What is the Definition of Personal Finance – Budgeting

If you find yourself asking where to begin with learning proper finance, start with the definition of personal finance, budgeting. Why the definition of personal finance is budgeting we will outline in the following article, because truly there is no more important lesson as to what proper financial management entails, and what will most directly contribute to your success with your money.

Proper Budgeting is Personal Finance Mastery

There is no need to look beyond budgeting when beginning your journey towards personal finance mastery. Budgeting can be a scary prospect when you have not done so for a long time, the money tale told by your expenses and income can paint a poor picture. But whether you are a millionaire with investments, countless loans, mortgages and stock holdings, or an honest hardworking fellow just beginning your financial journey, budgeting is the key to continued success with your money.

Proper personal finance budgeting allows you to account for what monies you have coming in and what monies you have flowing out of your accounts. Mastery of your finances, no matter your level of income is a matter of using this information to make decisions that increase the money you have coming in each month, and decrease the flow of cash you have leaving your possession. If you choose to achieve this through additional investments, decreasing interest rates with consolidation loans or a job promotion the basics of personal finance budgeting remains the same.

Proper managing of one’s debt, income and expenses is the soul of managing your money and that is why the definition of personal finance is budgeting. There is no need to get more complicated than this, with your credit cards, payday loans, investments and stock options, you will find yourself on a sound financial footing if you keep a detailed budget, follow your money, and ensure that you spend less than you earn each and every month.

To properly budget your personal finances you simply add up your sources of income, account for every penny that you have flowing to you each month, and track every expense. I am not concerned with the exact system you employ as long as you are detailed and know how your money is flowing. Track your loans, and if you have bad credit lenders, know how much you are spending in interest. Track your credit cards and what amount of your payments applies to principle and what cash goes towards interest. Make knowing your finances your business and when you have an accurate picture of the flow of your money, then work to improve your finances.

Most mistakes of personal finance are made because honest, hardworking people have an unclear, or foggy idea of how their money is spent from month to month. With a little attention to the details of your cash flow you will find that there are countless ways to save additional money, and increase your income. Keep a focus on the basics of personal finance and never forget that the definition of personal finance is budgeting. You too can start making a profit today.

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A Quick Guide to Managing Personal Finances Successfully

Managing your money and personal finances is easy with just a basic understanding of the world of finance. You can learn to handle yourself in stressful moments with this guide to personal finances, budgeting money, managing personal finances, using personal budget software or seeking finance help online. Our financial guide offers great value in assisting you in all areas of money.

Most people don’t think of themselves or their lives as a business. But from birth to passing, you are in business for yourself, the business of you. How you choose to manage your business is up to you. The same guidelines that apply to running a successful business also apply to leading a victorious life, both financially with your money and emotionally. Remember stress around money can affect your emotions negatively as well as your health.

Giving adequate service to our fellow human beings is the mirror of a successful business as well as providing value to their lives. If you seek to provide as much value to as many human beings in your life, you are sure to become a successful person and customers and wealth will knock at your door. So how does this apply to managing finances successfully you might ask?

Below are 4 important points of our guide from Personal Finances Online Help.com, to managing personal finances successfully.

Take extra effort in removing any emotion like dept anxiety or overwhelm from financial obligations worry over mounting bills and income. Removing the emotion from your personal finance budgeting will be a work in progress, and you should always remain on guard for over active emotions. Taking emotion out of dealing with your finances will help you come up with positive solutions and solve problems more effectively.
Managing your personal finances on a regular basis rather than letting the admin tasks mount up is important. That way you stay on top of where you are at, can change things, make better decisions ahead of time rather than always being in reaction mode or putting out fires. Avoid decisions that would lead to bankruptcy like over leveraging your loans or taking on financial commitments you don’t know how you can pay back.
Devote yourself to develop greater skill sets like budgeting, planning and even using budgeting software. Managing personal finances like a business is about seizing control of your destiny, both with your finances and your life. Try to be like the great business leaders and attack your future with vigour and enthusiasm. Overseeing your finances in this way, with boldness, and a belief in their importance can have amazing results. Lead your money with boldness, and like an army your personal finances are sure to follow
Using software to support you with your personal budgeting is a good idea because it contains spreadsheets that have everything in one place. You can see very quickly where your current state it, budget better, plan better, not to mention the time it will save you putting your own spreadsheet together. The ultimate personal finance software provides sufficient user-friendly features, allowing users to manage every aspect of their finances, including accounts, investments, future plans and taxes. Software will provide up to date information on tax laws and stock reviews to help you make knowledgeable decisions.
Remember proper budgeting of your personal finances is the beginning of good and sound financial management. Online sites and budgeting software can help you. Of course, this will not be possible without first your determination to manage your financial obligations without getting stressed about it.

