Tag: Money

The barter system however, brought with it some challenges such as double co-incidence of wants. What if we both needed coconuts? Also, there was no common measure of value and no medium to measure the value of goods so who decides if your coconuts are actually more valuable than my fish?

Commodity money was then created to address this concern. A commodity is a basic item which can be used by almost, if not, everyone. Things like seeds, tobacco, tea, salt and even cattle were considered commodities however, carrying bags of these items over a period of time proved to be extremely difficult… especially trying to carry cattle! There were three main functions to money in these days: money must be a medium of exchange, a unit of account and, a store of value. Although these commodities were considered to be mediums of exchange it was difficult to consider them units of account and given that these commodities were also perishable items they could never truly be considered to be a store of value either.

Then came the introduction of coins and paper money. However, according to Wikipedia ‘due to the complexities of ancient history and because of the fact that the true origins of economic systems actually precedes written history, it is impossible to trace the true origin of the invention of money’. That-said, metal objects were introduced as money because metal was readily available, appeared easy to work with and, was recyclable. Countries around the world were minting their own series of coins with specific values making it easier to compare the cost of various items. Some of the earliest known paper money dates back to ancient China, where the issuing of paper money became common from about AD 960 onward.

Paper money began, what we would call in today’s generation, trending. Nations around the world today all use paper money. Through the evolution of paper money has come a longer list of functions from the previous three. Money must continue to be a medium of exchange and a unit of account however, it must also be portable, durable, divisible, and fungible, which means the dollar in your pocket is worth the same value as the dollar in my pocket. Money has always maintained that it is a store of value however, this is where things begin to turn a bit grey.

Consider that $100 US dollars from just a decade or two ago purchased a lot more goods and services than it would today. The same is true for the euro, the pound, and the yuan. All around the world the money of many nations are suffering what is known as devaluation meaning year after year our money is buying less and less. How then can we maintain that paper money is a store of value?

People all over the world today seem to be working harder for money that is continuously buying less. So, just like the barter system could not be maintained as a viable way of trade, the current system we use on a global scale has also become a broken one. In all parts of the world we have one major inherent problem and that is that our money does not maintain its value.

We live in times and society where the pressures to buy and to show off the things we have bought (materialism) is enormous. Our inability to afford these things or put money aside for them has pushed us to the direction of buying on credit (getting things now and paying for them over time thereafter). Credit can, if approached with caution and discipline, greatly improve the quality of our lives. It can afford us things that we need now that we do not have cash to buy, for example, we may not afford to buy houses cash but may take a mortgage bond and pay affordable instalments over time, or take out a hire purchase for a car personal or business use. Credit can however become addictive resulting in impulsive buying habits (buying things that you do not need because you can afford them through credit limit). The fact that you can afford something does not necessarily mean that you can have it. If credit is not applied responsibly, it can have tremendous destructive consequences.

We live in a consumer society where people are judged by what they have, rather than who they are. This has developed a culture in which community members compete against each other regarding material possessions. This consumerism behaviour drives people to wear expensive label materials, expensive cars, and expensive houses with top of the notch furniture and equipment leaving them with very little or nothing to save. There is absolutely nothing wrong with acquiring these things if you can afford them. There is definitely everything wrong in acquiring these things at the expense of the provision for your children’s education and your retirement savings. While we may need credit and debt at some point in our lives, it should not be a way of life.

We need to plan now for the things we’ll need in the future. The starting point will be to understand the difference between needs and wants. Needs may be things that you may not live without or things that you must have or do, for example, provision for your children’s education, owning a house, life insurance, food, clothing, provision for your retirement, and transport for your business. Wants may be things that you desire to have and can live without, for example, label clothes, expensive furniture, expensive cell phones, luxury houses, etc. You need to take care of your needs first before looking at wants. Depending on credit is living on borrowed money which is a very expensive option. Try to save money for the things you may need that are not needed urgently or buy them on laybye. When you buy something on credit, you are actually borrowing someone else’s money. Borrowing money costs money. Do not overspend your income and do not over commit yourself with credit purchases. Whenever you are thinking about borrowing money, or buying something on credit, ask them to tell you how much you will be paying in total – including all the interest, administration charges, fees and any assurance premiums. Find ways of reducing your hire purchase debt by for example, paying a bigger deposit than required by the credit lender. The most effective helpful way is to look for ways of making extra money. This should be something that will not require much of your time and should not cost you an arm and a leg.

