Money Management Easy

Some people may be difficult to manage the money. They have high salary but they cannot fulfill the living cost. The money management is not difficult as your imagine. On the other hand, the ordinary clerk who has lower salary can fulfill the need moreover hey can save few dollars from her salary. The clerk can buy house and car because they can manage the money well.
Some people have to much money and they are confused to use the money. They just spend the money for something that they actually do not need it. They supposedly could make more money by investing in stock or precious metal.
You can manage the money easy by following these steps below:

1. You should know the net worth
How much your net worth now?  You must have asset such as house, car, motorcycle, computer, furniture, and else. Separate the asset that you do not have it. Remember, Do not list the house that you hire in your asset list because it is not your own. Car that you have not finished the payment is not also your own but he lease company own he car. You will have he car when you have finished to the credit.  Sum the entire of the assets.
The assets reflects of your wealth. People are said rich if they have so many assets.  On the other hand, the poor man has only few assets. 
Asset is your capital and is very important for your live. You can use it to make more money. For example, you can lease your house to other people. Perhaps other people need your car to go somewhere and you can hire your second car. The tenant will pay you after their return the car.
The stock or other invest is also your asset. Calculate the asset base the market value not the nominal value. Check the market value of your stock today at the internet.
Then check how much debt you have. Perhaps you have debt to your buddy or brother. List the it to your total liability including your mortgage, car lease, notebook credit and else. Substracts the total assets with the total liability that result net worth. The positive result means we have a health net worth. We hope the net worth is high.
2. Track your spending
Track the spending once you spend the money. You can record the spending every night in your notebook, notes, and others. At the end of the month, you can consolidate all of your spending and write it at the spreadsheet.
The important of tracking your spending to know how much money that you spend. You can also recognize the important spending or less important spending. Separates the need with want to slahs the spending. The need is something that you really need and ignore it can harm for your life, example, food, cloth, education, health, and others. On the other hand, the want is something that you may not need it. You will not die when you do not get it. For example, eating out, cinema, video, leisure, and others.  It is important to reduce the want especially you have no much money. You are better to allocate the money for saving or investment.
Begin with food expenses. Here are some examples of your food spending such as: cereal, milk, bread, vegetable, chicken meat, meat and others. Collect the note of your food spending. It is not difficult job to do it. Then you can track your cloth spending.  How much you spend for cloth. No all people buy cloth every month. They may buy once in two month.
You should also track your debt payment every month because it is also your spending. If we have much debt, we should reduce it. Some people prefer to pay the debt first than other expenses because they know the debt also if we do not pay it. The interest makes your debt grow.
You should not spend all money for food, cloth, and debt. You can also consider saving. Saving is also spending though you will use the money one day. Do not save at the end of month because you will not save any penny. Set some dollar at the beginning of the month for saving.
You are better to provide cash for emergency fund. Sometimes we must spend money that we have not predicted before. The amount of emergency fund is six time of your monthly spending.

3. Where you invest your money
Most people invest the money to the real asset such property, crop land, car and others. Those investment may not give the high return as the stock or bond. However, those assets can save the value of your money due the economic tight. The stock price or bond price may decline but the real asset‘s rice never decline. The land’s price never decline year to year. The land’s also has no depreciation so we do no have to spend money to maintenance the land.  Beside the land, people also invest the money to property such as house, apartment, hotel, farm land and others.
You should invest not only in one investment only. Spread your money to various investment and create the portfolio. It can help you to protect your entire assets. When the economic down, financial asset will also down too. Fortunately, the real asset increase over many times. The real asset may save your wealth. The real asset price has been increasing recently.
A Clever people will invest the money o various investment. They do not depend on one investment only. Some people just invest in one type investment only.  Recently, some people invest heir money in gold only due the return of gold price is so high. Someday the gold price decline and they will suffer loss from it. Recently, the gold price is not good as the last year. Perhaps the demand of the gold has declined. However gold could keep the value of our money.

