Posts Tagged ‘Financial Services’
PLANNED FUTURE FINANCIAL CONDITIONS
Has become a common phenomenon that many of our colleagues, or people around us who frequently complained that the conditions of the financial. The loan amount in excess of its revenues, and even exceed the number of assets that it owns. In such a condition that usually becomes a scapegoat is the small amount of income he has.
But the root of the problem which is actually not located on the side of income alone, but a failure to manage finances. Many of us who do not have financial planning, never even thinking to plan financial condition, let alone in the future. Financial planning is the absolute activity to be performed by any person and this is what will distinguish between a group of people who always stuck by the difficulty of liquidity and the Group of people who can enjoy life. This paper will try to discuss in a simple, how one should start planning financials.
Diagnosing the financial condition
The first step that needs to be done in preparation of financial plan is to diagnose the condition of our personal finances at this time. To note in diagnosing the financial condition is the magnitude of the total revenues, total expenses, the size of assets and liabilities debts we have.
In general it is clear that total income should not exceed the total expenses. For those who have a fixed income every month then could easily estimated the magnitude of the total income in one year, including income non routine such as allowances and bonus feast day. Then its expenditure should be regulated not exceeding total revenue routine that he possesses.
The income of the non routine should not be allocated to bear the total expenditure, but it must be allocated for the purpose of investment or reinforce emergency fund. As for people who have that kind of income variables (not fixed) then the total of its expenditure may not exceed 80% of the average income.
The next post is the asset that needs to be noted. We often mistakenly defining about assets in relation to financial planning.
The assets are in fact everything that delivers productive activity or support us. A simple example is the House we live in and the vehicle we wear can be classified into an asset because it supports our productive activity, while villa, stereo set, an acoustic guitar, golf and a second vehicle that is rarely we wear, definitely not an asset category. Savings and investment is one of the tangible assets yields.
Debt is the plural thing is done and is not really a thing that needs to be feared. Debt in fact is adding to the buying power of our revenue by attracting us in the future to the present. Are analyzed in terms of debt is a type of mortgage debt and liabilities we have responsibilities. Home credit and productive vehicle is definitely the kind of debt that is reasonable and can be tolerated, but credit card debt is a type of debt that is absolutely to be avoided. Interest rate credit card debt average reach 35 – 48 per cent per year and this is clearly burdensome financial digitalis us.
Given the size of the interest rate credit card, then use a credit card to look out for limited funds for the sake of practicality and comfort only and not to increase our buying power with the way owe. In terms of managing debt, the magnitude of the total liability of our debt repayment should not exceed 30 percent of our total revenue. When we’ve been stuck on the conditions of the obligation to pay the debts that exceed the threshold, then the restructuring absolute debt have to do with prioritizing on debts that have high interest credit card debt, such as credit without collateral, and the like.
Having An Emergency Fund
The second step in the preparation of financial plan is to check the availability of emergency funds that we have. An emergency fund is a Fund at any time must be available when unexpected expenditure arises. Many people don’t think about the availability of an emergency fund in their financial planning, so that when unexpected expenditures arise then that is often done is add the ability of purchasing power by creating debt, and usually this type of loan is a debt with such high interest rate credit card debt and credit/loans without collateral.
Whereas it is clear that the actual debt should not at all be a mainstay for unexpected expenses this close. This is where the importance of the availability of the Emergency Fund, so we don’t get stuck coils of high yield debt. The magnitude of the emergency fund to be owned in the financial planning vary, ranging from 5 to 20 times the total monthly expenses.
Too often, companies die unnecessarily. Why? Because most managers haven’t learned to recognize the symptoms of oncoming illness in their business. And when symptoms do start occurring, management doesn’t know how to manage in this situation. They haven’t had to in the past, and they are ill equipped when trouble sets in.
The obvious signs of business trouble are rarely its root causes. Losing money, for example, isn’t the problem. Rather, losing money is the result of other problems.
When you wait too long to recognize deteriorating characteristics, the company will probably seek bankruptcy protection, and only creditors, attorneys, and outside accountants benefit from this process. It’s the astute manager who recognizes fallibility and has the foresight to ask for help…before serious trouble sets in.
Corporate managers, directors, and financial professionals, you share in the business risks of the companies you serve. You accept additional risk when the company is heading for trouble. By recognizing some early-warning signs of business trouble on the horizon, you can eliminate, overcome, or, at the very least, sidestep those risks.
