Many individuals and couples have used their own judgment in regard to various phases of their family finances. The financial climate of today has shown many just how inadequate their financial knowledge and actions have been to meet their daily responsibilities.

As a result of the current economy, tens of thousands of families now recognize the urgency and importance for them to learn all they can about money management. They have began seeking, reading, going to class, in an effort to gain some sound financial knowledge, enabling them to manage their own family finances well enough to get out of debt and maintain some economic independence. Many have taken the opportunity to attend workshops and classes held by banks and other financial institutions in cities throughout the country. It is there they hopefully have learned how necessary it is. In this day and age, for both men, women and especially couples need to understand how to handle their family finances properly.

In addition to making yourself more capable of managing your family finances, it is important to gain an better all-round understanding of the essentials of finance – of government and corporation finances too – and also of the economic factors which affect the nation’s system of capitalism and free enterprise.
It is these factors that govern your living standard as they govern the living standard of the whole nation.

For instance, a knowledge of the reason for inflation and higher taxes… and you will know that, as voters, you can influence both. A broad understanding of the financial and economic fields will bring to you new and interesting experiences, it will also unlock many of your hidden abilities which you will find valuable for everyday living and financial decision making.

What The Future Hold

Today’s world circumstances are evidence that the coming years – from here out – will make demands upon an individuals capacities in the realm of personal finance and related fields as never before. It is a serious situation because so few US citizens are ready to meet these demands – (maybe our education system has failed).

Who should shoulder this responsibility – the rich? Shouldn’t everyone play a part and shoulder their fair share with enough economic knowledge to help operate our nation’s economy. It is not in the best interest of our country’s welfare (how much in debt are we) for Americans to leave the entire responsibility of national leadership – Congress & the President.

It appears that many Americans apparently, have no realization of the need for a financial and economical education in the field of finance, government, and business. Think of this economic waste of your inherent talents, for many of us have a sound instinct regarding the value of things – right government, right legislation, right money management, and right use of public monies when you thoroughly inform yourselves about them. This talented gift is a good solid base upon which you can build any proficiency. A better financial education provides the ability to be used in purchasing, running a business, managing personal finances, investing and in various departments of government and business.

Getting a handle on your finances not only gives a guideline on what and where you can improve but it also can provide an overall boost of confidence. When you begin to whip your money into shape and “make it behave,” you can then begin to reach those once evasive money goals. In our ADD culture of people rushing around it is no wonder they handle their money the same way – quickly and without a plan. They jump into stocks and mutual funds because of a slick sales speech or a hot tip from a beer drinking buddy. The true “secret” to succeeding financially comes from educating yourself in the world of investing, managing debt, taxes and planning your estate. As you become more educated you will make better, more informed and calculated money choices.

Before making any decisions in your financial world which may appear to better or improve your position in life financially, you should “survey your flocks” and get a picture of where you are currently in the world of your personal finance. Putting pencil to paper can be a big eye-opener as it gives you a true picture of – How you are doing financially! You should have a clear picture of your assets (what you own), liabilities (what you owe) and your current net worth to see what steps you should take to meet those financial goals. This could be trimming debt, boosting saving, adding more to your retirement plan or flat out eating out less.

For most people buying a home will not only be the largest purchase in their lifetime but also their greatest asset. It is for this reason you should make a thorough review and checklist before buying a home. In fact, having a punch list the way a contractor would go through a house is a great idea.

When looking for a home where do you start in a neighborhood? For starters, main traffic arteries through better residential sections usually are good guides to follow in picking a home or building site. Lots close to highways, including those beyond the developed areas, likely have fairly stable values.

Zoning restrictions may change sharply as economic pressure develops in future years. Even if no one puts a glue factory on your street, you may unhappily discover that your neighborhood is losing its original residential character. So ask your public planning officials about the prospects.

Restrictions running with the property may cause unpleasant surprises unless you know about them when you buy. You may suppose they merely keep the neighbors from doing things like erecting unsightly storage sheds in their back yards. But they also may prevent you from fencing your garden to keep out the neighbor’s dog.

Think ahead about the house you are buying – 5 or 10 years ahead. If you have young children, the question of separate bedrooms will come up in due course. Are there likely to be elderly parents or other relatives sharing your home in the future? If so, a first floor bedroom and bath may be desirable.

The whole question of the livability of any house may be considered in terms of the family’s needs. Will it accommodate without friction the hobbies of the individual members, their need for privacy? Is a rec room or home theather a vital requirement?

