investment

Oct

2021

5 Ways to Improve Your Financial Literacy

Reading Time: 5 minutes

There are many ways to improve your financial literacy. Money is involved in almost everything we do in our daily lives. We work at our 9-to-5 jobs to earn money because we have so many things to spend it on. Most of us barely get by on our monthly income, making it seem like we are working for money instead of making money work for us.

This is why financial literacy is important. Learning about money and understanding how you can make it work for you, instead of the other way around, will help you reach your financial goals quicker.

Learning about your finances can only start with the right mindset. Most people are afraid to tackle money issues because it is a sensitive subject that is tied up with their personal habits. If you want to save money, you need to accept the fact that you have to sacrifice some personal conveniences and luxuries to start saving.

Instead of treating your finances as a boring subject or a scary one, try to look at it with an attitude of curiosity. This is the only way you can start learning. Don’t be judgmental; just be curious about yourself, your money habits, and the possible ways you can make your money work for you.

Here are 5 ways you can start learning to improve your financial literacy.

1. Learn and Talk About Your Money

The first thing you need to do to learn about money is to become aware of how you spend your own money. Track your daily expenses in a notebook, a spreadsheet, your mobile phone; whichever way is convenient for you. Do this for a whole month and before the month ends, you will already see a pattern on what you spend your money on. These are your spending habits. Based on these habits, you can start learning ways on how you can better spend your money.

Tracking your spending also helps you identify your attitude towards money. Do you have a poverty mindset or do you have a wealthy mindset like rich people? Most people have a poverty mindset. Learning about your finances and having a plan of action will help you develop a wealth mindset.

Another habit you can develop is to be comfortable talking about money. Talk to other people about how they spend their money. Do they follow a budget? Has their budget worked for them so far? You might even find a buddy who you can learn from or who can help you stick to your money goals.

2. Make A Budget and Follow It

Once you’ve identified your spending habits, it’s time to make an evaluation. Look at the items you are spending money on and categorize them. Identify which are your major expenses. From there, identify which are the most important ones; the ones you need and can’t live without and which ones you can do without. Those items you can do without are your “money leaks”. You are spending money on these items unconsciously and these may be bigger items than just your cup of coffee from your favorite cafe each morning.

Based on this general category of your needs and your money leaks, create a budget. Your budget should help you plan out how much money you must allot for the important items on your list and how much you can spend on your money leaks (if there is extra money for them in your current monthly income). This way, you don’t feel deprived but you can control how much you can indulge in your favorite luxuries – not every day but maybe once or twice a week will allow you to save money.

Try to follow your budget for at least 3 months and adjust it accordingly until you create a budget that works just right for you. Then follow it each month while keeping track of your spending and your savings. This will help you discipline yourself so you can manage your money better. A budget will be a big help to improve your financial literacy.

3. Create Long-Term Money Goals

After learning and adjusting your spending habits, it’s time to create long-term financial goals. How do you plan to spend your money a year, 3 years from now? Having extra money tucked away in our savings account often inspires us to take up our buried dreams that we’ve kept in the back burner because we needed to earn thru a day job. This is the starting point of how you can make money work for you.

Write down how you want to spend your money in the next 3 years and even 5 years. Are you going on a travel adventure? Do you plan to put up your own business? Do you want to buy your own apartment? Are you thinking of studying again? Do you want take up that course you really wanted to take in college but had to give up to follow your parents’ advise?

Write down your dreams and do your research to figure out how much money you will actually need to make that dream a reality. Once you have the figures, then you can start learning new ways to not only save more money but to make your money grow.

If one of your major goals is to get out of credit card debt, write it down and see how you can adjust your spending to pay it off as quickly as possible.

4. Learn and Start Investing

Now that you have a clear idea of how much money you have, how much you are spending and saving and how much money you need for your financial goals; it’s time to start learning about investing. Unfortunately, money lessons are in most school curriculums so most people have to learn it on their own.

Investing is not only saving more money, it means creating wealth. One of the most convenient way to start growing your money is to enroll in your bank’s investment program. Be sure to ask your bank about it and learn how your money can earn from their program.

