What's your housing affordability?

Category: Home Loan

Take a cold hard look at your finances and decide how much you can realistically afford.Are you ready to take a dip in the property pool as a first-time home buyer? With the recent favourable hike of the real property gains tax (RPGT) in the Budget 2014, perhaps your dream home will soon become a reality.Now that you are ready, do you know what kind of property and at what price point should you consider purchasing? To determine your housing affordability isn’t always easy. Can you afford the brand new condominium near the city? Or can you only afford an apartment in the suburb?How much cash do you need to have to purchase a RM300,000 property? Will you be able to afford the down payment or the monthly repayment with your current income?

Before you start scouring the property listings, take a cold hard look at your finances and decide how much you can realistically pay.How much can you afford?To determine an affordable price point for your first property, there are a few things you need to consider. Some of these considerations include, your monthly income, cash amount you have available, and how much you can borrow.

Your loan amount depends on a number of things, including the market value or purchase price of your house, the type of property (e.g. residential or commercial), the location of the property, and your profile (i.e. age and income level).To gauge the maximum property price you can afford, it is always best to ensure that the total monthly instalments on all your outstanding loans, and your prospective home loan do not exceed 70% of your net income. Net income refers to your income after deductibles, such as income tax and EPF.

Based on the example profile below, the purchaser is eligible for the maximum home loan tenure at 35 years. For borrowers above 30 years of age, the maximum tenure is tied to a borrower’s age. Most banks stipulate that borrowers repay their home loans in full before they are 65 or 70 years old.

Here’s the breakdown:

From the calculation above, the monthly instalment and other debt commitments do not amount to more than 70% of monthly net income. Hence, with a net monthly salary of RM3,500, you are most likely able to afford a RM400,000 property.To make it easier, use online home loan calculator available on www.iMoney.my to calculate the monthly instalment of a property.

Based on the monthly instalment, you will know the affordability of the property on your current net salary.What about upfront payments?It’s not all about monthly instalments – the largest upfront cost in a home purchase is the 10% down payment on the property. But that’s not all.First-time home buyers may not know it; but buying and financing a home takes more than just the down payment and the loan.

There are various miscellaneous fees and charges involved. Below is estimation* of the fees and charges that may be incurred:

1) Stamp duty for transfer of ownership title (also known as memorandum of transfer or MOT)

1% for the first RM100,000
2% on the next RM400,000
3% on the subsequent amount

2) Sale & Purchase Agreement (SPA) legal fees

1% for first RM150,0000.
7% of remaining value of property within RM1 million

3) Stamping for SPA – Less than a hundred Ringgit

4) SPA legal disbursement fee – A few hundred Ringgit

5) Loan facility agreement legal fees

1% for first RM150,0000.
7% of remaining value of loan within RM1 million

6) Stamp duty for loan – 0.5% of loan amount

7) Legal disbursement fee for Loan Facility Agreement – A few hundred Ringgit

8) Fee for transfer of ownership title – A few hundred Ringgit

9) Mortgage Reducing Term Insurance – Think of it as a life insurance for your home loan. It can come up to RM1,000 or more, but this may be optional with some banks.

10) Government Tax on Agreements –  6% of total lawyer fees

11) Bank processing fee for loan – RM200

*Note: The fees and charges are just an estimation based on recommended numbers and industry averages. Actual figures may differ.

To put things into perspective, a home valued at RM400,000 with 90% margin of financing may set you back by about RM20,000 in fees and charges – which will have to be borne by you, the buyer.It is advisable to always have extra cash on top of the money allocated for the 10% down payment before making any property purchases.

Yes, I’m ready!Once you have dotted the i’s and crossed the t’s, and most importantly, found your dream home,  it is time to shop for a home loan that offers the most competitive rate. Most people just jump on the first home loan offer and do not spend time to compare and research.With iMoney’s home loan calculator, you can easily compare the rates and apply online with no additional cost. With free consultation, first-time property buyers can rest assured that they are making the right financing decision for their new home.

