Fortune Watch

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For many people, the closer they get to retirement, the more concerned they get about whether they have saved enough or not. And it’s understandable. With life expectancy climbing and the ability to not only live longer but to do so with a higher quality of life growing as well, it stands to reason that some people will be a little uneasy when their last pay check gets ever closer. Are you one of those people?

The first thing you should do if you find yourself close to retirement with no savings is to calculate the amount of money you will need during retirement as well as what age you plan on retiring. You will find many resources online that will help you come up with this number such as retirement calculators.

Identify Needs: There are many financial needs to think about when getting close to retirement, from wondering what your Old Age Security benefit will look like. You may even think about what it will be like to live on a fixed income for the rest of your life.

But before you do anything, just relax. Don’t try to think about everything at once. Just because you’re close to retirement doesn’t mean you stop planning. As a matter of fact, it’s a great time to refine your plan, or even put one in place for your golden years.
Now that you know how much money you will need on average you can set some savings goals for yourself. There are plenty of ways you can save money from shopping with coupons to taking your lunch to work with you to not buying a new car every year. Wherever you are spending money and can scale back, do. It will mean the difference between a happy retirement and a stressful one.

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Gone are the days of mid 50’s and 60’s when a family could survive upon a single income. Today the inflation and economic factors are such that survival on two incomes has become hand to mouth. Going by this trend we can very well imagine what the future holds for us. Two incomes certainly will not be enough. It’s best to prepare for the worst and expect the best instead of vice versa. Its best then to have multiple incomes flows into your finances than to have an insecure future. The concept and importance of extra income becomes all the more apparent.

People who have been well-to-do have always known and taken care of this. If one income dries up, one can always fall back upon the other streams of income, and if all go well you can only get richer, no harm in that. Ordinary and average living people have always been in a dilemma regarding this. Loss of one income really affects them adversely and it would take years of hard work before any normalcy returns. Not to mention, the rippling effects of financial distress that could cause a lot of heartburn and unwanted emotional disturbances.

Having diverse sources of income or extra income gives you a backup to fall back upon. If one source vanishes, you should not feel the difference. One should have enough time to reorganize and regroup, that’s it, and you are back on the happiness highway, safe and sound. The importance of extra income and extra sources of incomes is not lost on anyone today, therefore the want and rush.

Extra Income can be of two kinds – Linear and Residual.

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If you are like most people, you do not feel that you “deserve money”. The simple fact is that most people are broke. Most people are broke because they do not feel that they deserve money.

To be financially successful you must: save prodigiously, invest wisely, and act like an entrepreneur. If you don’t believe you are capable of financial success, figure out why.

OK, maybe now you are thinking, “I deserve money…right?” Well, here is the thing, if you have the thought that “It takes money to make money”, or “The rich get richer and the poor get poorer”, or “Money is the root to all evil”, then you do not deserve money…well, maybe not yet, but there is hope for you.

There are two sides to every coin, people can look at money as good or bad and often at times people look at money as bad to justify why they do not have any. I dont know, maybe someone with money or someone that was thinking of making money was with someone that did not have any and did not have any plans to make any. What they thought about having lots of money and they gave off one of the lame excuses as suggested in the previous paragraph.

Why do you deserve money? The answer is simple…because you deserve money! Look, making money is simply the result of exchanging your efforts or ideas for money.

There are a many ways to make a million dollars and most of them are quite fun ways to make money and thats the key! If you are willing to learn how to have fun, make money and teach others to do the same, then it should end up being easy to make the money for you.

Start with this; how much money would you like to have, then ask yourself how much money do I currently deserve doing what I am doing now? If the answer is not 10-20 times more, then you are not doing the right thing to attain the amount that you would like to have. Time to change…

Change…is the word “change” scary to you? If it is, then you do not deserve money! Broke people are afraid of change. Change is natural and should be embraced by everyone. If we do not embrace change in our life then we are accepting where we are and probably will stay where we are. If you are happy with what you are making and like where you work, then go out and buy your boss a gift basket, sit down, be quiet and stop complaining about your finances.

None of us have the ability to foresee the future or predict the hurdles which lie ahead of us. This makes building an emergency fund a financial priority. People who are living on a lean-and-mean budget will have the toughest time setting aside money for emergencies. If it’s possible to squeeze out another $40 or $50 each month and put it in a money market account, it’s worth doing.

Establishing an emergency savings account is vital in good times and in bad. The purpose of the fund is to sock away three to six month’s living expenses. But this money could also be used when you’re staring at major, unplanned expenses such as a car breakdown or a leaky roof.

Housing a small rainy day fund should be a vital part of an individual’s financial goals. This is of high importance if you don’t already have readily available funds in your account for covering any unanticipated expenses. They provide financial security because they give you funds to fall back on if you become ill, or if you or your spouse loses your job, you incur large medical bills, or have an unexpected large bill such as a major car or home repair. You do not want to end up in a situation where you have to buy daily necessities on credit.

Saving your money in a small account for emergencies is definitely a better alternative to taking a loan or cashing in your long-term investments. If you take a loan, there is the additional burden of paying interest. Encashment of your investments before maturity means not only will you lose out the interest, but also some part of the original investment. This will also set you back significantly in your overall financial plan.

I echo the idea of treating the emergency fund as a bill, put the money away and don’t be tempted by the latest sale. Success at building an emergency fund depends on consistency of saving money on a regular basis and keeping this money separate from the general savings account. Otherwise you will be tempted to dip into these monies even if you simply run over your budget at a certain point.

The size of the special savings account will depend on your personal situation. I always advice my clients to keep between three to six months salary in the reserve. But you will have to decide on an appropriate amount based factors such as your Dependants and fixed monthly expenses.

