The Best Way to Understand Personal Finance

When we are trying to understand Personal Finance, the best thing to do is to understand what Personal Finance is NOT.

Many people think that accounting and personal finance are the same, but Personal Finance is NOT Accounting.

On the surface they may seem the same; they both have something to do with money. However, the definitions will help us better understand the differences.

Merriam-Webster's definition of accounting is "the system of recording and summarizing business and financial transactions and analyzing, verifying, and reporting the results."

Based on this definition, we see that accounting is the process of analyzing and recording what you have already done with your money.

This is why having an accountant is usually not enough when it comes to your personal finances.

Accountants generally do not concern themselves with personal finance (there are some exceptions to this rule). Unless your accountant is also a financial adviser or coach, he or she will likely just look at what you have done with your money at the end of the year and provide you with a report of their analysis.

This report is usually your tax return; what you owe the government or what the government owes you.

Very rarely does the accountant provide an individual with a Balance Sheet or Income Statement or a Net worth statement; all very helpful tools that are necessary to effectively manage your personal finances.

Personal Finance is looking at your finances from a more pro-active and goal oriented perspective. This is what provides the accountants with something to record, verify and analyze.

The Merriam-Webster's (Concise Encyclopedia) definition of "Finance" is the "process of raising funds or capital for any kind of expenditure. , while savers and investors have funds that could earn interest or dividends if put to productive use. Finance is the process of channeling funds from savers to users in the form of credit, loans, or invested capital through agencies including COMMERCIAL BANKS, SAVINGS AND LOAN ASSOCIATIONS, and such nonbank organizations as CREDIT UNIONS and investment companies. Finance can be divided into three broad areas: BUSINESS FINANCE, PERSONAL FINANCE, and public finance. All three involve generating budgets and managing funds for the optimum results ".

Personal Finance Simplified

By understanding the definition of "finance" we can break our "personal finance" down into 3 simple activities: -

1. The process of raising funds or capital for any kind of expenditure = Generating an Income.
A Business gets money through the sale of their products and services. This is labeled "revenue" or "income". Some businesses will also invest a portion of their revenue to generate more income (interest income).

A Person earns money through a job, or a small business (self employment, sole proprietorship, network marketing or other small business venture). The money coming in can be a salary, hourly wage, or commission, and is also referred to as income.

A Government gets money through taxes that we pay. This is one of the main ways that the government generates an income that is then used to build infrastructure like roads, bridges, schools, hospitals etc for our cities.

2. Using our money to make purchases = Spending Money.
How much we spend relative to how much we make is what makes the difference between having optimum results in our personal finances. Making good spending decisions is critical to achieving financial wealth - regardless of how much you make.

3. Getting optimum results = Keeping as much of our money as possible
It's not how much you MAKE that matters - its how much you KEEP that really matters when it comes to your personal finances.

This is the part of personal finance that virtually everyone finds the most challenging.

Often people who make large incomes (six figures or more) also tend to spend just as much (or more) which means that they put themselves in debt and that debt starts to accrue interest. Before long that debt can start to grow exponentially and can destroy any hope they would have had to achieving wealth.

Personal Finance made simple

Personal Finance does not need to be complicated if you keep this simple formula in mind:

INCOME - SPENDING = WHAT YOU KEEP

For Optimal Results you simply have to make more than what you spend and spend less than what you make so you can keep more for you and your family!

If you are not actively working towards an optimal result you will by default get less than optimal results

It really is that simple!

Now that you understand personal finance and WHAT you need to do, the next step is learning HOW to do this!

The best way to start is following these 3 simple steps: -

1. Know what you want to achieve - "if you do not know where you are going, any road will take you there" has become a very popular quote, probably because it is so true. One of the practices that Stephen Covey highlights in his book "7 Habits of Highly Successful People", is to always start with the end in mind. Knowing where you want to go will be a big help in ensuring you get there.

2. Have a plan - that you can follow that will get you to your goals. Knowing how you will achieve your goals in a step by step plan is invaluable. Sometimes this is easier with the help of an advisor or a financial coach.