- See more at: http://www.imoney.my/articles/making-dream-home-reality?utm_source=facebook&utm_medium=referral&utm_campaign=hl-affordability-link-11-11#sthash.gFVYLq77.dpuf

Choosing the Right Financial Planner in Malaysia

Let us look at a simple case of Azmi who is 30 years old today, married with a two-year old son. When he compares himself to his father, who is 55 and just retired, he finds that his current salary is about 20% higher than what his father got when the father was about 30 years old, Ceteris paribus, all else being equal.
However, the price of the same type of terrace house he just bought near to his father’s house is 70% higher than what his father’s house originally cost. Imagine, his father bought it when he was about the same age as Azmi now. Add on the rising cost of goods and services due to inflation, you can imagine the financial challenges Azmi has in providing for his family. Back then, his mother was a home maker. Today, Azmi’s wife has to work to contribute to the home’s finances. Fortunately there are more financial products and services made available which can help them. Unless they know which one to choose and how it can help him, the services of a financial planner will certainly be valuable in helping him chart his financial road map.

Before you go out looking for a financial planner, it would be good to know why you need one as this will help you determine the type of financial planner you want to work with you. Be aware of the type of planners and the services they provide. The following is a guide to help you.

Financial Advisors and Planners Defined

There are two main designations for people in the Malaysian financial planning industry, namely financial advisers and financial planners. The definitions below are for easy reference. A professional who offers financial advice to clients for a fee and/or commission. (http://financial-dictionary.thefreedictionary.com)
A person who counsels individuals and corporations with respect to evaluating financial status, identifying goals, and determining ways in which the goals can be met. Although many people call themselves financial planners, a large number are primarily interested in selling a limited number of products they represent.
A full-time professional planner, including a certified financial planner, an investment manager, or a tax attorney, may be better able to provide unbiased advice to the investor. See also certified financial planner and chartered financial consultant (ChFC).

 

Wall Street Words: An A to Z Guide to Investment Terms for Today’s Investor by David L Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved.
Is there a difference? Yes and no. Yes in regards to the different licensing bodies because of the different sector of the financial industry the applicants originated from. Traditionally, advisers who evolved from being an insurance agent are required to complete and pass the Registered Financial Planner (RFP) or Syariah RFP programme. Only then can they apply for the Financial Advisers Representative (FAR) license through BNM. This also applies to those with the ChFC qualification.
Planners who evolved from being a unit trust consultant or remisier will need to complete and pass the Certified Financial Planning (CFP) or Islamic Financial Planning (IFP) programme and apply for the Capital Market Services Representative (CMSR) license, financial planning through the Securities Commission Malaysia (SC).

Today, both BNM and the SC recognise and accept the RFP, Syariah RFP, CFP, IFP and ChFC for both applica- tions, the FAR and/or CMSR licenses respectively. In other words, either license qualifies the holder to sign for a financial plan and charge fees. In view of this, initially you may find that some advisers come from the angle of insurance protection while planners tend to work from the angle of investments.
Ultimately, the work the licensees do for their clients are the same, holistic financial planning regardless of the origin of the license. This is due to market demand.

Types of Advisers and Planners

Yes, there are other types of licenses besides financial advisers or planners but their practice is limited to specific areas of expertise. The two tables below will give you a quick overview on who offers what so that when you are approached, you better understand the services offered. The fast pace of business today has resulted in people working longer hours with little personal time at the end of the day. Most would want to spend these precious moments with their loved ones rather than crunch- ing figures of their personal finances at home. There are those who find numbers simply confounding, so why bother? Not forgetting the rising concerns of our government over national household debts. Bank Negara Malaysia (BNM) reported a 75.9% ratio of household debt to the gross domestic product in 2011, which is an increase from 2004’s ratio of 66.7%. Generally if you are either a very busy person or not one who cares much for numbers, yet want to have a more definite direction in your financial life, you will seek out the services of a financial planner (Table 1).