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Why Personal Finance Software Is Important

Why personal finance software is important

These days, technology has really revolutionized people’s way of life, including their financial life. Back in the day, most people used a pen and paper to document their earnings, spending, and finances.

What is personal finance software?

Home finance software refers to a financial tool that enables you to prepare a budget, track your expenses, and check your overall finances. These days, there is no valid reason why you should be disorganized and mired in debt because there are many good personal finance programs that you can use to keep track of your money, plan your future, and completely control your finances. If you have a PC or laptop, you are lucky because you can easily find good home finance software at little cost. Application programmers have now catered for the high demand for these applications as they now come with all sorts of functions and capabilities that can save your money, time and effort.

Analysis

You can now analyze your finances unaided. However, this kind of analysis can be much easier if you have some accounting background. Finance software will analyze your important financial details. Details such as your monthly expenses will stick out. Many personal finance applications also allow personalization. If there is one particular aspect you want to know about your finances, you can simply create a specialized analysis. Many personal finance programs can also give you a monthly analysis-an excellent way to see how you actually spend your money on a monthly basis.

Budget creation

We all know the importance of a personal budget. But creating a real budget that you’ll stick to is easier said than done. You can find a personal finance application that creates a realistic budget for you. Simply enter your basic information into the software and quickly create a simple budget.

Checkbook balances and bill payments

Sometimes you’ll fail to pay bills on time. When it happens, interest rates are more than likely to shoot up. Fortunately, you can avoid this mistake once and for all. Look for a personal finance application that’ll remind you when to pay your bills. Likewise, you can accomplish balancing your checkbook by just ticking a box. Sum up any amounts withdrawn from your account and check carefully anything that seems suspicious. Once you have everything on record, it becomes much easier to know how your finances are faring.

Trust yourself and no one else

When it comes to finances, it is best to keep track of all you have carefully. You may trust your finances with your financial adviser, but it is still important to know where every cent is at, always. With a personal finance application, your money will never be far away from you. Whether you are paying bills, balancing your checkbook, tracking your paycheck, or creating a personal budget, you should not live without personal finance software.

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The Best Way to Understand Personal Finance

When we are trying to understand Personal Finance, the best thing to do is to understand what Personal Finance is NOT.

Many people think that accounting and personal finance are the same, but Personal Finance is NOT Accounting.

On the surface they may seem the same; they both have something to do with money. However, the definitions will help us better understand the differences.

Merriam-Webster’s definition of accounting is “the system of recording and summarizing business and financial transactions and analyzing, verifying, and reporting the results.”

Based on this definition, we see that accounting is the process of analysing and recording what you have already done with your money.

This is why having an accountant is usually not enough when it comes to your personal finances.

Accountants generally don’t concern themselves with personal finance (there are some exceptions to this rule). Unless your accountant is also a financial advisor or coach, he or she will likely just look at what you have done with your money at the end of the year and provide you with a report of their analysis.

This report is usually your tax return; what you owe the government or what the government owes you.

Very rarely does the accountant provide an individual with a Balance Sheet or Income Statement or a Net worth statement; all very helpful tools that are necessary to effectively manage your personal finances.

Personal Finance is looking at your finances from a more pro-active and goal oriented perspective. This is what provides the accountants with something to record, verify and analyze.