You can also consult a professional financial adviser who can help you decide on the best investment tool suited to your current situation and financial goals. This way, you are already growing your money while you are looking for other ways to earn more. In the meantime, stick your budget and keep saving. The desire to learn is your first step to further improve your financial literacy.

5. Keep Learning On How to Make Money Work For You

There are tons of resources about investing online and there are many books that you can read too. We have compiled some of the basics for you in these articles:

You can get more financial wisdom from these articles but be sure to read books too:

There are many resources that you can easily access to improve your financial literacy. As you learn more and enhance your personal money management skills, you will eventually get the opportunity to learn about financial instruments that you can use to increase your wealth.

You can read books, watch online videos and listen to podcasts about financial management or about investing tools that you are interested in. You can also take courses to help you learn about finances. Just keep on learning as much as you can so you have a better understanding of what works for you.

Updated. First published on Pinoy Smart Living on 2019.09.20.
Feature Image: Original Photo by Mathieu Stern on Unsplash.

Sep

2021

Grow Your Small Business with Helpful Apps

Reading Time: 3 minutes

You can grow your small business with some helpful apps. Apps or applications are useful software that you can use on your computer and mobile phone. They can help you in different ways depending on your needs. Here are a few of them that you can consider to help you in planning, managing and growing your small business.

Canva

Create beautiful posters, calling cards, invitations, or social media posts using Canva. There are hundreds of templates to choose from which you can customize to suit your needs. Different fonts and designs are available so you can have fun and be as creative as you want. You can also design graphs and charts, logos and flyers, as well as presentations. This is a good application to start with if you don’t have the budget to pay for graphic design software or to hire a graphic designer. This is one of the most popular apps used by many small business owners.

Evernote

In taking down notes and in planning; Evernote has been a useful tool for students and business people too. With this app, you can categorize your notes into different notebooks and tag them for easy searching. This means that you can keep all your meeting notes with clients or customer orders as well as have a place for jotting down any new business ideas you have. All you need is your email address to register for an account and you can download it on your desktop, mobile phone or it on a browser. The FREE version allows you to use it one device. Use it on the device that you use most often.

Google Apps

If you have Gmail, then you have access to Google Apps. Here you can use Google Docs for documentation; Google Sheets for recording a database and Google Slides for your marketing presentations. You can also use Google Meet to schedule and conduct meetings and Google Calendar to track your schedules. Since everything is stored in the cloud, you don’t have to bring the documents with you. You only need to be online to be able to access all these applications for free.

Paypal

All businesses need a way to send and receive payments and PayPal is the most popular application for online transactions supported by over 10 million online stores and 200 markets worldwide. It has partnered with major banks and credit card companies. You can link your credit or debit cards to be able to send and receive payments for your orders and deliveries and other transactions. It has 24/7 transaction monitoring and anti-fraud technologies for your safety and protection.

Trello

Need a space to work with your team for a project? You can write down tasks and assign them to your team mates, as well as indicate deadlines on Trello. You can use it on your computer or mobile phone’s browser. It works like a kanban board where you can move tasks around to indicate whether they in progress, pending or completed. Or you can move tasks from one department to another if that applies to your business. Tasks can also be broken down into checkboxes or lists and can include links or files. You can also tag team mates in your messages.

Most of these apps are free but they do have options for upgrading to a paid subscription later on if your business needs it. Once you get to know your way around these applications, it will become easier for your to identify the specific things you need for your particular business. This will make it more convenient for you to decide whether to upgrade your app or look for another one that suits your business more. Being accessible online is now the norm so it helps to learn about these apps to digitize your business.

Feature Image: Original Photo by Nikita Khandelwal from Pexels.

Jan

2021

10 Symptoms of a Poverty Mindset

Reading Time: 6 minutes

Do you have a rich or a poverty mindset? Did you know that a poverty mindset can lead to financial scarcity? Yes, our belief about things can influence our decisions and behavior about money. Thus, if you want to have financial abundance, you need to start with your mindset. So, how do you know if you are suffering from a poverty mindset. What are the 10 symptoms of a poverty mindset?

