How to Survive Being Broke

So you’ve just been laid off. You’re frantic about what to do because you don’t have any savings. Your bills are not suddenly going to disappear. How in the world will you make it until you have a regular income again? Do not fear, because we have seven tips that can help you keep the cash coming in and pay your bills.

The very first thing to do before trying to make more money, is to eliminate all your unnecessary spending. If you have some optional monthly expense that you can do without, cancel it. Cut back on things like eating out, going to the movies, and anything else you normally do that isn’t absolutely essential.

Apply for any kind of work: If you are desperate for funds, one of the most productive things you can do is apply for a job, any job! It doesn’t matter if you’re overqualified. Some income is better than none.

Tell your friends you are looking for work: Let’s be honest. If you have a personal connection to a potential job, you are more likely to land the job than someone without it. Even if your friends don’t know of a full-time position that you are qualified for, they may know of something part-time that can help.

Find freelance work online: If you can write or take photos, you can find work online. Some websites offer talented freelancers the opportunity to make some extra income doing things they enjoy. When searching for freelance work, however, be careful about getting involved with any site that requires you to pay an initial fee. These can be scams to take your money and not deliver results. Look for reviews of the site from people who have used it, to be sure you’re actually going to

How to Become a Financial Planner

Financial planners or advisers are professionals who educate people about the necessity and advantages of investing money, and also guide them in making lucrative decisions regarding the same. They analyze an individual’s current salary, lifestyle, priorities in life, and also his goals, and make a plan that would help in reaching the set goal. They help people in insuring their money for emergency purposes. Some people take up the responsibility of money management themselves. However, there are chances that they may make mistakes due to inadequate knowledge and inexperience in this sector, causing them to lose their hard-earned money.

Taking the help of a planner has become quite common in recent years, either because people are too busy, or because they do not want to take a risk of investing their money wrongly. In this age, when people are very busy, they rely on experts to make important decisions regarding their money. This job is, therefore, very hectic, and involves huge responsibilities. Here are certain important things you need to know if you plan to get into this field.

Becoming a Financial Planner

It is not necessary to have a bachelor’s degree to get into this profession. However, it definitely adds points to the work profile and earning potential. It would be beneficial to complete your graduation in the field of finance, economics, mathematics, statistics, business, or law. Studying these subjects would help in understanding issues and intricacies of financial management. Graduating as a Chartered Financial Analyst or a Chartered Financial Consultant would also help. You can also enroll into courses related to estate planning, investments, risk management, and taxes.

To practice as a professional financial adviser, you need to have certification. Those who aspire to be certified, should have a graduate degree, and most importantly, at least

The Financial Planning Process

It is essential that all of us have some goals in life. Short-term goals include a good job, great career, and small investments. Long-term goals include buying a house, children’s education, retirement policies, etc. Financial planning is one of the most crucial decision of one’s life. If you start planning early, you can get out of a financial mess that can arise later in life. It is very common to spend more than what you earn. Of course, there are facilities, like credit cards, buy now pay later schemes, installments, etc., which compel one to overlook their finances. At the end of the month, when bills keep pouring in your mail boxes, you find yourself in a sticky situation. And this mounting bill payment adds a semi-colon to your long-term dream of owning your own house. Sometimes, medical emergencies also forces you to dig into your children’s education fund. Marriage plans for your only daughter? You borrow some money from your retirement fund. There goes the trip to Egypt, you have planned all those years!

The answer to all the above mortifying financial situations is ‘Financial Planning’. The planning process helps give a direction to your financial decisions. It helps you decide various investments that can bail you out of your financial problems. For example, investment in mutual funds may help you repay the loan or save enough for your retirement. Once your financial goals are set, it helps make your life more secure and flexible for any financial emergency that may arise.

You can carry out your own financial planning by taking a guidance from self-help books, newspapers, magazines, the Internet, or discussing your financial needs with your spouse. If you feel, you can’t handle it yourself, then opt for a professional financial planner. This

Importance of Financial Planning

A broad definition of personal financial planning can be stated as, “a process of determining an individual’s financial goals, purpose in life, and life’s priorities, and after considering his resources, risk profile and current lifestyle, to detail a balanced and realistic plan to meet those goals.”

Financial Planning

It is a process which presents before an individual, organization, or even a country, the current financial position and the adjustments in the spending pattern, in order to meet the goals.

Importance of Financial Planning

It is important to plan finances in order to reap long term benefits through the assets in hand. The investments that one makes are structured properly, and managed by professionals through financial planning. Every decision regarding our finances can be monitored if a proper plan is devised in advance. The following points explain why financial planning is important.