However, if you are great with planning your financial goals but need to know what products and services will be suitable and are available, you will then look for a financial intermediary in specific areas as shown in Table 2 for help. Know the difference between a wealth manager and financial planner. Wealth managers are product specialists who advise on products based on your needs. Financial planners work out your plan and recommend products to implement the plan if necessary.

http://moneycompass.com.my/en/choosing-the-right-financial-planner-in-malaysia-part-1/

Retirement Planning for Young Adults

6 Reasons to Start Now so You Can Reap Big Rewards Later

 

If you are a young adult, planning for retirement, which is decades in your future, may be very low on your list of financial planning priorities. Here are 6 reasons why retirement planning should become a top priority now.

 

The sooner you start saving the more your money can grow.

If you start investing even a small share of your income in a retirement plan when you are in your 20s, you may be surprised at the potential size of your retirement nest egg in your 60s. For example, let's assume that you earn $40,000 annually at age 25, that your income will grow at a rate of 3% a year, that you will put 1% of your gross income in a retirement fund each year, and that you can earn 5% on the funds in your retirement account. Based on those assumptions, you would have more than $75,000 in your retirement fund at age 65. Putting away 1% of $40,000 could be relatively painless, since it amounts to just $400 or only $33 per month.

Make saving even more painless by setting up automatic withholding.

If you have a share of your pay automatically withheld and deposited into your retirement account before you receive your paycheck, you will quickly stop noticing the missing funds, resulting in an even more painless retirement savings plan.

You may be able to turbo charge your retirement savings with employer matches.

Check with your employer's personnel department and find out if your firm will match any of your contributions to your retirement plan. Many do-often matching contributions up to a set percentage of pay. If possible, save at least as much as the company matches, which will double your annual contribution up to that level. Thus, in the example above, if you put 1% of you income in your retirement account and your employer matches that amount each year, instead of having more than $75,000 at age 65, you will have more than $150,000.

Your retirement plan contribution may be tax deductible, reducing its actual cost to you.

For example, if you make a $100 tax-deductible contribution to your retirement plan and your marginal federal tax rate is 15%, the deduction will save you $15 in federal income taxes, reducing the cash cost of your contribution to $85.

For maximum reward, keep your hands off your retirement accounts.

While retirement accounts can be a tempting target in the event of a financial emergency, make raiding your retirement account a last resort. Not only can dipping into your retirement funds torpedo your financial future, but it can be doubly costly, since early withdrawals from many retirement plans funded with tax deductible contributions will be hit with a penalty as well as a tax bill.

Count on yourself for financial independence in retirement.

Perhaps the most compelling reason for you to begin saving for retirement as early as possible is that, given current trends, you may have to provide a large portion of your retirement income yourself. Increasingly, traditional pension plans are disappearing or, where they still exist, they are becoming less generous. Also, changes in the federal Social Security program could be ahead, possibly resulting in lower payments to future retirees.

http://voices.yahoo.com/retirement-planning-young-adults-7882730.html?cat=3

10 Mistakes Made by People Without a Financial Plan

10 mistakes made by people without a financial plan (Personal Money) - 01 Apr 2010

One of my favourite authors wrote: “Sometimes we can’t see the real value of a thing by just asking what its benefits are. We need to ask what problems we will face if we do without it in order to see the real and full value of something.” I believe the same applies to the value of a financial plan to our personal money management. In this article, I would like to share the common mistakes people make in managing personal money without referring to a financial plan?

Without a financial plan, you won’t know where you stand now in your journey to your financial freedom (it is like traveling without a road map). Are you there already, are you halfway through or are you hopelessly lost? You just won’t know. Without knowing how far away you are from your financial freedom, you won’t know what actions to take to move you closer to your goal. Even if you do take some action, without knowing the right direction you may be heading further away from your financial freedom. For example, you may invest in an investment product that promises high returns so you can achieve your financial freedom faster. However, this may turn out to be too risky an investment that loses you money instead and pulls you further away from your destination: financial freedom. When you have no big picture of the various alternatives or routes to help you reach your financial freedom, you don’t have a clear guide on what you should do to achieve your financial freedom. As a result, it is all too easy to make mistakes and waste your wealth unnecessarily. So, what are the 10 common mistakes people make without a financial plan?