Read Also :
How to organizes Finances
How debt influence net worth
Four Financial Goal Mistakes

7 Steps in creating personal financial plan

When someone travels to a place, they have to build the plan first. They should provide cash, the baggage, passport, visa, and others. We have to provide enough cash so we can buy ticket, food and cloth. We do not wan loss in a strange place and without any penny.
I believe that we should also build or create a personal financial plan. People should have a financial plan for their future. To create a personal financial plan, you can follow these steps below:

1. Compute the net worth
Net worth reflects the wealth of someone. The net worth is the excess of asset to the liabilities. It is not difficult to calculate it. First, you can list the entire asset that you have such as, cash, marketable security, house, car, property, and others. Counting the cash is not difficult. You compute the cash in your wallet and your bank account. On the other hand, you must be difficult when you should calculate the property and house price. You should compare the price to the similar assets. For marketable security, you can compute it as the market value of the security. For example, you have one thousand sheet of communication company stock that price is $20. The total net asset of security is $20,000.
Second, enlist the entire of debt such as notes, mortgage, lease, credit, and others. Place the short term at the first line of the debt. The short term is the debt that you should settle at least one year.
Third, subtract the entire of your asset with your liability. The result should be positive which means you have more asset than the liability. If the result is negative you have to improve it immediately. Next time, you should decrease your debt to improve your net worth.
2. Check the acid ratio
Compare the debt with your income. The debt supposedly must be lower than the income. The debt is not more than 30% of the income. If the debt is so higher, you have to reduce the debt soon or it will harm for you. High debt may charge you to your spending. You should allocate more money to debt. The higher acid ratio could make you bankrupt. You cannot pay the debt and you cannot fulfill your basic need such as food, cloth and house.
Reduce your debt fast as you can and do not borrow money again.
3. Analyze your cash flow
Recognize from where the cash inflow? We usually get the cash inflow from the salary. Perhaps you stream cash inflow from other sources such as business profit, royalty, goodwill, and others.
On the other hand, recognize your cash outflow? For what the money you have get? You must spend the money for food and beverages. Track the food expenses each month. There are some monthly spending such as, cloth, mortgage, credit, kid education, and others.
The Cash outflow is better lower than the cash inflow. It means you still hold some money. On the other hand, you should be careful if your cash outflow is higher than you cash inflow. You should increase the cash inflow as you can or you can reduce the cash outflow.
4. Manage risk
Life is full of dangerous but we can reduce it. Some people may buy insurance to protect their risk. They buy life insurance to protect their family and hope the family have sufficient fund when they died.
Managing a risk is not only buying insurance but also creating portfolio. Invest your money to various investment such as stock, bond, ETF, mutual fund and else. It may reduce your risk in investing. I prefer to invest my money at various investments than buying insurance. In my opinion, it is cheaper. When you buy insurance, you must pay some fee and transaction fee and the insurance company invest it a various investment.

5. How much money that you invest
This is important part of the financial plan. The investment is important for the future. It can fulfill the future expenses such as retirement, kid education, house, and others. If we have so much money, we can invest I to so much investment. More money you invest, more money you will get.
Should we invest the entire of money? Off course, we should not invest all money. We need some cash to buy something or we need it to buy our debt.  We also allocate some money for emergency fund that help us when we need money.
The money that we can invest is the income residual after we allocate to monthly expenses and saving. If we got so much money from other revenue, we can invest it.

6. Assess the risk tolerance
Are you dare to invest your money at the high risk investment? Most young man dare to take the high risk because they still young and they can make money fast. When they fail in one investing they can find money. On the other hand an old man should think over many times in investing at high risk investment.
The risk tolerance will determine how much money that you will invest. People who dare to take high risk may get high return. We cannot blame someone who chooses low risk. They can invest at safe investment or low risk investment.  There are some test to asses your risk tolerance and you can use it.

7. Assess asset allocation
What is the portion cash to the assets? The cash is very important but having too much cash is not profitable. You should diversify your asset to various asset either real asset or financial assets. Some experts suggest selling the investment such as stock, mutual fund, ETF, and bond. Use the money to buy real asset such as land, property, or cattle. Unlike financial assets, the real assets price is not volatile as the financial assets. You can also sell it when the price is high. Use the real asset to makes money by renting it. Not all people can buy a house so they can hire your house. People prefer to hire the money rather than buying it because the house price is so high.

read more :
5 ways save to food

How debt influence net worth?

Some people think owe money can increase the net worth. Let Says, Mr Broderick has $ 10,000 in the certified deposit. He wants to increase the asset by owe $ 10,000 from the bank. Mr. Broderick asset look increase. He has $ 10,000 in deposit and he has $ 10,000 in suitcase. Mr. Broderick want to buy the store at the certain city to wide the market.

Mr. Broderick net worth is not increase per se. After get loan from Bank the netw worth is become zero. He has deposit $ 10,000 asset, but he has bank loan $10,000 liability.

The Bank also charge interest rate 5% years so Mr. B will pay $ 10,050 next year. Next ten years Mr. B net worth will be below zero. The liability $10,050 minus $ 10,000 equals $ 50. If Mr. B cannot get the cash from his new store, he must be bankrupt. If, on the other hand, the new store sales so many product, the asset may increase. Let say, Mr. B can make money $ 11,000 from the new stores. His networth wil increase to $ 11,000 assets minus $10,050 loan equals to $ 950.

