Creating Wealth – Once You Leave School, Your Financial Statement Is Your Report Card

When creating wealth, your Financial Report Card is Your Financial Statement.

In school, your progress was measured with a report card. You could not continue on or move forward on to the next grade if you failed to make enough progress. Your teachers tracked and measured the success of your school work and activities regularly throughout the year and sent home progress reports and report cards. But what most people don’t realize is that once you leave school, your financial statement becomes your report card. It reveals or keeps track of how you’re progressing or doing in life financially.

For businesses (C-corporations for example), the tax code requires an annual financial statement each year: updated profit & loss statements and balance sheet, etc. But for the average person, there is no mandatory filing requirement (ie, regular checkup) and therefore most people are not even aware of their financial statement, the importance of a financial statement, or what a financial statement even is! It is not something you are sent in the mail or that the government or your employer or anyone else keeps track of for you (unless you’re working with a financial planner maybe).

Your banker however, will ask to see your financial statement in order to assess your level of financial intelligence or the amount of risk they perceive you to be. Your banker will want to determine your creditworthiness, he will want to examine your track record for how responsible and smart you are with your money. He will want to see over the years how successful you have been financially.

The better your financial report card looks, the faster you can move ahead, the more good debt you’ll be trusted with and able to borrow, the more favorable terms you’ll receive, and the wealthier you’ll become.

(And while your banker may not ask you for it by name – they know most people wouldn’t know what a financial statement is – your banker will ask you to provide all the information needed to compile a financial statement, like income, assets, liabilities, outstanding debt, etc and will compile it themselves, which you don’t normally get to see).

This lack of financial education is a major cause for all the debt and financial crises we hear about today, especially when you consider the incredible financial boom we had for so many years prior to this recession, where so many people made so much money, you would think they would be setup or better prepared to handle a downturn in the markets and the economy. This just goes to show that income does not equal wealth; it’s not how much you make that creates wealth, it’s how much you keep. And as we know during that period, the average savings rate for the country not only dropped to zero, it actually went negative – that is NOT a sign of creating wealth, but rather of speculation and gambling.

What is the Color of Money – Why Must Parents Also Play a Role in Teaching Financial Freedom?

A survey in North America on financial freedom

A survey at a University in the USA found that most teachers don’t think they are suitable to teach their students the basics of personal finance or issues regarding money. This is a recipe for a future financial disaster. Most teachers who recently graduated are still in high debt due to student loans and will feel uncomfortable teaching their students financial freedom.

Disturbing statistics.

During the survey the teachers were asked to rate themselves in six personal financial areas: Income and Careers, Planning and Money management, Credit and Debt, Financial responsibility and Decision-making, Saving and Investing, and Risk management and Insurance. Only 19% of the teachers felt they were “very competent” in any of the six areas. Another statistic shows that only 33% of them had taken a college course that included personal finance content.

The mind of children

This clearly indicates that there is a great need to incorporate personal financial management for all teachers, whether in undergraduate or graduate curricula for students studying to become teachers, or postgraduate or in-service courses or workshops. Over time this will revolutionise any economy in any country for financial freedom. The statement “Give me the mind of the children and I will rule the world” is a powerful claim and yet so true. Let’s teach financial freedom.

This is a great opportunity to dramatically change the quality of the future of financial education by providing teachers with a subject matter they need throughout their careers. This education can be applied to themselves and then pass it on to students. This is a win, win situation. It can be used to teach the teachers and then there will a better chance of educating our children in the area of personal finance in generations to come. Why not teaching financial freedom?

Long term goal

The goal is a worthy goal. It is of uttermost important for teachers to teach children to save, to invest and to be better stewards of their money – financial freedom. If they do, children will become better money managers and in time become parents who in turn teach their children. The ripple effect can turn any country into a prosperous country that will be financially free.

Many financial literacy advocates agree that a core part of any curriculum for teachers should include mandatory financial literacy classes. Correct, a mandatory financial education. This is a key factor for survival in this new competitive world. Yes, from kindergarten to the end of the school period. If my 5-year-old can beg for a hamburger and cry when he doesn’t get one, then he is more than ready to be schooled in the economics of eating out. So Parents can start to play a major role in this financial freedom teaching followed by 12 years of schooling then additional higher education in order to produce a generation of financial literate adults or parents.

No Degree to be handed out.

I suggest that college students should NOT be handed a degree without having taken personal finance classes. I think it is vital that graduates should know how to create a budget based on their expected salary. Every human being will use finances during their lifespan.

The recession is here and it will stay for a while, it can make or break a country and its people that lack financial education. Right now the majority of the people, young and old lack the decision-making training to make good financial choices. It might be challenging to teach people common sense, but we sure can do a better job of teaching basic financial literacy.