The Merriam-Webster’s (Concise Encyclopedia) definition of “Finance” is the “process of raising funds or capital for any kind of expenditure. Consumers, business firms, and governments often do not have the funds they need to make purchases or conduct their operations, while savers and investors have funds that could earn interest or dividends if put to productive use. Finance is the process of channeling funds from savers to users in the form of credit, loans, or invested capital through agencies including COMMERCIAL BANKS, SAVINGS AND LOAN ASSOCIATIONS, and such nonbank organizations as CREDIT UNIONS and investment companies. Finance can be divided into three broad areas: BUSINESS FINANCE, PERSONAL FINANCE, and public finance. All three involve generating budgets and managing funds for the optimum results”.

Personal Finance Simplified

By understanding the definition of “finance” we can break our “personal finance” down into 3 simple activities:-

1. The process of raising funds or capital for any kind of expenditure = Generating an Income.
A Business gets money through the sale of their products and services. This is labeled “revenue” or “income”. Some businesses will also invest a portion of their revenue to generate more income (interest income).

A Person gets money through a job, or a small business (self employment, sole proprietorship, network marketing or other small business venture). The money coming in can be a salary, hourly wage, or commission, and is also referred to as income.

A Government gets money through taxes that we pay. This is one of the main ways that the government generates an income that is then used to build infrastructure like roads, bridges, schools, hospitals etc for our cities.

2. Using our money to make purchases = Spending Money.
How much we spend relative to how much we make is what makes the difference between having optimum results in our personal finances. Making good spending decisions is critical to achieving financial wealth – regardless of how much you make.

3. Getting optimum results = Keeping as much of our money as possible
It’s not how much you MAKE that matters – its how much you KEEP that really matters when it comes to your personal finances.

This is the part of personal finance that virtually everyone finds the most challenging.

Often people who make large incomes (six figures or more) also tend to spend just as much (or more) which means they put themselves in debt and that debt starts to accrue interest. Before long that debt can start to grow exponentially and can destroy any hope they would have had to achieving wealth.

Personal Finance made simple

Personal Finance doesn’t need to be complicated if you keep this simple formula in mind:

INCOME – SPENDING = WHAT YOU KEEP

For Optimal Results you simply have to make more than what you spend and spend less than what you make so you can keep more for you and your family!

If you are not actively working towards an optimal result you will by default get less than optimal results

It really is that simple!

Now that you understand personal finance and WHAT you need to do, the next step is learning HOW to do this!

The best way to start is by following these 3 simple steps:-

1. Know what you want to achieve – “if you don’t know where you are going, any road will take you there” has become a very popular quote, probably because it is so true. One of the habits that Stephen Covey highlights in his book “7 Habits of Highly Successful People”, is to always start with the end in mind. Knowing where you want to go will be a big help in ensuring you get there.

2. Have a plan – that you can follow that will get you to your goals. Knowing how you will achieve your goals in a step by step plan is invaluable. Sometimes this is easier with the help of an advisor or a financial coach.

3. Use tools and resources – that will help you to stick to your plan and not become distracted by the things in life that could limit our incomes and make us spend more than we should. Don’t try and work it all out in your head! You will end up with a massive headache and your finances will become one gigantic dark fog!

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Actions to Do If You Want Your Personal Finances to Improve

At the turn of each year, we all have our dreams and we possess new energy levels to achieve them. This individual expectation is like a cycle. Everybody wants to succeed, at least in their minds but not everybody will. Below is a list of 25 actions you should take if you want to improve your personal finance this year.

1. REVIEW THE PAST YEAR: The first thing you should do is to analyze the past year. Research has shown that of the lots that make ‘new financial resolutions’ every year, less than 10% actually get to follow those resolutions through the year. Does it not bother you that at the beginning of last year, you also made resolutions that you failed at? Why turn around in cycles every year? Take a pen and paper, sit down and review your financial activities for the past year; from your income earnings to spending. Break everything down into tiny bits and you will have a clearer picture of why some of your financial desires didn’t come to pass. It could be that your total expenditure outweighs your income.

