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PERSONAL FINANCIAL TIPS
Whether you are a new credit card holder or are planning to settle down and start a family, or even just kick-starting your career and would prefer not living a paycheck-to-paycheck lifestyle - keep checking in here to find the advice you need!
15 Signals That Hint 'Financial Trouble'
"Spending money makes me feel good."
"I let others (or I wish there was another to) handle my finances."
"Someone will come along and rescue me"
"I rarely balance my checkbook."
"I now use my credit cards for small items I used to get with cash."
"20 percent or more of my take-home pay goes for debt payments."
"I'm afraid to calculate my net worth."
"I frequently find myself borrowing small amounts of money."
"If I lost my job, I'd be out of money in less than two weeks."
"It makes me uncomfortable to talk about money. "
"I don't know the total amount of my debts and obligations."
"It is very difficult for me to save any money at all."
"It seems to be a paycheck to paycheck life-style."
"There have been occasions when I have paid late charges on a loan."
"I have used (or plan to use) a debt consolidation loan to pay my bills."
Good and Bad Credit Card Use
Credit Cards are Good...
For identification (required for train/air tickets, movie tickets)
As a safer substitute for cash.
For automatic record keeping.
To consolidate many purchases into one payment.
To save money when you can take advantage of a good sale or offer.
For placing orders easily by mail or phone.
When you have leverage against the merchant when a problem arises. Your dispute/claim will get prompt attention when the merchant knows your payment can be delayed or disputed.
But Don't Use your Credit Card...
As a recurrent temptation to overspend
To purchase non-essential items.
As a result you may,
Increase impulsive spending.
Make payments late or only partially.
Face bankruptcy.
How to Keep a Watch on your Spending Habits
Write down all of the poor spending practices that you need and want to change.
Write down how you plan to bring about the changes in each area.
Construct a cash-flow sheet showing income and outgoings.
Set up and implement a spending-plan.
Discontinue borrowing and using credit cards.
Begin collecting and making notes on your cash purchase receipts.
Begin saving a little bit, everyday.
Look for alternatives and substitutes to spending.
Start utilizing discount coupons for rebates.
Wait for the sales. Comparison-shopping can save you a lot of money.
Take advantage of factory seconds rebuilt and used items where practical.
Start doing things for yourself that others were paid to do previously.
Separate shopping trips (when comparing prices, value,, etc.) from spending trips. (when actually making the purchase). Avoid carrying credit cards or extra cash on shopping trips.
10 Good Habits of Personal Finance
Manage your expenses so they don't exceed your income.
Spend money thinking of your future as well as your present.
Begin saving early to take advantage of compound interest.
Avoid collecting credit cards and using them for borrowing.
Always honour your debts and other financial obligations.
Project your income and expenses for the next 12 months and track variances.
Focus on the relationship between the risk and projected return of investments.
Maintain organized records for tax and general financial planning purposes.
Have a plan and a purpose for your investing.
Obtain a financial education to be in a position to make intelligent financial decisions.
BUDGETING AND SAVINGS
Did you know that by cutting down on colas you could do your health as well as wealth a favour?
Skipping a Rs. 10-bottle of a soft drink, say twice a week, could save you Rs. 1,040 a year or
Rs. 10,400 in 10 years! If, instead, you had saved this money in an account paying interest, you would have been richer by a huge amount at the end of that 10-year period. Now were talking BIG MONEY!
However, to achieve this and other goals, you need to PLAN NOW!
Planning Financial Goals
1. Assess Needs
Evaluate your present financial situation. You need to decide what you WANT and what you NEED.
2. Set Goals
The process of setting goals involves turning your NEEDS into goals. Achieving successful financial security starts with organized financial goals that are:
SMART or
Specific
Measurable
Attainable
Relevant
Time-related
3.Make a Plan
It is important to begin to develop a plan for your life. Ask yourself: Where do I want to be in five, ten and 20 years from now? Then imagine the actions you need to take to achieve those goals.
4.Take Action
The first step to accomplishing your goals is to take action. Many times goals are not reached because the first step was never taken. An important part of taking action is affirming your goals. Write them down. Say them aloud. Share them with your trusted friends. Seeing your goals in writing helps them to become a reality.
"Every month, I find I dont have enough money; if the month were only 20 days long, budgeting would be easy."
Daily spending and saving decisions are at the centre of financial planning. A budget, or spending plan, is necessary for successful money management. The main purposes of a budget are to help you:
Live within your income
Avoid borrowing more than you really need, if at all you have to borrow
Reach your financial goals
Prepare for financial emergencies
Develop wise money-management habits
Four Practical Steps to Budgeting
Step One: Add Up Your Income
Step Two: Estimate Your Expenses
Your budget starts with creating spending categories. How much you budget for various items will depend on your current needs and future plans. A detailed record of your spending will help you find out how much to budget in those categories.
Here are some broad categories as samples:
Housing (EMI or rent)
Electricity/phone bills
Food
Personal expenses
Household expenses
Transportation
Recreation and entertainment
Eating out
Gifts for friends and family
Savings
Miscellaneous
Taxes
Step Three: Calculate the Difference
Keep records of your actual income and expenses and look out for any budget variances the difference between the amount you budgeted for the month and what you actually spent.
Step Four: Track, Trim and Target
As you track your monthly expenses, you may need to trim them. Reducing an expense is usually easier than cutting it out altogether. Budgeting is an ongoing process. You will need to review, and perhaps, revise your spending plans on a regular basis.
Start Saving Early
Rita and Rahul both save Rs.1,000 per year. The money each saves earns 10% interest per year.