Half Full or Half Empty

Look at the featured image above. Do you see the glass as half full or half empty?

Some of you will probably say it is half full while some will say it is half empty. Your answer will depend on your attitude and perception of reality.

It is amazing how a single photo can be perceived in two completely opposite points of views. This simple test is actually used by psychologists to determine whether a person is an optimist or a pessimist.

Why is our perception so important? It is important because it will affect how you live your life.

Our life is shaped by our mind; we become what we think.
– Gautama Buddha

Our mindset greatly affects the direction of our lives. It influences our happiness, health, relationships and yes, even our finances. The financial gap between the rich and the poor is not because of the money, neither is it because of level of education, nor any other external factors; but rather it is all because of the difference in mindset.

So, if you feel like you have been working so hard all these years and yet you are being held back, maybe you are suffering from a poverty mindset.

10 Symptoms of A Poverty Mindset

To verify if you really have a poverty mindset, take a look at the following symptoms and ask yourself if you have it in you or not:

1.You Complain A Lot

You complain, complain, complain and complain. Did you know that complaining is the worst possible thing that you can do to yourself? When you complain, this means you focus on the negative aspects of your life. You focus on your problems when there are in fact a lot of things to be grateful for.

Be thankful for what you have; you’ll end up having more. If you concentrate on what you don’t have, you will never, ever have enough.
– Oprah Winfrey

Your mind is like a magnet. What you focus on expands. If you focus on the negative, more bad things will happen in your life.

2.You Play The Blame Game

You blame your parents. Sometimes, you blame your siblings. At work, you blame your boss or your employers. You also blame the government. At home, you blame your spouse. Some even blame their genes. You practically blame anything and everything around you. It is always somebody else’s fault but you. You refuse to take responsibility for the undesirable things. That’s a poverty mindset.

Many people who always blame the government for their situation. Yes, that may be true. After all, governments are far from perfect. However, how come there are people who became very successful in the same environment? The difference lies in the mindset. You can either play the blame game all you want or you can begin to take responsibility in your life and do something to change your situation.

3.You Believe You Are Always Right

Do you love saying “I told you so“? Do you always have to have the last word? If you answer yes, then you are a narrow-minded person. A narrow-minded person is a person who is not open to new ideas. They believe that their opinion is always right. You will never win an argument against this kind of person. If you are this kind of person, then that is another symptom of a poverty mindset.

To become successful, you need to accept that you don’t know everything. You need to be open to new ideas and embrace new ways of thinking.

The only true wisdom is in knowing that you know nothing.

– Socrates

4. You Won’t Invest in Yourself

You have money to spend on travels, gadgets, clothes and entertainment but you don’t have a budget to spend on further studies, seminars or even to buy a book. Some argued that they simply have no time. All those things are just mere excuses. What people do not realise is that the greatest investment that they can do is to invest in themselves. Your future is largely dependent on your willingness and ability to invest in yourself.

For example, if you work in a company and you think that your salary is very small, then ask yourself this question, is there someone else in your organization that is earning more than you do? Then why do you think the company is paying that person more? The answer is simple, most of the time, your compensation is based on your knowledge and skills. You want to earn more? Then invest in yourself.

5. You Believe is That Money is the Root of All Evil

If you believe that money is the root of all evil and all rich people are greedy, then you are already unconsciously derailing your way to success. These negative beliefs about money are products of your environment. If people around you believe in this idea, then your belief and value systems were definitely influenced.

For the record the bible verse where this belief system originated did not state that money is the root of all evil.

For the love of money is a root of all kinds of evil. Some people, eager for money, have wandered from the faith and pierced themselves with many griefs.
– 1 Timothy 6:10

The verse clearly states that it is not money per se that is evil but rather it is the love of money that is the root of all evil. Money is nothing but a tool. Money can also be use for the good of others.