3. Use tools and resources - that will help you to stick to your plan and not become distracted by the things in life that could limit our imports and make us spend more than we should. Do not try and work it all out in your head! You will end up with a massive headache and your finances will become one gigantic dark fog!

AOCS Currency, Your Community and You

Have you or do you plan to purchase silver or gold in the very near future? Has the news of the day gotten you drooling over Lakota silver rounds or other AOCS barter rounds? If so, you are not alone.

The current uncertainty about the national and global economy has many people concerned about everything from runaway inflation to complete economic collapse. Could the US Dollar go the way of the Zimbabwe currency? How can individuals and communities protect themselves in the event of the collapse of our currency?

Historically, gold and silver have been viewed as an inflation proof store of value. Whenever people get concerned about economic instability, they start buying silver and gold. The thinking goes something like this: if I own silver and gold and the value of the dollar falls, I can hang onto my silver or gold and sell some of it off for dollars right before I need the money. The value of the metal would remain the same and in a situation of inflation, I would receive more dollars for it than I paid when I bought it. A more extreme version of the thinking holds that in a total currency collapse people who own gold and silver can start using it to buy what they need.

Stocking up on silver and gold as you have the ability is definitely a good idea, and AOCS barter medallions are an excellent choice. However, individuals have to consider the limitations. Just because gold and silver are precious metals does not mean that in a crisis everyone will suddenly know what to do with them. It has been years since the US currency was made of or even backed up by silver or gold so many people have never seen these metals.

The key is actually to approach using silver and gold as money on a community level. Communities as a whole can place a hedge around their local economies by introducing commodity backed treaties (often known as silver currencies) into circulation.

Several communities in the US are beginning the process of circulating their own commodity backed contracts. Some examples are the Mattole Self-Sufficiency Project, Shire Silver, Community Dollar, Northern Colorado Community Barter, and Boulder Currency. There is even a virtual country called Wirtland with its own silver and gold pieces mean to circulate as currency.

Each community issuing a silver currency takes a different approach. For example, Shire silver is locally mined using a homemade striking device, whereas the Mattole Self-Sufficiency Project uses an industrial mint. There are also different approaches in how the silver is valued. The value of Mattole money is closely tied to the spot price of silver and as a result changes repeatedly. Community Dollar, Northern Colorado Community Barter, and Boulder Currency all adhere to a face value of fifty (usually interpreted as mean fifty dollars) for one ounce silver rounds used in their communities. This allows for the currency's value to be perceived as more stable.

Not all communities issuing a silver currency are starting from scratch. The American Open Currency Standard is a system of commodity backed currencies intended to circulate anywhere in the United States. AOCS is best known for its Lakota silver rounds. However, it has also produced the Go Local Local medallion and a series of rounds promoting various educational and ideological causes. Most AOCS barter rounds have a face value of fifty per ounce, allowing them to trade around the country at equal value. Most importantly, AOCS works closely with communities who wish to issue a silver currency and can streamline the process of designing and minting the physical currency pieces.

Of the examples listed above, Northern Colorado Community Barter and Boulder Currency both use AOCS currency within their communities. AOCS barter medallions also have a strong presence in Dallas, Fort Worth, and Austin, TX, as well as in some parts of the Great Lakes region, and in the Lakota and Soto Nations. As the economy continues to limp along, the presence of AOCS currency is only going to increase.

All of this makes AOCS barter medallions an excellent choice for people who are looking for silver rounds for sale. AOCS Mint has recently reduced the minimum order requirement on most AOCS barter medallions making it very affordable to get started. In addition, AOCS Mint has recently started the AOCS coin club, where you can automatically pay a set amount of dollars in exchange for a shipment of AOCS silver each month. If your community already has an AOCS currency, you will be able to immediately spend your AOCS barter medallions at face value. If your community does not yet have an AOCS currency you may still find a merchant or two who will accept it, or you could be the one to get the ball rolling on starting one.

The Gold IRA Rollover: Learn How to Invest Like a Billionaire

It's been said that imitation is not only a great form of flattery, it's also the best way of learning and modeling on the success of others. If it's financial success you're looking for, what better role model could there be than a billionaire?