Settle as many of these questions as you can in family discussions or in your own mind before you start looking at specific houses. It will save you time, perhaps save you from being talked into buying something that doesn’t really meet your needs.

For people who build their own houses, structural soundness is largely a question of good specifications and competent supervision to see that they are carried out. Buying an existing house, especially an older one, is a different matter.

The roof line, to take an obvious starting point, should not sag. Such a condition is difficult to correct. Don’t let anybody tell you it’s a minor matter.

The chimney is important. Some chimneys may be causing trouble. Only way to check on the chimney draft is to light a fire in the fireplace.

Gutters and downspouts should be checked carefully. What about termites? Stick a knife blade into suspected beams or joists. If the wood is powdery, buy some other house.

A floor drain in the basement is important. Lack of it sometimes betrays a careless or inferior builder. If the basement has an outside areaway, this should have a separate drain.

Basement leakage can be a major headache. Remember that it is very difficult to do waterproofing effectively from the inside. Wet patches on the foundation and basement walls are danger signs.

Heating systems may be convenient, but the is the furnace is efficient. You may have to check that with a heating specialist.

Water pressure is often a source of trouble in older houses. Turn on all the faucets in the house; then see if there is pressure enough in an upstairs faucet.

Overloaded electrical circuits are dangerous. Look at the fuse box. If larger fuses have been installed in order to accommodate more lights or appliances, the circuits are overloaded and there’s a risk of fire.

Picture windows are all the rage. Even expensive thermal glass does not counteract the tendency of cold air to flow off large glass areas. Moreover, big windows on the street side may drive you frantic, what with lack of privacy, and glare from headlights of passing automobiles.

Insulation of outside walls and roofs is fairly standard in the building of houses now. But insulating material that is pumped into wall spaces may settle. It generally is not as desirable as insulation that is nailed in place.

These are just a few of the many items to consider.

A carefully selected house financed with a mortgage can do three things for you. It can help you accumulate money and create a forced savings plan. A house can profit you over the years if you happen to own it during a period of economic growth, shortages or inflation. It is one of the few investments that can be used as well as held.

For most people, buying a house represents the largest financial commitment they will ever make. For this reason, every detail of the transaction is important.

The house should be affordable, sound, attractive, usable and marketable – it needs to have “good bones.”

Mortgages often run for 30 years so every fraction of a percentage point in the interest rate can translate into thousands of dollars lost or saved.

The monthly house payment should not be so large as to be make the purchase a risky one or so small that the increased term of the mortgage piles up more interest charges.

The price, although sometimes brushed off as not that important when compared to the amount of the monthly payment, but it is obviously very important. Overpaying could result in a substantial loss. This is obvious when you see how many people are “under water” with their home in the current economic down turn.

Here are three questions to ask yourself before buying a house:

• Is the house attractive and a good buy at the price?
• Can I afford to buy it under the financial terms offered?
• Will I save money by buying instead of renting?

Choosing a good neighborhood is probably the first step in choosing a house. Naturally you will consider availability of shopping facilities, schools, churches and transportation. But there are other things to consider.

Suburban and rural areas attract many. They provide that “spacious living” out with the trees and bees. They also present their problems.

Cost of transportation is another item that can eat into the savings you make by living in the suburbs. You may have a long commute to work and pay to park it every day. That soon runs into money.

When buying a home make sure it fits in your budget, try to keep your monthly payment around 25% of your take home pay. Also as many have discovered in these troubling economic times… when two incomes are required to make the monthly payment a job loss can seriously hurt your financial position.

The first “rule” in buying insurance or really anything is to make sure you understand what it is you are buying. You must be educated on the financial instrument but also understand how it operates.

It is easy today to go online and search for life insurance, but you

may be better off choosing an independent agent rather than a company. Go after the word-of-mouth recommendations, and… do not be afraid to ask questions. If an agent arrives via a cold call without a reference from a mutual friend, ask for references, get names of clients who you can contact on how they have fared working with the agent, what kind of job of analysis and planning was done.

Most agents called “underwriters,” may be honest and competent, however they are salesmen. Those who work for one company do posess a special knowledge of and a natural bias for the policies of their own company. You will probably have to rely on an agent’s advice and counsel to a very certain extent, but remember they are no “impartial expert.”

Don’t be pushed, pressured or rushed. Make sure the agent takes the time required to review your unique needs and resources carefully, time enough to work out an best individual solution for your individual insurance needs. Make sure you take the enough to provide all the information needed, as well as time enough to think long and carefully before you sign on the dotted line.