6. You Avoid Your Finances

Do you know your personal net worth? Your net worth is the amount of everything that you own minus everything that you owe.

People who have a poverty mindset avoid looking at their finances or they simply don’t bother at all. Some people are even scared of looking at their monthly credit card statements. If you are scared to take a closer look and examine your finances, then that’s a symptom that you have a poverty mindset. You are scared to face reality. You keep on buying stuff you do not need and you don’t want to pay attention to where your money is going.

You need to keep track of your personal cash flow. You can only improve your financial situation if you are fully aware of your present financial situation to begin with.

7.You Focus on the Now

What are your plans 5 years from now? How about 10 to 20 years from now? If you have no idea how to answer these questions, then that is another symptom that you have a poverty mindset.

You put importance on the short-term rather than the long-term. You want everything now without considering the future consequences. You have no plan for the future. A financial goa l should be a must for everyone.

8.You Have All the Latest Trends on Credit

Take a look at all your possessions. Do you own the latest gadget? Are you a walking advertisement of signature brands? If you can afford it, then that’s a different story. However, if you have been using your credit card to pay for the purchases in monthly installments, then you have a problem. If you are this person, then that’s another symptom of a poverty mindset.

Spending on things will only make you feel better temporarily. Remember, you have nothing to prove to anyone. Don’t be so concerned in showcasing your wealth to people you don’t even like.

9.You Focused on Me, Myself and I

A poverty mentality focuses on getting rather than giving. If you are not willing to do anything for anybody without receiving anything in return, then it is a sign that you have a poverty mindset. You always think of yourself first. You always look into what’s in it for you.

For example, in business, are you more concerned about how much profit can you make rather than how much value you can add to your product or service? In a relationship, are you focused on what your partner can do for you rather than what you can do for your partner?

You need to give first before you can receive. That is the law of the universe. The most successful businesses in the world gave value to consumers first before their businesses grew.

10.You are A Consumer Rather Than An Investor

A few days before your salary, you are already thinking about what you will buy. You prioritise spending rather than investing. You spend first and save whatever is left behind. Most of the time, there is nothing left to save. So basically, you work to spend. All wealthy people save first before spending.

If you score 0 to 2, congratulations! You have a wealth mindset. It is just a matter of time before you become wealthy, if you are not one yet.

If you score 3 to 5, you are not yet there but you are on your way to overcoming your poverty mindset. Having the correct mindset is your first step towards financial freedom.

If you score 6 and above, that is a clear indication that you have a poverty mindset. Fortunately, mindsets can change. You need to deliberately immerse yourself on a growth mindset on a daily basis. That’s the only way for you to change your financial situation.

Edited Version. First Published in Pinoy Smart Living on 08.07.2018

Feature Image by Image by Gerd Altmann from Pixabay.

Dec

2020

Start-up Terms That Every New Entrepreneur Should Know

Reading Time: 2 minutes

Starting a new business? Here is a list of start-up terms that every new entrepreneur should know:

1. Angel Investor

Also known as a seed investor, an angel investor is a high net worth individual who invests money in a start-up. This person can be a family or friend of the business owner. in return for the money invested, the investor will then become a shareholder of the company.

2. Business-to-Business (B2B)

A B2B business means that your product or service is being offered to other businesses.

3. Business-to-Consumers (B2C)

A B2C business means that your product or service is being offered directly to consumers.

4. Beta Test

Beta testing is the final testing of a product before it gets released to the market. This allows the company to receive direct feedback from its target customer. It is the same as a soft opening soft or soft launch. In short, it is a trial run. By doing this, a company gets a chance to improve the product or service.

5. Bootstrapping

Bootstrapping is building a company from scratch with limited resources using your own personal savings.

6. Burn Rate

Also known as the run rate, it is amount of cash that is being used by the company to finance its operation. In a way, it is the rate of money that the company is losing each month because the company is not yet earning. In short, it is the negative cash flow.

7. Minimum Viable Product (MVP)

The minimum viable product is a version of the product with just the basic features. This version is just enough for the product to be usable to its target customers. Releasing a minimum viable product is cost-effective. It also shortens the product development phase. In addition, the business can start receiving feedbacks from the customers that they can use to further improve the product.

