Brand New Financial Year

Yes that is what it is. Welcome to a brand new year where everything we will be doing, saying, buying etc will be a fallout of the kind of person we have trained ourself to be from last year.

I expect everyone to be alert financially this new year as the global financial meltdown is expected to hit us more in Nigeria this year (2009), never mind what Soludo & the CBN thinks.

Well I welcomw all once again and we will certainly get rich gradually this year as long as we follow proven guidelines.

HAPPY NEW YEAR.€€

What is the goal this Xmas?

In the midst of our rush to earn money, our scramble to save for retirement, our focus on frugality, it’s easy to lose sight of why we’re doing this. What is the goal? What is it we’re trying to accomplish by getting rich slowly? For me — and for many others — the answer is Financial Independence.

Your Money or Your Life defines Financial Independence as “having an income sufficient for your basic needs and comforts from [sources] other than paid employment”. Financial independence implies freedom. It’s the condition of having saved enough money that you can do whatever you choose. Whether you elect to keep working doesn’t matter — you have enough saved and invested to follow your dreams.

But is Financial Independence just a pipe dream? Is it something only for the lucky and the strong? No, says James Stowers in his book, Yes, You Can…Achieve Financial Independence. It’s a goal that anyone can fulfill as long as she’s armed with some basic knowledge, as long as she makes smart choices.

The keys to accumulating wealthStowers starts with the basics. The first chapter of his book covers the history of money. (A little like this, but with a different focus.) The next few chapters briefly cover sources and uses of money, the dangers of inflation, and the extraordinary power of compounding.

Some readers might argue that this information is too basic, but I disagree; a firm grasp of these fundamentals is the foundation upon which Financial Independence is built. Stowers ends this section by offering four keys to accumulating wealth:

1. Start investing as early as possible. It takes significantly less money to accomplish what you want, and you have more time working for you.
2. Be determined to save on a regular basis. It is an easy way to accumulate wealth.
3. Begin investing with the largest possible sum you can. You will have more money working for you over a longer period of time.
4. Reach for the highest rate of return you believe you can safely receive on your money over time. Each additional percent is important. The higher the rate, the less money it takes to accomplish what you want.

Financial Independence is built upon these four guidelines.Confronting your financial challenges“In order to save money, you must fight to keep from spending it,” writes Stowers in the book’s second section. He encourages readers to set goals, to prioritize wants. “Since money can be spend only once, you need to decide which wants are most important. To do this, it may be helpful to place a value on each of your want.”Exercise: Pull out a piece of paper and list your wants. These can range from a new house to a hot tub to a trip to London to a new blender for the kitchen. Next to each item, write why you want it. (You might want a hot tub, for example, because it would allow you to relax with family and friends.) When you’ve finished, take another piece of paper and re-order the list based on how important each want is to you. If a trip to London tops the list, are you still willing to delay it by spending N10000/month for that gym membership you rarely use?

The challenge is to balance the present and the future. “Money has no value unless one has time and good health to enjoy it,” Stowers writes. He asks readers to know themselves and to make decisions based on their temperament. “If you have to be poor,” he asks, “would you rather be poor now or at retirement?” By planning carefully and investing wisely, you shouldn’t have to make this choice.

Planning for Financial IndependenceAfter covering the basics of saving and estate planning, Stowers describes the path he recommends to Financial Independence. He believes readers ought to save early and often, making regular scheduled investments in the stock market through the use of mutual funds.

Have a Merry Christmas.

5 Ways to Succeed with Your Financial Plan

In a recent post, I wrote about how to make a plan for your financial goals. However, I'm sure you've made plans for other things, as well – such as losing weight, studying more, and other things. Chances are, you've failed a few times. Everyone has, and financial plans are no different than any other goals. How are you doing on your New Year's Resolutions for this year?

#1 - Break it down
You won't be able to succeed if your goals are huge. I suffer from this problem – if I have a huge project in front of me, I won't even get started! I'll just procrastinate and leave it alone. With a goal like "Solve my financial problems," I have no chance of succeeding. However, if I break down the goal to something manageable, such as 'Send an extra one thousand naira with my bill payment,” the goal is a lot easier to achieve! In fact, this is an excellent way to pay down your debt faster.

#2 - Try not to do it alone
Do you have any other friends who are in the same situation with their personal finances? If you know anyone – even your spouse will work, but other friends are even better – who wants to work with you, meeting your goals will be a lot easier. A partner will offer encouragement, help, and advice as you follow your plan.

#3 - Set reminders
You should be reminded of your goal every time you are in a position of temptation to break it. For example, I have a bad habit of cracking my neck, so I wear a bracelet on my hand that reminds me of my goal whenever I feel the urge. I even turned it into a game – if I fail and do crack my neck, I move the bracelet to the other wrist. If I don't have to move it once in a day, I win! You might put a reminder in your wallet, which you will see every time you are about to spend money. Think of the areas where you can improve, and make sure the goal will be fresh in your mind when the situation arises.

#4 - One step at a time
Always have a next step: a goal is achievable if it is simple, clearly designed, and realistic. Every time you complete a step in pursuit of your goal, make sure that your next step is obvious. What exactly do you need to do next to improve your financial situation?

