Financial Handbook Research

Risks are a result of competing priorities that we do not plan for at any level of life. Background Everyone has an idea of what they need to do and what they plan to do. Companies, individuals, groups of people prepare budgets to guide their financial spending. People want to acquire houses, pay educations fees, invest in securities, invest in retirement schemes, invest in health schemes among other competing priorities. However, the problem of unexpected/ unforeseen expenses throws our budgets off the hooks (Australian Securities and Investment Commission, 2017). It is a process of creating a financial future, and the earlier one begins the better. The earlier one begins the greater the chances of solidifying the foundation and therefore creating plans that are achievable, measurable and realistic.

Laying foundation requires small but disciplined contributions, curtained over time and transformed into a savings. Saving requires a balance between spending and consumption. Saving requires one to spend less than one earns. People save towards short term issues and for long term objectives. After saving one invests. The level of investments and the reason for investments is the background of savings. The rate of saving is a factor of what one plans to invest in. Investment needs one to identify projects that are not only profitable, sustainable but also have a potential for growth in future. Different upbringing subjects different teens and tweens to different environments. Tweens that are born in low-income families tend to be more responsible at an early age while teens born in upper income families tend to have a way forward already drawn up.

A financial plan already set up, a savings plan initiated by parents already in session (Bernstel, 2002). Most of these families have wills drawn in their names, estates bequeathed under their administrator’s name. That, not withstanding, every teens and tweens need to solidify their financial base as early as possible to lay a foundation for future financial success. Budgets should be prepared in line with expected earnings and savings required. Teens should be taught that needs must be expensed from earnings before anything else. In the budgeting process the list of needs (expenses) must appear first. The difference between the expenses (needs) and the incomes should then have a portion set for saving and a portion set for wants like having to go for a weekend movie with friends.

This does not imply teens ought not to reward their efforts ahead of saving, as experts agree that rewarding oneself is the first step to acceptance of saving. The opportunities provided are the first step towards getting to the final career goals and financial goals by extension. The college situation is one that allows one to handle amounts of money ranging up to a few thousands. Regardless, what determines the financial success is how a student handles the amount of money at hand. The better one handles their finances, the closer one gets towards their goals of becoming self-reliant and self-dependent besides being able to invest for marriage, weddings, housing, insurance and lifetime investments in stocks, health and retirement benefit schemes.

It all has a strong foundation with college life. On a similar note, it is vital to open accounts that do not have penalties when minimum balance is reached, accounts that offer online banking even though this may also be risky for extravagant spenders. For purposes of cheque payments it is vital that cheques don’t bounce so us to avoid falling in the wrong books of the credit bureaus and incurring the extra penalties. It is vital to keep track of your financial income and incomes sources. It is important to have a stream of income and be able to track them. Such sources of fund include student grants, scholarships and sometimes if one is a work study student. The user should be free to switch between plans of meals as long as one avoids buying snacks and sodas from convenience stores.

In the purchase of food and on daily minimal expenses, one should know how to take advantage of student discounts and student perks. In addition, students should take advantage of student buses to and from home, reduce on movie outings on weekends and cut back on unnecessary costs. To help one achieve this, it is important to keep money in the banks to avoid the trap of impulse buying so as to seal the purchases loopholes at all costs. Students should also make shopping lists on a monthly basis and cut out on habits that are costly like drinking and smoking. Depending on the number of dependents and the financial obligations at hand, such people are also characterized by a stream of expenses.

There may not be a particular age for employment, but such people usually have plans for the future such as having a family, a wedding, plans to have their first or second investment, plans to own a home and plans to own a car and plans to join the defined contributions schemes among others. This is hardly the accumulation phase but saving will be that necessary expense. The key focus of this group is to settle. Settlement implies acquisition of basic home equipment like laundry machine, taking care of basic daily financial expenses which require a specific and elaborate budgeting. According to Credit Canada, it is prudent to save 10% to 15% if employed and 2% to 3% if not employed (Credit Canada, 2013). It is important to choose a bank that gives the best interest rates to save with.