Financial institutions and credit providers make most of their profits from the interest they charge on the money they lend, for example, if the repo rate (the interest rate at which the Reserve/Federal Bank lends money to the financial institutions) is 5.5% and the prime rate (the interest rate at which banks lend money to customers) is 9% and the bank or furniture store charges you 17% interest, that institution is making 11.5% (3.5% + 8%) profit from you. This excludes the mark-up that the furniture/clothing store has already factored in the selling price of the merchandise. So, you are paying even more. This is not about paying less or more, it is about whether you can afford to repay without sacrificing your immediate needs.

Finding a balance between savings for the future and committing to debt has a lot to do with our need for security and harmony. No one likes to feel exposed and at risk, so we must make sure that we have some money saved for emergencies and irregular expenses. Committing to debt is spending our future income (money we have not earned as yet) now and this puts us in a disadvantaged position. Some people have committed themselves to so much debt that all their monthly income is spent as soon as they receive it. The only way to prevent this from happening is by using a budget and strictly following it.

There is a simple rule in life that many of us choose to ignore regarding future financial wellbeing. We have to sacrifice some things today so that we may live better tomorrow. The truth is that if we spend all our income today, we’ll have nothing left for tomorrow and this will force us to work extra hard just to survive. If we force ourselves to save some of our income today, we’ll have something tomorrow to enable us to relax and enjoy life. Putting money aside on a monthly basis for future benefits requires commitment and discipline. Try to save at least 10% of your income every month and see what difference it will make to your financial situation. However you cannot save what you do not have. Once money has been accumulated then strategies for saving and investing it can be sought. Getting your saved money to grow and work for you requires financial literacy and skills to navigate the maize field of investment options.

Money should be multiplied – Whenever you get access to cash, think of a genuine and legal way to multiply what you have before you spend it on yourself. More is better as it gives you leverage and it multiplies your ability to make a difference. When I just started working in 1995, I thought that all the money I received was just for spending hence I could not wait for payday to buy music and spend on partying and having fun. I was very surprised to see friends beginning to buy assets such as cars etc and I still reverenced having a huge collection of CDs. Today I am a changed man. I know that I did Math in school in order to use it hence the term MULTIPLY excites me when it comes to money.

Money must work for you – There comes a time when you get money to do some work while you sleep. With time you need to reverse roles with money. Let it work for you instead of you working for money. If you had a $1000 and you deliberately invest it in a lucrative product, shares or other investment portfolios, that money will have doubled in 6 months if not trebled. Learn to set aside surplus not under your pillow but in some investment house somewhere. Have many streams of income coming your way. One thing I realized during the economic turmoil which we faced in Zimbabwe for 10 years and the world over in the recent past is that you need something that generates hard cash daily. It may not be your core business but it helps to cast your net wide. While you specialize in your area of study, diversification helps you immensely

Money in itself is not the sum total of wealth – Money will make you rich and not necessarily wealthy. Riches fly away but wealth is more than money. When you invest in buildings and other immovable legacy elements, you are growing your wealth portfolio.

It is easy to lose money – Money is lost in many ways. If you keep having to replace the same asset because of damage or loss then you are losing money, when your time is wasted, realize that your money is being wasted too. Its easy to be rich today and a pauper tomorrow if you do not exercise wisdom on money matters.

You get money to the level of your responsibility and readiness to manage it – Money that comes to someone without enough wisdom to use it will soon fly away, money becomes a source of danger when it comes to a juvenile who has no clue what this power tool can do. I have watched lotto winners move from millionaire to zero status because they were not ready to receive such amounts and lacked wisdom in spending. I realized that as I grew in my level of responsibility, taking care of the needs of my family, brothers and sisters, I seemed to increase in my financial capacity. Watch people who focus on themselves; their financial capacity is stunted.

Plan your money just as you plan your life – No matter how much money you have, a clear spending plan and reporting exercise is necessary. A simple budget and recording of expenditure will help you realize where your money is going. It removes the surprise factor where “suddenly” you realize you actually no longer have the money you used to claim you have. Money sometimes seems to “disappear” from your wallet but it is all because you have poor management skills as an individual. You must be able to account for every cent that you spend. Failure to do so will make you an enemy of your own greatness.

Make decisions with the knowledge that each one affects your bank balance – It does not matte the color, size or nature of decision you make each day, it either adds to your money or takes away. One man taught me that Every decision has a financial consequence. Think about that each time you decide. As long as you are alive, you will always have to make decisions. Daily you are either making a decision that will take money away from you or increasing the money available to you.