1.   Under save

Without a financial plan, it is hard for one to imagine how much money one need to support his future financial goals and commitment. Without that idea, one tends to feel that they can afford to spend most if not all of their current income. As a result, there is either very little or no saving at all.

2.   Over save

On the other hand, some people tend to save a lot and spend very little. They believe that the more they safe, the better their financial position will be. However, this is only half correct. We save money to achieve financial goals and make our life better. We don’t just save for the sack of saving. By having a financial plan, you get to know the optimal saving amount and also optimal spending. As a result, it prevents you from over saving and become the true master of your money.

3.   Under or over insure

Since everyone has different needs of protection, it is hard for one to determine how much he should insure himself for his own circumstances without clear picture of his financial situation. As a result, one tend to over insure himself if he is risk averse. On the other hand, one tend to under insure himself if he is a risk taker. By having a tailor-made financial plan, you can tell how much insurance coverage necessary for own needs and avoid spending unnecessary money on insurance premiums.

4.   Commit too big a house

Without a financial plan, it is hard for one to know the right amount to spend on his own home. Therefore, most people will determine their affordability based on their ability to pay the down payment and service the monthly mortgage installments. However, this consideration fails to assess how this purchase will affect your ability to achieve other future financial goals. As a result, they end up buying too expensive a house and put a strain on the other financial goals. By having a financial plan, you will be able to know the real price (opportunity cost) you have to pay for that home purchase. You will be able to know how much you need to adjust your children’s tertiary education, your retirement age, your retirement income and other financial goals to accommodate that purchase.

5.   Over or under spend on children’s tertiary education

Without a financial plan, you can’t see the impact of your children’s tertiary education funding on other financial goals. Therefore, you may over or under spend on children’s tertiary education. In proper financial freedom planning, we would like to know the optimum amount for us to spend on children’s tertiary education. The idea is not to over spend one child and affect the funding of other financial goals or worse still affect the funding of other children’s tertiary education. On the other hand, you also don’t want to under-spend on children’s tertiary education and regret it later in life.

6.   Invest into unsuitable investment products

Without a financial plan, you don’t know the right investment return (ROI) that will help you achieve financial freedom and yet is not too risky. As a result, you may end up investing into too high risk investment products that may deplete your hard-earned money if you target too high a ROI, for example 20 or 25% per year. If you target for too low ROI, you may end up investing into too low return investment products that may not help you achieve your desired financial goals.

7.   Over invest into properties

Without taking into consideration of a diversified asset allocation in a financial plan, one may end up over investing into properties. Properties investment is not bad but over investing into properties is bad. It will expose you to too much risk into one asset class and badly affect your investment if property sector takes a dip. In addition, it may also affect your cash flow if you take a lot of loan to finance your property investment.

8.   Undersell your business

A good sale of your business can provide you enough funding for your financial freedom and complete retirement. On the other hand, a bad business sale will fail to give you sufficient fund for your financial freedom and complete retirement. Without a financial plan, it is difficult for one to know the complete impact of business sale to his financial freedom planning. Therefore, there is a risk of underselling your business.

9.   Retire too early or too late

In retirement planning, you don’t want to retire too early whereby you don’t have enough financial resources to support your retirement life style. You also don’t want to retire too late that you don’t have enough time to enjoy life. Without a financial plan, one seldom has enough information to make the optimum decision. As a result, you will either retire too early or too late.

10.   Start planning and taking action too late

Without financial plan, you don’t know the exact price you need to pay for procrastination, either procrastinate in saving, investing or insuring. Basically, you don’t feel the pain of not taking the actions now. As a result, you tend to take it easy until it is too late to enjoy the benefits of early planning and action.

Since our money is always limited, we should avoid every single mistake that will waste our money unnecessarily and stop us from achieving financial freedom. Therefore, arm yourself with the big picture and the best routes today by creating your own financial plan.

http://www.yapminghui.com/articles.php?a=more&id=237

Want to Be Happier? Stop Doing These 10 Things Right Now

Blaming

People make mistakes. Employees don't meet your expectations. Vendors don't deliver on time. So you blame them for your problems. But you're also to blame. Maybe you didn't provide enough training. Maybe you didn't build in enough of a buffer. Maybe you asked too much, too soon.