Simple Guide: Create a ledger of credit and debit. Every of your income, no matter how little, should come to the credit side while expenditures come to the debit. Sum each side up. If your debit is over 30% of your credit, do you still wonder why that financial dream of yours was out of reach in the past year?

2. CREATE A CHECKLIST OF ALL YOUR FINANCIAL MATTERS: The second step is to create a checklist of all your financial matters, while including ‘Emergency’ as the last in the checklist. This is because emergency situations will always arise and can dent your plans, if you are not adequately prepared.

The best way to create this checklist is to break each financial matter down into months. Many people go through the year with false belief that they have everything sorted out in their heads. The more reason they fail because human beings are susceptible to memory loss. Sort them out in black and white instead, and a new level of motivation will come on you each time you look at the checklist. Alternatively, tools such as PocketGuard and Spendee can help you do this.

3. SET SPECIFIC FINANCIAL GOALS: After creating the checklist, the next step is to set your financial goals complete with specific dates. That is only when your wishes become goals since the dates act as deadlines thereby putting you on delightful pressure to beat them. Any goal without a specific date of achievement is not a goal. You are merely wishing. Sadly, this is what many people do.

By specific, I don’t mean you saying you will make a million naira in August 2018. Be more specific with date. Rather, say ‘August 30, 2018’ for instance. Then it becomes a goal that you can wake up every morning and chase around.

4. KEEP A FAITHFUL BUDGET: The failing of many people is that they are never faithful to their budget. This shows indiscipline. Learn to set and work within budget. That way, you can meet most of your financial plans and obligations. Going beyond budget will only put you in bad debt and make you miserable. If you cannot plan your budget in black and white, there are wonderful digital tools such as Wallet and Personal Capital that enables you to do this and carry your budget around in your phone. Some others like PocketGuard even alert you that you are already spending beyond budget. Take advantage of these tools for better living. One thing you must never do is to simply budget in your head.

5. SPEND WHAT IS LEFT AFTER YOU HAVE SAVED: Learn to live by this rule today. For every dime you earn, save at least 10% of it. Now, this is the difficult part: many people aren’t disciplined enough to do this. The key to achieving this is to separate your business income from your personal finance.

6. LEVERAGE ON GOOD DEBTS AND AVOID BAD DEBTS: Everybody should like debt. This is a principle of the wealthiest people in the world. They like good debt and abhor bad debt. Good debt brings you more cash flow and if well managed, sets you towards financial freedom. Bad debt on the other hand, brings you unneeded luxuries, put serious pressure on you and can make you miserable. If you must boost your personal finance in 2018, try to avoid bad debts.

Good debts are incurred towards fulfilling rewarding financial obligations like the purchase of businesses, investment and stocks or real estate; these are things that will compound your financial interests over time and make you independent. Bad debts are taken out to buy non-essential luxuries such as cars, holiday trips and best proposal dinner. These luxuries don’t compound wealth. Rather, they take what you already have. Decide which one you want.

7. PAY OFF YOUR SMALLER DEBTS FIRST: By now, you must be saying ‘but I am in debt already. My debtors are breathing down my neck’. All well and good. Make it a point of focus to liquidate your bad debts. Start by making a list of your bad debts in order of their sizes. Then settle the smaller debts first. Any debt that is fully settled should be cancelled out before moving to the next.

The logic behind this is simple. The smaller the debt, the easier it is to pay off. With each debt cancelled out, the more confident you will become of liquidating the bigger ones. This confidence brings with it desire not to keep going through the show of cancelling out debts every year. In other words, you’ll become a better manager of your finances.

8. LIVE YOUR MEANS: This must be a strange one. I have heard many people advocating that people should live below their means in order to have reasonable savings. Well, I actually believe people should live their means. If you can afford to conveniently buy out a business, why not? The key to living your means is convenience.

In measuring your convenience level at taking on situations, you must be truthful to self about your financial situation. You might be on a 100, 000.00 Naira per month wage and feel you can live in a two bedroom apartment in town. You should calculated the other supervening expenses like monthly feeding, clothing, welfare and transportation to know how much you are left with to contribute towards the means you want to live.