8. Pivot

A pivot is a shift of business strategy when the initial product or service failed.

9. Return-on-Investment (ROI)

The return on investment is the measure of whether a business is profitable or not in a given fiscal year. To calculate the ROI, simply divide the net profit with the total investment made then multiply by 100. Generally, an average return of 5-12% is good.

10.Venture Capital

Venture capital are private firms that offer financing to start-up companies. These firms can be pension funds, financial institutions, investment banks or even universities. They see potential long-term growth in the start-up. These firms will buy a stake in the company for a certain period of time and then exit once they are already profitable.

Photo by Startup Stock Photos from Pexels

Oct

2020

How to Adapt to the Digital World

Reading Time: 2 minutes

The world is moving at a rapid pace towards digitalization. Sooner or later, we will be living in a world of paperless existence and our smart phones will take the place of our credit cards and paper money. Businesses are trying to automate. People of all ages, are trying hard to familiarize themselves with technology. Gone were the days were you have to wait for the bills in your mail. With all these changes, how to adapt to the digital world?

Digital Transformation

What is digital transformation? Digital transformation is the use of technology in all areas of the business. With digital transformation, you are not only changing the business processes. You are also changing the status quo. It is a cultural change that will ultimately alter the habits of people. For instance, in the new normal, employees will be working remotely from home. There will be restrictions in in-person contacts and interactions. As the businesses change, people will also begin to change.

Although the world is already going towards digital transformation, the pandemic accelerated the process. If business owners will not adapt soon, their businesses might suffer. As businesses begin to digitize, people are forced to adapt and learn new technology, applications and processes.

Tips on How To Adapt to the Digital World

Here are some tips on how to adapt to the digital world:

1. Be Open to Change

If you think the world will go back to how it was before COVID-19, think again. We are in a whole new world. There is no going back. So, stop resisting. Learn to let go. Be open to change. Be open to new experiences.

2. Learn Technology

It will be difficult to live life in the new normal without learning technology. Technology is a mainstay in the contemporary world. It is already a part of our world from banking, medicine, retailing, and communications.

3. Upgrade Knowledge and Skills

As more and more business processes become automated, jobs that used to be done by humans will now be done by robots. So, it is best to upgrade your knowledge and skills, In order to remain competitive, basic knowledge on technical and digital know-how is now a basic requirement.

4. Invest in Technology

Technology is now a necessity. As employees begin to work at home, children also began online learning. Technology is now needed to work, study, earn, pay your bills, and communicate with others. Thus, it is important to invest in gadgets such as computers, smart phones including the internet.

Feature Image from Pixabay

Aug

2020

Assets and Liabilities in Personal Finance

Reading Time: 2 minutes

Do you know what an asset is? How about a liability? Many probably have an idea on what they are but how many actually understand these terms? True, it might sound boring for many. Unfortunately, these terms are part of the basic terms that everyone should know about personal finance. A deeper understanding of these two terms can lead to drastic improvement on the current stage of your financial life. So, what is the importance of assets and liabilities in personal finance?

Assets vs Liabilities

An asset is any resource that has monetary value. In short, in personal finance, an asset is anything that you own that has value. Your car, house, investments, cash and items such as antique furniture, artworks, watches, jewelries and even some luxury things are all considered assets.

On the other hand, liabilities are everything that you owe. They can be in the form of mortgages, loans, debts and any money that you owe others.

Net Worth

Your total assets minus all your liabilities is your net worth. Knowing your net worth will help you understand your current financial situation. If it is positive, then good for you. If it is negative, then it is a warning sign that you are living beyond your means. In addition, your net worth can serve as reference point in your financial goals.

Launch Challenge

Compute your personal net worth now. Knowing your current state of your finances will help you improve your financial life. Your current net worth will be your starting point in your financial journey.