Taking responsibility when things go wrong instead of blaming others isn't masochistic, it's empowering—because then you focus on doing things better or smarter next time. And when you get better or smarter, you also get happier.

Impressing

No one likes you for your clothes, your car, your possessions, your title, or your accomplishments. Those are all "things." People may like your things—but that doesn't mean they like you. Sure, superficially they might seem to, but superficial is also insubstantial, and a relationship that is not based on substance is not a real relationship.

Genuine relationships make you happier, and you'll only form genuine relationships when you stop trying to impress and start trying to just be yourself.

Clinging

When you're afraid or insecure, you hold on tightly to what you know, even if what you know isn't particularly good for you. An absence of fear or insecurity isn't happiness: It's just an absence of fear or insecurity.

Holding on to what you think you need won't make you happier; letting go so you can reach for and try to earn what you want will. Even if you don't succeed in earning what you want, the act of trying alone will make you feel better about yourself.

Interrupting

Interrupting isn't just rude. When you interrupt someone, what you're really saying is, "I'm not listening to you so I can understand what you're saying; I'm listening to you so I can decide what I want to say."

Want people to like you? Listen to what they say. Focus on what they say. Ask questions to make sure you understand what they say. They'll love you for it—and you'll love how that makes you feel.

Whining

Your words have power, especially over you. Whining about your problems makes you feel worse, not better. If something is wrong, don't waste time complaining. Put that effort into making the situation better. Unless you want to whine about it forever, eventually you'll have to do that. So why waste time? Fix it now.

Don't talk about what's wrong. Talk about how you'll make things better, even if that conversation is only with yourself. And do the same with your friends or colleagues. Don't just be the shoulder they cry on. Friends don't let friends whine—friends help friends make their lives better.

Controlling

Yeah, you're the boss. Yeah, you're the titan of industry. Yeah, you're the small tail that wags a huge dog. Still, the only thing you really control is you. If you find yourself trying hard to control other people, you've decided that you, your goals, your dreams, or even just your opinions are more important than theirs.

Plus, control is short term at best, because it often requires force, or fear, or authority, or some form of pressure—none of those let you feel good about yourself. Find people who want to go where you're going. They'll work harder, have more fun, and create better business and personal relationships. And all of you will be happier.

Criticising

Yeah, you're more educated. Yeah, you're more experienced. Yeah, you've been around more blocks and climbed more mountains and slayed more dragons. That doesn't make you smarter, or better, or more insightful. That just makes you you: unique, matchless, one of a kind, but in the end, just you. Just like everyone else—including your employees.

Everyone is different: not better, not worse, just different. Appreciate the differences instead of the shortcomings and you'll see people—and yourself—in a better light.

Preaching

Criticising has a brother. His name is Preaching. They share the same father: Judging. The higher you rise and the more you accomplish, the more likely you are to think you know everything—and to tell people everything you think you know.

When you speak with more finality than foundation, people may hear you but they don't listen. Few things are sadder and leave you feeling less happy.

Dwelling

The past is valuable. Learn from your mistakes. Learn from the mistakes of others. Then let it go. Easier said than done? It depends on your focus. When something bad happens to you, see that as a chance to learn something you didn't know. When another person makes a mistake, see that as an opportunity to be kind, forgiving, and understanding.

The past is just training; it doesn't define you. Think about what went wrong, but only in terms of how you will make sure that, next time, you and the people around you will know how to make sure it goes right.

Fearing

We're all afraid: of what might or might not happen, of what we can't change, or what we won't be able to do, or how other people might perceive us. So it's easier to hesitate, to wait for the right moment, to decide we need to think a little longer or do some more research or explore a few more alternatives.

Meanwhile days, weeks, months, and even years pass us by. And so do our dreams. Don't let your fears hold you back. Whatever you've been planning, whatever you've imagined, whatever you've dreamed of, get started on it today. If you want to start a business, take the first step. If you want to change careers, take the first step. If you want to expand or enter a new market or offer new products or services, take the first step. Put your fears aside and get started. Do something. Do anything. Otherwise, today is gone. Once tomorrow comes, today is lost forever.

