Importance of Savings As a Secondary Income

A lot of money management lessons and experts acknowledge that savings are an important starting point towards having a secondary income. Savings in this regard point towards the money that is saved every time an individual gets any form of cash be it salary, gifts or tax refunds. The savings you create over a long period of time or even a shorter one could prove to be as important as having another stream of income. These savings always help you especially in meeting unexpected expenses and realizing future goals.

Affording Large Purchases

One of the greatest advantages of having personal savings is that they enable you make some large purchases like houses, cars, meeting college fees etc. saving gradually greatly builds your savings value and this enables you to inch closer to affording that great dream that you have. In this scenario your savings act as an extra source of income as you can take them plus the cash at hand you have and fully pay for that big goal you have been working towards achieving.

Savings enable you to make these huge purchases without the option of taking a loan or debt to finance the purchase. In a normal case, if one does not have enough money to buy something they have the option of taking out a loan in order to get enough resources to pay for the purchases. If you have savings in your bank account or in any financial institution, you could use them instead of taking a loan which will plunge you into more debts.

Earning Interest

If you were to put your savings in an interest earning account, you will have created another source of secondary income for you and the family. However, in order to earn a substantial interest from your savings, there are some factors that you ought to consider. The interest rate is one of the most important factors to consider first if you want to earn more. It is important to remember that the higher the interest rate will be then the higher your money will grow. The other factor to consider is the time that you will keep your savings deposited in your account. The longer the money will stay in the savings account, the more the interest you will earn making your income to be higher as time goes by.

The third factor to consider is the way the bank you use pays its interest. Compounding interest is the way most banks pay their interest meaning that you will be earning an interest not only on the initial amount you have saved but also on the interest you earn per year. This is a sure way of earning some extra income from your savings adding more advantages of having savings in the first place. When looking for a bank to place your savings in, ensure that the bank has a higher Annual Percentage Yield (APY) as it will mean that your savings will earn you more returns per year.

Putting Your Savings in an Investment

When a person decides to have some savings on the side, they are not only said to be saving but also investing in real sense. It is possible to put your savings in a form of investment that you will not touch for a long period of time like maybe 10 years. It is not a must that you put such savings in a bank account rather you can invest them in a more benefit-earning investment option. It is possible to risk these savings on the stock market or pensions which are better performing and guaranteed to give you more returns in the end. They can also be invested for the long term that is you can opt to keep the savings there until when you retire. When you liquidate your savings you will make a good sum of money in returns as the savings will have grown by leaps and bounds.

Savings act as a safety Net

It is always advisable to save for a rainy day or any eventuality that might occur in future like loss of employment. If at any given time you may lose your job, your savings should be sufficient to push you through a period of around 6 months before you become stable again. In this case, your savings will be an important source of income as they will help you cope for the period of time you will be jobless.

From the above facts, it is crystal clear that savings are generally as important as your other sources of secondary income and it is paramount that everyone takes up the habit of saving. As much as one is always thinking of looking for other avenues of earning an extra income, it is important that people realize the importance of savings to an individual. Therefore it is important that every person everywhere in the world takes it upon themselves to ensure that they have sufficient savings in bank accounts, investments or peer-to-peer lending networks. They will provide them with an extra income as well as shield them when the rainy day comes.

How to Invest Your Funds Smartly

 

Starting a new business can be a very tedious task that comprises of several steps and decisions. Cost plays a very important role here. It is not a rarity to hear about the startups that start with a very positive sign to be closed down due to the lack of financial resources. So you should be very wise in spending your money if you really want your business to remain profitable in the long run. Here are some tips for the same.

Due Diligence

Before you decide to invest any amount you should know the returns it can fetch you. Many times the startups invest the funds lavishly as they are supported by angel investors. But when they fail to bring in the objected returns the rotations stops and they stop getting any help that situation is detrimental to the startup entities, so always make a plan before investing.

Be Miser

It is also important to invest as small as possible. To be precise instead of investing a large amount at once you can better break it into different parts and then invest in a strategic manner in different phases. You can have a projected returns on each phase. You can proceed only after realizing those returns.

Demand Value

You can also afford to spend more if you are getting a good value out of it be it in terms of performance, quality items or the reputation.

Have a Passive Income

Though you should avoid too much indulgence in passive income as it can act as a hindrance to our startup’s growth you can always have a certain amount invested in securities, stock market, real estate and other entities where you can get the passive income It will prevent you from getting boot strapped.