Start at the top

I repeat again, teachers are a pivotal factor in the future success of financial education. We have to start somewhere and the best place to start is with teachers so they can teach children to walk the long road to financial freedom in a very competitive world. My suggestion is to educate the educators and to mandate that schools add money management to their basic curriculum for future generations to compete in a global village.

Parents will follow.

I must acknowledge that we also need to teach parents that they can instill in their children certain core values concerning finances. We know that children follow in their parent’s footsteps of what they’ve learned at home. I realize we can’t just put the financial education entirely into the hands of educators to teach, so parents do a have a vital role to play teaching financial freedom. Any suggestions are welcome. Let us strive for future financial freedom.

If you want more information, please feel free to go to my blog.

Why the World Needs Financial Planners

Several weeks ago I rang a applicant to align a analysis of his investment portfolio. He and his wife accept been retired for a few years now and are adequate a adequate retirement in a quiet bank town. Like all acceptable banking planners we accept been befitting audience up to date with approved letters and newsletters.

The fallout from the all-around banking crisis and connected ambiguity has fabricated a lot of audience abashed about the aegis of their investments. It’s fabricated banking planners even added abashed with falling investment ethics and abhorrence of accident audience in such airy markets.

You will accumulate from my antecedent posts and online writing that I am a able apostle for banking education. I accept a banking planner’s role is not just about managing investments on account of audience but added about teaching audience to yield albatross for their own banking approaching through able banking education.

Financial apprenticeship is important because the aim of a lot of humans is to advance a abounding and advantageous activity culminating with an affordable retirement affairs that has been years in the making. For a lot of people, that agency authoritative the appropriate investment decisions forth the way, or at atomic minimising the bad ones, and the abstruse to that is about accepting the ability to accomplish as abounding of those ‘right’ decisions as possible. It is not about handing over that albatross to a third affair or dupe anyone abroad to accomplish those decisions for you. It’s about accepting ascendancy of your own affairs and compassionate what, why and the risks of any investments you are in. Nicolas Cage will adjure to that. He absent aggregate by handing ascendancy of his investments over to his banking manager.

But, I’m transgressing, so let me get down from my appearance about banking apprenticeship and get aback to my applicant and the acumen why the apple needs banking planners.

On speaking with the applicant we enjoyed the accustomed pleasantries and accepted altercation about the accessible Christmas period. My admiration to accumulate the audience abreast on their investments and what was accident in the accounts apple was the affective agency for my buzz alarm and appeal to accommodated afore Christmas. We’re not talking about a baby investment actuality either. This is the acme of a lifetime’s plan and accumulation all formed calm to accommodate an abounding acquiescent assets for the blow of their lives.

To my dismay, Ted (I’ll alarm him Ted, but that’s not his absolute name) declared that he was too active arch up to Christmas to accept any affair to altercate his investments. He went on added to advance that unless I was advising any changes, he could do annihilation about the apple or the banking markets so was blessed just to leave altercation on his investments until his next academic analysis in April next year.

It was at that point why I accepted the affidavit why the apple (and Ted) still charge banking planners.

Apathy and fear.

We can deliver all we like about the charge for humans to yield ascendancy and albatross of their own affairs but there will consistently be humans who can’t be bothered, or accept to accept a adult access to their investments. For many, it may be they feel the accounts apple is too complicated, so they canyon ascendancy of the accommodation authoritative action over to their banking adviser or third party. Perhaps they feel added adequate because they’ve got anyone to accusation if things go wrong.

Whatever the affidavit and admitting my admiration for humans to yield ascendancy of their own affairs through able banking education, there will consistently be humans who don’t care, don’t wish to care, or are too abashed to affliction and that’s the acumen by the apple will consistently charge banking planners.

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Are You Disappointed With the Financial Advice That You Have Received to Date?

If you are a business owner or a private individual with over £250,000 of investment capital then the chances are that you may be dissatisfied with the level of service or standard of advice that you have received in the past.

Many conventional financial advisers have a reasonable level of knowledge but often the advice that they provide is related to financial products as this type of transactional advice generates commission. But what difference does this type of advice bring to your life or your future? Why would you need to make a difference?

Regardless of your current financial position, the future is full of uncertainty as governments worldwide are diminishing the value of their fiat currencies in order to clear massive debts. In addition the value of cash (once regarded as a safe haven) will be eroded by deflation. Investment markets will be volatile for some time to come, and the worst of the falls in investment markets may be ahead.

So conventional advice, providing products based in these areas (and all too often – little other real advice other than information on products) may not provide you with the financial security you need.