Never Borrow money to finance an expenditure – I can agree with you if you say to me you borrowed in order to finance an order you had received. You borrowed to buy a house or some other asset that can generate revenue. People who borrow lots of money to spend on their stomachs lack vision. Why eat a sumptuous meal out of borrowed finances knowing that you are simply meeting an endless temporary pleasure. Most people approach banks for financing and wonder why their applications are not approved. Check your reason for entering into debt and count the cost. If you are borrowing so that your money will multiply and create a better bank balance for you then you are on the pathway to success. You definitely need money to make money – Most ideas need financing. I do know however that there are many who have managed to start businesses without money. You see, the pro-VISION always follows VISION just as CREAM follows DREAMS. You have to have vision first and money will pursue it passionately.

Inflation is crafty in his theft. He doesn’t take all the power of your money at once; he bleeds it slowly and steadily, counting on a general naiveté of money, banking, and financial markets to prevent the call for his head. Inflation hides his theft in a snowstorm of official-looking reports and statistics.

Inflation is egalitarian in his theft. Whether a man has 10 dollars or 10 million dollars, he’ll take six cents out of each dollar this year. He taxes each man in direct proportion to the amount of money he holds.

In distributing that money, however, inflation is the lowest type of thief. He takes the 60 cents from the poor man and the 600,000 dollars from the rich man and gives it all to the rich man less a few pennies for administrative expenses. Even when the rich man pays the wages of the poor man, inflation has again stolen a little of its value by the time poor man gets his hands on it.

Who is inflation and where did he come from? In times gone by, inflation was born on a printing press and in the counting houses of kings. Today, with just a stroke of a pen and the clicking of a computer keyboard in a central bank he springs to life.

In simplest terms, inflation is too much money chasing too few goods. In more technical terms, inflation is the result of a total money supply that has become undocked from the total goods and services produced. He owes his entire existence to money masters who have convinced themselves that the process of moving money from hand to hand and around the world is too messy to happen without their meddling.

Who are these money masters? They are lonely, twisted practitioners of the dismal science of economics, confident in their ability to succeed in a task which is beyond the capability of any group of men. With religious fervor they hold tight to their beliefs despite thousands of years of failure, and each quarter proudly proclaim, “this time, we got it right.”

But, it is only by chance that they actually make a correct decision. You see, to truly succeed, they must divine what every man, woman, child, business, corporation, investor, fund, speculator, government, nation, group, and natural force will do today, tomorrow, next week, and on into the future. By its very definition this is an impossible task, but prognostication is only part of the job.

Once the money masters compile their assumptions about assumptions, they must attempt to guide their ship down a narrow channel bounded on one side by confidence in the money they create and destroy, and on the other side by investments they have made in the infamously ravenous governments of the world. Any errors in navigation will take months to detect and years to correct.

If the money masters of the central bank create money faster than the rate of growth of domestic production, prices for goods and services will rise and that money will flow to other nations to buy their less expensive goods. Deluged with a surplus of that currency, foreign monetary exchanges discount it, which inflates the prices of foreign goods in terms of that currency.

The impossible task of predicting how many computers will be sold, how many houses will be built, and how fruitful the farmer’s field will be is further complicated by a government that spends more than it takes in. If the government issues more bonds than the money masters predicted, the central bank has to purchase those excess bonds to protect its previous investments. The supposedly omniscient money masters have to create more money than they intended to pay for them.

If the poor man gets a raise next year, he may, again, be able to afford the goods he could earlier this year. If not, his standard of living is continually decreased. Meanwhile, the government spends the newly-created money with wealthier corporations and individuals, giving them the benefit of using the money before prices become inflated.

Master your inner thoughts and spoken words

Your inner thoughts are the start of everything that you create. What you focus on expands. Negative, fear based thoughts will manifest themselves into reality if you allow them to grow in your mind. You must focus on the things that you want so that it expands and manifests in your life. Your words are also important as negative words such as “I can’t afford it” or “I will never be rich” will send out the wrong message. The universe only responds to thoughts and words of abundance. From this moment forward stop yourself the second you think or say a negative word and immediately replace it with something positive. You must believe that you can be rich and live a life of abundance. If you have the mental capacity to read this article then it is your duty to get rich so that you can help those that are less fortunate than yourself.

Create a spending plan

A spending plan specifies exactly how you will spend and save your money. I prefer not to call it budgeting as this implies constraint and scarcity of choices. A spending plan on the other hand suggests mastery and control of your finances. It is vital to track every cent that you spend. The idea is to create a list of spending priorities that is aligned to what is most important to you. There is one thing that is non-negotiable. You may not spend more than your earnings and at least 10% of your income must be saved so that you can build capital for investment. You should have a short-term plan that covers the period of a month and a long-term plan that is for a year. This is because certain expenses like home improvements may need longer planning periods. Long term home improvements can also be managed by taking out a loan and paying a fixed monthly amount that fits in with your plan.

