Personal Finance Archives - Page 13 of 21

How Banks make Money off your Money?

Hey guys today we will discuss how banks make money off your money? In addition to that we will discuss where is the best place to park those funds. The big banks are a multi- billion dollar business and are basically too big to fail as the government has labeled them as such. Obviously you want flexibility with how you manage money so we all should consider what that means in our lives.

But if that flexibility is staying with a bank that charges you $12 dollars a month in checking account fees, maybe that is not the best route for your hard earned dollars. There are many options in the banking industry to stash your cash, for example, Big to fail banks, Credit Unions, Online Banks, and Brokerage Companies. These are the most widely used options where people maintain their money in a flexible liquid account.

Now that you understand the choices behind where you can place your money, would you care if Bank of America made $300 dollars a year off your money or if a credit union made $150 dollars a year off your money? I guess you might be thinking that it all depends if any of the money is coming from your pocket or from the imaginary money tree inside the bank? Well I hope to inform you today with the details behind how these banks operate, and then you can make a decision. See below for the 5 levels on how banks make money off your money.

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The Behaviors of Finance

One of the basic foundations behind getting your personal finances in order, which many people need to look at a bit differently, is behaviors. The basic misunderstanding that many who are struggling with money issues, is that they focus on the money as the problem, but in reality it is the behaviors. When we have routines that complement positive actions around how we handle money it sparks a change within us that correlates back towards money. Whether you struggle with keeping expenses down or a habit of saving a specific amount every month, it all boils down to what you do every day.

By realizing your actions and faults you have taken the first step towards accepting the bad behaviors ruining your life. The next step in this process is to begin with 1 positive money behavior and consistently perform it for at least 45 days. It could take a lot of effort, but without effort you will never see gains with personal finance. Money management is only tricky when you are in denial of your abilities behind controlling the old mighty reflection in the mirror. Granted it might not seem all that difficult to say no to yourself, but after 5 days attempting to change a bad behavior people tend to break down and revert back to bad habits. Money101 is based on a class that teaches you that choices in the right direction will always be the beneficial way to live a stress free money life.

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Where do I see Myself in Five Years?

The title question is probably asked millions of times a day by people in random situations. Where do I see myself in five years? I wanted to give you a personal post where I answer the question. By doing this publicly I hope to achieve all the goals I have for my family in the next 5 years. Hey you reading this, have you ever written down your 5 year goals list for your current life situation. If not then I recommend you proceed diligently to find a pen and paper to complete a 5 year list today. Why did I finally decide to write a post about this now? First off because I lose paperwork all the time. Secondly because files on my computer can get lost for a myriad of techie reasons. Third reason is primarily because I freaking want to.

I talk with people from time to time and they either do not have goals or could care less to think about where they will be in 5 years. If you are not forward thinking then you might as well start literally taking steps backwards. Just take a post it, write down the goals you want to accomplish in 5 years, laminate it and put it on the fridge. That’s a fun weekend project you can do with your kids. So where do I see myself in five years?

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Financial Fitness

How can you develop financial fitness? Well it is simple by working every dollar that crosses your hands and taking the time to see how the money plan you have now will give you what you want later. Real financial fitness can take place, but the trick is you have to want to work those dollars. Many people love working out physically, and on the flip side give up financially. Most of the readers of this blog are in the 25-35 age range, and that means you guys are abundantly blessed with physical energy. Now if you could just direct some of that energy to daily financial fitness workouts, life can be a nice walk in the park.

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The Truth behind Assets and Liabilities

I think there is a misconception behind what an asset is and what a liability is? The truth behind assets and liabilities is that one puts money in your pocket while the other takes away money. If you question this monetary foundation then please reevaluate the stance on how to distinguish both of these financial terms.

If you can early on capture the real essence of the assets and liabilities game you will succeed with money and possibly have the freedom from worrying about money. The real conundrum that can be simply solved is to ask yourself before a purchase will this put money in my pocket or take away. That shiny new car might seem to many as an asset, but it is really a liability. Why you may ask because you then have to fork over thousands of dollars per year now after owning it that you didn’t have to before owning it. Hence your cash flow is now affected negatively. The costs include insurance, car payments, gasoline costs, maintenance costs. Before you signed on the purchase order dotted line, you never had to worry about having the money for the newly found car costs.

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The 4 Principles of Personal Finance

After reading many books, hundreds of blogs, and hundreds of financially related websites I have come to decipher the 4 basic principles of personal finance.

The 4 Principles of Personal Finance:

Patience

Planning

Pre- Tax

Production

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How to Control the Uncontrollable?

Prepare Now for the Uncontrollable Events

When I say this phrase I want you to really grasp that it is an oxymoron, because uncontrollable things are out of our hands. But you must see that the way you prepare yourself in many aspects of life will help you eventually when the uncontrollable events take place. By being just a little bit more organized you can overcome those unfortunate aspects of life. What are some of the uncontrollable events I talk about?

Uncontrollable Things:

Medical Emergencies

Death

Time

Other People

Natural Disasters

Governmental Policies

Inflation

Politics

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Real Estate can be compared to Dividends

Buy Low to Sell High is the name of the game

How can I say that real estate is closely related to dividends? The two might be at both ends of the investment spectrum for most people, but if you break them down to appreciation and cash flow they are somewhat similar. The real estate market is and will always be the investment where most people can possibly reach financial independence and Wealth. It is by far the oldest form of investing known to man. It can add an additional 20K in annual income if a property is bought at the right price and if managed correctly. On the other side it can drain you by the thousands with home maintenance and tax costs. What is the secret to gaining success in real estate, buy low and sell high, while renting it out for years to recoup any initial investment outlay is a preferred method. I guess you have to buy smart and find a reliable contractor who can tell you the ins and outs of the home.

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