– Cash Flow: Financial planning helps in increasing cash flow as well as monitoring the spending pattern. The cash flow is increased by undertaking measures such as tax planning, prudent spending, and careful budgeting.
– Capital: A strong capital base can be built with the help of efficient financial planning. Thus, one can think about investments, and thereby improve his financial position.
– Income: It is possible to manage income effectively through planning. Managing income helps in segregating it into tax payments, other monthly expenditures, and savings.
– Family Security: Financial planning is necessary from the point of view of family security. The various policies available in the market serve the purpose of financially securing the family.
– Investment: A proper financial plan that considers the income and expenditure of a person, helps in choosing the right investment policy. It enables the person to reach the set goals.
– Standard of Living: The savings created by through planning,

How to Establish Business Credit?

With the rapid change in the financial world, everything related to finance is changing, whether it is credit facilities or investments. Steps are being taken to make everything simple, convenient, and fast. There is a consensus among financiers that businesses have different financial requirements, and there is a need to resolve them. One such step taken by these, which may help businesses, small or big, is to establish business credit. This is an option which you can avail of, where financial institutions provide loans, without needing the credit rating or the personal assets of the owner as security. And, most importantly, the organizations of every size and age can avail of it, whether it’s old or new, big or small. Whether you need finance for setting up or expanding the business, purchasing material or equipment, or advertising, this facility is always there for you.

Steps

There are various steps involved in establishing it. The first point that you should remember is to ensure strong fundamentals of your business. Moreover, you should also take care to see to it that you meet the requirements of financiers. Ensuring this would make listing of your business with commercial credit reporting agencies easier.

The next step is to develop a connection with suppliers and vendors. These suppliers and vendors should be such that they not just extend credit payments, but most importantly, report the history of your payments to the respective agencies. You need to have the backing of at least five such vendors, and they should not tie your personal guarantee or social security number while giving you such credit.

Obtaining credit cards for the same is the next step. You should get three such cards, but make sure that they are not connected to your personal credit. Moreover, you should

What is Tangible Net Worth?

One of the financial parameters which lenders care a lot about when deciding whether or not to finance a company is its tangible net worth. It represents the total of its tangible assets like land, building, machinery, inventory, etc.

Explanation

If there is any party which is most concerned with the tangible net worth, it is the lender. When a company approaches a lender and asks for a significant amount of money as a loan for expansion purposes, the lender will no doubt be a little wary.

The lender will view all the finances of the company, its performance, its ability to generate revenue and its ability to pay back the loan. Of the parameters it chooses to examine when they evaluate whether or not the company will pay back the loan, is the tangible net worth of the company.

One look at the word will tell you that it has got to do some thing with tangibility and the market value of the company. It is the amount of money that the company would realize, should it go into the market and sell all of its tangible assets. The distinction between tangible and intangible assets needs to be made here.

Tangible assets are those which can actually be touched, felt and sold. Intangible assets include goodwill, trademarks and patents which the company has. But, while intangible assets command a pretty good value, no one in the market will be willing to ‘buy’ goodwill, unless they buy the company outright. Therefore, tangible assets include all such items which have a resale value.

Importance

Let’s go back to the reference about the lender here. When a lender evaluates whether or not to give you a big loan, the lender no doubt wants to know if you will be able to pay it

Acid Test Ratio Formula

An acid test ratio, also known as quick ratio, is used to calculate whether the company will be able to meet its current liabilities with the short-term assets it has. Although working capital ratio is used for the same purpose, it includes inventories in short-term assets as well, which might not be easy to convert into cash. The acid test ratio formula, which does not include inventories is thus, a far more stricter test of determining a company’s current financial capability to meet its short-term liabilities.

Formula for Acid Test Ratio

In accounting, the acid test ratio formula is mathematically presented as follows:

Cash + Accounts Receivable + Short-term Investments/Current Liabilities

There is an alternative to this formula as well, which is:

Current Assets – Inventory/Current Liability

Example

To make it more clear, let’s take an example of a fictitious company ABC. In the balance sheet of ABC, the current assets are:

– Cash: USD 50,000
– Accounts receivable: USD 30,000
– Marketable securities: USD 5000
– Inventory: USD 30,000

Current liabilities are:

– Accounts payable: USD 20,000
– Accrued expenses: USD 15,000
– Notes payable: USD 3,000
– Long-term debt’s current portion: USD 7,000

Now, company ABC’s acid test ratio will be total current assets from which inventory is subtracted, divided by total current liabilities, i.e., (USD 50,000 + USD 30,000 + USD 5,000 + USD 30,000) – USD 30,000 / (USD 20,000 + USD 15,000 + USD 3,000 + USD 7,000) = 1.88

With the acid test ratio as 1.88, the company XYZ has USD 1.88 of short-term liquid assets to meet every USD 1 of current liabilities.