The transaction is not over when you have decided to sign. You should expect your agent to furnish you with a written summary of the plan you and he have worked out for using the insurance proceeds in case anything happens. You should expect him to handle or guide you through any paper work that may be required.

And finally, you and your agent should go over your insurance policies regularly (we do every year) to see what adjustments or additions may have become needed as needs changed.

Hopefully the day will come when you have accumulated enough wealth by hard work and shrewd investing to enable you to begin cutting down on your insurance. That will be a happy day if it comes. But the truth is, even the men who make the big fortunes seldom find it advisable to dispense with their insurance.

There are hundreds of companies that write life insurance in the United States. Which one should you buy from?

Don’t buy from a small or relatively new company unless you are thoroughly familiar with it. That may sound tough on young and struggling outfits, but the prudent thing is to make them prove they can give you the economy, safety and experience of the large, well-established and well-known organizations.

Do take group insurance if eligible for it or the special insurance that is sometimes available to such groups as teachers.

Do ask around among your friends and relatives and find out how they feel about companies with which they have had experience. When they are dissatisfied find out why. Remember those companies that are consistently praised or recommended – there is a reason why.

Companies vary in the premiums they charge for their insurance, in the benefits their policies provide, and in various practices connected with the sale and execution of their contracts.

If you shop costs, be guided for the most part by general reputation; look upon cost estimates as approximate, don’t fuss over slight differences, and don’t think in terms of price tags only.

When looking at your life insurance have you ever taken the time for figure out – How Much You Need? Or is it a wet finger in the air for a guess?

Lots of formulas have been offered as solutions to that question – how much life insurance is enough, but none are really useful. At one time a familiar one was that said 10% of your income should go into insurance premiums. Another says a man should carry at least $100,000 for a wife and $50,000 for each child. Another says to provide enough to assure half of his present income.

One fancy one suggest to treat Dad as though he were a capital sum, hired out at interest. Estimate his probable future earnings over his life span, says one such theory, subtract his personal expenses. Calculate the sum of money that, if invested at a reasonable rate of interest, would produce the same sums in yearly payments of principal plus interest. Buy that much insurance.

Most of these attempted formulas ignore any type of budget. All ignore the fact that every family is in some way different from all others. And all ignore the fact that there is no such thing as “enough” insurance for the same reason that there is no such thing as “enough” income or “enough” years to a lifetime.

The best way to decide how much insurance you need is to forget all such systems and work on your own individual situation.

First, estimate how much immediate cash would be needed to wind up your affairs. This amount should include: funeral and medical bills, unpaid income and property taxes, death taxes if any, outstanding bills and debts, estate costs, the general expenses of getting the family re-established.

Next, work out an estimated budget. This will involve some long, sober husband-and-wife talks – for the basis of such a budget is what the spouse and the kids would most likely do should something happen. Go item by item, the minimum amount the family would probably need for housing, clothes, food, and so on.

Third, fix the amount desired for special lump sum needs or goals. For example: the mortgage, an emergency fund, college educations.

Then go back and find out how much of this ready cash and steady income your present resources will provide. Social security will, in most cases, provide a chunk of income while children are around and, later on, after the spouse reaches sixty-five. Social security will pay a small lump sum benefit, too. You may have group insurance where you work. You may have health insurance to help with medical costs. You may have savings or investments to provide cash or produce income, or to do both. The family may have or be due to inherit an independent income of some sort.

Between the sum you have figured the family would need and the sum your present resources would supply, there will be a gap. The amount of insurance you need is the amount it will take to fill that gap.

Don’t be surprised if you have to compromise. You may very likely find that you can’t afford enough insurance to fill in the entire picture all at once. You may have to let this item slide for now, concentrate on that item, weigh one need against the other. You’re the only one who can say what your household budget can and should absorb.

There are basically two kinds of life insurance polices, and everyone has opinion on which is best. Each has its special uses.

Here are the 2 Types:

• Term Life Insurance – Insurance with NO investment plan
• Ordinary Life Insurance – Includes and investment plan inside the policy

Term Insurance

You buy it for a specified period only – usually 10, 15, or 20 years. At the end of that time you stop paying and the protection stops too. You get nothing back if you are still living at the end of the term, and little or nothing if you drop the policy before that.

As you grow older, the cost of term insurance gets higher.

Term insurance is relatively cheap, as far as annual expense is concerned. It is usually recommended when temporary protection is needed, or when the buyer needs protection but just can’t afford higher-priced insurance that might be more desirable for the long pull.

