Saving Money

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When it comes to accumulating your own wealth, there are numerous methods to achieve this goal. One of the easiest approaches is to save money. This sound like quite easy but not exactly easy to achieve. Thus, it’s really important to have some rules to strictly follow before actually saving money in the long run.

First, you need to have the ability to distinguish your needs into necessary needs or desirable needs. Necessary needs may correspond to the needs that heavily impact or affect your living functions. If these necessary needs can’t be satisfied, then there will be something lost in your daily living, whether it’s a physical loss or a spiritual loss. On the other side, desirable needs are needs that affect or influence your living quality. If these desirable needs can’t be satisfied, then there will be less satisfying living quality but without any functional difference.

You can set up your own goal or ratio about the actual expense on both needs, but the ratio of desirable needs have to be lower than the ratio of necessary needs in order to actually saving money. The less you spent on desirable needs, the more money you can really save.

Second, when you are not using your money, where do you put them? Do you leave them in your bank account and doing nothing? Making this portion of money active but not spending them is another key for saving money. Starting timed deposit may be a good start. It’s zero risks and this portion of money will generate a small portion of income based on the interest rate eventually. There is no bad about it and nearly no efforts spent on it.

There are still many ways to utilize this portion of money, but investment or buying stock shares may be categorized in earning money instead of saving money. Thus, if the above rules can be strictly followed in your own way of planning, saving money is not just a slogan but an actually achievable goal.

If you are unable to save money, you could use a business loans calculator as a way to finance your business.

Some keys to follow to get out of debt without dying in the attempt

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Debts are part of anyone’s life. We use them to build heritage, travel, study or for any emergency. What to do to get out of them if they accumulate?

List the debts

The first step in getting out of debt is to be clear about how much is owed, in what products, to whom the family was borrowed. Start by ordering the debts from high to low. The largest must be paid first and then the others. Another way that can work is to list them for the highest rate at the lowest interest rate.     

Follow a method

There are various strategies to save and make a budget. You can find methods to save money, others to leave an amount of your income in the service of debt. Some famous methods are even famous as kakebo or nowball’. This will help you organize your budget. Of course, it all depends on how you feel without debt, because there are even studies where they conclude that having debts offers some psychological advantages.

Take care of the expense

It is necessary to be clear as a rule of thumb to never spend more than you earn to ensure good financial health. In addition, it is important to give priority to the fulfillment of the main financial responsibilities, such as the payment of invoices, which is recommended, must be total and on time.

Save money

A recommendation that, although it seems difficult, is easier to apply than is believed. To achieve this, it is advisable to have liquidity to cover current expenses for 6 months, being cautious of any future situation that may arise. It is always essential to have sufficient savings or long-term assets.

Pay more than the minimum

If, as you change jobs (people who change more often after employment, improve their income compared to those who do not) raise the salary, check before buying more things, if you can pay your credits faster. Remember that in Colombia there is no penalty for making advance payments of bank loans.

And last but a really important one, return every credit card payed.

What is Business Investment?

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Business investment is, together with consumption, one of the two most important components of aggregate demand. This consists in the act by which you invest in certain assets with the aim of obtaining income or income over time. In other words, it consists in giving up current and certain consumption, in exchange for obtaining future benefits spread over time. Business Investment can be classified in two types:

1. Temporary Investments: these are considered to be those that are carried out temporarily. The idea of these investments is to obtain income from the resources in a short period of time that does not exceed the year or the normal cycle of operations of the company. To achieve these benefits, capital must be invested in high quality securities.

2. Long-term investments: these involve the use of the economic surplus in order to obtain greater long-term benefits. Only long-term investments are those that demonstrate that the company carrying out such investment intends to remain the owner of said investment for more than one year its above the normal cycle of operations. In a more technical way, it is the investment account for Individuals with Business Activity or Moral Person with attractive returns. You will also have the additional services you need to manage your company’s money and carry out financial operations.

Business investment plays two important roles in any economy. On the one hand, it contributes to increasing demand, since this pulls the demand when companies acquire investment or capital goods from other companies, which in turn affects the production and employment of the short economy as a whole term.

On the other hand, business investment raises the productive capacity installed in a country, through the accumulation of capital goods and, therefore, fosters long-term economic growth, with the consequent generation of wealth in the investment company environment. Business investment is therefore necessary for a business to function and perform properly.

What you need to know about Financing!

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Talking about finances for those who are not familiar with them can be tedious and boring, and talking about what credits are can be even more, but when we have a company it is essential to master the subject, so here is the most important things you should consider.

1. The cost of money – Money is a loss and has a price. When we turn to relatives or friends to apply for a loan, they may not charge us any interest for such money, if so the cost is zero; But with lenders, investors and financial institutions, the cost of money is the interest rate they charge us for granting us such resources during the term in which we are going to need and until the day we pay it.

2. Appropriate time to apply for a loan – Something very important is to determine when to obtain a loan, each person has a different perception of the response. In my opinion, we have to consider the level of commitment to the business, because managing resources outside of us can be worrying for some and relaxing for others, so the best time will be for the entrepreneur to be able to manage.

3. Stablish the Main objective to obtain a loan such as the following:

– Start of a business

– Purchase of raw materials

– Purchase of supplies

– Purchase of machinery

– Purchase of transport units

– Liquidation of high-cost or short-term liabilities

– Constructions and / or extensions

– Others

4. Determine your moral solvency – Being morally solvent does not imply having a huge house or luxury cars, much less a bank account with many leading zeros, having moral solvency implies having high values of responsibility and honesty.

5. Record of income, costs and expenses – On a grid sheet, write in the first line the income obtained from the sales of your products on a weekly, monthly and annual basis. If you make a detail in the number of units and amount you sell it will be much better. In the second line, make a list of all the production costs you make, that is, all the materials you use to produce, including the salary of the workers involved. In a third line, record all the expenses you make daily and that do not affect your production but you have to make them to operate, such as purchases of stationery, water, food, etc. Add up all costs, expenses and determine the total on a daily, weekly, monthly and annual basis.      And finally, some other thing to consider are to determine your utilities, know your financial solvency and determine your ability to pay the credit and administration of your credit.

Types of Business Loans

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During running your own business, there are times when you will want to take out a loan. According to Rehayem, 2019 at g2 (learn.g2.com), business loans are agreements made between business owners and banks or private lenders for lending, and return it back as agreed. There are different types of business loans, such as: term loans, SBA loans, fixed-asset loans, bank line of credit and other.

Term loans are typically thought as a loan. “Term” here means the length of time between when the loan is sent and return of the loan. The length of time refers to the borrower, can be a year to more than a year. The lender will set the term for the borrower with the status of the borrower’s business and his credit quality.

SBA (Small Business Administration) loans are loans that are not issued to small businesses, but the owner of the small business must pay back a portion of a bank loan taken. This loan is a government’s way to solve small business problems in the form of an SBA 504 Loan.

Fixed-asset loans are loans that are secured, means that the borrower promised to make the asset a collateral, like a reassurance to the lender. If the borrower doesn’t pay back the loan and interest, the lender has the right to claim the asset.

Bank line of credit is a similar form of debt financing. It functions like a credit card for business, but no card included. The money is only used whenever needed by the company, so no risk of borrowing too much or not being able to pay the interest.

Other than that, there are many lenders that offer lower rates to non-profits for a goodwill. Startups and small businesses can use loan organization software to assist finding loans for their needs.

source: What Are Business Loans? (+ Which Type Is Right for Your Business?), by Maddie Rehayem, 30 April 2019.