out of the eighth grade but spends less than he earns is smarter than a college professor who is unable to make ends meet. Furthermore, the book goes on to say that working for a steady paycheck can get you started as a good money manager but your best investment of time and money is to buy a business or property.

4. The Millionaire Fast Lane – MJ Demarco

This author preaches that it’s a fool’s game to work hard, save 10% your income and retire at 65. He believes this because financial markets are just too volatile and you’d be using a walker by the time you actually had enough money to retire. He feels that a better policy is to utilize the unpredictability of the financial markets to make money quickly and enjoy it now.

5. Your Money Or Your Life – Vicki Robins

This book centers on the idea that if you live more frugally this will increase – rather than decrease – your quality of life. The author cites numerous examples of what you should not do such as the practice of working in a job that generates less income than what you pay for child care and “time-saving” trips to McDonald’s.

6. The Millionaire Next Door –Thomas J. Stanley and William D. Danko

These two authors did research into US households that had a net worth of $1 million or more. They identify most of us as “Under Accumulators of Wealth” (UAW) – or people who have a low net wealth compared to their income. The book also includes advice like taking skimpy vacations to help you achieve a higher net worth compared to your income.

7. The Money Book For The Young, Fabulous & Broke – Suze Orman

Instead of providing information for people who are about to retire, this book is designed to help younger people navigate the basics of the financial world such as coping with huge student loans and a job market that is nearly as dismal for young people as the Great Depression was for everyone.

8. Secrets Of The Millionaire Mind – T. Harv Eker5 Money Principles from MyMoney.gov (Part 1)

This author believes that if you’re poor it’s because you think like a poor person. Conversely, if you’re rich it’s because you think rich. Eker also believes that people who are poor basically program their children to be poor by giving them a worldview that makes it impossible for them to accumulate wealth. However, don’t worry. According to this book if you start thinking like a tycoon you can be one, too.

9. Think And Grow Rich – Napoleon Hill

This book dates back to the 1930s when the author interviewed a number of millionaires and philanthropists, including the steel tycoon, Andrew Carnegie. As a result, this book is a perennial best seller of self-development that encourages the notion that “greed is good” – so long as you are willing to share your wealth.

10. The Richest Man In Babylon – George Clason

This book is built around psuedo biblical parables about attaining wealth. It has inspired investors since the early1920s. Like many of the personal finance books that followed this one, The Richest Man In Babylon stresses saving rather than spending. It also maintains that charitable giving is just as important as getting rich so long as you don’t permit the people you help to become dependent on you.

Understand How Much You Really Earn For Better Money Management

1040A formHave you heard about people who earn six figure incomes but still swim in debt? That goes to show that a higher income does not necessarily mean you will be debt free. Sometimes, you can earn only $30,000 a year and be free from credit.

If you just graduated and you are beginning to explore employment possibilities, you have to keep this fact in mind. The amount of money that you earn will not determine if you will be financially secure or not. Money management is the most important factor to help you stay out of any financial difficulty.

But before you can really learn about financial management, you need to understand just how much you are really earning.

Know your payroll deductions to manage money correctly

When an employer comes to you with a job offer, that usually includes the income that you should expect to receive. But before you rejoice in the amount that you will receive, you have to know that they usually show you the gross income that you are entitled to. However, do not assume that you will receive the whole amount. Nobody ever sees the gross income – at least, this is true for the regular employed workers.

There are many deductions in your gross income that you are most likely to receive a lower amount than what is offered to you before your employment is finalized. You need to understand these deductions so that you can perform better money management. That way, any expense that you will base on your income will be from an accurate figure. That will keep you from falling short and could keep your life out of debt.

So what deductions should you expect to be taken from your paycheck?

  • Federal and/or state withholding tax. This is also known as the income tax that is mandated by the federal and/or government. Take note that there are states that do not collect income tax. Make sure you know if your state collects them so you can verify in your payroll slip. The amount that will be taken from your gross income will depend on the exemptions that you will declare. For instance, if you are the breadwinner in the household, you will have lower tax deductions. You can declare the number of people that rely on you and your income. This can be your spouse, children and even your elder parents. All of these will be placed in your W-4 form. But be careful about the exemptions you will indicate in your W-4. Although it will increase the income you can take home, it could end up costing you when your tax returns are filed.

  • Social Security contributions. Another deduction that is mandated is the contributions to your Social Security. This is also known as the Federal Insurance Contributions Act or FICA. This helps you with a lot of claims. It can be disability or retirement benefits that you can receive when you need them.