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You will need to make a clear plan of how to get where you want to. The financial plan needs to be broken down into realistic achievable goals with a clear deadline. The plan needs to include how much you are currently using to pay off debts, how much you are currently using to cover all living expenses and how much you are currently saving.

When you have that clear you need to look at where you are going to cut costs.
What can you live without?
Do you subscribe to magazines or newspapers you do not need?
Do you have memberships you do not need?
Is your rent or mortgage very expensive?
Are you spending a lot of money on driving where you do not need to go?
Do you rather eat out then cook yourself?
Do you pay too much for electricity, telephone, Internet connection and TV?
Do you have the best credit card, insurance, rent or mortgage and bank account deals you can get?

The meaning of these questions is that you should not settle with what you have now. Then your situation will stay the same.

Always shop around for better deals and always look at how you can cut costs.
Maybe you find out you need to move to another place where it is less expensive.
Maybe you need to eat more canned beans.
Maybe you need to use your bike, or your feet instead of the car.
Maybe you need to read magazines only when you go to the dentist or to the hairdresser.

Whatever it takes to improve your financial situation; decide to do it.

Write down both the longer term goals, medium term goals and the short term goals and what you will do to achieve them.

You need to set time limits for when you want to achieve the goals you worked out in the previous step.

Write down exactly what you are going to do to achieve them.

There are many blogs and websites about “Financial Freedom”. I’ve come to notice that each site author has a slightly different definition of what Financial Freedom really is. So, my goal here is to just lay out in plain sight what my own idea for Financial Freedom is, so I might have a better chance of getting there myself.

My idea of Financial Freedom is the ability to choose to do what you wish with your life, without the need to think about if there is enough money to do what you want. In order to break down what this really means, you’ve got to really understand what money itself is.

Money is basically what makes the world go round.

If you had enough income piling into your bank account to meet your basic necessities, such as food, a place to live and clothes, how would life be different?

Now, you may be saying “but I do have enough money to provide for the necessities.” And you may be correct. But, the real question I want to ask is, “How do you get that money?” Is the income you earn each month Linear (i.e., from working in a job or a self-employed business type setting), or is it non-linear, leveraged, and passive?

My friend Jonathan from SmartWealthyRich recently wrote a post Gotta Get Goals which I really liked.

My entire goal is to create a lifestyle that does not require my presence.

How beautiful an idea is that?

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If you could reach just one goal in 2007, which one would it be? How much of a difference in your life would it make if you reached it?
Will 2007 be just another ho-hum year that started with good intentions? Or will it be YOUR Year! Your year to lose that weight you’re tired of carrying…start that business you’ve been talking about…get out of debt for good. Are you tired of being stuck in the same gear?

It’s a well known fact that the biggest reason most people fail to achieve any real success in their life is….they never plan to. They want to. They dream about it and fantasize about it. They talk about success. Maybe they even read success books, listen to success tapes and attend success seminars.

However, the sad fact is that unless a person has some incredible luck (like winning the lottery), their chances of succeeding without a plan are almost nil. But suppose you could spend a few hours over the next few weeks and easily and totally plan the kind of year you’re going to have in 2007.

What kind of year would you plan? Would you:Double or even triple your income. Start your own business. Build the dream home you’ve always talked about. Eliminate all your consumer debt. Marry the person of your dreams. Get in the best shape of your life. Take the vacation of a lifetime.

Sound too good to be true? Well, it is if you don’t have the right plan. Think about it. 2007 will be the best year ever for some people. They will achieve at levels they never thought possible just a few years ago. First, they will have a good plan built on solid principles. But they’ll also have something else. The critical difference. They’ll have a system of follow up and accountability that will help them put their plan into action (and keep taking action).

I hear you are planning to have a baby…

If you considered only the financial implications of having children, you might end up childless. There’s no two ways about it: having a child is very expensive. Financial experts say a home is the biggest investment most people will ever make, but they’re forgetting about the cost of raising children, which far exceeds the average home price in many parts of the world.

Fortunately, most people don’t base this important decision on financial issues alone, but as with any other decision that will impact your financial situation, it’s smart to go into it with your eyes wide open and to be prepared. The changes that accompany adding a new little member to your family can be stressful, but you can reduce the stress greatly by minimizing the financial factor.

First, have you considered how you’ll manage on the reduced income caused by time off for the pregnancy and birth? Check with your employer to see if you’re covered by short-term disability insurance, which covers pregnancy.

In planning your personal finances for the baby’s arrival, there are several issues you need to consider. It’s time to get out a pen and paper and work out a budget that you can use once you’ve brought the baby home. Remember, these figures are in addition to your regular weekly and monthly bills.

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The most popular way for families to reward themselves for months and months of hard work is a nice family vacation; it’s what we all dream about all year long. Escaping from your everyday world and your usual climate takes a lot of planning and financial resources, that’s why it is so important to create a budget all year long so you can reap your rewards.

Financial planning is a must for your vacation, not just simply setting aside an amount every payday but taking into consideration the timing of your vacation, do you have any idea how much you can save? In the travel industry peak vacation times are more expensive. What are they referring to as peak time? Usually it is in the summertime, because that is the time that families have to spend together because the kids aren’t in school. So it is to your advantage to entertain the idea of vacationing during these non-peak periods of time and make your family budget stretch to maybe a better vacation destination then you thought you could afford.

Accommodations can be made for your children to take school assignments on the vacation with them. This can also help if you are taking a long car trip or airplane ride, your children will have something to focus on and keep them busy during these times. Surely if you asked your child if they would like to take a vacation in the middle of the school year they would definitely love the idea and you will love the savings. Make sure to speak with your children’s teachers and school and there should not be any problem.

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