#5 - Declare WAR
When you make the decision to succeed, to break your old habits and to meet your goal, you are declaring war on your old ways. I have a giant sign taped to my computer that simply says “WAR” – it represents my war on procrastination. When you make the decision to fix your financial situation, you have made a huge step towards winning. You have to keep that enthusiasm with you always if you want to achieve your goal.

Remember: it's war! War against your old self, war towards your goal.

Did you know that being unselfish can actually be selfish?

Before I confuse myself and you, let me explain. I used to think that by never spending money on myself or taking time for myself, I was being unselfish. I thought that because I have family that depends on me financially, anything I spent for "me" would be a waste.
I was completely wrong.
Do you know your most important asset? Your home? Nope. Your car? Nope. Your most important asset is you. Yes, you.
Without you, you don't have an income. Without you, your parents don't have a child. You are a producer, and if you're not 100% then how can you produce at 100%? Assets support cash flow. You are your most important asset. You need cash flow to prosper and pay your bills. But are you taking the time to nurture and protect your most valuable asset? If you're like I used to be, probably not.
Here are seven practical ways to protect and grow your most valuable asset: You.

1. Get more sleep. Tonight.
This is hands-down the fastest and simplest way to improve your productivity. With enough sleep each night, you won't need to down those 3 cups of coffee just to get going in the morning. With the right amount of sleep your body property handles food processing. You're less cranky. You're more creative.

2. Cut draining relationships
Relationships are a two-way street. Sometimes they are life-giving and refreshing, other times they are life-draining and depressing. Good healthy relationships go both ways. If you're constantly dealing with relationships that are life-draining and you're not a counselor by trade, it's time to cull your list of friends.
Is dropping friends harsh? Yes, but again, taking care of yourself is not selfish. If you're worn down by numerous draining relationships, what will happen when one of your healthy relationships actually needs you? You'll be too drained to help.

3. Never skimp on insurance
To be able to produce at a high level, you cannot be concerned with factors outside your control. Insurance may be costly, but the peace of mind it provides (Automotive, Health, Life, Property) can provide you with a huge return on your money.
While the cost of insurance is important, your focus should be “how will this improve my ability to produce more income?” Insurance is about transferring risk. The more risk you can transfer away from yourself, the better you will sleep at night and the more productive you will be.

4. Fuel yourself properly
The biggest problem for many hard workers is fuel. It's not that we don't eat. It’s that we don't eat well. We stock up on coffee, Red Bull and fast food to make it through the day. Eating balanced and healthy meals will not only make you feel better, you'll live longer as well.
. Now you have no excuse. Fueling yourself properly is both a short and long term investment in your MVA (most valuable asset).

5. ABL. Always Be Learnin'
When you begin to view yourself as your most valuable asset, your mindset changes dramatically. One area that changed dramatically for me personally was in the area of education. I used to feel guilty about buying a fantastic new business book, or wanting to go to a thousand dollar conference. No more.

Investing in yourself through education is nearly always a good investment. I'm not just talking traditional schooling here, education could be reading that marketing book you've been wanting for years, or attending a free online class or webinar.

6. Do 25 Pushups. Right Now.
I'm serious. Get down and do them right now.
Did you do them? If you did, I'll bet you feel better now. Exercise makes everything better. You'll live longer. You'll feel better. You'll look hotter.

7. Schedule time to do nothing
Put “nothing” on your schedule. Of course, you'll not actually end up doing “nothing”, but you need to schedule that time in if you're not getting enough of it. Maybe you read a book, or go for a jog, or spend time with your kids. Just put it on the schedule.
It may sound selfish to think of yourself as your most important asset. It isn't. In fact, protecting your ability to produce and grow is one of the most unselfish things you can do for your family and your future.

What are you doing to improve and protect yourself?

Do You Know Where Your Money Goes?

If you’re having trouble making ends meet, or your savings aren't growing as quickly as you expect, the question of "Where did my money go?" may constantly be on your mind. Learning the answer may seem like an overwhelming task, but it's one worth doing.
There are many ways to track your monthly expenses. What matters is that you track expenses, not how you track them. You can track things in whatever way makes sense for you: using a program designed for that purpose, using a basic spreadsheet, or even good ol' pen and paper.

There are two main reasons to track your expenses:

1) Discover where you are spending more money than expected

Basic tracking will help you to cut back in areas that you didn't even know were causing problems. The classic example is how much your daily bread purchase adds up to over the year. This isn't done so that you’ll say "I can save x-naira a year if I give up my bread," but rather, "Are those daily bread purchase worth x-naira a year to me?" You may decide that your daily bread is worth it to you. You can't make that decision unless you have accurate information.

2) Set reasonable savings goals

You can't expect to save N10,000 a month (or whatever your goal is) if you only have N1000 left after all of your expenses. Without accurately tracking your expenses, you’ll likely be frustrated if you cut back on spending and don't see the results you expect -- even if your goals were not reasonable.