Interpretation

If the acid test ratio of an organization is less than one, it means that it does not have enough current assets to meet its current liabilities. That is why, it is very important for companies to

How to Raise Money for a Business?

The capital is one of the first things that needs to be taken into consideration when one is setting out on a business venture, and there are many different sources to obtain this capital. It is not necessary to stick to one particular source rigidly; even a combination of various different sources can be used.

Anyone who is wondering how to raise money for a restaurant, a start-up, an advertising agency, or any other small-scale venture should keep these methods in mind. Approaching the right people for it is vitally important for the success of the business, and if this is not catered to properly, it will be doomed from the very beginning.

Personal Savings

This is the most obvious source of money for starting a business. If you have saved up enough money over the years, go ahead and make use of it to serve the underlying purpose. You will not be answerable to anyone, and you will not have to worry about repaying someone. If you choose this option, ensure that you are not using all your savings though. Many people neglect this option because if they lose it, they will have nothing left to live on.

Venture Capitalists

This is the next most obvious source for your initiative. Venture capitalists are professional agencies who put in venture capital into an upcoming business. What they get in return is either its share, or a share of the profits, or pretty high interest rates. It may sound like exploitation, but this is one of the best ways to get money. Venture capitalists are always looking for new and innovative business ideas that are likely to succeed.

Angel Investors

These are a refined form of venture capitalists, but many people think that they mean the same thing. Angel investors are less

What is the Difference Between a Public and Private Corporation

Companies are generally classified as proprietary firms, private companies, and public companies. While proprietary firms have a single proprietor who looks after the business, private firms can have some members who sit on the board and run it. Public corporations, on the other hand, are listed entities which have full-time board of directors consisting of a chairman, chief executive officers, managing directors, chief financial officers, independent directors, and audit professionals.

Private Corporations

A private company is held or controlled by the founders or promoters of the company. A privately held corporation can start its operations once it gets incorporated. It is not listed on the stock exchange and hence cannot raise funds through equities. One of the biggest advantage for a private company is that such a company does not have to show its financial information to the public. It is not answerable to shareholders like in the case of a public corporation.

In a private corporation, the management has total control over the company’s operations and it can take decisions in favor of the organization without much consultation with parties like major shareholders and stakeholders. So, the chances of an investment proposal getting rejected because of non-approval by sources related to the company are zero. Private companies are not allowed to offer their shares to the public unless they complete the formalities and listing process. Many people think that private companies are always very small as compared to public companies. However, this is not true as there are private companies that are earning millions of dollars in profits every financial year.

Public Corporations

A public corporation is a business entity which is listed on the stock exchanges of the United States. This is a company which has sold a part of its stake to the common public through

Importance of Social Cost Benefit Analysis

Social cost benefit analysis is a part of calculating the merits of a project or a government policy. As the name suggests, social cost-benefit analysis of anything is associated with its social impact. This means that how a project or a policy will affect people is analyzed. Only after calculating the opportunity cost of a project, it is approved.

The scope of social cost benefits can be applied to public investment and also to private investment. In case of public investment, it plays a major role in the economic development of a developing country. And, in case of private investments social cost benefit analysis is important as investments are to be sanctioned and are monitored by the government. There are two aspects of calculating the cost benefit analysis of any project. One is the private cost-benefit analysis and the other is social cost-benefit analysis. Though, social cost-benefit analysis is usually undertaken by the government.

Social cost is often in contrast with private cost. Major differences between social cost benefit analysis and private cost benefit analysis are as follows:

1. In social cost benefit analysis, not only profit but also other effects like how will it affect life of others are considered. Whereas, in private cost benefit analysis, the focus of the analysis is on maximizing profits.

2. For calculating social cost benefit, market prices for the factors to be considered cannot exist. Therefore, market price is not the main factor taken into consideration while calculating social cost benefit. Whereas, for private cost benefit analysis market price forms the base of the analysis and the key factor that determines if a project is viable.

Social Cost = Negative Impact
Social Benefit = Positive Impact

Social cost benefit analysis has been introduced to develop systematic ways of analyzing cost and benefits of