Wealth is simply the accumulation of money, and it can only be created by the amount of money that is received and never spent. If you want to build wealth, then anytime you receive money: dont spend all of it. Sure it is a very simple concept, but it is very difficult to continually achieve. Luckily there are readily available allies to help you: find some compelling reasons to start saving, build it into a habit, watch the results of your efforts build, and set some financial milestones to reward yourself.
Setting aside a percentage of any money that you receive is the best method to follow through and build the habit of saving money. There are a few misers among us who find saving easy to do, but most people want to spend far more than is earned; let alone have the discipline of spending less than what they earn. So it starts as an uphill mental and emotional battle that gets easier by following through with the habit, and seeing the results of your effort. Spending less than what you earn every week, every month, every year, is the only way to amass money.
How much money should you set aside to build up savings? It should be a percentage so that you automatically move it into a separate savings account anytime you receive income, without exception. It is my experience that the range of 3% to 10% is the most successful starting percentage for people who continue saving over long periods of time. Saving only 3% is so small that it is nearly painless to even the lowest income earners (this is actually where I began years ago). Selecting a percentage under 3% accumulates to such a tiny amount of savings that I havent heard of anyone sticking with it. And starting out by setting aside over 10% is too painful for even high income earners to withstand, because they are so accustomed to spending on every whim. As you repeatedly save a set percentage rate, it will become more habitual, automatic and expected. Then youll be ready to increase your percentage rate. And the higher the savings rate, your growing pile of money will create more motivation to continue to save. This summer, I spoke with a successful saver who lives very well on only 30% of his income. Because he saved diligently to continually buy rental homes, after a couple decades he earns over a million a year in rental income by Ashville, North Carolina.
In the fragile first years of saving money, it can take only a single wrong financial move to wipe out everything that youve saved so far. And the most common wrong move doesnt look like it when it is occurring. This draining move can also start insidiously small and build a different habit, the wealth-destruction habit. You know the problem: pay your credit card balance in its entirety, every month, without exception. As an example, if you havent saved money for a vacation before you depart, and then charge it all to your credit card, there is a giant probability that you wont pay it off for a very long time. The credit card companies know this and they are extracting interest dollars from you instead of earning interest yourself. Youve shifted to the dark side of wealth destruction where it is more common for your credit card balance to grow than shrink.
Lets get back to building your wealth. Once you start setting aside the savings percentage that youve decided and opened a dedicated savings account, you need to closely review your account statements for motivation. Reviewing the progress that youve made so far youll see how you are moving toward financial goals can be self-reinforcing. And another motivator is rewarding yourself by spending some money on yourself when youve reached certain milestones. For example, you could start with a goal of accruing $500, and reward yourself with something meaningful; and then each time you double your amount of savings you get another reward. My advice is to at least begin with a savings percentage, even as small as my 3%, and allow this simple concept be of great financial benefit to you.
How to Safeguard Your Financial Life
Several financial planners would agree that one of the
foremost and important steps that you should take to
protect your financial stability is to set aside funds
as emergency reserve. The concept that you have the
fund for emergency and unexpected events is enough to
help you stay away from using your credit card and
drown yourself in debt.
How to Get Started
Everyone must stash a little extra cash in case of
emergencies. However, how much money should you keep?
Although the topic of exactly how much money is needed
for your emergency fund is open to debate, the minimum
amount should be enough to cover your expenses for
daily living for at least three months. It is also
wiser to save for six months though most financial
planners agree on a full year worth of cash.
Your personal circumstances and what it takes to
provide you with a peace of mind are the elements to
help you determine just how cautious you want to be.
If for instance, you have well-off parents who have
always been supportive and willing to help you in a
financial crisis, an emergency fund for three months
will be sufficient. On the other hand, if you had
reach for you credit card for help and end up paying
15% in interest on the debt, you would be better off
saving enough money for your expenses that would last
for at least six months.
If by any chance you are thinking about where to place
your money, emergency fund, paying off the credit card
debt or funding your 401(k), you can always start with
your credit card debt. Next, you can contribute to
your 401(k). This step is especially useful since you
can later borrow money from your 401(k). However, as
soon as all those are finished, return to your project
of setting up your emergency fund.