Today is the most precious asset you own—and is the one thing you should truly fear wasting.

Be Happier: 10 Things to Stop Doing Right Now 

8 Financial Tips For Young Adults

Unfortunately, personal finance has not yet become a required subject in high school or college, so you might be fairly clueless about how to manage your money when you're out in the real world for the first time. If you think that understanding personal finance is way above your head, though, you're wrong. All it takes to get started on the right path is the willingness to do a little reading - you don't even need to be particularly good at math.

To help you get started, we'll take a look at eight of the most important things to understand about money if you want to live a comfortable and prosperous life.

1.    Learn Self Control

If you're lucky, your parents taught you this skill when you were a kid. If not, keep in mind that the sooner you learn the fine art of delaying gratification, the sooner you'll find it easy to keep your finances in order. Although you can effortlessly purchase an item on credit the minute you want it, it's better to wait until you've actually saved up the money. Do you really want to pay interest on a pair of jeans or a box of cereal? (To learn more about credit, check out Understanding Credit Card Interest and our Debt Management feature.)

If you make a habit of putting all your purchases on credit cards, regardless of whether you can pay your bill in full at the end of the month, you might still be paying for those items in 10 years. If you want to keep your credit cards for the convenience factor or the rewards they offer, make sure to always pay your balance in full when the bill arrives, and don't carry more cards than you can keep track of.

2.    Take Control of Your Own Financial Future

If you don't learn to manage your own money, other people will find ways to (mis)manage it for you. Some of these people may be ill-intentioned, like unscrupulous commission-based financial planners. Others may be well-meaning, but may not know what they're doing, like Grandma Betty who really wants you to buy a house even though you can only afford a treacherous adjustable-rate mortgage.

Instead of relying on others for advice, take charge and read a few basic books on personal finance. Once you're armed with personal finance knowledge, don't let anyone catch you off guard - whether it's a significant other that slowly siphons your bank account or friends who want you to go out and blow tons of money with them every weekend. Understanding how money works is the first step toward making your money work for you. (To find out how to have fun and still save money, see Budget Without Blowing Off Your Friends.)

3.    Know Where Your Money Goes

Once you've gone through a few personal finance books, you'll realize how important it is to make sure your expenses aren't exceeding your income. The best way to do this is by budgeting. Once you see how your morning java adds up over the course of a month, you'll realize that making small, manageable changes in your everyday expenses can have just as big of an impact on your financial situation as getting a raise. In addition, keeping your recurring monthly expenses as low as possible will also save you big bucks over time. If you don't waste your money on a posh apartment now, you might be able to afford a nice condo or a house before you know it. (Read more on budgeting in our Budgeting 101 special feature.)

4.    Start an Emergency Fund

One of personal finance's oft-repeated mantras is "pay yourself first". No matter how much you owe in student loans or credit card debt and no matter how low your salary may seem, it's wise to find some amount - any amount - of money in your budget to save in an emergency fund every month.

Having money in savings to use for emergencies can really keep you out of trouble financially and help you sleep better at night. Also, if you get into the habit of saving money and treating it as a non-negotiable monthly "expense", pretty soon you'll have more than just emergency money saved up: you'll have retirement money, vacation money and even money for a home down payment.

Don't just sock away this money under your mattress; put it in a high-interest online savings account, a certificate of deposit or a money market account. Otherwise, inflation will erode the value of your savings.

5.    Start Saving for Retirement Now

Just as you headed off to kindergarten with your parents' hope to prepare you for success in a world that seemed eons away, you need to prepare for your retirement well in advance. Because of the way compound interest works, the sooner you start saving, the less principal you'll have to invest to end up with the amount you need to retire, and the sooner you'll be able to call working an "option" rather than a "necessity".

