5 Reasons Why Financial Education Is Important

It’s important that we keep on educating ourselves financially.

But why is it important to have financial education anyway? What impact does it have in our life that its important for people to take the time and effort to learn and keep on improving its financial education?

There are actually a lot of good reasons why having financial education is important but I’ll be enumerating five (5) reasons why we need to have it.

You’re In Charge of Your Financial Well-Being – This I believe is the most important reasons why people need financial education. Your own financial well-being rests in your own hands, not your broker’s, wealth manager’s. financial adviser’s or financial planner’s. They might say that they have your best interest at heart, but at the end of the day you’re just another client to them that will give them commission when you purchase several financial tools from them. The risk is still yours, its not their money that they’re taking care of, so why do they have to do a good job making sure it keeps on growing and not lose money at all. Not all advisers, planners and brokers are like that, but most of them are. And its really hard to find someone whom you can trust. So it’s still up to you to make sure that you’re finances are well taken cared of. So take the time to build up your financial education. This will allow you to properly assess the advises that you receive and see if they fit into your overall plans. Time to take charge of your own financial well-being.

There’s No Such Thing As Job Security Anymore – Have you ever been laid off or do you know someone who has been laid off? Not a pleasant experience isn’t it? Especially if the lay off caught you by surprise. In today’s modern world, job security no longer exist (unless you work in the Philippine government), you’re only as good as your last sale or last performance. What if you’re suddenly laid off, do you have enough money to support your needs while you look for a new job? How long will it last? What if it took you longer than you expected to find a new job? With financial education though, you’ll be able to figure out what to do if you suddenly got laid off. There are other ways to earn money than just getting a job. In fact the stuff that you’ll discover once you’re financially literate, will allow you to earn more than any job can offer. Don’t let job security fool you, be financially literate and open your mind to a wealthier possibility.

Your Company Won’t Take Care of You After Retire – Gone are the days where you work hard all your life for a company then they’ll take care of you after you retire. Now companies have cheaper options for their employees. Robert Kiyosaki called it defined contribution plan, wherein companies just match whatever amount their employees put in their retirement plans such as 401k in the US or Social Security System (SSS) here in the Philippines. Some companies provide a lump-sum cash for their retiring employees, equivalent to the number of years working for that company, aside from the SSS. Now these plans and benefits are good, but should not be the only thing employees will rely on for their retirement. Chances are, the amount you saved up using these plans won’t be enough to cover for all of your needs when you retire. But with proper financial education, people will be able to invest properly their earnings and make sure that they won’t end up depleting their retirement account earlier than they expected.

Making Money Work For You – You work because you need to earn money. In short you work for money. Do you think the rich work for money? Probably those who are greedy, yes. But what makes them rich anyway? Money inherited from their family? greed and corruption? Maybe, but what about those who are honest? What makes them rich? The rich has money working for them. They don’t just work hard, but they also work smart. They have money working for them so they continue to earn even when they are not working at all. They earn when they’re on vacation, they earn when they’re asleep, heck they even earn while their in the bathroom. It’s their money that’s doing all the work. Again this is because of financial intelligence. Financial intelligence allows you to invest your money in assets that earns you money. In short, money working for you.

To Be Rich and Wealthy – I’m sure most of you dreamed of becoming rich and wealthy. But how do you do it? Get a job and work your way up? Well that can work, but it will take you longer to get there and not everyone can get rich with this method. Win the lottery? Well if your lucky, but this won’t also guarantee that you’ll really end up rich. Chances are you might just spend all your money in less than a year. Own a business? That’s also a good idea, but do you know how to establish a business that will make you rich? Being rich and wealthy will require hardwork and dedication from an individual, but more than that it requires financial intelligence. It’s actually easy to make money, the hard part is to make sure that you keep that money. That’s why winning the lottery is not the answer to riches, because if you don’t know what to do with your money, you’ll end up spending it all. Same with inheriting money. Without financial intelligence, you’ll be burned with expenses here and there and before you know it you’re money will be gone. But if you have financial intelligence, you can get rich, even if you are deep in debt. This is the secret of the rich and wealthy. Being financially literate is the key that makes them who they are today.

Being financially literate is important. It is what separates the successful people financially from those who aren’t. So take time educate yourself financially and take control of your future.

How the Financial Management Process Is Transforming

The process of financial management is one of the key processes in an organization. This process plays a vital role in supporting the corporate decisions, while meeting the regulatory and legal requirements. To run an organization smoothly, it is essential to manage its finances in an accurate and appropriate manner. This is why entrepreneurs hire an expert help or partner with a financial service provider to handle end to end accounting tasks.

With a comprehensive network of professionals, finance and accounting service providers bring together the right set of people at the right time to help entrepreneurs lead the financial market. By focusing on improving the performance and increasing the value of a business, these service vendors offer a range of financial services to bring a transformation in this sector.