Not all debt decreases the net worth. For a moment, debt must decrease the net worth. If we can use the debt, the net worth could increase. Before propose the loan, a businessman should make sure that the debt can be useful for business.

Borrowing money for buy a luxorious car must decrease your net worth. You cannot generate financial benefit from luxorious car. The interest rate of lease car is high and the value decreases every year.

In my opinion, the debt is difficult to lift our net worth. The interest of the debt is high so you will difficult to pay it.

Borrowing to userer or mafia is a fast ways to bankrupt. They can provide the cash quickly without guarantee but they will find you wherever you go. They are not shame to charge the high interest to the borrower.
Read Also Why people fail to reach financial freedom 
Financial advice for teenager 
How to create strict budget
 

What is Liquid Net Worth mean?

Liquid net worth is the diferrence of liquid asset to the debt or liabilities. The liquid net worth compute how much cash that we can spend. The liquid asset is very important for our life. We need cash to buy food or beverages. If you go vacation to underdeveloped country, some cafe may not receive your credit card. They just need cash. Therefore, you should change your money to the destination local currency.
Beside paper money and cash, there are some liquid asset that you may have. In your country, the suppermarket still receive your debit card. You can use it to buy meat, vegetable, cereal, milk, for your daily necessity.
When you go to cafe, you can also pay the food and beverages with the debit card. Surely, your asset will decreases if you often eating out.
Even a company need liquid asset for buying inventory, buying raw material, paying the salary, paying tax, and others. The company is impossible to pay the employee with table or car. The employee will not receive the office inventory but they just want cash.
The lack of liquid asset can disturb the company operational so the man does. A health company must have a good liquid net worth. 
The money that you put in investment is also liquid asset too because you can cash the money easily. It needs few hours or second to cash the asset. When you need money, you can ask your broker to sell the stock. Surely, the stock price is same with the market value that day. You can either win or loss in selling stock that day.
Though the investment is a liquid asset but we cannot predict the value of asset like a cash. Today, our stock price is $ 1,000. The next days, the price might increase or decreases. Beside stock or equity, the liquid asset from investment are non-IRA mutual Fund, ETF, and others.
The other liquid assets is precious metal such as, gold, silver, platinum, and paladium. We can sell the metal at jewelry store or online store such as Amazon and eBay. The precious metal price is stable unlike stock or other capital market investment. The best investment metal is precious metal bar.
To calculate the liquid net worth, you add all the liquid asset. Then sub it with your debt. It is good when you have a positive liquid net worth. If, on the other hand, you have negative liquid net worth, you need to add the liquid assets.

How to increase net worth

People try to increase the net worth that depict the wealth. Net worth is the difference between the assets and the liability. A rich man may not have high net worth if he or she borrow money to buy asset. Off course, the high debt makes the people or unwealth. Example, Mr. Jordy has luxorious car, and big house but he lease the car. Each month, he has to pay two hundreds dollar while his salary is only $ 2,500. Meanwhile, his neighbor Mr Jones has no car. He just got $ 1,000 from the business but he has no debt. He has paid the house previous years. Though Mr Jones salary is lower than Mr Jordy, Mr Jones has higher net worth.
The higher net worth, the more rich people. There are some ways to increase the networth:

1. Increase the asset
This strategy is good for people who cannot reduce the liability side. They should work hard to increase the asset side to balance the liability side on the right.
Increase the cash stream by working for other company, opening a business, selling stuff at internet, selling the stuff at the garage, and so.
You can also increase the house. Buy some house and hire those house to the renter. The renter can pay the rent expenses each month or each year.
Beside buying house, you can also buy other aseet to keep your value of money. Buy some productive asset to increase your networth. Some plantation or livestock can make you money. The plantation can produce fruit and cereal and you can sell it to the market.
2. Decrease the liability
This strategy is fit for someone who cannot increase the asset. They have to decrease or reduce the debt so it can lift the net worth. Try to decrease the useless liability such as plasma tv, luxorious car, and other.
Settle the debt as soon as possible. Use your asset to pay the debt with interest. The high debt decrease your net worth and it may reduce the asset. 
3. Increase the asset and reduce the liability
This strategy can increase your net worth fast. Surely, everybody can do it but the result may vary.  Despite you have much money, you do not spend it for luxorious things. They prefer to save or invest more money to make other money. As consequently, the asset may increase because the asset can generate money.
Our investment such as stock, mutual fund, or ETF price might increase. When we sell the investment, we will get money.