How to know you're a smart money manager and how a DMM can help you
“Money, like emotions, is something you must control to keep your life on the right track.”
Can you consider yourself as a good money manager? ‘Yes’, ‘No’, or ‘Maybe’? Don’t worry! It may happen that unknowingly you’re following good money management habits.
Check out these 11 signs and judge whether or not you are good at money management. While analyzing your financial situation, you may also come to know that you’re rich than what you think of yourself.
So, keep a note of how many signs you can relate to yourself.
Check out these 11 signs that you are good at money management
1 You have opted for automatic payments
Do you get shocked after seeing your bills every month? No? Then, you’re on the right track and show signs that you’re good at money management.
Along with that, if you opt for automatic payments to your savings account, then you score some extra points.
2 Managing credit cards wisely is your strong point
You need to use credit cards and manage the payments in the right way. However, having too many credit cards is not advisable.
When you manage your credit cards wisely, it is the gateway to take out loans at favorable interest rates and in turn, help you enjoy a good lifestyle, and definitely, build a good financial future.
But, if you’re not able to manage your credit cards properly, you can easily fall into debt and will have to struggle to pay off your credit card debt.
3 You ensure to repay your credit card bills at every billing cycle
Another thing - When you’re paying with debit cards, keep a track of the money you’re spending.
4 You question yourself about the strategies you’re following
If yes, then you’re on the right track.
It is better if you consult a financial advisor from time to time to be sure that you’re following the signs of a good money manager. Through this analysis, you may also discover signs that you’re wealthier; that is, your financial planning and investments will bring profitable returns in the future.
5 Building an emergency fund is your top priority
Experts say that the ultimate sign that you are rich than what you think is to have an appropriate amount of emergency fund.
Building an emergency fund gives you peace of mind and in turn, you can save money on health issues.
It makes sense - right? :-)
6 Saving for retirement is your second priority
If building an emergency fund is your top priority, then saving for retirement definitely ranks second.
You can open a 401(k) account and deposit the maximum amount you’re eligible to and you’ll be assured to have a good life even after retirement.
7 You put emphasis on earning and not only on saving dollars
If you put more emphasis only on saving, then it’s a sign of being a poor money manager. Astonished? But, it’s true.
Most rich people rely on getting paid according to results, and are typically self-employed.
Don’t worry if you do a job and job satisfaction matters to you. Look for avenues to earn extra or try to get a promotion to earn more.
8 You have a diversified portfolio like a good money manager
One of the best ways to earn more is to invest wisely.
Researches have revealed that millionaires usually invest about 20% of their household income, every year. So, this is a definite sign to be wealthier.
Only investing is not enough; you need to invest in a diversified portfolio, so that if you don't profit from one investment or lose in one, other investments will help you achieve your financial goals.
9 You like updating knowledge on safe banking
Financially savvy people mostly use apps to be sure that they’re spending wisely.
It is advisable you check your account details from time to time so that you can report immediately if you find something fishy.
10 Only buying things you can afford is a sign that you are wealthier
It is not wise to load your credit cards to buy the things you want. Instead, save the amount and then buy, or at first make a plan to pay the amount back, and then go ahead with your buying urge.
Think - if you have the money to buy a RV (Recreational Vehicle) with cash, you can say that you’re rich. But, if you buy the same RV after about, say, 7 years, you’ll still be regarded as rich, but by then, you might have attained another financial goal.
Surveys point to the fact that about 33% Americans don’t have retirement savings or household savings.
11 Both you and your partner like talking about money with each other
A study from Fidelity Investment in 2015 stated that about 40% people don’t know how much their partner earns. This is not a right approach and can definitely be a sign that you are a poor money manager.
If you don’t have idea about total earning, how will you plan for your retirement?
Therefore, make the initiative to talk about money. You can select a money date every month - that’s the best way to talk solely about money management strategies to follow.So, how many of these signs do you follow?
Congrats! Even if you follow one or two - you’re on the right track. Start following the other tips and build a good financial future.
6 Things you might be doing wrong by being a smart money manager
You might have scotred good in the previous section. But, do you always think of money in order to handle your finances the smartest way? If "yes", then you are wrong.
Check out whether or not you're going in the wrong direction by doing these 6 things.
1. Thinking about money all the time
Several researches have found out that if you think about money all the time, which you might do in order to manage your money efficiently, you may be losing your capacity to make effective decisions.
You might be hesitant in making any other decision because the mind is always focused towards maximizing your financial gains. Studies also reveal that even a little amount of exposure to finance related thoughts can weaken moral resolve. For people, who are smart money managers, can't help but start thinking about money even when they listen to music.