Aside from these two, there are other deductions that you could be subjected to in order for you to enjoy certain benefits.

  • Retirement contributions. These include 401K or other pension benefits.

  • Health insurance. Some companies will give you a health benefits but most of the time, you need to pay a portion of it. You also have the option to include your family members in the coverage but that usually means you need to brace yourself for more deductions.

  • Life insurance. Some hazardous jobs or well privileged ones are given life insurance coverage too. The same conditions are usually implemented as the health insurance.

Apart from these, any court ordered deductions may also be in effect.

  • Wage garnishments. The most popular court ordered deductions that you may receive is wage garnishment. This can be due to a previous legal action that a creditor filed against you. This is automatically deducted and the employer arranges for it to be given to the corresponding creditor.

There may be other deductions on your payslip that you should know about. Always review the amounts removed from your gross income. If there is anything that you do not understand or a deduction that suddenly went up or down, ask the Human Resources department. Monitor these as you might be subjected to higher deductions than necessary.

Budgeting your net income for accuracy

The reason why you want to understand your income is because you want to be able to input an accurate figure in your budget. The most prominent tool in money management is a budget plan. To make your budgeting efforts effective, you need to input accurate amounts in it.

If you put the gross income in your budget and your expenses balance it out perfectly, you will end up falling short every month. You should never put your gross income unless you plan to include all your deductions in your budget plan. But to keep the plan less complicated, just input the net income and keep the deductions from it. If you need a reference for the deductions, you can use your payslip instead.

Feel free to use online budgeting plans to help you get started with money management. Websites like BudgetTracker.com or BudgetPulse.com can provide you with free templates that you can use.

Financial Plans That You Can Use In Money Management

calculatorYou can never be too cautious in life. Whenever you make a financial decision, you have to know that it can really change your life. Whether that is for better or for worse will depend on the current situation that you are in and the consequences of that particular choice that you will make.

Since your financial decisions can alter your life, it is only right that you plan for it. No one ever got into trouble for planning. When you make this your first step in any endeavor, you get to think and foresee the results that you want to happen. It enables you to prepare for any event that could ruin your chances of reaching your goals. Not only that, it allows you to align it with all your other goals in life.

Different plans that can keep your financial life organized

Fortunately for you, there are different financial plans that you can use to help make your money organized. Even if you do not have any goals at the moment, keeping your financial life organized will still be beneficial for you. At the very least, it will help you prepare for any goals that you can come up with in the future.

Of all the plans, the most generic that you will need is a budget plan. This will give you a general overview of the money that comes into your pocket and the expenses that you use it on. The main purpose of your budget is to make sure that your expenses are not exceeding your income. In case your income is not enough, you can choose which expenses must be cut back on. That is because the budget plan shows the priority expenses that needs to be funded in order to keep yourself from financial trouble.

From this plan will emerge a couple of other financial plans.

  • Spending plan. This is the more detailed expenses list that is indicated in your budget. Having this plan will help simplify your budget because it only has to contain your spending categories. This spending plan will help you jot down the details – especially for your cash expenses. If you have a food category, this spending plan will show the number of eggs, bread, meat and other products that you bought. If anything, this will help you compare prices of past purchases.

  • Payment plan. When you are in debt, a payment plan will help you in prioritizing which debts must be paid first. It will also contain the due dates and the different accounts that you have to finance every month. The idea is to keep yourself from missing any payment because that can end up being costly. You will waste more money on penalty charges.

  • Saving plan. You can also create a saving plan for all the things that you want to build up funds for. It can be for the major events in your life like marriage, the children’s college education and retirement. It can also be big purchases that you want to make like a car, or your home. It can also be that business that you have always wanted to start.

  • Investment plan. When you want to grow your money even further, you can set up various investments to diversify your sources of income. You want to keep track of everything to see how much you are actually earning. It will show you if one investment is earning more than the other. That will help you make better decisions about where you will put your money so its growth can be maximized.

If you are unsure about the type of plans that you can use in your unique financial situation and goals, you could get help from a financial planner. It is advised that you get a professional that is duly certified by the Certified Financial Planner Board of Standards, Inc. You can learn more by visiting their website at CFP.net. You can also do your search through reputable associations like the FPA or Financial Planning Association.

Benefits of financial planning

Planning is always a good thing and there are various benefits to it. Your finances can really spiral out of control if you are not careful. Things have a way of going wrong and you want to be organized to keep that from happening. And even if something happens, you can easily find a way to put things under control.