Ordinary life

This is a permanent, lifetime policy. You must pay an annual premium as long as you live, or at least until you are about eighty-five, to keep the full amount of protection.

The premium is higher than for a term policy bought at the same age but the premium always stays the same, instead of going up periodically as on term insurance. Part of what you pay goes to build an increasing cash value. You can borrow against this cash value – bad idea. If you cancel the policy, you get the cash value back or exchange it for a certain amount of paid-up protection.

This type of life insurance policy comes with a few different names:

• Ordinary life
• Whole Life
• Variable Life

All give some permanent protection and contains an element of saving. The reason many do not like these types of policies is the though the may have a “savings plan” built in the rate of return is not very good, compared to taking the difference in the cost between the 2 polices and investing the difference in a good growth stock mutual fund over the long term.

How much life insurance does a person need?

It has been said – not at all helpfully – that the man who died yesterday didn’t have nearly enough, while the man who will die next week needs none at all today. You hear of families being “insurance poor,” meaning that so much goes for premiums that living standards actually suffer.

Do not forget – Insurance agents are salesman. They make money when you are sold something. When purchasing any type for financial product it is important to understand what you are buying.

Insurance or any kind is highly technical. You should expect to be an expert and you it is not required. It helps, though, if you understand the underlying theory.

First, picture a spreadsheet of statistics known as a “mortality experience table.” It takes a million persons at the age of one year and proceeds to tell you approximately how many of them are going to die every year from age one to ninety-nine.

This table is the precision tool which makes life insurance possible. You, as a buyer, are concerned with who is going to die; all the insurance company cares about is how many.

The Works in Theory

To see how this works, imagine a group of ten thousand young married men, all twenty-nine years old. These men realize that some of them will die during the coming year, leaving widows without income. Why not get together and raise a fund to guarantee each widow a $50,000 nest egg?

A glance at the mortality table shows that thirty-four of their number probably will not live out the year. That means that thirty-four widows will need $50,000 apiece – so the fund must contain $1,700,000. Each man puts $170 into the kitty and is assured that his wife will not be left destitute if he should be one of the thirty-four.

“Management” will have to tack on a little extra to pay for time and paper work. On the other hand it will also allow for the fact that some money can be invested for a while and produce income.

There you have the equivalent of a life insurance company writing one-year-term life insurance policies.

The basic pattern is as simple as that. A big national insurance company works with a varying number of people of all ages and walks of life. The investment of collected funds plays a big role in its operations. Most insurance is not written on the simple, one-year, revolving-fund basis. But the theory is the same.

Study the above example and you will see that if you live, you cannot expect to get back all the money you have paid in unless you have a type of policy specifically designed for investment values. Some or all of your premium has gone into the common fund to pay beneficiaries. You have not thrown this money away, however, for you received something in return. It paid for protection against something that might have happened but didn’t

There are two basic reasons why a man or woman works hard and tries to accumulate money. First, there is the desire to acquire wealth. It may be that they desire to use it to obtain an independent income, luxuries, a business or the freedom to retire when they want. The second, is a way to provide an estate to leave to their family upon death.

Building up wealth is a slow and arduous process. But creating an estate can be done overnight. Life insurance does it. For this reason life insurance should most definitely be put in place before diving into the long, slow and sometimes hazardous process of saving and investing money. After the fortune has been made, perhaps the life insurance can be eliminated, but the cost and value should be accessed. But until the investments are large enough to take care of the family and dependents in case “something happens to the breadwinner,” in other words, in case of death.

Buying life insurance is not always easy because the buyer is apt to let emotions sway their judgment. Life insurance salesmen sometimes deliberately, or unwittingly, play on these emotions and cause the buyer to get more insurance than they can afford or the wrong kind for their particular purposes.

The young person in the market for life insurance should know the fundamentals of insurance and how it works. They should understand the different kinds of insurance. They must be able to get and use expert advice. One must understand how to build a program of family security, tailored to fit their individual needs.

Get these things clear in your mind to start with:

The basic job of life insurance is protection. It has certain investment features that should be remembered. But concentrate on safeguarding your family against possible loss of your earning power. Don’t take on such things as retirement and college educational plans, at least not in the beginning.

The subject of death should not be evaded. Some people, including a lot of young couples, are squeamish about dealing bluntly and openly with the chances of death. That attitude is a luxury you can’t afford. Sit down and explore your problem thoroughly and rationally.