The interest rates will be calculated as Interest Rate * Amount* Number of years of saving (Kapoor, Dlabay, Hughes, 2012). If one can have this interest earned compounded it would be better since the amount under compounding will be much more that the amount under simple interest. However, employed individuals tend to over spend because of surety of income after a specified period of time. This should however, not be construed to mean you don’t reward yourself when you achieve. This helps usher one into the home ownership and family face with comfort and ease. Couples Money Management for Couples Soon after employment one normally thinks of courting. Courting brings the extra strain on cash due to having an extra person but equally brings the extra cash that comes with the extra person assuming they too are employed.

The biggest hurdle is aligning the financial goals of both individuals you are able to plan your finances as a unit this is because it is noted that 70% of divorce are finance related (Palmer & Paull, 2013). These should be done as early as possible so that when children come, focus and full attention is given to children’s upbringing. It is important to note that spending will be much higher once the children are born. It is therefore important that budgets made for the year are realistic and reflect the increased demand. Couples should decide whether to pool their income together into one account, or have a percentage that is joint and a portion that is individually run. It is prudent that the budget reflects the portion that is out for spending only since savings must be higher than consumption at this stage to cater for the future increased needs.

However, the birth of the new born comes with a requirement for new financial rearrangement and realignment of goals of the family. Having a child ushers in an era of fresh responsibilities. It is important that as a new parent you aim to keep it simple only focusing on the basic necessities. It is important that when one is outlining their expenses, they should create an emergency fund, and realign their investment plans while also looking at their retirement times. For purposes of financial planning parents can have the following; 1. However, financial planning is a continuous process. In the normal course of life it is prudent to increase emergency funds in your budget and savings. It is prudent to keep four to six months of expenses worth in a savings account for emergency cash.

This account can be spread over into other income bearing investment as long as their retrieval is easy and fast. This amount could be put in interest bearing money markets, as certificates of deposits, treasury, short term U. This is a program that is usually set up by employers for their employees and requires enrollment and constant update. Planning for children’s College education It is prudent to start saving for college as soon as possible. Four years of college in a public university that is in-state resident is projected at about $110, 408. It is prudent to begin saving as early as when the child is born. For example, if you save $500 per month at 6% rate of return the amount would total to $191,000 by the time the child is ready for college.

Further, renting is only temporary and short term as finally one would wish to have a home under their full ownership and control. Consideration of other costs such as costs of security and renters’ insurance costs is also important. One can opt for a full home ownership. If one decides to pay through a mortgage, then it is vital to start thinking of the implementation of the home ownership process. One has to choose the best location for home, assessment of the units available and calculating the amount in your budget. On average, insuring a home costs $636 per year with some variations. It is advisable to purchase an umbrella policy that covers all liabilities, for example, if someone sustains an injury while in your garden.

It is also important to consider the available disaster insurance policies available. Disasters include hurricanes, floods, earthquake based on the disasters that are relevant to your area of residence. A standard flood policy could cost an average of $540 for a year. One could renegotiate for lower interest rates on mortgage, clear long overdue debts and maybe if possible, return some of the previous supplies that do not really seem like selling or seek appropriate financial assistance(Kapoor, Dlabay, Hughes, 2012). It would also be advisable that one sells unwanted items. These are assets that are obsolete, outdated or fully depreciated but can still fetch a few dollars. Such class of assets could help one make an extra dollar for other expenses. These are rare occurrences but however, whenever they occur it is important to make sure that during this time, your medical insurance is right in place, no month goes unpaid for, and your mortgage is duly serviced to avoid repossession as this would mean moving steps back.

Further, it is important to plan for as long a life post-employment as possible. It is not advisable to limit planning to 10 years because one might live another 30 years post-employment (Turner & Klein, 2014). As one plans, sources of income for retirement such as personal retirement benefits, employer pension plans, annuities and public pension plans should be maximized (Kapoor, Dlabay, Hughes, 2012). Planning post retirement For purposes of retirement, it is wise that one also prepares a retirement budget. After comparing the budget against the income, make sure all the income you are entitled to is streaming into your account. F. , & Houston, J. F.  Fundamentals of financial management. Cengage Learning. M. , Johnstone, R. , & Karandjeff, K. Beyond Financial Aid How colleges can strengthen the financial stability of low-income students and improve student outcomes.