Well-organized Financial Operations

By structuring and standardizing the accounting functions, an entrepreneur gets empowered to identify the improvement areas and recommend relevant suggestions to overcome industry challenges.

In order to explore the full potential of resources, financial firms integrate advanced technologies and applications that further automate the accounting processes and deliver timely reports and accurate results. This allows the in-house staff to shift their focus on other core areas. Service vendors offer robust platforms and resources to manage transactions and operations of the financial sector.

Service offerings:

• Market research
• Financial planning and management
• Accounting BPO Services
• Banking Services
• Financial research and marketing
• SLA management

With the help of a service provider, entrepreneurs can minimize the risk factor and maximize return on investment, on various financial decisions.

Other allied financial services include:

• General Ledger Accounting
• Accounts Receivable Management
• Accounts Payable Management
• Bank Reconciliation
• Collection Outsourcing

Effective Decision Making

The service vendors deliver an adequate financial plan & a performance management agenda so as to help an entrepreneur make better decisions. Entrepreneurs refer to financial forecasts before making any acquisition or adding a new segment to their business.

The process includes the subsequent offerings:

• Financial Information Management
• Cash & Working Capital Management
• Expense Management
• Financial Reporting & Analysis
• Budgeting & Forecasting

Financial Planning and Transformation

Making a financial strategy helps an entrepreneur redefine their business goals and ways to accomplish them. It helps a financial officer to evidently articulate the fiscal vision of an organization, analyze the process efficiency and develop a future ready business model.

To bring transformation in the financial processes, it is essential to understand the business needs and then plan ahead for success. Financial transformation involves a review of the entire process and explores the growth and challenging areas that an entrepreneur need to focus upon. Service providers suggest relevant changes to be implemented in a business for process improvement.
Due to new and improve methods and business solutions the process of financial management is transforming drastically.

Financial management services have become a necessity for entrepreneurs who want to better their accounting stature and overall business proficiency.

7 Tips for Selecting the Right Financial Planner

Here are a few tips to help you choose the right Certified Financial Planner CFP or Chartered Financial Analyst CFA for your investments.

1. Ask for their credentials. All professionals have certifications and professional degrees. These degrees and certifications tell you that this individual has been trained, educated, and have passed testing and requirements from their professional association and the SEC. Never work with anyone who is not certified or chartered by the professional association that governs the conduct of that profession.

2. Ask the Financial Planner their investing philosophies. There are numerous theories, portfolio diversification methodologies, and strategies. Your Financial Planner should have a well thought out philosophy that goes beyond the canned phrases such as “we are here to help you” or “we care about your investments” which are merely slogans for their firm. What you want to know is the following:

2.a. Find out the risk factors involved, by asking if they are risk adverse or aggressive growth. A valid Risk Analysis by an independent 3rd party Risk Assessor provides an unbiased opinion on the true risk of the funds being suggested to you.

2.b. Do they use the standard portfolio diversification OR are they using the new, modern approach to diversification. It may sound great that a diversification method has been around for 60 years however, that is not a good thing. The market structure and investing has changed dramatically in the past few years. Newer methods are superior and provide higher Rate Of Investment ROI.

2.c. How current is the Financial Planner’s education. Every Financial Planner must keep current with the continually changing market structure. This requires yearly training and continuing education just like teachers, doctors, and other professionals must do.

3. Is your Financial Planner an independent, Franchise, or a division of a larger financial services company? This is critical information you need to know before handing over your hard earned money to any advisor.

3.a. An independent Financial Planner works independently and can offer funds based on their own personal assessment and philosophies. The downside to this type of Financial Planner is they are an entrepreneur, often a very small business, and have limited resources for research and analysis of various funds. If they do not have access to reliable information, fund analysis could be more limited to highly popular yet lower ROI funds.

3.b. A franchise is a small business that is legally tied to a much larger corporation that sells franchises. The franchisee must sell products and services designed by and structured by the large corporation that sold the franchise to them. Their strategies and fund offerings will be dictated by corporate franchise mandates. This may be a conflict of interest at times if the franchisee feels compelled or is compelled to promote a specific fund, because the corporation wants to sell that fund to investors.

3.c. A division of a larger financial services company means that the Financial Planner works for and is an employee of a large financial services company that creates, markets, and sells funds to investors. This type of Financial Planner must promote and offer whatever funds the corporation deems correct for the corporate business model. This can become a conflict of interest at times if there is a limited number of fund offerings, or if corporate is promoting a specific fund heavily.

4. Does your Financial Planner have a complete education on all 3 levels of market and fund analysis?

4.a. All Certified Financial Planners have an excellent education in Fundamental Analysis.

4.b. Risk Analysis is also a critical area and this needs to be clearly and concisely explained to you exactly what the risk factors are. If the recommended fund is a Fund of Funds, then the additional risk associated with a Fund of Funds must be clearly explained to you in simple layman’s terms. Understanding the stock market is not rocket science. Anyone can learn how to buy and sell stocks, and how to invest.