If you do not feel like you are required to make your
entire funds this week, you can start like everyone
else. Begin by setting aside a monthly amount, like
for instance, 5% of your paycheck or other amount that
allows you to build one months worth of living
expenses over the course of a full year. It is also
advisable and helpful to make this automatic. You can
do this by asking your bank to do an automatic program
for deduction from your checking account to your
savings account.
Additionally, monitor you spending habit each month
and always search for areas that you can develop. If
by any chance you receive a promotion, bonuses, or
other unexpected windfalls, always think about
including them to your emergency fund.
Where to Keep the Cash
Keep your emergency fund somewhere that is both easily
accessible and safe because you might be required to
get the cash in a hurry during emergencies. Remember
not to put your cash in the freezer but do not tie
them up together in stocks whose worth may have
declined by the time you need them.
The best option you have is to open a savings account
or money market account. However, always examine their
offer with regards to the minimum balance, interest
rate and other terms.
By time you think you have saved enough, learn how to
stop. You can now sleep easier and try to start
placing your additional saving into higher-interest
and usually less accessible investments or accounts.
I have just heard about another way of making a little bit of extra money. This is by taking part in different surveys for a range of companies who are looking to find out more about their customers or potential customers. You may think just like I did that this would hardly be worth your time or effort, however you may be surprised when you realise you much these companies are willing to pay.
A few days ago a friend of my step-daughters came round to our house to play. They are both twelve years of age and have known each other since primary school. This friend also stopped at our house for her evening meal and while at the dining table, eating her food, she started up quite an interesting conversation. She asked my step-daughter if she would be interested in joining her to take part in a survey which would be about the subject of childrens banking.
I started to ask this girl, who is called Emma, what would be involved. Emma replied that a lady would be going round to her house on Saturday morning and would be asking her a series of questions about banking, for example who she banks with and how much money she attempts to save as a twelve year old. She continued that the meeting would last around an hour and a half for which she would be paid 20. If she then also kept a form of diary for a week, she would then receive another 10.
My step-daughter suddenly became very interested and asked me whether she would be able to go aswell, I told her that she could.
Emma then told our family that she regularly took part in these surveys and had been introduced to the idea by a friend of her mothers. She stated that on average she made around 100 a month from taking part and completing these surveys, not bad for a twelve year old. I joked by asking her whether I could also go around on the Saturday. Emma replied that this survey was only aimed at schoolchildren but that her parents also regularly took part in other surveys and that she would let me know when the next one was going to take place.
The Saturday arrived and I took my step-daughter to Emma’s house. I started talking to her parents while I waited for the meeting to finish. Her parents then told me about their own experiences of completing different surveys and stated that even though it is not a massive amount of money that it is a lot for what you have to do. They also said that it helped them to pay a number of bills each month.
My step-daughter really enjoyed the meeting and came out kissing her 20. It beats washing your car, she said to me with a huge grin on her face.
For the past five years my sole source of income has been profits made from trading on the forex market. Over that time period, many people, perhaps somewhat envious of my ability to earn money from home without having to report to a boss, have asked me what it takes to trade for a living. How can one arrive at a point where one feels confident enough to leave ones regular employment, strike off on ones own with no guarantee of a regular paycheck, and put what might conceivably be ones entire savings up to that point at risk in the markets?
While I unfortunately cant actually give you confidence in your ability to make it on your own, nor the stomach to risk your hard earned savings, I can tell you the practical steps that I took to get where I am today. These steps do not include the obvious learn of the existence of the forex market, as presumably you already know something about forex trading, or you wouldnt be reading this article.
Furthermore, while these steps have been applicable to trading the forex market in my case, one could easily apply the same principles to becoming a professional trader in the equities markets, derivative markets, etc.
Step 1) Start saving your money. To trade professionally you need a bankroll, and one that is large enough to withstand the ups and downs that are a natural part of trading. For me, this was easy. I had been putting money aside ever since I started working. Those like me that have been raised to understand and appreciate the value of saving, will accomplish this quite naturally. However, if you are a habitual spender and are accustomed to living paycheck to paycheck without putting anything extra aside, be prepared to expend some serious effort curbing your habits and learning to save instead of spend. How much money will you need? Unfortunately I cant answer that specifically because it will depend on the trading strategy that you use, the amount of leverage you
plan on trading with, and the amount of money that you need to take out in profits. You should count on having a bare minimum though, of a full six months salary saved up before beginning full time trading. One years salary would be still better. Keep in mind that the larger your bankroll, the more money you can earn without risking an unnecessarily large percentage of your bankroll.
