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Tag Archives: Investing

Why a Budget is Not the Same as a Financial Plan

A Budget is Not the Same as a Financial Plan

The terms “budget” and “financial plan” are sometimes used interchangeably. However, in my mind, there are differences between the two. I have a budget for each month, along with an over-arching financial plan. To me, a budget is more of a short-term spending plan and a financial plan is long-term with multiple goals and steps along the way. Here are some of the differences between a budget and a financial plan. Budget First, let’s talk about what makes up a budget. A budget is a listing of your expenses and financial obligations and is a guideline for your spending. It may contain categories, like housing, utilities, groceries, etc. In addition it is usually for a specific time period, such as a monthly budget or a weekly budget. Generally your expenses are broken down into a budget and then totaled so they can be compared to your income for the same period of time. In this way, income and expenses can be compared so adjustments can be made to help you achieve balance in your personal finances. Financial Plan Now let’s examine what a financial plan is. A financial plan helps you to evaluate your financial state using your budget as ...

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What Would You Do With $500?

using an extra $500

I love to find articles about the best ways to use an amount of cash. No matter what your financial beliefs, there are basically four ways to use money: spend it, save it, invest it, give it away. The good folks at Mt Edgecumbe Hospital in Sitka, AK are giving me $600 for meals next week while I’m working at their clinic. Unless I make lots of friends and go out every night, I’ll probably get most of my food from the grocery or as take out since I hate eating in restaurants by myself. I’m guessing that will probably take about $100. That leaves me five Benjamins to use however I want. What would you do with $500? Spend It If I had consumer debt, I’d probably use my extra $500 toward paying it off. $500 is not chump change, and gaining a windfall to put toward debt can be a great shot in the arm to sustain motivation toward debt payoff goals. Since I don’t have that type debt anymore, I could use this money to spend on holiday gifts or for our trip to Mexico that’s coming up next month. We also need a new couch in ...

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3 Stock Market Investing Tips for Beginners

3 Tips for Beginner Investors

If you’re an individual investor in the stock market, the first thing you should know is that the deck is stacked against you. Your investment in a company’s shares will not move the price, so the only way you “win” is by being lucky enough to buy before institutional investors or hedge funds pour hundreds of millions, if not billions, of dollars into the shares you already own. As they say, “a rising tide lifts all boats.” In many ways, if you keep this basic premise in mind, you will understand the following fundamentals of becoming a successful investor. Here are three stock market investing tips for beginners! 1. Understand the Basics Investing in the stock market doesn’t need to be complicated. While some investors devise complex algorithms, formulas, and screeners to compare return on equity (ROE), earnings per share (EPS), compound annual growth rates (CAGR) and P/E ratios, individual investors likely don’t have the same resources. But by sticking to fundamental investment principles, you can still earn a market average or higher return in your investment accounts. What kind of investor are you? If you are young, maybe you can afford the volatility of risky investments because you won’t ...

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Why Aren’t More Young People Investing For Retirement?

investing early

There’s a lot of investment research that suggests that young people aren’t investing for retirement, at least not to the extent that economists would wish. A 2013 Wells Fargo Investment survey puts the number at 46%, but because this number includes people who are saving cash for retirement, it’s likely that the number is somewhat less. This can be a disconcerting thought for people concerned about financial security in the future. There are many reasons, good ones and otherwise, which are keeping millennials and other young investors out of the markets. We’ll look at a few of them below. Debts Young Americans are paying more money to service debt than they are paying into investment accounts. This is a big problem. Debt tends to accrue at faster rates than investments earn people dividends, so it makes a lot of sense that young people wouldn’t invest. Because debt often has a lot of concurrent factors which keeps people from having any or much extra money, this can be a truly difficult situation. Alternative Investment Forms Some people don’t invest in the big markets because they are involved in other kinds of investment. Forex and Real Estate are two good examples, though ...

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Don’t Fear Stock Market Downturns

market downturns

    There are several reasons not to pay attention to the news. Anyone looking at headlines lately can’t miss seeing headlines like Dow plunges, stock market suffers worst one day drop since 2008, US stocks tumble on global slowdown fears. If hearing that makes you want to stuff money under the mattress, you’re not alone. Fear is a huge motivator when it comes to investing. We work hard for our money, and it’s painful to see balances plummet due to unforeseen events that we don’t even really understand. As hard as it may be, don’t fear stock market downturns. I’m sure our parents and grandparents have many stories of watching the economy and stock market fall and recover. In my adult life, I only have one period of turmoil under my belt, but it was a doozy. Living Through a Stock Market Melt Down At the beginning of 2008, I was a new Mom who owned a business. Most of my free time was spent trying to figure out how to keep all the plates in my life spinning. We were seriously in debt and almost living paycheck to paycheck, even though our income was pretty high. The one bright ...

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