Rita starts at age 22 and stops at 30. Rahul starts eight years later than Rita, at age 30, and stops at age 65.
By the time they both retire at 65, Rita has already made net earnings of Rs. 388,865.35 with the total investment of Rs. 9,000, while Rahul has invested a total of Rs. 36,000 but receives Rs. 329,039.5 only in return.
Because Rahul started to save late, he never caught up.
SECURE ONLINE TRADING
Millions of people around the world are enjoying the convenience and fun of shopping on the Internet. Smart cybershoppers will continue to take sensible precautions. To minimize any risk associated with using credit cards, here are some common sense practices to keep in mind:
Cardholder Identity | Use a Secure Browser to Navigate the World Wide Web
Cardholder Identity
Authentication Services
To enhance online shopping; security, credit card companies are now establishing cardholder identity authentication services, such as Verified by Visa, through the card issuers. Such services will let you use a personal password with your card, giving you added reassurance that only you can use your card to shop online.
Use a Secure Browser to Navigate the World Wide Web
Use a secure browser - look for ans after the http in the web page address or URL.
Keep Your Password Secret
Some online stores require you to register a user name and password before buying an item. Keep your Internet account password secret from outside parties. Never share passwords with anyone and avoid using easy-to-guess passwords, such as your telephone number or your birth date.
Use the Internet to Compare Between Shops Before Buying Online
Compare products and prices before you buy - click around to find your item at the best price. Access to product reviews and other online information that can enhance your knowledge and help you make a more informed decision.
Protect Your Card Details
Only give your card details when making purchases - do not provide them for any other reason. Never send payment information via email. Information that travels over the Internet like email, is not fully protected from being read by outside parties.
Check Delivery and Return Policies
When calculating the final cost of a purchase, dont forget shipping and handling charges or any taxes and international costs. Before completing an online transaction, read the delivery and return policies on the online stores home page. If a merchant doesnt post such information, it may be a good idea to shop elsewhere.
Keep a Record of Your Transactions
Keep a record of your transactions - just in case you need to return an item or have a question about your purchase.
Be Familiar with the Online Company
The more you know about a particular merchant, the more confident you will feel when shopping from the merchants website.
Make Sure the Online Merchants Use Industry Security Standards
That lock and key mark, for example, indicates that a merchant uses SSL (Secure Sockets Layer), which ensures that your communication is secured. Some merchants ask you to create a personal account that requires a password.
Look for Privacy Statements
Be sure to understand a merchants privacy policies and explanation of how your data is protected.
Make Sure Your Online Transactions are Legal
Remember, you should only use your card for legal purposes. If in doubt, check with your card-issuing bank.
PROTECT YOUR IDENTITY
Protect your cards as you would your cash. Depending on the issuing banks policies, you may be liable for the losses incurred on a lost card and have to go through the hassle of cancelling and changing your cards.
While the credit card industry continues to develop better and more effective methods to fight fraud, the ultimate way to combat the problem is to keep a watch on your card and your personal data at all times.
The following are some tips you can use to keep your credit and debit cards safe:
After receiving a new card
Ensure that your card is signed on the signature panel as soon as you receive it.
Make a record of your credit card account numbers and telephone numbers for reporting lost or stolen cards. Keep that list in a safe place.
When selecting a PIN, always avoid the obvious your name, telephone number, or date of birth or any combination of these.
Never write down your Personal Identification Number (PIN) memorize it. If you must write down your PIN, do not keep it in your wallet, purse or on the card itself.
Prepare for financial emergencies
Never disclose your PIN to anyone. No one from a financial institution, the police, or a merchant should ask for your PIN. You are the only person who should know it.
When using your card
Report lost or stolen cards to your bank immediately. You may also be required to make a police report and produce written confirmation.
Protect your cards as if they were cash. Do not leave them unattended anywhere, such as in a car, bar, nightclub or on the beach.
If at all possible, do not let your card out of your sight during a transaction.
Ensure you get your card back after every purchase.
Always check transaction receipts including the purchase amount when you sign them -
keep copies of transaction receipts and ATM receipts.
Always check your billing statement, especially after a trip. Check the amounts of your purchases against your transaction receipts - specifically look for transactions that are not yours.
Never give your credit card number over the phone, unless you are dealing with a reputable company, or if you have initiated the call yourself.
Be careful when giving out your credit card number over the phone. Ask for information in writing from the company making the offer.
If you feel pressured by a telemarketing salesperson, be suspicious. Never give out your account number unless you have decided to make a purchase.
Do not volunteer any personal information when you use your credit card, other than your identity document, which may be requested.
Know who has access to your cards. If your credit card is borrowed by a family member (spouse, child, parent), with or without your knowledge, you may be responsible for their purchase or cash withdrawal.
Guarding Your Personal Data
Identity fraud is a very specific type of crime, where an imposter uses your name and credit
records. Many countries have made identity theft a crime. Many victims of identity fraud have
been unknowingly impersonated for years. It is impossible to completely insulate yourself
against
identity fraud, some say. But you can protect yourself by following these tips:
Do not disclose your identity numbers (such as PAN or Permanent Account Number,
Passport number, Unique customer ID) casually. It is prized information for crooks.
Do not print your identity numbers on checks.
Keep your credit cards and bank account numbers secure. Do not give them out to telemarketers who phone you.
Make sure credit cards and receipts are returned following transactions.
Shred any financial documents that you want disposed, including credit card transaction receipts, ATM transaction records, credit card statements, bank statements or even pre-approved credit applications.
If you hire household workers, lock up financial documents.
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