What Billionaires Know

Though their world views may have little in common, billionaires like George Soros, John Paulson, and Carlos Slim have all admitted to holding a part of their wealth in gold. Even Warren Buffet, who personally prefers what he calls "productive investments," admits that gold has served investors well especially during times of inflation.

Do you remember those dark, dark days of 2008 when the stock market's near crash caused retirement accounts to lose $ 2 trillion in a mere 15 months? Guess where your money could've been at that very same time gaining in value instead of losing it?

That's right, gold.

Had you purchased gold in 2001, by 2011 you'd have seen your investment grow by 700%. Let's say that again: a growth of 700%. This same decade was also one of the rockiest economic periods in human history. As the stock market fell, gold thrived. Why? Because when the stock market tumbles and big money investors look for other safer places for their money, precious metals is often where they go.

Could this all happen again? Well, today we're inside the largest stock market bubble in history. Many experts believe it's only a matter of time before that bubble bursts again. If you do not want to again see your retirement accounts lose their value because of another collapse of the economy, the time to change your investment process is now.

Why the Billionaires Own Gold

Gold is nature's hard asset. Gold has been civilization's store of value for thousands of years because gold is a tangible and finite resource with high intrinsic value. Gold is an alternate form of money all over the world. (It was mentioned in the Bible 417 times.) Gold is not subject to the sections of dilution and devaluations of other paper investments like stocks, bonds, and mutual funds. Neither is the value of gold at the mercy of governments or financial institutions. It can not be printed like money, and unlike stocks, it will not ever merge or split. Gold historically moves against the direction of the stock market. Billionaires know that gold is an excellent way to reduce the volatility and vulnerability in their capitals.

If you want to protect and preserve your wealth, there's no better place than gold.

When Is the Best Time to Buy Gold?

Many market oracles believe, at the time I'm writing this, that gold is in the final stage of a bear market. Some experts believe that at current prices gold is still undervalued by as much as 50%. This may be the epic rise that gold experts have been overing over the years.

But even if it does not experience an epic rise in value, gold is still a necessary means to protect the value and diversify the portfolio you've got.

The best time to buy gold may be now.

How to Bring Gold into your IRA

If you have a self-directed IRA , you can direct some of your IRA funds to be invested into gold. The only requirement is that the gold meets certain purity and refinement standards. The easiest way to invest in gold is through a self-directed IRA.

A self-directed IRA investment is like a regular IRA except that you the investor get to choose how your IRA funds will be invested instead of the trustees or custodian. This gives you flexibility to invest your money in whatever way you feel comfortable. It can also ensure that you are always aware of where your money is and how it is being invested.

In this IRA the gold does not get delivered to you once you purchase it. The reason for this is that delivery of the gold would be considered a disbursement of your IRA and you would probably be obligated to pay penalties. Therefore, once you've decided to put your money towards gold, you will then have that gold delivered and held for you at a designated depository. You will be informed when your gold reaches the depository and you will never have to worry about your gold ever being taken out of the depository or used by anyone but you.

Learn What the Billionaires Know

Billionaires may not have to worry about retirement 401 (k) s and IRAs, but the rest of us do. Now you can learn to invest like a billionaire by downloading our new FREE mini-course entitled "Essential Guide to Successful Gold & Silver Investing." This powerful course was designed to offer tips and expert advice appropriate for both the savvy investor and the beginner and could save you thousands of dollars in your own investing decisions. While you may not be able to live like a billionaire, at least today you can learn to invest like one.

Modern Family Cars for the Modern Family

As we progress through life we ​​go through different types of cars. It starts out with a fun sporty car for your younger years until, ever, you require a family car for your whole family. These are the best family cars for the modern family who still wants to be trendy.

Kia Soul

The Kia Soul is a large car that has sufficient space for a family. Not only is it large but it also is not difficult to drive because of its practical size. It has been engineered to be regularly sized on the outside but spacious on the inside.