1. Compute all your Assets

Start by making a list of all your assets. Your assets include the following:

Real Estate Properties
Automobiles
Cash deposits
Investments on businesses, bonds, stocks, funds, etc.
Insurance
Watches and Jewelries
Other items such as antiques, art works and luxury items

Then, place a monetary value on each one. Record the estimated current market value not the purchase price.

Add then add them all up. The total value is your assets.

2. Compute all your Liabilities

Real estate mortgages
Auto loans
Credit card balances
Student loans
Other personal loans

Add up all the outstanding balances to get your total liabilities.

3. Calculate Your Net Worth

Now, subtract your total liabilities from your total assets. Then, that’s your net worth.

Do this every month to monitor your progress. Your goal is to slowly increase your net worth.

Now that you know your net worth, it helps to keep this in mind each time you spend your hard earned money. Knowing your net worth will help you make good financial decisions.

Feature Image by Bruno /Germany from Pixabay Images

Feb

2020

Rules to Double Your Money

Reading Time: 3 minutes

It is nearly impossible to build your wealth by just relying on earned income. Warren Buffet advices that you need to create a second source of income. Savings alone is never enough for the value of your savings depreciates over time because of inflation. You need to learn to invest your money. Through investing, you are creating a way for your money to work for you. And before you know it, after a few years, your money will be doubled. Thus, it is for your own benefit to understand the rules to double your money.

There are many investment vehicles to choose from. A wise investment should beat inflation. It should also increase in value over time. Moreover, it should also help you achieve your financial goals.

The Rule of 72

The Rule of 72 will come in handy if you want a quick way to estimate the returns of a particular investment. It is a simple way to find out how long it will take for your money to double given a fixed annual rate of return. It can help you determine how good (or not) a particular investment is.

Time to Double Your Investment = 72 / Rate of Return

For example, if you are going to invest your money in a 2% return, that’s 72/2 = 36. It means that it would take 36 years for your money to double. A 3% return will take you 24 years, A 4% return will take 18 years and so on and so forth.

Watch the video from Alliance Group for a simplified explanation of the Rule of 72.

This rule can be used not just in investment but in anything that grows at a compounded rate. That is the reason why it is also important that you understand the concept of Compound Interest.

Compound Interest

Compound interest can either be your best friend or your worst enemy. It all depends on how you use it. You can either gain from it or you can loose a lot because of it. Your life can be much better or much worse than you already have. It’s your choice.

What is compound interest? Compound interest is the adding of interest to the interest earned on the principal amount. In short, it is interest on interest. The interest is reinvested again and again and added to the principal amount. Because of this, the balance don’t just grow, it grows at an increasing amount.

Watch the Youtube video by Investopedia to better understand what compound interest is.

Compound interest can either be good or bad, depending on how you use it. It can be good if you use it on savings or investments. It can be bad, if you have debts.

Compound interest is the eighth wonder of the world – Albert Einstein

If you understand the concept and take advantage of it, you can learn a lot from it. The original amount that you have saved and invested will grow at a rapid rate. An investment left untouched for a couple of years can add up even if you do not add anything later on.

The chart above shows that supposed you invest $1,000 for 20 years and just leave it there, your money will grow up to $7,250 at 20% compounded annually even if you don’t add anything during that period. This is high compared to $3,000 value of simple interest.

That is the power of compounding. It will help you achieve wealth even if you don’t lift a finger. Compound interest is one the main reason you should learn to invest your money. Make it your best friend and it will do wonders in your life.

On the other hand, compound interest can also work against you. If you have debts, compound interest can become your worst nightmare. In the same way that savings can increase, debt can also increase at a rapid rate.

An example of this is credit card debt. If you only pay the minimum amount due, interest charges are accrued. By paying the minimum amount due, you are actually just paying a portion of the interest. Instead of lessening, the principal amount remains the same and additional interests are added causing your debt to balloon. If you keep this up, it will become problematic in the future.

Don’t make the mistake of making compound interest your worst enemy.

Updated Version. First Published in Pinoy Smart Living on 11.27.2018

Feature Image by Posted by A.L. Jonas in Financial, 0 comments