The Personal Income Statement
A personal income statement is a document which details revenues, expenses and profit or loss that a person has obtained a period of time.
Having a personal income statement allows a person to understand and analyze the income, expenditure and profit or loss (difference between revenue and expenditure) has been obtained for a period of time, and based on that analysis, to make decisions (for example, to reduce expenditure in particular item) or financial planning.
Also, a personal income statement allows a person to compare the results achieved in a period, with the results obtained in previous periods, and thus, for example, whether it is meeting its financial goals.
To better understand the concept and the usefulness of a personal income statement, see below how to develop and take advantage of one in three steps:
1. Income Detail
We must first make a list of all revenue that we earned over a period of time (for example, for a month, six months a year, etc..) Regardless of the time they become effective charges, For example, if we sold some assets, we record the sale, even though half of it just go to collect the following month.
Between incomes include: wages, business, investment, etc.
2. Detail costs
After detailed our revenues, we began to detail all expenses we made during the same period equally, regardless of when they are made the payments, for example, if we bought an asset, we record the purchase even though half of it just go to pay the next month.
Among the expenses include: food, education, health, transportation, clothing, recreation, services, interest, etc…
3. Develop personal income statement
Once we have the necessary information, we began to develop our personal income statement (preferably in an Excel spreadsheet).
Gross profit is for the sum of the income, while net profit is the difference between revenues and expenditures, there is no profit when revenues are greater than expenses, and no loss when expenses exceed income.
Risk Management
Management, administration or management of risk in terms of personal finances is to control the risk that may exist when investing money.
Every investment has a risk, i.e. a probability of obtaining bad results, in general, the more potential to provide an investment return, the greater the risk involved, and, conversely, the less cost it offers, the lower its risk.
For example, investing money in creating a company has a high promise of profitability, but also a high risk, as opposed to, for example, put money into a savings account, which has a low profitability, but also a low risk.
One objective of risk management is to minimize or reduce the risk that there may be the time to invest, although, however, risk management also involves taking some risk to the extent that it seeks to earn higher returns.
Irrigation management involves the following steps:
* Collection of information: is to gather information, or well informed about an investment before deciding to purchase it, which means knowing their characteristics, advantages, disadvantages, cost-effectiveness offered (for example, your interest rate in case it has ), its market, and so on.
* Information analysis: is to analyze the information collected, or the investment itself, in order to determine as accurately as possible their profitability, their performance, the capital recovery period, safety and risk, etc…
* Comparison of investment alternatives: should have several investment alternatives, we proceed to compare them taking into account such factors as the required investment, profitability, risk, liquidity, etc.
* Selection of the best investment alternative: in this step is necessary to choose the best investment alternative, based on factors such as our capital, knowledge, profitability objectives, risk tolerance, etc.
* Diversification: diversification is to create an investment portfolio or diversified portfolio, i.e. not to concentrate all the money in a single investment or a single type of investment, but distributed in different investments to minimize risk.
Consumer Credit Counseling Can be Beneficial to your Financial Well Being
If you are to where you are having trouble making ends meet financial speaking or making payments consistently on all your bills late, then maybe you should consider consumer credit counseling.
If you are to where you are having trouble making ends meet financial speaking or making payments consistently on all your bills late, then maybe you should consider consumer credit counseling. Pay a bill late once in a blue moon is not a life stopping event (although I do not recommend due to the negative effect on your credit score), but if you cannot pay their bills (including the minimum payments) or always late, then pay them to consumer credit counseling certainly help you out of a jam financially and prevent creditors from pursuing you on a daily basis.
Before signing with the credit counseling agency first to find it please make sure you do your research. While many companies are trustworthy and reliable there are some who give the industry a bad name. Most legitimate companies offering their services for a small fee up front. Definitely avoid offering to settle your debts for free or with a small advance payment of $ 75 to $ 90. Most companies that fall into this category usually end up as reliable and are only good for taking your hard earned money with zero return on investment. You can verify the legitimacy of a counseling agency consumer credit by checking to see if they are registered with the Association of Independent Consumer Credit Counseling Agency or the National Foundation for Credit Counseling. Both companies have reputable counseling agencies as registered members.
Another advantage of using a consumer credit counseling agency is its ability to keep the companies that owe money off your back as you make minimum payments to them. A company must trust the advice of your payment and forward it to the creditor you owe money to allow you to concentrate on learning how to prevent future financial crises and problems.
Do not let the horror stories of how people were burned using a credit counseling service. If you do your due diligence you will be able to find a just society that will help you better manage your debts, maintaining its reputation with its current and future creditors. Always make sure the counseling company is on your side and do not see it as a consumer who is in default of its debt. His fair representation of what you should include them recognizing him as an individual interested in credit counseling to its creditors.
A small disclaimer should be observed. Although in most cases the consumer credit counseling does not work well in helping a person to leave the financial crisis is no substitute for a huge amount of debt. With that said you should know that if your current debt is so high that requires you to consider filing bankruptcy, then any credit counseling company will be able to help you avoid the inevitable.
