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Posts Tagged ‘extra money’

Financial Planning in a Bad Economy – Part 2 Shopping Banks, Safe Stocks, Dividends

Monday, March 9th, 2009

This continues the two part financial planning series. Previously we discussed the importance of budgeting and the downfall and ease of credit card pitfalls.

In a down market it is ok to hunker down in safe places as well as places which have been dreadfully dangerous. FDIC backed banks, badly beaten down stocks, and commodities can all be apart of your financial planning and investing future in a down economy and beat up financial market.

Shopping Banks is Safe and Wise

Although banks are collapsing in on themselves, as long as the Federal Deposit Insurance Corporation (FDIC) insures the bank, you can leave your money in a bank with peace of mind. The FDIC insures up to $250,000 of your deposit, which means that you are guaranteed this money no matter what happens. Making sure that the bank you chose is FDIC insured is crucial; furthermore, many people have just lost money by giving their money to banks that were not FDIC insured. Even though interest rates are not the greatest right now, it is better than nothing. Take the effort and look around banks in your area for the best interest rates for savings accounts and certificates of deposit. Taking this extra effort really will pay off.

Savings accounts generally have a much lower interest rate than certificates of deposits. However, money can be taken out of savings deposits anytime, but money can only be taken out of certificates of deposit at certain times. If you have extra money that you do not need right away, placing it in a certificate of deposit is a good idea. You can find certificates of deposits that last for three months, six months, one year, two years, or even more. The longer the time period; the higher the interest rate will be. It may seem minuscule, the extra money generated by the interest rates can add up quickly.

Stocks, Commodities, & Dividends

Investing in the stock market is very risky at this point in time, making money in the stock market is still possible. Doing plenty of personal research on companies and stocks from the Internet or literature is the first place to start. Just be warned that the greater the return on your money, the greater the risk of losing your money. Some stocks to steer away from are bank stocks. The government may nationalize these banks, which would make your stock basically disappear.

If you are looking for stability and are willing to take a lower return, search for stable companies that are recession proof. These companies would include those items that people cannot live without. Commodities, like gold and oil, are also items that will virtually never completely lose their value in the present time. Also, if you feel uncomfortable about investing your money even after researching, you may want to consider hiring a financial adviser who will do the investing and research for you.

Another way to make money on the stock market is searching for dividends. A dividend is a certain amount of money a company will pay a shareholder for every stock of that company he or she holds. Some companies have no dividends while others have dividends as high as $4.00. Dividends vary from company to company with some paying quarterly and some paying biannually. However, be cautioned that companies can change the frequency or price of the dividend at anytime.

Planning financially, making money, and saving money are still very possible in a down, unpredictable market. Taking the time and extra effort to research about banks and the stock market is worth it. Look for high interest rates in banks and high dividends in stocks. Additionally, get debt paid off as soon as you can to avoid a bad credit score, credit collectors, and interest rates taking over your life. Lastly, do not forget to write out a budget, and specifically give a set amount of money to spend on your living costs and luxuries to avoid spending excessive money.

If you missed Financial Planning in a Bad Economy – Part 1 here it is.

Financial Planning in a Bad Economy – Part 1 Budgeting and Credit Cards

Saturday, March 7th, 2009

This post is a two part series on financial planning and wise savings ideas in a down or troubled financial market.

In an economic market filled with volatility and uncertainty, knowing how to financially plan and where to invest money can be a mystery even to experts. With people losing jobs left and right, financial stability is hard to find for anyone. Therefore, everyone should know how to manage and know where to invest his or her money. Money can be saved in a bank or invested in the stock market even in a down market as this.

Concisely Budgeting Saves Money

The most basic key to successful financial planning is literally planning and writing out a budget. If you can physically see where your money is going and how much you spend on a certain items or luxury unnecessary, you are more likely to save money. If you track your spending habits without changing anything for the next week, you would be surprised in where you see your money go. People do not plan to fail; they fail to plan. Planning out exactly how you will spend your money, and adhering to your plan will result in saved money and extra cash for you. A big player in what got the economy in a downturn is excessive spending and buying. If you know that you cannot afford something, simply restrain yourself, and do not buy it.

Credit Card Pitfalls

Too often people forget that they will have to pay that credit card bill back. When you use a credit card, it is easy to think that you are not really spending your money because you are not physically using cash, but rather a plastic card. However, this money will absolutely have to be paid back at one point in time, and if you do not have the money, you will feel the consequences: bill collectors and a ruined credit score.

Do not waste your money on a new couch or car when you know that you are in risk of losing your job. You will need all the extra money you can save. If you know that you have some sort of credit card debt, as hard as it may be, try and get it paid off as soon as possible. Just making the minimum payment on credit cards is a trick by the credit card company. You will never pull yourself out of debt if you just pay the minimum payment because the interest will catch up faster than you can pay.

People tend to neglect the fact that interest rates do add up quickly if not paid off in time. Additionally, you need to carefully review the terms of your credit card. Too often, credit card interest rates will go up after a certain amount of time, thus, increasing the amount you will have to pay. Sadly, this happens to many unfortunate, poor people, but this is just the way the credit industry works.

In summary, simply creating a financial budget allows one to think carefully about where money goes and if your hard earned cash is being wasted or not. In addition to financial planning through budgeting , also relates to avoiding credit card pitfalls. It is easy to get caught up in credit card debt because of the ease of use, the delay of realization, and the killer credit card interest rates.

For more financial planning ideas in a down economy check out Shopping Banks and Safe Stocks and Dividends.

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