Simplify your lifestyle

You can save and live a life with lesser stress if you just simplify. An expensive car and dining out at popular restaurants is not a necessity. Don’t drink coffee at Starbucks or spend money on fancy branded clothing. Once you are earning your desired working income then you can treat yourself to luxuries but if you are struggling to save then really think hard about your lifestyle and spending habits.

Pay off your bad debt

Credit card debt is bad if you pay just the minimum amount every month. If you have a large credit card bill then do your best to pay if off quickly.This is because the high interest will keep you in debt for many years to come and will result in you paying more than the original amount. Sometimes it is necessary to take out a loan to take care of an emergency or a home improvement project. This is not avoidable but get the best interest rate possible and pay more than the required monthly amount so that the loan is disposed off quickly.

Create a balance sheet and income statement

This might sound like a scary proposition and you may think that these financial reports are just for businesses. This is not true, every person needs these drawn up so that they know what their net worth is. A person may be earning a really good income but can still have a very low net worth. Net worth is the total of all your assets such as cash, investments, properties and cars minus your liabilities such as loans. A person can have many assets but may still be in big trouble if they can’t pay back their liabilities. The ideal situation is to have assets that you own completely and liabilities that are not more than 40% of the value of your assets.

Financial Goals

If you have no financial goals then you have nothing to aim for. There is no point in saying you want to get rich. You have to specify the exact amount and the exact date you want it. What is the ideal working income that you want? Write down the exact amount then double it to take into account taxes. What is the exact amount of money that you wish to have in your bank account in five years time? What would you like your net worth to be in five years time? Write down all these figures and look at them everyday before you go to sleep and again when you awaken in the morning. This gives your subconscious mind something to aim for and manifest into your life.

Learn to invest

The interest your money earns in banks or financial institutions will never make you rich. It is important to earn more than 20% interest every year on your money. Financial institutions will never be able to do this for an individual. It is up to each person to learn the skills to invest in the stock market and residential property market. This is a long-term commitment which requires diligent study and application. You must read the books, attend the seminars and listen to a good mentor so that you can acquire the required knowledge. Once you have the knowledge then massive action and discipline is needed to execute the investment strategies. The work is hard but it will be worth it if you can retire early and not have to worry about whether you can afford the lifestyle you want.

“How can my savings be losing value? I put them in a bank, and they are earning interest every year!” Well, this is true, but when inflation is taken account of, they are actually losing money. Inflation is easy to understand if you look back 50 years. Back in the 1960’s, you may have been able to buy a house with just a few thousand pounds – but what can you do nowadays with that much? Not an awful lot, because of inflation. The cost of everything has increased. Let’s say the rate of inflation is 10% each year, but your bank pays 8% interest on the money. If you had invested that few thousand, it would be earning interest, but since the cost of everything was increasing too, the actual value of that money in the bank – what it could buy you – was decreasing at the rate of 2% per year (10% inflation, minus 8% interest). Therefore, simply leaving money in the bank is not really helping yourself financially, at all.

As of today, the inflation rate in the UK is about 4-5%, while even the best basic savings account earn about 2% interest, with most earning only around 0.5%. It should be painfully obvious to you that if you are only earning 2% interest on your savings when the cost of things is increasing at twice that rate, you are losing out.

No, of course not. Not all of them anyway. However, if you wish to build equity and wealth – that is, to become richer – then simply putting money in a bank will not do it. Even if you work hard all your life, you could only ever hope to break even. This is the myth of saving. However, savings should always be kept around as a backup – the key is to diversify your money. If you had all of your savings in the bank, and the bank collapsed – as was the case with the recent collapse of the bank of Scotland and loss of millions of pounds – then all your money will be gone. If you split your saving up between 10 different banks, you would be covering your bases, but still only earning a basic rate of interest. The best thing to do is keep some in savings, keep some in one form of investment, and some in another etc.

The key to building worth is to invest in something that earns a higher rate of return than inflation. If inflation is 4.5%, you need to earn at least a guaranteed 5% to make that money work for you, and to build your wealth.

“But investing is risky, isn’t it?” Yes, and.. no. The rate of return that you can get from your money will depend entirely upon the risks that you take with it. If you are willing to risk the money on something that has a high chance of losing value, you may get a rate of return of 15%, or you may actually get a negative return of -5%. If you just want a safe 5% investment, there’s very little chance it won’t give that in return. You choose the level of risk you are willing to take, and you reap the rewards. Either way, you need to invest instead of simply saving.