Pay Yourself a Salary

One of the best ways to keep yourself from being bankrupt or bootstrapped is start a habit of paying yourself a certain salary every month apart from the profits you earn. It will help you to remain profitable even in the unlikely event of your business faring badly.

Rope In Partners

Another thing that can make your startup run smoothly with adequate finds is roping in several partners. You can find out the business entities that belong to the similar field that you are working in. For example if your field is hospitality then hotels or travel agents can be an ideal partner. It will help you to get more funds.

7 Tips to Help You Manage Your Income and Start Saving Money

If you’ve always struggled with saving money for various reasons, it’s time to make that change today. Whether you agree or not, you must admit that being financially stable is highly important for anyone. You don’t want to be without a savings account to turn to in case of emergencies. Here are some helpful tips that can help you out with your budget. You do have wealth; you just need to know how to manage your income.

  1. Do not buy anything you don’t need – In order for you to start saving money; you have to forget the shopaholic in you. Even in the grocery, don’t put anything in your cart that you do not really need. While you can reward yourself every once in a while, as much as possible, don’t spend too much on things you’d probably ignore after a couple of days after you purchased it.
  1. Use your credit card for emergencies only – While many would suggest for you to pay for your purchases with a card rather than cash, this allows you to spend more than expected. To manage your budget, bring enough cash with you for the day and unless it’s a life and death situation, do not use your card.
  1. Get a passbook savings account – When you have ATM cards that tempts you to withdraw from anytime, you tend to spend even when you don’t have to. Only keep one card that you can get cash from in case of emergency.
  1. Set aside specific amounts for your monthly expenses – Once you receive your paycheck, divide your income according to your expenses. Be strict about staying within your budget. The percentage of savings really depends on your income but here’s a rough example of how you can divide your paycheck:
  • Rent/mortgage, Groceries, Bills, Gas Money – 50%
  • Savings account 1 – 20%
  • Savings account 2 – 10%
  • Savings account 3 – 10%
  • Self-reward – 10%
  1. Have various savings accounts and deposit a few dollars monthly on these accounts – If you’re saving money for a car or a new laptop put this in a different savings account. Another bank account should be used for other needs, such as travel funds, unexpected car repairs, hospitalizations, home maintenance, etc. As seen on the budget example above, the 20% should go to your life savings account that you shouldn’t touch until you no longer have a choice.
  1. Find coupons you can use or go onto online deal sites that can help you purchase things while still saving money. You should still remember though that as much as coupons can be attractive, if you don’t need it, don’t buy it.
  1. Invest in residual income opportunities. Depending on your expertise or your interest, there are many ways you can earn passive income. You can even check your bank’s best interest rates for your savings accounts and the interests earned can be your residual income.

Easy Ways To Regain Control Over Your Finances

Money and the absence of it is one of the most common sources of fear in the world. If you learn how to eliminate the anxiety that finances cause, you can start acquiring more of this all-important resources. It is far better to gain control over your finances than it is to let your finances control your life.

Start by creating a budget and diligently adhering to it. Although most people are well aware of the benefits of budgeting, few people actually take the time to write one. Knowledge is what you know, but wisdom is how you use what you know to benefit and improve your life. Put this knowledge into action and start budgeting today.

Stop spending money on things that you really don’t need with the intention of rewarding yourself. This is especially true of big ticket items that won’t provide the same lasting satisfaction and peace of mind that savings will. Write a reasonable sum into your budget for treating yourself on a regular basis and stock all your overages away. Savings are infinitely more valuable than tangible assets when financial problems arise.

Consider your risk tolerance and remain cognizant of this in everything you do. Your risk tolerance basically defines the amount of risk that you are capable of handling at any one time. If you take on too much financial risk, you will be more prone to irrational and hasty decision-making.

There are lots of ways that you can take on too much risk. For instance, if you choose to finance a home or purchase a car before you’re actually ready for these purchase, this will create an excess amount of risk. The end result will be anxiety and stress and a tendency to make choices that aren’t in line with your financial well-being or your financial goals.

Establish a mindset of gratitude, no matter where your life might currently be. If you make a point of being happy with what you already have, you won’t be as likely to overspend on new things that you really don’t want or need. More importantly, you also be more predisposed to taking good care of the resources your currently own. This will extend the lifetime of these assets and help you get more value from them.