The Easiest Way to Get Rich
Most people live obsessed with wealth. Many spend most of his adult life trying to get it, but very few find a way to reach your goal.
Ways to achieve wealth is more, we can create a multinational company, to be famous artists, athletes be successful, be world-famous authors, winning the lottery, inherit a fortune, etc.
Unfortunately most of these get-rich are complicated and, in most cases, are beyond the reach of most of us.
An interesting method of how to get rich, although not come to follow to the letter; we can take as a reference to start our road to riches.
1. Getting a good paying job
The first step of this method is to get a good paying job, which may require a great effort from us and take us some years, but is a necessary step if we have a good source of income.
2. Get good tax advice
In most cases a good portion of our revenues will go to government funds, so if we take seriously our quest of wealth, an important requirement is to get a good tax advisor to help us reduce legally pay our taxes.
3. Saving 20% of what you win
As soon as we receive our payment, we must deposit 20% of it in a savings account, most banks can do this automatically for us.
4. Conservatively invest the money that accumulates in the savings account
Once a month, we go to our savings accounts, divide the money, and invest equally in the next three conservative assets: private equity investing, real estate investment trusts, mutual funds and cash.
5. Reinvest all income from assets
All revenues generated by the assets listed above, must be reinvested in the same mutual funds that generated them.
6. Never touch these funds
We must never touch those funds, we must try to ignore the news on speculation or market movements and maintain the strategy of investing 20% of our revenues in these assets, we must bear in mind that every market has ups and downs, but the long run, all markets will almost certainly increase their value.
7. Wait a decade
If we follow the above steps in a decade we can probably say that we are rich, probably are not going to be a Bill Gates, but almost certainly will be within 20% that make up the wealthy, if we wait another decade, we will be within 5% or even more.
Doing Business Opportunities
Many people think that business opportunities are increasingly scarce, either because competition is increasing, it is impossible to compete with transnational corporations, or because everything is invented.
However, business opportunities are always present: the markets constantly change, needs change, tastes change, customs and habits change, and new opportunities appear.
Whether the market is in boom or crisis, there will be opportunities that could benefit from, and to better exploit these opportunities, see below a few tips:
Patience to wait for opportunities
The first advice is to wait patiently for opportunities, if we want to start a business or invest, but do not know what business or where to invest our money, rather than force things and invest in something that we’re not so sure that will successful, we must be patient and wait for a good opportunity.
But be patient and wait to see a good opportunity not mean we should stay with his arms folded and wait, but we must be alert to the emergence of opportunities, but we must also look.
To do this, we must remain attentive to market changes, new trends, the emergence of new trends, the emergence of new needs, changes in the economy, etc.
And while we await the emergence of an opportunity, we can keep improving our ability to finance and other business issues, so that, as is this a good opportunity, we can make the best possible way.
Act as soon as possible
We must have patience to wait for business opportunities arise, but as soon as they appear, we must not waste time and act as soon as possible.
As it presents a good opportunity, many people try to analyze it thoroughly, trying to gather as much information as possible and try to anticipate all possibilities, to the point that always end up finding an excuse for inaction or, worse, leave the opportunity ends up being used by another person.
So the recommendation is that appears as a good opportunity, we gather information about it, analyze it, prepare and act in the shortest time possible, without attempting a full analysis, gather all available information, or provide for all possibilities.
And for this, we rely mostly on our instincts, and know that once a decision is taken, there will be time to gather more information to better prepare, or to make corrections as necessary.
Act despite fear
With the emergence of an opportunity, many people are dominated by fear, and waiting for it to decide to leave or that in any case, reduce, to the point that, as in the previous case, end up wasting the opportunity.
As this advice is that even if we are afraid at the time of having to take a chance, if your instincts say it is a good opportunity, we must act and take it without waiting for the fear to leave or decline.
We must take a little courage, dare and act despite the fear, knowing that it is usually only present at the beginning, and gradually will fade as we put into practice our idea.
Do not wait for the right time
Many people who are a good opportunity and that already have an idea that allows them to take advantage; often decide to wait for just the right time to start putting into practice his idea.
You may sometimes have to wait for the opportune moment to act, but in most cases, timing is always the moment is how to seize an opportunity.
So whether you want to start a project, start a business or acquire an investment, rather than wait for the right time, the recommendation is that we try to act as soon as possible, probably decide to wait for the right time, it never come.
Do not pay much attention to others
Most of the good opportunities are not obvious and, in most cases, to seem foolish, for what is common to hear criticism or discouraging comments from others when one intends to take a chance.
And what is worse is that many people end up ignoring these critical and discouraging comments from others, and eventually miss good opportunities.
As the last advice is that as soon as a good opportunity, rather than listening to the opinions or comments of others, listen to our own instincts, and seize the opportunity, knowing that most people who achieved success with a project rare, always heard these criticisms at the time.
