My Personal Finance Blog

Before we can start building our wealth through personal investment we have to know where we are going to get the money to invest. It has to be discretionary money – money we will not need to cover our day-to-day living expenses. Many investment plans fall down because the money has to be used for unforseen emergencies or unplanned-for contingencies. The only way we can build our wealth is to earmark the money as investment money and protect it by making sure our other living and emergency costs are planned for. This means budget planning.

Hate The Idea Of Budgeting?

So many people hate the idea of budgeting. The idea of living on a budget is not appealing. So many negative pictures come to mind: having to restrict ourselves; having to go without some pleasures; having to discipline ourselves. For some people it means facing reality, because they know they are living beyond their means and they do not like the idea of having to change. Yet, if they don’t, they will get deeper and deeper into debt and will never be free. Unfortunately, this is the story of a great many people.

Budget Planning Makes Us Free

Budget planning puts us in control. We control our money, which means we control our lifestyle. More than that, we control our future. There are so many things in our lives that virtually control us, often through no fault of our own, this is one area we can control and it is one of the most important. We all know money is not the most important thing in life, but we also know we cannot live without it. Money worries are one of the most, if not the most common worries. Taking control of our money goes a long way towards reducing those worries.

Get What We Want

Budget planning is the first step to peace of mind and then to financial freedom. I mean being in a position where the smallest financial glitch does not become an emergency – things like your pay being delayed; the car breaking down; a sudden medical or dental bill. For many people events like these mean they will simply go into more debt with their credit card or they make a panic call to friends or family or, if they have no one to call, just getting through the best way they can. In fact, this feeling of insecurity can hang over their heads causing a great deal of anxiety.

Budget planning is a positive step towards freeing up money to build personal investment, which leads to personal financial freedom.

Solar energy is power generated from the heat of the sun. The sun illuminates and provides heat and warmth on the surface of the earth. Technologies that capture and store solar heat for an extended period of time can be applied to benefit homes, offices, and factories. They can transform solar energy to run devices that provides warmth and lighting during night time or during cloudy days.

You can make use of solar energy yourself by learning how. Solar energy as a resource is free. However, the cost of materials and equipment you need to tap that resource ranges from high to low, depending on what suits your needs. The good thing about it is that, unlike oil or gas heaters for which you pay every month, you spend less and less for energizing and heating your home with solar energy. Without ill effects on the environment, solar power can cool, heat and ventilate your home.

If you are thinking about having your own solar power for any particular use, it would be easier if you try to find a solar collector first. A solar collector is any material such as clear plastic or glass that can attract and capture the energy brought on by the heat of the sun in concentrated quantities. An example of a trapped or captured heat is when a car that has sat out in the warm sun all day has become exceedingly hot so that you need to open your windows in order to let the warm air escape from your seats and compartments and allowing the car to cool inside. A greenhouse is another example. It has the same effect as its glass or clear plastic walls and roof can attract the heat of the sun and trap it inside to keep the needed amount of heat for the plants to grow normally and efficiently.

Also, tapping solar energy for home use can offer you optimum benefits if you familiarize yourself about what an active and a passive home means. These are two types of solar homes which give homeowners choices on which part of the homes they want energized or what equipment they want run by solar power. Solar energy can be used to warm your home, heat your water, as well as generate electricity for lighting at night. Consequently, you will need to consider the cost which a particular type of solar home entails when you choose the type of solar home you want.

Passive homes do away with special facilities or materials for heating. They merely use their windows for maximized entry of sunlight. The sunlight gets stored by having the doors totally closed during the warmest hours of the day and keeping the heat trapped inside. In the evenings, thick curtains can be used on the windows to keep this heat concentrated inside the home. This allows the natural heat of the sun to warm your home without using any special or elaborate equipment and materials.

Active homes, on the other hand, use equipment such as blowers and pumps. Substitute heating sources also need to be used when the sunlight captured during daytime is not enough for the heat to circulate inside the house. Active homes use specially-designed boxes placed outside to attract sunlight and store the heat, thereby providing more supply of energy to heat the homes. These boxes heat water or air inside pipes and ductwork which in turn facilitate the circulation of heat inside the homes.

In the long term, solar energy is cost-effective. It can heat our homes without spending for artificially-generated heat. Solar energy does not harm the environment and can be found anytime and wherever the sun shines.

If you have any experience in personal investments, you’ll know that a recession = financial investment opportunities. So perhaps it’s time to put the fancy cars, big homes and designer clothes aside, and focus on a lasting solution to guide us towards long-term financial health. Recession or no recession, here’s some investment advice that is sure to contribute greatly to your future finances.

The burning question is how much should we save and invest? A common rule of thumb of the financially secure-those with sizable nest eggs-is 25% of pre-tax income for the first 20 years of full-time work. After this period, you can live luxuriously without saving and watch your nest egg grow.

Dr. Bradford D. Smart, a world-renowned management psychologist, asks us to imagine a husband and wife, both managers at a fast food chain. Let’s say they each earn $50,000 per year, a little over the median income in the United States. Now and managed an 8 suppose they each put aside $12,500 per year (for a total of $25,000), and they have been saving like this since they were 20 years of age. They chose to invest conservatively% return.

In 20 years, at an 8% ROI, they’ll have $1.1 million. Even more exciting is the fact that they can now let this money grow without additional savings from their salaries. Their nest egg will double every 9 years, totaling $2.2 million when they’re 49 years of age. If they don’t touch it until they are 67, they’ll have $8.8 million.

The fact is most people don’t think long-term. By living lean for the first 20 years of saving, they can now spend a lot while their nest egg grows and grows. Most of their friends who start saving at 40 will never catch up. The fast food managers won’t get to lead flashy lives between the ages of 20 and 40, but once they reach middle age they’ll have the satisfaction of financial freedom.

The majority don’t save early. They figure out the magic of compounding when they’re about 45 and realize it’s too late to let the money earn money for 30 or 40 years. Realizing that they’re never going to catch up, they crank up their ambition and aim for the job with the highest salary (and the longest hours). Meanwhile, their friends (with lower salaries) who have been steadily saving get to kick back in their later years and watch their money grow.

Right now you’re probably thinking this is all very well – in theory – but we’re in the middle of an economic tailspin. Yes, the market is down, way down (40% since the beginning of the year), but it won’t be like this forever. People need to think long-term – 10 to 20 years into the future.

People also need to read Warren Buffet’s op-ed piece for the New York Times where he talks about how he is personally buying up American stocks. Lots of them. A simple rule dictates Buffet’s buying: “Be fearful when others are greedy, and greedy when others are fearful.” He rightly points out that investors should be wary of highly leveraged entities or businesses in weak competitive positions, but explains that fears regarding the long-term prosperity of the nation’s many sound companies make no sense.

The big take-away point here is to think long-term-to start saving and investing early and to take advantage of the investment opportunities presented by the downturn in the market. Today most people are digesting their daily dose of media panic about the market and failing to see the big picture.