Budget | wealthymatters

Gaurav Mashruwala On Teaching Kids About Money

January 25, 2012 5 Comments

wealthymatters.com Following is an excerpt from yesterday’s TOI.

A question that is frequently asked by the parents of young children is: How do we teach a child about the value of money and which is the right age to discuss the subject. The standard answer is that irrespective of their age, children today are already exposed to money-all the time, through media, through daily transactions with goods and services. Money is not just a currency of exchange, but an important factor underlying people’s lives, decisions, conversations and choices. Therefore, the child understands the power of money, says financial planner Gaurav Mashruwala. She or he starts believing that money can buy most things, especially given the onslaught of advertising. Most parents believe that exposure to money means discussing banking, investment, stocks, etc. However, money is about so much more-discipline, gratification, patience and value. In reality, there are four aspects of money-income, expenses, assets (investments) and liabilities (borrowing), says Mashruwala. A child needs to be exposed to all these aspects in a systematic manner. The right age to expose a child to money management is the day the child learns to spend money. Read more of this post

Filed under Theory, Tool Kit Tagged with bank account for kids, Budget, chocolate bank, financial planner, Gaurav Mashruwala, piggy bank, postaday, teaching kids about money

The Miscellaneous Head

April 13, 2011 4 Comments

The best laid budgets go wary.No matter how experienced the budgeter there are bound to be some minor unplanned for expenses.Mind you I am not talking of emergencies such as surgery or even infrequent expenses like say replacing a home appliance or unexpected expenses such as repairing a car.I’m speaking of small expenses such as an improptu evening out with friends or forking for a kid’s school project , toy or outing.These are the sort of expenses which call for a miscellaneous head in our budgets.Budgeting too tightly means there is no flexability to accomodate these small expenses and soon life is bound to become a drag.

The way to ensure there is always a little something for the extras is to decide on a figure and open a small savings account.If you withdraw from this account,top it up in the next budgetary cycle.This way you can be impulsive without upsetting the budget or going overboard with impulse spending.

Filed under Theory Tagged with Budget, budgetary cycle, emergency, flexibility, home accounts, Miscellaneous head, postaday2011, RandomBlog2011, savings account, unplanned expense

Dealing with Savers and Spenders

April 12, 2011 5 Comments

I found the following post here: http://www.misformoney.net/2009/04/opposites-attract-when-saver-marries.html . I found the advice pretty sage.It’s basically for couples to help them deal with different money habits but I don’t see why the tips can’t be used with the friends,colleagues and business associates we need to work with.

Opposites Attract – When a Saver Marries a Spender

Let’s be honest, it is common for couples to fight about money. It is also common to have two financial opposites in the relationship. This pairing provides special challenges, but there are many couples who make it work. It all starts with awareness, first about yourself and second about your partner. Read more of this post

Filed under Theory, Tool Kit Tagged with Budget, compulsive spender, fight about money, financial goals, money habits, saver, spender

5 Habits of Financially Successful People

March 9, 2011 1 Comment

Here is a piece I found while surfing at Wise Bread.com wealthymatters.com http://www.moneymanagement.org/Community/Blogs/Blogging-for-Change/2011/January/Five-habits-of-financially-successful-people.aspx Check if you have the following criteria in place if you are serious about being financially successful.

What is the true definition of financial success? Although it varies from person to person it can usually include: the ability to pay bills without worry, being free of debt, and having enough money in savings for things such as emergencies, family vacations, retirement, college funds, and more.

Being financially successful is easier said than done. There are no quick fixes or magic formulas for achieving financial success. Financially successful people understand the difference between wants and needs and how to create clear financial objectives for achieving their goals. Below are five habits of financially successful people. Read more of this post

Filed under Tool Kit Tagged with Budget, credit, credit report, dream, financial education, financial freedom, financial goals, Habits of Financially Successful People, interest rates, Money, plan, postaday2011, RandomBlog2011, saving, scams and frauds

Learn Wealth Building From The Millionaire Next Door

February 14, 2011 35 Comments

Do you want to be a millionaire? Then perhaps you should start by studying the habits of millionaires….. And this book is just the right place to start.

If you check lists of the best financial books of all time, you’re bound to find several that include The Millionaire Next Door: Surprising Secrets of America’s Wealthy. Written in 1996 by professors William Danko and Thomas Stanley, its main premise is that people who look rich may not be wealthy; they overspend — often on symbols of wealth — but actually have modest portfolios and, sometimes, big debts. On the other hand, many actual millionaires tend to live in middle-income neighbourhoods, drive economical cars, wear inexpensive watches, and buy suits off the rack.

Following are some of the gems of wisdom found in the book that the authors Danko and Stanley have gleaned from their thousands of surveys of millionaires.

#1: Income Does Not Equal Wealth
Yes, higher-income households tend to have more wealth than lower- and middle-income households. But the size of a paycheck explains only approximately 30% of the variation of wealth among households. What really matters is how much of the income is invested. On average, millionaires invest nearly 20% of their income.

Danko and Stanley even offer a “simple rule of thumb” formula for determining whether you have a net worth that is commensurate with your income:

Multiply your age times your realized pretax annual household income from all sources except inheritances. Divide by 10. This, less any inherited wealth, is what your net worth should be.

Those in the top quartile of wealth accumulation are prodigious accumulators of wealth (PAWs), according to Danko and Stanley. Those in the bottom quartile are under accumulators of wealth (UAWs).This formula also helps in sorting out the millionaires/millionaires-to-be(PAWs) and the millionaire-lookalikes(UAWs).Here is a calculator to do this calculation easily:https://wealthymatters.com/2011/01/17/am-i-wealthy-calculator/

#2: Work That Budget Read more of this post