Mo money, Mo Problems

I do believe that we can eat an elephant, big as it may be a bite at a time. The same applies to any problem we have. We can find a solution by breaking down the problem in bits then slowly resolve each problem at a time. At the moment, money is on most of our minds so let’s break the problem down.

We were all happy to receive the cheques and yes, we will be going out of our way to do a lot that we were unable to do previously. However before we go a-spending I would like to share a few concepts with you. One of the basic concepts of economics is;

Income – Spending = Savings

I suggest that we all do less spending to ensure that a lot of saving is done. I agree that we do have pressing needs like rent, fees, debts, and many more that need to be taken care of immediately. But please remember to step back before spending and ask yourself whether you can sleep comfortably after spending, or even be bold enough to stand up in a crowd and state loudly how that money was spent.

I did do some research to help our siblings who did get considerable amounts of money. Here are a few pointers on CDs (Certificates of Deposit) as a form of investment. This is how CDs work: When you purchase a CD, you invest a fixed sum of money for fixed period of time – six months, one year, five years, or more – and, in exchange, the issuing bank pays you interest, typically at regular intervals. When you cash in or redeem your CD, you receive the money you originally invested plus any accrued interest.

1. CDs generally have a higher interest rate that normal savings account.
2. Before getting CDs make sure you have checked out the following.

• The interest rate- check to make sure the interest rate you discuss with the banker is the interest rate on the certificate you sign. Check to see whether the interest rate is variable or fixed. It is advisable to go with a fixed rate that way the bank doesn’t change the rate in the future. Do confirm with your banker how often and in what form they will pay you the interest on you CDs.
  
• Determine how much of your money will be covered in case the bank goes under in the time your money is deposited with them.
  
• Make sure that you are familiar with any fees the bank may charge in case you withdraw your CDs before their maturity date.
  
• Make sure you are clear on the maturity date and determine whether it is a “single date” (the CD matures on a particular date and the bank needs you to determine what you want to do with the funds afterwards) or whether it has a “roll-over” function which means the bank automatically rolls over to a new CD.

Please read more on CDs here and ask your banker more questions since this site may have information that may not particularly apply to our banks here. Please do read this article as it may clear most questions you may have on CDs.

Thought of the day
How can we give back to our society? For it is in giving that we receive.

WHERE DID ALL THE MONEY GO?

How time flies. It’s a new year again with new beginnings I hope despite the political environment. I did make some resolutions in the beginning and despite the fact the first month isn’t over I have only two of them left and it’s a struggle to keep them.

Talking about resolutions, I am concerned with the recent turn of events related to our brothers and sisters change in luck with regards to personal finances. It is no secret that financial management is not one of our strong suits. My worry is that a lot of waste will be seen and regrets will result eventually. I need not say what the consequences are for bad financial management. Even small business lenders like microfinance institutions have a follow up system to ensure funds are spent appropriately. How difficult will it be to appoint people to do the follow up for the funds? Is it not possible to let the recipient name a person they feel ca guide them to ensure the funds are not wasted? I know everyone had plans on how they were to spend the monies. The question is how well do the recipients of the funds follow their spending plans that is, if he plans were actually genuine. Are there any feasibility requirements for the plans before cheques are issued?

I have a few words of advice for the recipients of the funds.

1. Money is not a measurement of power. Having more money today doesn’t mean that you are more powerful as a person don’t go on a spending spree to show people that you can now afford buying more stuff(most of which you can probably do without).
2. Your spending plan should be simple. Have a clear goal. Know how to achieve it. Ask advice if anything is unclear of if someone else you know has done the same thing/business (saves you from making costly mistakes you cannot afford).
3. Remember your past spending mistakes and avoid them at all cost, do not try get-rich-quick schemes. No one ever made money overnight. Work longer and harder than you did before you got the money since you now have more to lose in case you fail.
   

I could go on and on about what you need to do or not but at the end of the day each one of us needs to be honest with themselves and review how they have spent such funds in the past and how they are willing to learn from that and make improvements this time.

Thought of the day

Spend wisely and encourage each other to do the same.