Start making a proactive plan to take care of your existing debt. Reach out to your creditors and attempt to establish reasonable payment plans that you can actually adhere to. If this doesn’t work, think about getting a debt strengthening loan in order to centralize your payments and make everything easier to manage.

If you’re being pursued by a debt collection service, make a point to connect with the company to discuss your accounts. Find out how much you owe altogether and determine whether or not your can feasibly repay your debts. If you have acquired more delinquent accounts that you can reasonably manage, it may even be a good idea to consult with a bankruptcy attorney. Efforts like these are a proactive way to start bringing your finances into a more manageable and profitable state.

Six Things You Should Do About Your Money

Money doesn’t just happen. You work hard to earn it and get the best from it. But if you’re not a good expense manager and too much of it slips through your fingers like dry sand, today is the day to think about things differently to change the rest of your life for the better.

1. Perk up your pension.

The pension climate is changing so much that many financial advisers don’t talk about pensions anymore; they talk about ‘retirement income’. Do you know how much you’ll have? With auto-enrolment putting people into company schemes up and down the UK, this is probably a good time to look into just what your pension pot will be worth to you when you get to retirement age. The government’s Money Advice Service has a really useful online calculator allowing you to get an idea of how much you might have when you retire. If you’ve done the calculation and find there’s not as much as you thought there might be, now’s the time to pay more in. The sooner you start, the larger your pension pot will be. Talking to an independent financial adviser can be invaluable.

2. Keep saving.

Living ‘hand to mouth’ with your money is fine – until something unexpected happens, like needing a new central heating boiler, a big bill on the car, or a sudden hike in season ticket prices for your commute. Putting a little bit away each month will cushion the blow when it comes (and it surely will eventually), but before then, you’ll reach the point where you have sufficient funds for a holiday without spending it all. The equivalent of a month or two’s salary is a good cushion to aim for.

3. Divide and conquer.

If you’re not a good money manager, and find you’ve overlooked a standing order the suddenly dips your bank account into the red, consider setting up a second bank account. Get paid into the first account. Add up all the monthly bills that go straight out from the bank, and leave enough to pay them all in that account. Include a little extra for the cushion we talked about. Transfer the rest into the second account. That’s what you have to spend for the month, so you’ll have a better idea of what you can – and can’t – afford later on, to stop you having too much month left at the end of your money. Sure, there might be lean times towards the end, but you’ll be safe in the knowledge that your bill are all paid, so you’re not going to get into arrears. Setting up the arrangement could hardly be easier. The bank will help, and you can make the transfer on a standing order so you never need to think about it again.

4. Fight the impulse.

So much is bought on impulse today. The thrill of the chase and the adrenaline rush of the purchase may seem less appealing if you decide later that you don’t really want, or worse still, can’t afford, your latest purchase. Never fear! If you still have the receipt, you can probably take back the expensive shoes and put the money towards the electricity bill instead. Who needs a pair of Kurt Geiger shoes anyway?

5. Count the pennies.

If you’ve done what we suggest in tips 4 and 5, you can build on that success by using money management apps on your smartphone to track the spending of funds in your second account. Simply key in the value of everything you buy and assign it to a category, then the clever app will do the money management for you by adding it all up. You can even photograph receipts or do voice recordings to record your spending. Expense management was never so easy! And what’s more, seeing what you spend will let you see if there are better (or more enjoyable) ways of spending your money.

6. Make a will.

This might be a tough one to talk about, but it could save your family a fortune in the long run. For example, if you’re half of a couple living together and one of you dies without having made a Will, the other may have no claim on funds you’ve saved together. A Will is the only way to issue instructions about where you want your money to go. And it’s not just about money; you may have things of great sentimental, or even financial, value that you want to go to specific people.

Four Good Ways to Buy Silver for Investment

Investors buy silver for three reasons: as investment, as hedge against inflation, and for replacement of fiat currency. While many dividend growth investors see no value to holding silver, because it pays no compounding dividend, I believe some precious metal give extra-diversification to any portfolio.

Buying for investment is simply a supply/demand trade on price increase. It’s a commodity trade counting on the silver spot to rise. Or, it could be buying silver coin with numismatic value, again hoping for value appreciation.

As an inflation hedge, we can look back to the 1970’s when inflation reached 13% and silver prices skyrocketed. During this period, people held silver to offset inflation, and as its price rose investors grew out of the woodwork. Of course, by the 1980’s most personally held silver sold off at profit and went into paper investments.