4.c. Technical Analysis is an essential analysis tool that all Financial Planners need to be able to do at least on the basic level. They do not need to be expert technical analysts but if there is no Technical Analyst TA on staff, or if your prospective Financial Planner scoffs at technical analysis, be very wary. Technical Analysis is the study of price for a fund in a chart form. This gives you the easiest way to see what your funds are doing, how they are performing against other funds, and whether the funds you own are actually trending up or if they are trending down. Just having a percentage number or other statistical numbers is not sufficient in our modern markets. Using charts to follow the growth or decline of your fund gives you a window into the markets. Technical Analysis is the only way you have of monitoring your funds performance quickly and easily.

5. Does your Financial Planner treat you with respect. Do they consider your viewpoint, expectations, and your requests. Working with any professional requires mutual respect. You should not be treated as if the concepts of investing are impossible for you to learn or understand. Explanations should be simple, concise, and make sense.

6. Your Financial Planner should always maintain a professional conduct and manner. A Financial Planner can never be a good friend, because being too friendly puts you at risk. If you feel your Financial Planner is a friend rather than a professional advisor, it will be far more difficult for you to maintain an unemotional attitude toward them. You may feel compelled by this friendship to go along with their suggestions, even though they conflict with what you believe is best for your investments. Although it will be tempting to want to have a close friendly relationship, the more you maintain a professional relationship the better you will be able to make unemotional decisions for your investments. Being too close or too emotionally connected puts you at risk of making decisions based on your feelings of obligation to a friend, rather than decisions based on what is right for you and your investment goals.

7. Experience matters even more in the Financial world than anywhere else. A younger Financial Planner may be fully capable, have scored excellent marks on their testing, and know many new things about investing. However a young new Financial Planner will not have the experience of having been through Bull markets, bear markets, and sudden catastrophic events. They will not completely comprehend risk because until a loss is real, the loss is incomprehensible.

6 Reasons You Don’t Need a Financial Health Coach

Is a financial health coach a luxury only the rich can afford? Or, can expert financial advice even help those who are living paycheck to paycheck?

What is a Financial Health Coach?

A financial health coach is a personal financial expert that understands budgeting, debt, savings, credit, providing for college, retirement, spending money wisely, and organizing an individual’s financial future. They are not financial planners, tax specialists, stock brokers, CPAs, or financial gurus.

They will explain how money and debt works, and provide pertinent information so individuals or businesses can make their own prudent financial decisions. They are teachers and advisers, not salespeople.

What is Financial Health?

Being financially healthy can mean different things to different people, but there are some basics that apply to everyone:

Financial responsibility – understanding the basics of personal (or business) finance and being able to take care of your financial needs.

Financial Literacy – being able to make sound financial decisions based on available information.

Financial independence – being able to make and implement your own decisions – sometimes with the help of an adviser, but often on your own.

Financial security – having peace of mind that you have the money to support the basics of life, enough to provide some luxury, and plenty to provide for the bigger events in life – college funds, medical needs, and retirement.

6 Reasons You Don’t Need a Financial Health Coach

Now, financial health coaches cost money, and one lesson you will learn from one is to not spend money unnecessarily. So, before you shell out some of your hard-earned cash on a financial health coach, let’s see if you really need one.

Is you household on solid financial ground? Do you have a household budget and are able to stick to it month to month? How about the financial health of your business – is your financial budget working? If all is well with your budget, then you can probably save the money and put it into a family vacation or fixing up the house.

Have you put money away for a college fund? Have you begun funding your retirement account? Do you know the best ways to save for these very expensive needs? If so, you probably don’t need a financial health coach.

Do you notice how other people live a feast or famine lifestyle and are constantly on a money roller coaster? Do you realize how fortunate you are to be on a level path to financial success? If this describes you, then you can skip the financial coaching.

Do you have a defined investment philosophy and understand your own personal risk tolerance for investing? Do you have a customized lifelong plan to guide your spending, funding, and investing? If you already have this, then your financial health is better than most, and you can do without a financial coach.

Do you make a billion dollars each year. Are you a billionaire? According to Forbes, there are 1,826 billionaires in the world, so chances are you are not one of them. Perhaps if you have billions of dollars, you are financially savvy enough not to need help. However, since you are likely not one of those lucky 1,826 individuals, you should seek out help so you can do the most with your money – whether its millions or thousands.

Become a Financial Health Coach

It’s easy to see that most people need a financial health coach to manage their money and save for big ticket items like college and retirement. It’s easy to see that becoming a financial coach would be a great side gig or career. If you enjoy financial matters, like helping people simplify their lives and achieve their financial dreams, it might be time to look into the world of financial coaching. You’ll be helping yourself, and in a position to help countless others reach their financial dreams.