Step 2) Get an education. You cant start trading before you know something about the market you are trading in. This education does not have to be formal (as in University classes), and you do not have to understand economic forces as well as Alan Greenspan prior to getting started. You should, however, have a basic understanding of why the market that you are trading in exists, how buying and selling on that market works, and the strategy that you are going to employ to take your profits out of the market. There are a lot of totally free resources on the internet that are worth your time to read (and there are a lot of opinions and ideas that are NOT worth your time, but reading some of those that are not worthwhile is part of the process of developing
discernment about what is and is not a good resource).
There are also some inexpensive trading courses on the internet that are useful. Part of the education process is coming up with a trading strategy that you are comfortable with, as well as a money management strategy to ensure the long term viability of the trading strategy. There are many good trading strategies out there, but regardless of which one you choose, you must understand that the traders that are successful cut their losses early and let their winning trades run. This can be somewhat more difficult than it sounds, but is really the key to making money trading.
Step 3) Sign up for a demo trading account and start practicing while you are not at your regular job (or, if you have free time and internet access at your job, WHILE you are at your regular job). We list some good forex brokers at forex-rates, so if you are planning to trade currencies, be sure and sign up for a demo account with one of the listed brokers. In order to get a real feel for the trading strategy that you have chosen, you will have to do a lot of practice, so take your time with this step. Dont start trading with real money until you have an actual
history of successful demo trading
Step 4) If you are making money trading on paper and are comfortable with your trading strategy, go ahead and get started trading for real on a part time basis. Dont include all of your savings as part of your trading bankroll yet. Start slowly and gain a comfort level. As your confidence builds, move money from your savings to increase the size of your bankroll.
Step 5) When you can estimate that your average gains from real trading (from step 4) are at a level where, if you were to trade full time using your current bankroll, you would be making profits that slightly exceed your current employment salary, you are ready to quit your job and trade full time. Remember, you want your trading profits to exceed your present salary. This will give you the opportunity to maintain your current financial level, but at the same time continue to increase your trading bankroll, which will enable you to earn more and more money as the size of your available funds grows larger.
It is important to have patience with yourself at each of the steps mentioned. Maintain emotional equanimity and understand that fear and greed are a traders most dangerous nemesis. If you can keep these emotions under control and maintain the discipline established while following these steps, you can look forward to making it as a professional trader.
Cash Advance Loans – Online Financial Help In A Hurry
Everybody at some point in their lives gets in a tight spot with money, which is where finding cash advance loans online can become helpful. What is a cash advance loan you might be asking and how will one help me?
A cash advance loan is also commonly referred to as a payday loan. When you have applied for a cash advance loan online you will need to have an active checking account or savings account, as this is the method that the loan company will use in order to collect the money that they are owed.
The term of cash advance loans online are normally between one to six weeks and usually no more then two or three months.
How can a cash advance loan help me?
A cash advance loan can have money in your hand in less then 24 hours, many times even the instant that you are approved. This can be very helpful if you have a dire need for money. You dont need to have stellar credit in order to qualify for a cash advance loan. Most all cash advance companies will only require and active checking (or savings) account and that you have proof of how much money you make in a month. Many companies additionally require that you have been at your current job for at least six months. Cash advance loans can also help you bring your credit score up if the company happens to report to any of the three major credit reporting agencies.
Why would a cash advance loan not be a good idea?
There are large fees associated with getting a cash advance loan. When you get your loan the loan company will be requiring you to pay anywhere from $15 to $50 per hundred dollars that you plan to borrow. If you need to extend a payday loan for whatever reason you will be charged additional fees each time you do so. You can end up paying more in fees then the amount that you wished to borrow in the first place.
Do thorough and complete research and make yourself well informed about how these types of loans will work. Then you will be able to be absolutely sure that cash advance loans are the best option for you to choose.