Company-sponsored retirement plans are a particularly great choice because you get to put in pretax dollars and the contribution limits tend to be high (much more than you can contribute to an individual retirement plan). Also, companies will often match part of your contribution, which is like getting free money. (To learn more, see Understanding The Time Value Of Money and Retirement Savings Tips For 18- To 24-Year-Olds.)

6.    Get a Grip on Taxes

It's important to understand how income taxes work even before you get your first paycheck. When a company offers you a starting salary, you need to know how to calculate whether that salary will give you enough money after taxes to meet your financial goals and obligations. Fortunately, there are plenty of online calculators that have taken the dirty work out of determining your own payroll taxes, such as Paycheck City. These calculators will show you your gross pay, how much goes to taxes and how much you'll be left with, which is also known as net, or take-home pay.

For example, $35,000 a year in California will leave you with about $27,600 after taxes in 2008, or about $2,300 a month. By the same token, if you're considering leaving one job for another in search of a salary increase, you'll need to understand how your marginal tax rate will affect your raise and that a salary increase from $35,000 a year to $41,000 a year won't give you an extra $6,000, or $500 per month - it will only give you an extra $4,200, or $350 per month (again, the amount will vary depending on your state of residence). Also, you'll be better off in the long run if you learn to prepare your annual tax return yourself, as there is plenty of bad tax advice and misinformation floating around out there. (To learn all about your taxes, visit our Income Tax Guide.)

7.    Guard Your Health

If meeting monthly health insurance premiums seems impossible, what will you do if you have to go to the emergency room, where a single visit for a minor injury like a broken bone can cost thousands of dollars? If you're uninsured, don't wait another day to apply for health insurance; it's easier than you think to wind up in a car accident or trip down the stairs. You can save money by getting quotes from different insurance providers to find the lowest rates. Also, by taking daily steps now to keep yourself healthy, like eating fruits and vegetables, maintaining a healthy weight, exercising, not smoking, not consuming alcohol in excess, and even driving defensively, you'll thank yourself down the road when you aren't paying exorbitant medical bills.

8.    Guard Your Wealth

If you want to make sure that all of your hard-earned money doesn't vanish, you'll need to take steps to protect it. If you rent, get renter's insurance to protect the contents of your place from events like burglary or fire. Disability insurance protects your greatest asset - the ability to earn an income - by providing you with a steady income if you ever become unable to work for an extended period of time due to illness or injury.

If you want help managing your money, find a fee-only financial planner to provide unbiased advice that's in your best interest, rather than a commission-based financial advisor, who earns money when you sign up with the investments his or her company backs. You'll also want to protect your money from taxes, which is easy to do with a retirement account, and inflation, which you can do by making sure that all of your money is earning interest through vehicles like high-interest savings accounts, money market funds, CDs, stocks, bonds and mutual funds. (Find out all you need to know about insurance in Understand Your Insurance Contract, Five Insurance Policies Everyone Should Have and Insurance 101 For Renters.)

A Financial Basis for Life

Remember, you don't need any fancy degrees or special background to become an expert at managing your finances. If you use these eight financial rules for your life, you can be as personally prosperous as the guy with the hard-won MBA.

http://www.investopedia.com/articles/younginvestors/08/eight-tips.asp

10 Tips For Achieving Financial Security

When it's time for you to retire, will you be able to afford it? Almost all of the research conducted on the subject, over the last few years, shows that most individuals are unable to demonstrate financial readiness for their retirement years. This only serves to underline the fact that saving for retirement is a challenging process that requires careful planning and follow-through. Here we review some helpful tips that should help you on your way to a comfortable retirement.

Start as Soon as You Can

It is obvious that it is better to start saving at an early age, but it is never too late to start - even if you are already close to your retirement years - because every penny saved helps to cover your expenses.

If you save $200 every month for 40 years at a 5% interest rate, you will have saved significantly more than an individual who saves at the same rate for 10 years. However, the amount saved over the shorter period can go a long way in helping to cover expenses during retirement. Also, keep in mind that other areas of financial planning, such as asset allocation, will become increasingly important as you get closer to retirement. This is because your risk tolerance generally decreases as the number of years in which you can recuperate any losses goes down.