A simple rule I advocate is this: if a personal financial project is more than 10% of your actual income, then you might be better off living below your means.

9. AVOID HAVING ENTITLEMENT MENTALITY: As a major, nobody owes you anything in life. So quit that lazy mindset. In business as in your personal finance, you are solely responsible for the decisions you make; for your successes and failures. Once this is firmly ingrained in your mind, the zeal not to fail will become a greater motivation that pushes you towards making smart financial choices. You will learn the act of taking responsibility. The most successful entrepreneurs don’t sit down and wait for goodwill from some family members or friends. They struggle their ways through web of failure until the elusive success is captured. Then they work harder to keep the success. You should also have that mindset.

10. AVOID THE LOTTERY: This might not go down well with some lottery lovers but if you don’t have firm control of your personal finance, then stay off the lottery. People ask and I tell them lottery is business of luck based on correct punditry or guessing of a given situation. You expend money time and time again in the hope of becoming lucky and hitting the jackpot. But what if you don’t? Let us even assume you win. Have you taken stock of how much you have contributed to the lottery over the months and years and if what you won is up to your contribution? A few will be lucky to hit it big. However, a vast majority of people won’t. The wealthiest people know that waiting for some big manna from heaven is a lazy way of understanding the concept of luck. They know that luck is a deliberate effort of an individual therefore they diversify their portfolio before engaging in lottery.

11. OPERATE 3 DESIGNATED BANK ACCOUNTS: I am advocating this because most times we tend to draw from a single bank account to solve our personal financial challenges. The danger in this is that such practice is an enemy of financial planning and often runs people dry.

If you are serious about securing your financial future, then have 3 bank accounts where you save at different times. The first should be for savings and this could be your salary account. The second is for emergency while the third is for philanthropy. Since you’re working on a budget, you know which account to go to on each occasion and discipline will stop you from touching the other accounts when you have no need to.

Finance experts like Robert Kiyosaki advocate this strategy. I recommend it also.

12. TRACK YOUR NET WORTH ALWAYS: Do you really know how much you are worth? The problem is many people have a false sense of security. They believe selves to be worth more than they actually are. People who take control of their personal finances make it a habit to track their net worth always. Quit blushing over your assets. Try removing your liabilities from those assets to get an idea of how much you are really worth. Whatever remains after you have subtracted your liabilities from your assets is what you are truly worth.

13. DIVERSIFY YOUR INVESTMENT HOLDING: Diversifying will help you to minimize your investment risks. Smart working entails you have your risks spread in different sectors. If your investments in a sector fail, your investments in other areas will help to mitigate the effect of your loss. There are many reasons why you should diversify: loss of business, inflation, taxation, government policies and political instability are a few of the reasons why you should never remain in a single sector as an investor.

14. CREATE PASSIVE INCOME: This is a key to financial freedom. To build passive wealth, you must be involved in activities or buying assets that generate you more income. To boost your personal finance this year, start engaging in activities that will generate you income even when you are not seriously working. Leverage on technology and get involved in online businesses, get involved in genuine network marketing programs, invest in viable businesses and watch your income compound.

15. LEARN THE RULES OF INVESTING: That you want to diversify and create passive income does not mean you should not follow the rules of investing. The first rule of investing is that you should never invest in what you don’t understand. Get adequate knowledge before plunging your hard-earned money. The second rule is that you should never invest money you cannot afford to lose. Investment can be a risky venture, so have liquid cash you can fall back to if the investment fails.

There are other rules you should learn such as the principle of compound interest, legal framework of what you are investing in, and so on.

16. ENGAGE IN YOUR PASSION AND HAVE FUN: Some people are miserable because they are not doing what they love. Some are stuck in jobs they hate just for the salary. To do great things in life, you must be passionate and enthusiastic about what you do. I love providing business and financial solutions to people who need them. It gives me joy.

Learn to be passionate about what you do. That is when you can have fun and enjoy life to the fullest. Not loving what you do can drive you to make poor financial choices.

If you hate what you are presently doing, here is a tip: give yourself sufficient time to properly invest in what you are passionate about. Then move on.