If you can answer yes to some of these questions, it’s time to take decisive action.
Is the owner or top management overextended?
Whose work are they doing? When they continue to perform functions that should be done by others (once the business has grown to a more complex level), they’re overextended.
The Federal Deposit Insurance Corporation offers the following guidelines to evaluate whether you are facing significant financial difficulties.
- Loan payments, excluding mortgages, but including credit card charges, take up more than 20% of your monthly net income.
- You are close to, or surpass, your credit card limit.
- You must borrow to make payments on existing loans.
- You only pay the minimum amount on your bill.
- Lack of money is forcing you to pay bills late or postpone doctor’s visits.
- You must work overtime, or take a second job, to cover basic living expenses.
A person who starts a new business is often asked when sales of the company provide benefits? Or ask how far is going to be able to get a fair wage of your company? It is through the analysis of financial breakeven establish the answer to these questions and an overall view on how the results change when the benefits of increased sales or reduced. Honestly, it is impossible to predict a precise amount of sales or profits as a company has many fluctuating factors such as variety of products. Many customers who buy differently and the interaction between price, promotion and the number of products sold. These and several other factors complicated the analysis.
Despite these difficulties, we present a simple model is often called in different ways: the break-even analysis, break-even point, made the point of financial equilibrium model of financial equilibrium, the cost of volume and profit, etc.. This last name is attractive because the break-even point can be adapted to determine the sales needed to achieve an amount of benefits. However, use the terms financial breakeven analysis and break-even point.
To help with our explanations, we will use a shell company or DMC ‘a company that provides oil changes for cars. “The amounts and assumptions are also fictitious. The 4 simple steps below provide the necessary calculations to obtain breakeven point.
1 – variable and fixed costs
2 – The income or sales
3 – The range of benefits
4 – The break-even point per unit
If you own a home, you will certainly have the desire to ensure a suitable amount for the security of your home and property. Not having insurance could be catastrophic if a fire or other natural disaster occur and destroy part or all of your home. People need to evaluate what may be most important when it comes to insurance. It is preferable to have a considerable in certain areas are needed more than not having much in all areas insurable. In addition, disability insurance is a very important, because if they become disabled and unable to work, which will happen then?
Assess how much money they pay for health coverage, as you may need an operation immediately and without notice. If you have a job, then you probably have this insurance through your company. If you are the mainstay of a family may wish to review your budget and find a way to have a type of coverage that will protect them like their family.
If you already pay for their own health insurance, then have to pay more per month if you want greater protection. So, they know they will be covered on your health. This is important because very often people have business insurance, but can not receive medical treatment when needed.
Retain these items of information in his mind when deciding what type of insurance and how much they can elect to pay for it. When you see the importance of having health insurance, life, property, disability and other types of protection, it is easy to understand that the cost can succeed on the amount of money they will pay if they have no insurance.
In the past five years, the economic flow in collateral to support financial intermediaries that provide credit to small and medium enterprises (SMEs) has grown 350%, which has generated a wide range of products for the sector and has contributed to that interest rates decline. Still missing, however, be done so that resources reach the business and are well used, say experts.
Currently, Nacional Financiera (Nafin), through the National Guarantee System is working with 30 financial intermediaries, of which 43% is non-bank and 57% bank. Together these institutions offer over 100 specialty products for the SME sector.
“Through the guarantee program can significantly induce the credit in our country, because it has several benefits: the first is that risk sharing with financial intermediaries, the second is to achieve better terms because, with decreasing risk decreases the rate at which the financial intermediary is willing to lend to the company, “said Luz Stella Lozano, Deputy Director General Nafin Building.
With an average amount of 460,000 pesos, commercial banking has supported since 2006 to January 2011 at almost 400,000 SMEs.
Ignacio Deschamps, president of the Association of Banks of Mexico (ABM), said that thanks to the guarantees of the development banks, 80% of the loans granted requests no mortgages, so this program makes it even more accessible loans to entrepreneurs.
Commercial banks, meanwhile, has tried to adapt to the SMEs, for “specific expertise that intermediaries have gained by studying their customers can loosen up their credit, as prerequisite to take a mortgage and opt for a flow analysis on the company to see if the fund is profitable product, “said the official development banks.