You will gain control of your finances after you decide which expenses are necessary and which can be cut back. Set reasonable saving goals for yourself. Limiting certain expense categories can help you to stay on track with your plan. This entire process will only work if you have the discipline to stick to your plan. Fortunately, the pain of passing up an "urge to splurge" gets easier the more you do it.

Give your children a Gift that will keep on Giving.

There are many occasions for giving gifts, especially to children. And one of the biggest occasions is coming up: Christmas. You might give clothes that the children can wear or some toys that will keep their attention, or you can gift them some shares of stock.

Buying them shares of stock might set a different course for their financial lives and get them interested in investing and personal finance at a young age. If presented as a fun game, kids will usually enjoy the experience and will want to learn more.

You can even download software for them to track their stocks or you can use a simple spreadsheet.

There are different ways to accomplish this. If you already use a stockbroker, there might be offerings available to help you, so check that out first. You can also use a service like http://www.investordelight.com/ to track their investments in all kinds of graphs and get them accustomed to online investing.

Once they have their shares, you can also introduce the children to fantasy stock markets where they have an imaginary amount of money to trade and compete with other children. There are many benefits to having children learn stock investing.

A good place to begin might be Young Money, where they can start with an imaginary $10,000 in fantasy money.

If you wish to give something more hands-on, consider Cash Flow for Kids, or the regular Cash Flow game if the children are older. Cash Flow makes it real and offers a fun way to learn the basics of personal finance.

Whichever gift you decide to give, make sure it’ll be something more than just a temporary moment of excitement and continue to pay dividends for a long time.

How do you manage your TIME?

We’ve all heard that time is money, and anyone who’s applied quality time management strategies can attest to that fact. Knowing how valuable your time is may inspire you to work on your time management skills.

The point is that there are usually a small number of critical tasks that, if completed, would make it a successful and productive work day. While this discussion deals with tasks at work, the method also works in other situations, such as household tasks. The problem arises from the fact that the critical tasks are typically associated with some level of discomfort and so we do our best to avoid them. We introduce other, less important, tasks into our lives to stay busy and avoid the tasks we really need to get done. By removing those non-essential tasks and focusing on getting the critical, yet uncomfortable, tasks done, we can accomplish a successful day's worth of tasks in a short amount of time.

This concept ties into the subject of procrastination. It always seemed like my semester-long projects in school were accomplished in the last few days before they were due. If I had worked on the project up front with the same amount of focus and desperation, despite the discomfort (i.e., lack of sleep, etc.), that I put into it at the end anyway, I could have completed the semester-long project in the first week of the class. If that was the major contributor to my grade, as was often the case, I would have freed up a significant amount of time, since I might not have had to go to class anymore or put in the same level of effort for the rest of the semester that I might have otherwise.

What distractions are you using in your life and what are your critical tasks? Perhaps you've been avoiding doing something about your debt because you're afraid to take an honest look at your finances or because you assume that doing something about it will be difficult. It may be time to push aside the distractions and take decisive action such as consolidating your debt.

Take decisions and act on them.

PROCASTINATION - No1 Investment Mistake

Time is your greatest friend. Once you have decided to get onto the Investment Ship, you are automatically given an ally. Time is your asset. Depending how you use this asset, it can work for you or against you. By putting forward your investing, you are not utilizing the time asset.
Time and amount of money required are inversely proportional. What this means is the more time you have, the less money you need to invest. The longer you wait to get started with your investments, the more money you will have to put in to get the same type of return as somebody that started earlier.

Here's an example: Let's take three people, Mikel, Stanley and John. John was smart and at age 20 he started investing N1000 per month. Stanley started investing N1000 per month at age 25. Mikel, always waiting for the "right time", started investing at the age of 35. Assuming 9% return on their investments, and their desire to retire at age 65, how much will have each have if they continue investing N1000/month until they retire?

Waiting five years to start investing cost Stanley N272,355.82, and waiting ten years to start investing cost Mark a total of N446,309.40. That's almost half a million naira (ignoring taxes).You might be looking for the right time to start investing. The only "right time" to start investing is today. Putting off investing for any reason is going to cost you much more in the long run than getting the timing correct.

Make it automatic -- one of the secrets that the government uses to make sure that everybody pays their income taxes is that they have it automatically taken out of your paycheck before you even see it. Once the company sets up payroll taxes for you, there is no more thought that goes into paying the government.

You should follow this system. Make investing automatic. There are many ways of investing and saving automatically. You can have it taken out of your paycheck and automatically invested. You can have a certain amount taken out of a bank account monthly.

Meanwhile, whatever you do, start your investment plan today.

Are you investing for the right reason?

Ok, you have finally realized you must start putting part of your income away(investing, I mean) for your future and you have taken the steps to achieve this by diong so, but are you actually doing it for the right reason?

Take for instance, you put some money into stocks and mutual fund. Then out of the blues you begin to pump money into insurance for a three year plan because you have been promised by a sale agent of a good payout for the current year. If you jump at this offer, thereby negleting the plan you have already setup, then you will rock your financial boat for the future.

You need to look out for details such as past dividend payment history, past earnings etc to be convinced you are taking the right step and not tying up your money for long periods in unexpe ted investment plans.

Happy investing.