The currencies exchange rate is the gain, and in exchange investing money slightest movement in the currency can fetch these companies thousands and thousands of dollars as they invest in bulk.

Forex trading is somewhat different than equity trading, and even individuals can attempt it, but exchange investing money is mostly tried by HNI (High net worth individuals) as it requires one to deposit a heavy sum. In the same D-mat account one needs to deposit extra and your account will be opened for exchange investing money.

There is a simple rule: Exchange of currencies from one hand to another at an ongoing price during the market hours. Exchange investing money is all about investing money in foreign currencies. One makes a profit by selling the currency at a higher price than the buying price. The economy of the country, its GDP, inflation everything counts in the rise of its currency. If US dollar slides because of any reason it is likely that the foreign currency will gain ground.

Exchange investing money is a highly liquid investing and one gets to trade 24 hrs a day. So now it is pretty much clear that money used to invest in money is called Forex or foreign exchange. One can determine currency moves through charts and graphs as well. Make sure to read about currency frauds and scams before venturing into this field.

The bottom line: exchange investing money is a very lucrative field, but only when you focus all your energy there. If you don’t know what you’re doing, this can be devastating to your portfolio.

If you do plan on investing with this field, take your time, learn the ropes, and make sure you know what you’re doing before getting in here. Once you are financially educated, you can start investing, and watch yourself get rich from exchange investing money.

The reality is that many people do not have enough money left over after paying their regular bills to comfortably attain many of the objectives and acquisitions that they desire. It may be almost impossible for you to live out your lofty dreams, solely on the proceeds of a regular paycheck.

Therefore, a critical part of your game plan to have a better financial year is to look at options to increase your earning ability. Without additional sources of income, you will be challenged in your quest to manage your budget, avoid burdensome debt, and save towards building your wealth.

Although they know that they need to improve their cash inflows, a lot of people find it difficult to come up with practical ideas to make more money. Others are afraid of doing something outside of their nine-to-five jobs. Let’s look at some simple ways in which you can generate extra cash.

Imagine how hard it would be to win a soccer match without knowing where the goal was located! Similarly, if you want to score on the financial field, you need to be clear about your money targets. So, your first step is to determine exactly how much more money you need to earn.

A detailed budget worksheet can help you to calculate the extra amount of cash that will be required to cover all your monthly requirements and save for additional demands. To make this process easier, you can download a ready-made budget form or app online.

List both your actual and desired costs in your budget. After adding up all your projected costs for a month and subtracting this figure from your income, you will arrive at a shortfall amount. If you were able to earn this much more each month, then you would be able to live your desired lifestyle.

Once you know by how much you need to increase your earnings, your next step is to convert this figure into a smaller amount that may seem more likely to be attained. When faced with a large deficit, you may get ‘brain freeze’ rendering you incapable of thinking of ways to earn extra money.

For example, if your budget reveals that you need another $900 per month to accomplish your objectives, break down this target amount into $225 per week or $30 every day. It will be easier for you to think of earning options if you focus on the smaller requirement than the big sum.

The next step is to convert the required dollar amount into the number of units that you have to sell to attain your target. To earn $30 per day, you may need to have five customers who provide you with $6 profit; or you could sell ten items, each supplying you with a profit of $3.

When trying to find realistic methods of making money, it is critical to be aware of the number of units you need to sell or customers to be serviced, and the profit you need to attain. Consider your options to ensure that you can reasonably earn your target in the time that you may have available.

• Window Shop- Banks are always trying to outdo each other for new business, interest rates and terms will vary from bank to bank, as will the bonuses that they will offer. Look at as many offers as you can and pick the best. Credit Unions are also worth looking into, and quite often they offer the best rates.
• Invest Big- While interest rates for money market accounts are higher than saving accounts, these are still considered conservative investments, if you want to earn a lot of interest, you need to invest a lot of money. Banks and institutions that offer the accounts, usually require large minimum deposits.
• Link your money market account to your checking account- Maybe not a great idea for your money making account, but this is a good safeguard against accidental overdrafts. Banks do charge huge overdraft fees.
• Avoid withdrawals- The whole point of a money market account is to earn interest; if you withdraw frequently, it sort of defeats the purpose. Banks also typically limit the number of withdrawals you can make to about six per month. Should you exceed that, there will be stiff penalties charged.
• Monitor your earnings- While it’s best to leave the money alone, it is also a good idea to keep an eye of how much it is earning, and whether or not you are getting the yields you expected.