How to Create Financial Wealth and Abundance

The biggest money myth is that financial wealth is measured by the amount of money an individual accumulates. In actuality, a much better way of measuring wealth would be the number of years of financial freedom that is accumulated. Here’s some background as well as a simple formula to measure your wealth thanks to Financial Breakthrough 101.

The purpose of money
When I ask people to tell me what money means to them, I hear words like freedom, security, and independence. Money, and having enough of it, allows us to do whatever it is that makes us happy. Whether or not we love our jobs, we still show up every day and do our best. And we do that in order to pay the mortgage and put food on the table.

That said, most people would rather be doing something else. I’ve yet to hear of anyone who revealed on their death bed that they wished they had worked more. Thus, money is essentially stored energy that allows us to do that something else, whether it’s spending more time with family or sailing around the globe. More information on how to build your wealth by singapore advance loan.

Financial freedom – years, not dollars
The measure I’m about to propose turns the commonly held perception of wealth on its ear. This benchmark turns some millionaires into paupers, and makes those with a modest $150,000 401K into the stinking rich.

Mistakes on Bank Loan Financial Breakthrough 101

Mistake #1: Underestimating the value of personal credit. Bankers look at your personal credit history (credit cards, mortgage payments and personal bills) to get a sense of your track record with financial responsibilities, says Michael Toth, Senior Vice President of Business Banking at KeyBank. “If a business owner hasn’t shown the diligence in managing their personal credit, there is potentially a stronger likelihood that they will take the same approach to their business credit,” he says.

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Mistake #2: Applying for the wrong type of loan. One of the most notable pitfalls Toth sees is small business owners using credit intended for a short period of time for a long-term purchase, or vice versa. “They will use the wrong type of credit product for the wrong type of purpose,” says Toth. For example, if you buy a piece of machinery with a loan that was intended to fill a short-term need like employee payroll, then you risk being saddled with a loan that you can’t get out from under.

Mistake #3: Expecting a loan without collateral or a plan to pay it back. A banker won’t approve a loan that he doesn’t think has a chance of getting paid back. So be sure to detail in your business plan how you are going to make the revenue to pay the loan back or any collateral you have to back it up. Also, be sure to explain why the loan is critical for your business.

Mistake #4: Waiting too long to approach a banker. Small business banking is about relationships. Toth says there’s a much better chance bankers will lend you money when you need it, if they already know who you are and what your business is. Not only will you develop that face-to-face relationship, but you will also have the opportunity go get your business financials organized and in shape with a banker’s eye in mind.

How You Can Learn from Extra Ordinary Individuals and Improve Your Path to Financial Success

1. Spend Less Than You Earn
This first principle is easily the hardest to implement and the most essential to your success. However, it is crucial that you understand the difference between a “need” and a “want.” For instance, you may “need” a reliable method of transportation to move from one location to another, while you “want” the newest luxury-model automobile with leather seats, GPS system, and chrome wheels. Don’t be seduced by the false promises of advertisers and salesmen. Use your money for essentials and save the excess for the future – the time for extravagance is after you’ve reached your goals.

2. Trust Your Instincts
No one has your interests in mind to the same degree that you do. You and your family will be the ultimate beneficiaries or victims of your financial decisions or those made on your behalf. For that reason, you should never take or agree to any investment action that you do not fully understand and are in total agreement with.
Setting yourself up for a solid financial future

3. Fulfill Responsibilities to Loved Ones
Remember, you’re not the only one in the boat. If something happens to you, such as the loss of your job, a serious illness, a disabling accident, or a premature death, others dear to you will be affected emotionally and financially. These obligations are best met by the judicious purchase of three important forms of insurance:

Health Insurance. The likelihood that you will experience an illness, medical condition, or accident requiring medical treatment is extremely high, and the costs of the subsequent treatment can be devastating. As a consequence, the purchase of health insurance should be every person’s first priority. You can save money on premiums by enrolling in your employer’s plan if it provides one, and by selecting a high deductible before the insurance company becomes liable. The difference between a $300 deductible and a $3,000 deductible can be several thousand dollars a year for a family. If you can qualify for a health savings account (HSA), establish one for the tax benefits it provides.

