Personal Finance Tips And Advice

Are you one of the 50% of Americans that don't expect your personal finances to improve

in the next six months? According to a recent Harris Poll 30% of Americans feel that their finances will worsen. Fear of losing your job or losing money influences us tremendously.

There have been studies done by behavioral finance experts that say by nature we seem to look at our own situations as worse than they actually are. Is that true for you? One solution to this problem is to figure out how to conquer the emotions that stop you from making the best financial decisions you can.

Psychologists often use the phrase, "The emotional tail wags the rational dog." The same is true for us in managing our personal finances. So what can you do to help yourself?

The first thing to do is to save money and save money early. A gentleman was discharged from the Army in 1958 with a check for $3,500. A researcher at Smith Barney gave advised him to save and invest his money. He was advised to save it and invest it. He ended up investing the entire amount in IBM stock because he was familiar with the company. That stock is now worth over a quarter of a million dollars.

Richard Thaler, author of the bestselling book,"Nudge," and professor at the University of Chicago, School of Business, says that the biggest problem Americans have is just not saving enough money. It is recommended that you save ten percent of your income, but many people fall far short of that. He says that people are not perfect. We all make mistakes. Figuring out how your emotions are getting in your way of saving will go a long ways in helping you get your finances back on track.

David Laibson, an economics professor at Harvard reports that the reason that people don't save is primarily due to procrastination. They don't want to fill out the paperwork that would make automatic payments into a savings plan. They decide that they'll do it next week. It's very similar to putting off a diet. It's much easier to start on Monday. Do something about putting a savings plan in place. Use a strategy like saving ten percent of your income and put it on auto pilot.

Can you imagine how it would feel to have done this consistently throughout your life time? Warren Buffet, the third richest person in the world, worth $47 billion dollars, keeps $20 billion dollars in cash on hand. It helps him sleep at night.

Your area of focus should be on building an emergency fund that will carry you through three to six months of unemployment. Try to eliminate big money expenses that may be unnecessary. Start networking with others before you lose your job. Find organizations to join where you can network at least once a week. Six-figure earners acquired their recent jobs through personal contacts.

Get your finances back on track by saving on a regular basis, making good financial decisions without undue emotional factors and do yourself a favor by networking with others like-minded business people on a regular basis.

by: Sherry Tingley

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