For people who fear paper currency default, we should consider that central governments around the world, including our own Federal Reserve, print money as a solution to stagnant economies. The threat of any countries paper money becoming worthless is real, since none are redeemable in gold or silver as they were at one time.

In 2002, we saw a severe financial meltdown in Argentina and Paraguay when banks closed, only to reopen later, but limiting the amount of money depositors could withdraw. Argentines who converted cash to gold or silver coin were adequately protected during this crisis, while others were not.

Printing money, deficit spending, and endless debt increases has become the norm for leaders both home and worldwide. For no other reasons than these, it’s wise to hold some assets in precious metals.

Best Ways to Buy Silver

Regardless of your reason for holding silver, the aim is to buy silver priced on the weight of the precious metal. For example, silver bars and coin are priced on weight, meaning that 1-oz coin or 1-oz bar carry the same amount of raw silver.

You also want to buy silver that is.999 fine silver. The best source will be a reputable dealer and not eBay, Craigslist, etc. Avoid scammers by using reputable dealers like American Precious Metals Exchange, JM Bullion, Provident Metals, and others with proven business practices.

Coins

Silver coins are minted specifically by a central government and come with an official guarantee of both weight and silver purity. In the U.S., the American Silver Eagle is the only federally minted coin, but nations like Canada and Austria also offer coinage. Popular choices are:

  • United States – American Silver Eagle
  • Canada – Canadian Maple Leaf, Canadian Silver Cougar
  • Austria – Silver Philharmonic

Silver Rounds

Silver rounds resemble coins but private mints make rounds and they’re not backed by a guarantee like government assurances. They are less expensive (lower cost over spot) and good for larger quantity purchases but are not legal tender (money). However, they’re tradable in a financial meltdown, as the weight of raw silver is all that matters.

Silver Bars

For larger amounts of silver, bars are the best choice. Silver bars can run in 1-oz, 10-oz and 100-oz options. Larger silver quantities are also available in bars. Buying larger amounts offers a better discount off the spot price.

As with rounds, bars are not backed by the government. The goal, however, is to acquire larger amounts of silver at lower premium that is easily storable and tradable at the market price.

Junk Silver

Junk silver is really not what it sounds like – a ‘junk’ investment. It’s any old silver coin in fair condition without collectible value but with true silver content. In the United States, pre-1964 nickels, dimes, quarters, half-dollars and dollars carried 90% silver content. Junk silver is important since these coins have the lowest spot price of any physical silver.

Online Banking: Easy, Efficient, and Environmentally Conscious

The Internet has simplified so many aspects of life and made many daily transactions instantaneous. It can be easy to take these seemingly small conveniences for granted sometimes. How often have you hopped on the Internet, logged into your online bank account, and transferred money instantly from your savings account to your checking account to splurge on new clothes or pay for an unexpected expense? Going to the bank is no longer the chore it once was. Now the bank comes to you. It’s on your laptop and your smartphone and stays open 24/7 as long as you have an Internet connection. From saving trees and customers’ time to reducing overdrafts and identity fraud, online banking has streamlined the way most people manage their finances today.

While e-banking cannot provide every service that physical bank locations and real live bankers can, it comes pretty close. With a username and secure password, bank customers can access their accounts through their bank’s website and view balances, authorize transfers, order checks, view loan statuses, and receive and review monthly statements. Many bank sites even offer the option to chat instantly with a customer service representative. Through this service, customers can skip the long lines and wait times at brick-and-mortar banks and have questions answered in a timelier fashion.

Another bonus of going paperless is sustaining the environment. Every time a bank customer opts out of monthly paper statements for e-mailed versions, countless trees are conserved. Also, the fuel used to transport the paper is saved, and carbon emissions are drastically reduced. Making this small switch has already had a significant positive impact on the environment.

Finally, the conversation about online banking isn’t complete without addressing mobile banking. Now, you can open an app on your smartphone to access your bank account. This technology is already the norm for millennials and will undoubtedly be how most people bank in the near future. Through a bank’s app, customers can instantly access their account balances, make transfers, and even cash checks. To deposit a check, customers can simply snap a photo of each side of an endorsed check, and the funds will appear in their account as soon as the check is authorized.

Now that bank customers can access these services in the palm of their hands via mobile apps, avoiding overdrafting and quickly spotting identity fraud is easier than ever. The world will always need real banks and bankers, but online banking, and, more recently, free smartphone apps offer an easy, efficient, and eco-friendly option when waiting in line at the bank simply doesn’t fit into your day.