Financial planning for your life decisions will keep you from making choices that will put you farther from your dream. Not only that, it will keep you vigilant about anything that you may be doing wrong.

Admittedly, all of these plans can be tedious. However, this small sacrifice can get you the following gains:

  • Allows you to monitor the condition of your finances.

  • Aids you in making the right financial decisions.

  • Tells you which expenses will support your life’s goals.

  • Instructs you on how you can achieve your goals.

These are only a few of the things that you will get for being organized. Most importantly, an existing plan will give you the convenience of identifying how to make revisions as your life situation changes.

Money Management Tips For Retired Individuals

benjamin franklin on moneyNow that you are about to retire, are you feeling confident about you money? There are so many things to think about during this time and your finances is usually in the forefront. Sometimes, we have a lot of dreams and perceptions about a retiree’s life. When we find that time upon us, we realize that there is a lot lacking and that keeps us from fulfilling the dream retirement that we have always wanted.

If you think that you haven’t done enough in your pre-retirement years and that your money is not in a good position, you don’t have to worry. Although you will stop working full time, there are some things that you can do to help alleviate your situation.

Even if you do not have any financial problems when your retire, money management is still an important task that you should work on. Your ability to earn a lot is no longer possible and you may want to make sure that the resources that you have will stretch and fund your purchases until you need them.

Budgeting your retirement money

If you haven’t guessed it yet, you really need to budget. The question of why is no longer relevant. Now, you need to ask the question how.

Budgeting your retirement money is just like before. There is not much difference except that your resources now would have been greatly reduced. Given that, you need to consider how you will change your spending to make sure that you will live within your means. You basically have an idea about how much you have in your retirement plan and what you are entitled to receive as your Social Security benefits. Take note of this and calculate the monthly amount that you will receive.

If you need to lower your spending, here are two things that you may want to consider.

  • Relocate. If you used to live in the city because of your work, you may want to think about relocating farther from the metro. Suburban areas have lower cost of living and that can really help you shave off from your total expenses.

  • Indulge in do it yourself projects. Since you are no longer working, you have all the time to do tasks and chores in the house that you used to hire someone to do. Mow your own lawn, tend to your garden and clean your own place. If these are the things that you used to pay someone to do, well now you have to time to do them yourself. This also includes cooking your own meals. If you used to eat take out food or you dine in restaurants, you now have the time to experiment in the kitchen. That will save you a lot of money too.

How to manage your debts in retirement

There are some people that have no choice but to carry their debts into retirement. How can you implement money management if your limited resources will have to share it with your debts?

Here are some tips that will keep your debts from ruining your retirement money.

  • Enter a debt relief program. There are many debt relief programs that you can go into. Your choice for a debt solution will depend on how much you can afford to pay your dues. When determining the ideal debt payment, make sure you allot enough money from your budget on the things that are important like you health care fund.

  • Seriously tackle your mortgage. Since this is the type of debt that is usually carried over into retirement because of the long payment period, you may want to seriously pay this down. You have the option to either refinance or go into reverse mortgage with your lender. Find out about both so you can understand which option can work best for you.

  • Increase your debt payment fund. There are two ways you can increase your debt payment fund. One is to lower your spending. We have discussed that in the previous section. You have to consider removing the unnecessary expenses that you used to enjoy. The other way to increase this fund is by earning more money. Let us expound on that in the next part of this article.

Do you need to earn more money?

Before you start to think about earning more money, you may want to do your research and find out if you are eligible to receive other benefits. You can do your search through the Benefit.gov website. They have a page that works as a great benefit finder tool. By answering a couple of questions, you should be able to narrow down the possible benefits that you can receive from the government and organizations.

But if you find that all of these are still not enough, we have some tips for you to help you make ends meet.

  • Get a job that you want to do. This is different from what you did in your youth. With all the financial support that you are getting from your Social Security and retirement plan, you are not compelled to work very hard to earn more. Now you just have to work to make sure you have enough for your other needs like debt payments or health care costs. You can use a hobby or work on a less stressful consultancy job.

  • Get rid of the clutter in your life. We all accumulate a lot of things throughout our lifetime. Maybe its time for you to sell them off and earn some money out of them. Downgrade your life and get rid of the stuff that you do not need and are just accumulating dust.

  • Invest what you can risk. Another great way to grow your income is to start investing. If you are timid about it, you can actually start small. Invest what you can risk to lose. Look into mutual funds, bonds and stocks. These can be a great source of additional income for you.

Money management does not really stop even when you have retired. Make sure that you stay on top of your finances. That way, you will have more than enough to spend for the remainder of your life.