2. Not able to multiply money properly
It is said that "A penny saved is a penny earned" However, to make this statement true, you need to invest that penny properly in order to multiply the cents you've saved. Similarly, when you are earning extra due to overtime or from any part-time job, most of you have the tendency to use it as rewards and spend it somewhere. Instead, you should create a separate fund in order to save these extra dollars, so that you don't have to worry about it and the money can grow.
3. Not buying good quality food
Often with the intention of saving money, you start compromising on certain items, like food. Remember that frugal living doesn't mean compromising with the necessities in life. It is advisable to not compromise on food quality.
If required, consult a professional to know what you need in order to maintain proper nutrition and try to find out ways to cut down cost.
For example, you can start couponing or look for deals, or even you can buy in bulk in order to save money.
4. Extreme couponing
Though couponing is a good habit to save money, yet smart money managers often begin extreme couponing. There are some disadvantages in doing so.
First of all, it takes a lot of time to sort and clip coupons and the habit may become addictive.
Think once - instead of spending so much of time in couponing, you can utilize the time in doing some other work or spending time with family. In order to manage money, extreme couponing can also entice you to eat unhealthy food since most of the coupons usually are for sugary and highly processed food items.
Rarely, you'll find coupons for organic and fresh fruits and vegetables.
5. Earning more not necessarily solves monetary problems
Most of you often think that earning more can solve all your financial problems and start thinking about how to earn more. However, this is not always true. If it's difficult for you to plan an effective budget and follow it, then the reason may be that you're having money management problems and not earning less.
Even if you start earning more, you might end up facing the same issue if you're not able to manage your finances properly.
6. Getting obsessed with being frugal
Practicing frugality can sometimes lead to becoming a chronic underspender. Such people begin to neglect basic necessities in life such as, avoid visiting the doctor so as to refrain from spending money.
It might also happen that they start taking advantage of others by leaving very little tip for a service or constantly arguing with service providers so as to get an item for free of cost. Some people also hesitate to invest in comparatively low-risk options such as, money markets or CDs.
If you continuously think of saving money, then you might lose interest in enjoying little things in life that give pleasure.
Read more: Read more: Stop being selfish and cheap and practice a frugal debt free life
For example, you may be hesitant to gift even a small item to your girlfriend which will surely make her happy. Or, you're not going to a long awaited vacation which you want to and your financial condition also permits you to do so. So, even if you'll have money, you won't be able to enjoy a good lifestyle. It is true that too much of anything is not good for you; but, you can buy a not-so-expensive gift for your girlfriend or take a vacation where you won't have to spend much.
It is advisable you try to strike a balance.
Try to save a decent amount every month and invest properly for better return in future and at the same time, try to enjoy a good lifestyle instead of worrying about money all the time.
What do you think? Isn't it a good approach?
However, if you're not being able to manage your finances on our own, you can take help of a daily money manager.
A daily money manager makes your financial journey comfortable. A daily money manager performs your basic financial works and helps to manage your personal finances. He comes to your aid when you can't control your overspending habits in spite of your best efforts.
Daily money managers - What kinds of tasks do they perform?
When you become obese due to lack of proper food habits, you consult a trainer in a gym. The personal trainer helps you to get back in shape. Similarly, a daily money manager (DMM) assists you in completing your daily financial chores.
Check out the tasks primarily done by the daily money manager:
(a) Screening your emails
(b) Repaying your several bills
(c) Managing accounts
(d) Making budget plans
(e) Making reports on expenses
(f) Solving disputes with the creditors
(g) Making file systems in digital formats
Can a DMM help to solve your financial problems?
A lot of times, people get into financial problems due to improper budgets and money mismanagement. They fail to follow a proper spending plan and as such face thunderous financial storms. Daily money manager helps these persons by pointing out the errors in their payment plans and budgets.
A daily money manager helps you keep a tab on your cash flow. You can know where your money is being spent. More importantly, you can find out if your money is going out from your checking account or credit card accounts.
Daily money managers help you spot the trouble areas and offer solutions to your problems. They help you live as per your means. They make you control your borrowing habits and help you follow proper spending plans. Besides, daily money managers show you the tactics to live without the plastic cards.
The daily money managers work hard to make your financial life less stressful. They help you to consolidate credit card debts. For example: they'll assist you to shift the outstanding balances of a card with high interest rates to a card with low interest rate. Then they'll develop a clever strategy to erase this credit card debt from your life.
