First Step to Financial Success: “Be In The Know”

There really is no golden formula to cultivate a healthy savings habit. Just Google savings and budgeting and a world of information is at your finger tips. We all know that savings is important and we should set savings goals and stick to a budget. However, faced with so many financial responsibilities, constant increases in cost and unexpected expenses popping up ever so often, financial management could become a very daunting task.

In our current financial and economic situation in Trinidad and Tobago, many people live pay check to paycheck with minimal left over once bills are covered. After bills are paid, they then have to rally out with what’s left until the next salary comes in; this is where we get the popular phrase, “More month than money”.

The reality though is that, the financial position for each person is unique. Based on the current situation of an individual, their financial responsibilities will vary accordingly. For most people, housing is most important, be it a mortgage or rent. For others who may already own their homes or live with relatives, car payments, credit cards and other loan payments may take priority. Then of course, groceries and other utilities may take preference and the list goes on and on.

Another dynamic is the self employed, whose income may not be fixed, having to manage these varying cash flows.

For the financially savvy, managing their finances may not be a challenging task. However, making the right investments, protecting and creating future wealth is their focus.

As we mentioned before, money management can be challenging but with the right guidance and tools, anyone can become financially successful. With our series, “Your Financial Freedom starts here”, we aim to provide you with sufficient information to make the necessary adjustment to your current money habits.

Today we focus on the first and most important step – Be in the Know

Bringing awareness to your finances is the first step to take control of your money. Knowing your total income (all monies coming in) and where all of your money is allocated (expenses), is key in the process of money management. The obvious secret to wise money management is to make sure that you are not spending more than you make. Surprisingly many people fall into this trap, unaware of this mistake and get caught in the web of debt and other financial woes. When you know your income and expenses, it paints the big picture that a lot of persons are oblivious to.

Know Your Income

For many this may be a simple task if your only source of income is your weekly, fortnightly or monthly salary. However, items like overtime, commission and any other supplemental income must be correctly accounted for. Further, there are several individuals with sideline businesses which are an additional stream of income to factor in. This task becomes further complicated for self employed individuals who work with unplanned and varying inflows. Now before you get a headache, J you do not need to be an accountant to figure this out. The following table can be used as a guide to fill in your information.

John Doe – Total Income

Month: June 201X

Item

Value ($)

Basis Salary

 

Overtime

 

Commission

 

Dividends or Investment Income

 

Payments from sideline businesses

 

Monthly Sales (Revenue from business)

 

Total Income

 

Once we have our income covered, we move to the expenses which can be a bit more challenging. Keeping track of all of your expenses may pose greater difficulty than your income because it is so easy to forget about the smaller expenses. We can account for our bigger, fixed payments; mortgage, rent, school fees, loan payments etc. However it’s the breakfast on the go, car maintenance and the unexpected medical fees to name a few that throw us off. Many of us underestimate our total monthly spending and this, is the start of financial difficulties. The secret to this is to categorize your spending. You can break down your spending as the example below:

Household

Value

Rent/ Mortgage

$2,000.00

Electricity

$400.00

Water

$100.00

Phone (landline)

$150.00

Groceries

$1,000,00

Internet

$150.00

Other: Repairs

$200.00

Total

$4,000.00

$4,000.00

 

 

Savings and Debt

 

Saving Contribution

$500.00

Loan Payments

$600.00

Credit Card

$200.00

Insurance (life, health, other)

$300.00

Pension

Investments

Total

$1,600.00

$1,600.00

 

 

Leisure

 

Entertainment

$500.00

Restaurants

$300.00

Drinks

$200.00

Movies

$100.00

Shopping

$300.00

Other

$100.00

Total

$1,500.00

$1,500.00

 

 

Children 

 

Medical Fees

$200.00

School Fees

$300.00

Books and stationary

$150.00

Childcare

$400.00

Child maintenance

Other

$250.00

Total

$1,300.00

$1,300.00

 

 

Travel

 

Traveling expenses

Fuel

$400.00

Parking

$100.00

Other

Total

$500.00

$500.00

 

 

Personal

 

Personal care

$250.00

Clothing

$500.00

Medical fees

$250.00

Cell phone

$300.00

Food

$300.00

Other

Total

$1,600.00

$1,600.00

Total Expenses                            

$11,000.00

The example above can be a true reflection of the monthly expenditure for an average family. It is amazing to see how quickly this all adds up, highlighting the need to account for all expenses. To accurately track/measure/control your expenses, you have to record everything you spend in a given month. Tools like Online Banking, Mobile Banking and Tele Banking can help in this where credit or debit cards are used to make purchases. However, cash purchases are not as easy to monitor. As such, try to make more purchases with a debit card or, keep all bills, receipts and records of all purchases. If no receipt is given, try to make a note of it at the end of each day because by the next day, you may forget what was spent.

Once we get past this first step, our financial picture becomes very clear and we will be in a great position to develop our monthly budget which we will be discussing in our next blog.

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Start Your Forever After Today

It’s the official start of the wedding season and we know that many of you are busy making final preparations for the BIG DAY!!! The dress, invitations, flowers, venue, decor, cake, tokens, food; everything has to be perfect.

We know that this planning process can be overwhelming and stressful at times so we have created the “Forever After Wedding Checklist” to help you along the way 🙂

12 months or more before the big day:

  • Choose your wedding date
  • Decide on the ideal wedding size
  • Determine the available budget
  • Look at venue options and reserve the date
  • Meet and book the person who will be conducting your ceremony
  • Make the first draft of your guest list J

9 – 12 months before the big day:

  • Find and order your wedding dress
  • Book a photographer and videographer (if you are having one)
  • Meet with your caterer and taste menu options
  • Decide on décor concept
  • Choose the bridal party
  • Book your live entertainment or DJ
  • Order and reserve any rental items you may need from a rental company

6 – 9 months before the big day:

  • Buy your wedding rings, especially if you are having them custom made
  • Reserve your wedding car
  • Design and order your wedding invitations
  • Order your bridesmaid dresses and groomsmen attire (flowers, shoes, accessories etc)
  • Research your marriage license requirements
  • Order your wedding tokens
  • Choose your wedding cake

3 – 6 months before the big day:

  • Finalize your guest list
  • Send out your invitations
  • Book your hairdresser and makeup artist
  • Decide and order ring bearer and flower girl outfits
  • Plan your honeymoon
  • Obtain material for décor
  • Open your Forever After Account **
  • Finalize your gift registry

2 months before the big day:

  • Confirm your menu
  • Finalize the details of the ceremony
  • Purchase or make your own guest book
  • Compile a sound list for your musicians or DJ

1 month before the big day:

  • Write your wedding vows if you so choose
  • Plan your rehearsal
  • Meet with your photographer
  • Get your final dress fitting done
  • Ensure the bridal party is fitted as well
  • Follow up with any guests who have not RSVP’d
  • Finalize your seating plan
  • Have your makeup and hair trials
  • Confirm your honeymoon reservations
  • Prepare items for decoration
  • Make final arrangements with florist
  • Finalize the wedding cake
  • Collect your marriage license

1 week and under before the big day:

  • Have your rehearsal
  • Relax 🙂

On the big day:

Smile for the camera and enjoy!

Wow! The list itself is enough to give anyone a headache as a lot goes into planning a wedding. This is why we created the ** Forever After. This investment account is a great nest egg that can be used toward owning your home and so much more. With the Forever After, you also receive gift cards that you can include in your wedding invitations, and give your guests the opportunity to make a financial contribution to your new beginning. For more information, read more or call us at 62-First and start your Forever After today.