Remember given the improvements in health and medical treatment we are all living longer. The cost of providing your current lifestyle will leap ahead in future years. This will provide a very real problem for many people as they are likely to outlive their capital.

Many of us are living our lives, as if nothing has changed, but a very real change has taken place, the transfer of wealth from the west to the east. Compounding the significant reduction in wealth, our politicians have let us down badly and created massive debts which will impoverish this country for years to come.

Of course it is very easy to pretend that no real political or financial changes have taken place and it may be pleasant to pretend that our government is capable of dealing with the massive problems and significant debts that they are faced with.

If that is your position then you may want to carry on receiving conventional financial advice even in these unconventional times.

After all you will not have to cope with reductions in your pension income or standard of living now, nor will you have to cope with higher taxes. However all of these events are inevitable. To provide a brighter financial future you may wish to seek out a different style of adviser, an Alternative Financial Adviser.

Alternative Financial Advisers can provide advice on products if required but they are more concerned with providing you with a realistic view of your current and likely future financial position.

They will work with you in creating a financial model, this will enable you to make the very necessary decisions now to influence your future later. Alternative Financial Advisers will normally agree to coach you to an improved financial future. In order to do so they may have to spell out some financial truths that may be uncomfortable for you to listen to.

In addition to personal (alternative) financial planning for individuals – Alternative Financial Advisers can often assist business owners, that is particularly true if your Alternative Financial Adviser is also an Alternative Corporate Financial Adviser.

Their knowledge and bespoke planning fills a void left by accountants and conventional financial advisers. Business owners have a massive opportunity to leverage their business and both increase their personal wealth and the value of their business.

Such an Alternative Financial Corporate Adviser needs not only to possess a considerable knowledge of accounts and financial planning strategies but also considerable knowledge of tax and sensible tax strategies.

Business owners who have applied financial strategies advised by such advisers report a marked increase in their personal wealth and the values of their business over as little as 2/3 years. Alternative Financial Advisers make a significant commitment of time and support to each client they agree to work with, quite clearly this service can only be provided by fee and retainer.

However most advisers of this type provide a “discovery meeting” at no charge. This will enable you to investigate what if any difference they can assist you to bring to your future, using financial strategies not simply products. They will also provide clear financial statements each year so that you can establish what progress you are making.

After all what is the “alternative”?

Five Ways In Which You Can Benefit From The Services Of A Financial Planner

There are at least five ways in which you can benefit from the services of a financial planner. As the name suggests, the financial planner is a professional who helps people identify/formulate their financial goals, and then make plans towards the attainment of those goals. Consequently, the five ways in which you can benefit from the services of a financial planner include where:

1. The planner helps you in making an accurate assessment of your current financial position: the truth of the matter is that many of us have no idea where we actually are, in our financial lives. We don’t have a clear picture with respect to what we own, in terms of assets, and what we owe in terms of liabilities. You will be surprised to learn that there are many people who don’t even have a clear picture on what they earn (from their various channels). The end result of all that is the situation where a person’s financial life runs on ‘autopilot.’ And that tends to lead to a situation where a person earns money, and somehow it ‘disappears,’ and somehow he or she doesn’t have an idea on where exactly the money went to. The financial planner helps you bring the whole situation under control, by helping you make an accurate assessment of your current financial situation. At this point, the planner may also help you identify the opportunities before you, as well as the threats staring at you, with respect to your financial life.

2. The financial planner helps you in financial goal formulation: having helped you make an accurate assessment of ‘where you are’ with respect to your financial life, they also help you work out where you want to go, again with respect to your financial life. That they do through the process of financial goal formulation. The planner won’t, of course, create the goals for you. You have to own the goals. What they do is help you in the process of goal formulation.

3. The financial planner helps you in the creation of financial plans: the formulation of financial goals is akin to the definition of ‘where you want to go’ financially. Just knowing where you want to go is typically not enough to get you there. You also need to know how exactly you are going to get there. This is through the creation of plan(s) toward the attainment of your financial goals. This is also where the bulk of the planner’s work comes from, hence the name of the profession.

4. The financial planner helps you by building ‘accountability’ into your financial life: whilst many of us may already have clearly defined financial goals and plans for their attainment, what keeps us from actually attaining them is our lack of accountability. In these types of matters, it helps to have someone (especially a non judgmental professional) you can be accountable to, and that is a way in which the financial planner can help you.

5. The planner helps you in the elimination of finance-related stress: the reason as to why people experience finance-related stress tends to be where they feel that their financial lives are ‘out of control.’ The financial planner, by helping you identify your current financial situation, create financial goals and come up with plans for their attainment can ultimately help you stop feeling as if your financial life is out of control. That way, they would also have helped you in the elimination of finance-related stress.