Life Insurance. A young, single person needs only enough insurance to pay his debts and burial expenses; parents with one or more children need enough insurance to replace their incomes for the family until the children become adults or through college. The cost of raising a child to age 18 (not including college), for example, was $226,920 in 2010 for the average middle-class family. The average cost for college tuition and room and board for a full-time student is an additional $17,633 per year; if you want your kids to go to a private four-year college, plan on a whopping $32,790 per year. Fortunately, the cost of term life insurance for a young adult is surprisingly inexpensive. For example, a healthy non-smoker at age 25 might buy coverage for as low as $25 a month for $500,000 of insurance. Both income earners in a family should have term life insurance, as their income should be replaced in the event of a death.

Disability Insurance. The insurance industry suggests that the odds of suffering a disabling injury that keeps you from working at least 90 days are 80% for the average 25-year-old. While your specific odds may be lower, depending upon your lifestyle and occupation, the impact of a disability is such that you should protect yourself and your family with disability insurance. Most employers who offer health insurance also offer a disability component. If it is available, take it – it is a small cost to pay for peace of mind.

4. Establish an Emergency Cash Fund
Bad things can happen. The amount of funds in your emergency fund should be an amount equal to a minimum of six months’ income in a cash or savings account. In other words, if you earn $60,000 after tax, have a minimum of $30,000 saved before you begin to consider other investments. While this amount may seem to be unreasonably high, you should keep in mind that according to a US News survey, the average duration between jobs in 2010 was 33 weeks – or more than seven months. It does not make financial sense to invest funds which might be needed with little notice in an investment that moves up and down in value; invariably, it will be low when you need to liquidate.
You can build emergency funds more quickly by taking advantage of employer-offered matching funds plans. In many cases, employers will match your investment dollar for dollar up to a specific percentage of your income in a company-sponsored plan. This means you make a return of 100% on your portion before you make any investment earnings. Take full advantage of any matching funds that your employer might offer.
Since your emergency fund should be kept in a low-risk security, consider the rates being offered by U.S. Treasury notes and bonds, as well as savings accounts of different banks and financial institutions. For example, a credit union, which has similar federal guarantees for their deposits, might pay a higher interest rate on your savings than a bank.

5. Make Time Your Friend
Recognize that financial security for most people is the result of a lifetime of accumulation, not a lucky event nor a sudden miracle. There is no mythic figure handing out million-dollar gifts, and all investments are not Apple or Microsoft. However, time and consistent investment can result in very large sums.
For instance, $100 per month at age 25 invested in a savings account at 5% per year will grow to almost $145,000 by retirement at age 65. The same investment in a balanced stock and bond fund with its historical 30-year return rate of 9.5% would grow to more than $460,000 during the period. Establish the habit of making some investment, no matter how small, each month.

6. Diversify Your Investments to Balance Risk and Reward
When you have adequate insurance and an emergency fund balance, it’s time to consider other investments. There are an array of possible investments, each of them with different investment characteristics.
Common stocks are popular with beginning investors, since their prices are readily available and securities can be easily purchased or sold most of the time. Equity securities can be purchased as stock in a single company, as an unmanaged portfolio of different company stocks or of stocks in different companies in different industries, or as a portfolio of stocks managed by a highly-trained professional manager with a public track record of results. Real estate is also popular with special income tax benefits, but real estate is generally more expensive to buy and sell and less liquid; it’s harder to turn your investment into cash.
Regardless of your investment choice, remember that all investments are volatile – they go up and down based upon the number of buyers and sellers at any specific time. While we are most aware of this regarding stocks because their price variations are reported in the daily newspaper, the value of real estate also varies over time. For this reason, no more than 10% of your assets should be invested in a single security or piece of real estate.
financial freedom

7. Relax and Take the Long, Certain Road to Financial Success
The ability to accept the unknown and to cope with the unexpected (such as wide swings in stock prices) is often referred to as “risk tolerance.” Everyone has a different level of risk tolerance which can also vary from day-to-day within a single person.
If you have any investment or might be considering an investment that will keep you up at night worrying about its outcome, avoid it or get rid of it. There are too many other viable investment opportunities available at legalmoneylender.org that will meet your objectives for you to lose sleep or suffer undue concern. If misfortune occurs, scream, take a deep breath, and make the best decision you can based upon the facts available to you. There are few things that can’t be remedied, including bad investment returns.