Another good aspect of the daily money managers is that they help you spot the fraudulent financial transactions. They'll make you alert about the fraudulent activities. Most importantly they'll let you know if you're paying your credit card bills or another person's bills.
Daily money managers - How do they help to avoid money problems?
The cash flow reports prepared by the daily money managers are extremely helpful. These reports show the consumers how much they have spent at a given point of time. Some consumers are totally astounded to see these reports. These consumers can't believe that they have spent so much money in such a short span of time. Once they overcome their initial shock, they understand their major mistakes. Thereafter, they work with the money managers to rectify those mistakes.
The daily money managers compel the consumers to discard unhealthy money habits. Sometimes, they use aggressive tactics to make the consumers reduce their spending habits. Instances are there when the daily money managers have put the credit cards into the refrigerator to stop the consumer from using them.
Daily money managers - Can they help you to have a peaceful marital life?
A common cause of the marital quarrels is the financial problems. Couples have frequent fights on the financial issues. A daily money manager listens to the versions of both the individuals and find out effective solutions to the problems. The money manager helps to fulfill the desire and wishes of the respective individuals through smart budget planning. This in turn helps to make the relationships better.
There is one thing which needs to be remembered though. Daily money managers can't do miracles. The couples need to support the money managers by making rapid adjustments in their life. They need to have faith upon the money managers and follow their instructions.
Financial planner: 6 Questions you may ask and tips to spot a trouble
Financial planners show you the correct road to a happy financial life. They suggest you the tips and strategies to repair your damaged financial health efficiently. The planners also help you cure your financial diseases and restore your health.
Usually, people don't hesitate to bombard nurses and doctors with all the questions in their minds. But it has been observed that some people avoid asking tough questions to the financial questions. It may be the case that people feel uncomfortable about discussing about money. But this should not be the case. You should ask several questions to the financial planners before working with them. This will help you know whether or not the planner has sufficient knowledge and expertise to bail you out of your financial problems. Read on to know about 4 essential questions you must ask to a financial planner.
Questions you should ask your financial planner
Check out the 4 essential questions you should never forget to ask a financial planner:
Q1. What is your educational qualification?
A. Any one can claim himself to be a financial planner. But does he have the requisite qualification to be regarded as a financial planner? You should ask the planner about his educational qualification at the very first meeting. This will help you know whether he is qualified enough to give financial tips and suggestions to the people. Check whether or not he is recognized as a Certified Public Accountant or a Certified Financial Planner.
Q2. For how many years are you working in the industry?
A. You should ask the planner as to whether he has provided financial counseling to the people in the past. Ask about his total work experience in the industry. It is better to work with a planner who has good knowledge and experience in various financial fields such as investments, debt, tax, retirement planning, mortgage, credit, etc. Select a financial planner who has minimum 5 years experience in the industry.
Q3. What kind of services do you actually offer?
A. Ask the financial planner about the type of services he offers to his clients. But don't expect him to offer financial products such as bonds and mutual funds to you. The financial planners are not allowed to do that.
Q4. Will I be working with you directly?
A. You should know whether or not the financial planner will be only working with you. If the planner has several clients and can't work with you directly, then ask him about the persons who will assist you. You can do a background check of those persons as well.
Q5. What is your remuneration?
A. Some people shy away from asking this particular question. It is not an embarrassing question at all. After all, you need to know how much you'll have to pay for services of the financial planner. The answer to this question will help you know whether you can afford him. You must also ask the planner about the mode of payment. Usually financial planners are paid in 4 different ways - (a) fees, (b) salary, (c) commission, (d) fees and commissions.
Q6. Can you give some details about your client portfolio?
A. If you are in your fifties and are looking for advice on retirement planning, then a financial planner mainly dealing with corporate clients may not be helpful for you. So, it is better to know about the type of clients for whom he usually works for.
2 Tips to recognize a bad financial planner
Here are the 2 tips that may help you spot and avoid working with a bad financial planner:
1. Dig information: Research on the financial planner before deciding to work with him. You can ask his existing and past clients as to whether they are satisfied with his service. Have they at all financially benefited by working with the planner? Make sure you ask this question to the clients of the financial planner. You can also browse online to get information on the financial planner. If you find too many complaints have been made against the planner in the popular financial forums and social networking sites, then it is better to not work with him.
2. Look at his criminal record: Find out if any lawsuit has been filed against the financial planner in the past. Check whether or not the planner has been penalized due to some fraudulent or unethical activities in the past. You can even check his background with some reliable financial organizations such as FINRA and CFP Board.
Finally, you should ask the financial planner to draw up a contract where details of the services will be laid out. Make sure you read the contract time and again before signing it.