Treat Your Savings as an Expense

Saving on a regular basis can be a challenge, especially when you consider the many regular expenses we all face, not to mention the enticing consumer goods that tempt us to spend our disposable cash. You can guard amounts you want to add to your nest egg from this temptation by treating your retirement savings as a recurring expense, similar to paying rent, mortgage or a car loan. This is even easier if the amount is debited from your paycheck by your employer. (Note: If the amount is deducted from your paycheck on a pre-tax basis, it helps to reduce the amount of income taxes owed on your salary.)

Alternatively (or in addition), you may have your salary direct-deposited to a checking or savings account, and have the designated savings amount scheduled for automatic debit to be credited to a retirement savings account on the same day the salary is credited.

Save as Much as You Can in a Tax-Deferred Account

Contributing amounts earmarked for your retirement to a tax-deferred retirement account deters you from spending those amounts on impulse, because you are likely to face tax consequences and penalties. For instance, any amount distributed from a retirement account may be subject to income taxes the year in which the distribution occurs, and if you are under age 59 1/2 when the distribution occurs, the amount could be subject to a 10% early-distribution penalty (excise tax).

If you have enough income, consider whether you can increase the amount you save in tax-deferred accounts. For instance, in addition to saving in an employer-sponsored retirement plan, think about whether you can also afford to contribute to an individual retirement account (IRA), and whether the IRA should be a Roth IRA or a Traditional IRA.

Diversify Your Portfolio

The old adage that tells us that we shouldn't put all of our eggs in one basket holds true for retirement assets. Putting all your savings into one form of investment increases the risk of losing all your investments, and it may limit your return on investment (ROI). As such, asset allocation is a key part of managing your retirement assets. Proper asset allocation considers factors such as the following:

• Your age - This is usually reflected in the aggressiveness of your portfolio, which will likely take more risks when you're younger, and less the closer you get to retirement age.
• Your risk tolerance - This helps to ensure that, should any losses occur, they occur at a time when the losses can still be recuperated.
• Whether you need to have your assets grow or produce income.

Consider All of Your Potential Expenses in Your Financial Plan

 
When planning for retirement, some of us make the mistake of not considering expenses for medical and dental costs, long-term care and income taxes. When deciding how much you need to save for retirement, make a list of all the expenses you may incur during your retirement years. This will help you to make realistic projections and plan accordingly.

Budget

Saving a lot of money is great, but the benefits are eroded or even nullified if it means you have to use high-interest loans to pay your living expenses. Therefore, preparing and working within a budget is essential. Your retirement savings should be counted among your budgeted recurring expenses in order to ensure that your disposable income is calculated accurately.

Periodically Reassess Your Portfolio

As you get closer to retirement and your financial needs, expenses and risk tolerance change, strategic asset allocation must be performed on your portfolio to allow for any necessary adjustments. This will help you ensure that your retirement planning is on target.

Reassess Your Expenses and Make Changes Where Possible

If your lifestyle, income and/or fiscal responsibilities have changed, it may be a good idea to reassess your financial profile and make adjustments where possible, so as to change the amounts you add to your retirement nest egg. For instance, you may have finished paying off your mortgage or the loan for your car, or the number of individuals for which you are financially responsible may have changed. A reassessment of your income, expenses and financial obligations will help to determine if you need to increase or decrease the amount you save on a regular basis.

Consider Your Spouse

If you are married, consider whether your spouse is also saving and whether certain expenses can be shared during your retirement years. If your spouse hasn't been saving, you need to determine whether your retirement savings can cover not only your expenses, but those of your spouse as well.

Work with an Experienced Financial Planner

Unless you are experienced in the field of financial planning and portfolio management, engaging the services of an experienced and qualified financial planner will be necessary. Choosing the one who is right for you will be one of the most important decisions you make.

The Bottom Line

What we've discussed here are just a few of the factors that may affect the success of your retirement plan and determine whether you enjoy a financially secure retirement. Your financial planner will help you to determine whether you should consider other factors. As we said before, starting early will definitely make the task ahead easier, but it is not too late to adopt some of these practices, even if you are already retired. 

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