17. EXERCISE TO KEEP YOUR MIND AND BODY IN SHAPE: Many people work few hours and they are fagged out since they don’t perform any kind of exercise. Engaging in physical exercise keeps your mind at alert and your body in great shape to take on any physical activities.

18. TAKE YOUR HEALTH VERY IMPORTANT: All your goals in life will go as far as your health permits. Your health is your number one wealth; therefore you shouldn’t be careless with your health. I have seen people who are careless about what and how they eat and drink, and are clumsy. Personally, I hate sluggishness.

19. BE FLEXIBLE AND ALWAYS ADJUST: We all want to appear to be in charge, that we have planned ahead and are ready to take hold of our financial situations. However changes will occur along the way, some of them beyond our control. The people who take biggest control of their personal finances are people who adjust to favorable evolving trends. They are spontaneous in their approach towards life. The danger of being rigid is that you are not open to new ideas and opportunities. You are stuck with your viewpoint, with your personal understanding of doing things which may be what is limiting you. The wealthiest entrepreneurs and CEOs have a trait in common. They hire the smartest people to bring new innovative ideas that they can learn from and make adequate adjustments along the way. This is how businesses succeed. This is how personal finances compound. There are times when you follow your conviction, but make sure you have taken every necessary factor into consideration.

20. WORK SMART: Have you noticed that while you are stuck in your 9-5 job for a few thousands every month, another person works few hours and earns far higher than you? The rule of the 21st century is working smart. While I loathe laziness and cannot encourage it, yet your hard work should be embedded in working smart. Think of disruptive ways you can engage the public that will generate you more income. Do you have large following on social media? You should leverage on that and promote your passion. Create reasonable awareness. The more awareness you create, the more people that need your services will seek you out. You don’t have to wait for the fat bucks to come to you so you can rent the choicest office space. Take advantage of technology and start with what you have.

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5 Reasons to Use a Cloud Server for Your Business

The majority of traditional companies invest in expensive in-house servers for their file sharing, email and applications. These solutions feature physical servers and a number of virtual machines. For the management of the servers, they need to spend a lot of money in the beginning. The cost includes the purchase of equipment and IT staff, just to name a few. But cloud servers offer many advantages. Let’s talk about 5 reasons to use a cloud server instead.

The downside of an in-house system is that it comes with high initial. Plus, you need to order a replacement as soon as the old system stops working. Not all of small businesses can afford to buy a new unit. Cloud servers, on the other hand, are much cost-effective. Without further ado, let’s read about 5 reasons to use the alternative.

1. No Upfront Cash

The first reason to go for a cloud server is to save tons of money. Unlike a conventional system, cloud machines don’t require you to invest in high-end machines. All you need to do is pay a small fee at the end of each month, and you will be good to go for the entire month.

2. No Cooling Required

Since you don’t need to manage all the equipment in-house, you can use a server that an experienced provider can control. Therefore, you don’t need to install air conditioners to cool down the servers and the related equipment.

For small businesses, this is a huge advantage as they can invest that budget on other projects to expand their business.

3. Software Updates

Another great advantage of cloud servers is that the software they run receives updates on a regular basis. You don’t need to pay for buying the software updates as this will be taken care of by the service provider. This can save you a lot of time and effort.

Opting for the updates is based on the computing needs of your business. So, this is another reason to go for this alternative instead of in-house equipment.

4. No Surprise Costs

This is another huge advantage of these systems. You can easily predict the costs of IT support. You don’t need to worry about the server outages. Although the cloud service comes with its own costs, you can enjoy cost savings over the long haul. That’s the reason many companies don’t manage in-house hardware anymore.

5. Easily Scalable Solution

Cloud servers offer a scalable solution to meet the changing needs of a small or large business. On the other hand, these systems require a fast, stable internet connection. As long as you have a fast connection, you can get the most out of these servers. Also, you can buy more bandwidth and other system resources by paying a small monthly fee.

Long story short, these are some of the reasons to choose a cloud server instead of an on-site system for your small business. You can try out these systems if you don’t want to manage in-house systems. Hope this helps.

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