Honda CR-V

The Honda CR-V is the typical SUV that works for any family. Road trips and travels became easy with this fantastic design. The Honda CR-V is compact, easy to drive and manoeuvre yet it has lots of space for your family.

Subaru Outback

The Subaru Outback is one of the latest SUV models that Subaru has released recently. The car is a cross between a wagon and an SUV. With extra space in the back your family will be comfortable. The rear seats are designed to support child seats too so that your little infant will experience comfort as well.

Toyota Highlander

Some families prefer to go on adventures in the mountains or camping by the rivers. It is important to have an off-road car that has sufficient space for your children in the back. The Toyota Highlander has been manufactured to have enough trunk space for luggage as well as leg room in the back seats.

Safety is an important factor when traveling with your children. Children may not understand the concept of safety and that's why it is important to have a safe traveling car that does not have faults. You should also make sure that you teach your children that wearing seatbelts are important when traveling to any destination.

Before considering any car you should always test drive it to make sure that you can handle its power. Checking the reputation of the vehicle manufacturer is also necessary when considering it for you and your family's travels and adventures.

It is also important that you always check the mechanisms of the car before you travel to any far destination. Make sure that you check that all the lights are working and that the brakes are functioning regularly without stickiness or pulsations. Also ensure that the wheel supplier has properly fitted, aligned and balanced the wheels on the car.

Gold As a Strategic Inflation Hedge

Whenever the economic situation turns uncertain and people are worried about their equity and currency investments, they turn to gold for hedging their risk. Gold is not just a metal but also a very important financial commodity. Gold is something that remains under the ownership of the investor, and the value of gold is also rarely likely to decline in case of economic recession.

Ever since the price of gold hit a record of three decades, the belief of people about gold being the perfect inflation hedge has strengthened even more. While currency is subject to inflation, gold is not. With the increasing significance of gold as an investment commodity, it is not only the people who are investing in it, but also countries and companies.

LaTely, the Chinese government has been putting parts of the trade surplus into gold. This has not only increased the demand of gold worldwide, but the value of gold has also surged. Basically, people are buying gold as a hedge against economic crisis because they are aware of the fact that during the time of crisis, the price of gold rises, hence offering a reasonable amount of return.

The primary reason for the production of gold is accumulation. This is what makes the metal very important in terms of value and return on investment. We all know that money is printed keeping the gold reserves in view and hence, gold is money. It is a perfect store of value, and the more the level of acceptance and use and demand of gold, the higher the value of gold is likely to go.

Gold tends to be the perfect investment and inflation hedge. While all other commodities are going to impact you negatively because of inflation, value of gold will actually rise, it increasing your chances of getting a high return.

It is evident that anyone who possesses investments in gold is likely to have more power and is likely to reap the benefit in the form of high returns. This is because investments in equity and other commodities are likely to loose their value considering in time of a liquidity crisis or any other kind of economic crisis.

Gold is an attractive investment because it is not subject to any particular laws like other investments in the stock market, currency or commodities, which are strictly regulated. For those people who have investments in other financial instruments and commodities, gold can act as the perfect diversifier for the investment portfolio. The basic purpose of the diversification of an investment portfolio is to invest in different kinds of instruments in order to reduce the risk, so that the return does not become negative in case of a crisis.

Gold is considered an asset by the holders because it remains to be the most strategic store of value. This is mainly because gold would always maintain its intrinsic value, which significantly increases the benefit of the investors and enables them to capitalize on the effects of inflamation on gold.

Money and the Laws of Value

One summer day a hen was on the look out for food on a farmyard. As she scratched at the straw on the ground, she unwrapped a diamond jewel. The hen suspect that the jewel might be valuable because of the way it glittered in the sun.

This object is probably worth a lot, the hen thought to herself, but I will trade a bushel of this diamond for a single bushel of corn. (One bushel of diamond is worth about 20 million tons of corn)

What is true for the hen is also true for human beings. People can not use money better than their level of appreciation of its power. If you are primarily a consumer you will only be familiar with the consumption power of money - what money can buy. An investor is very familiar with the reproducible power of money - How money can multiply. A business man is familiar with the production power of money - How money change forms into valuable products and services. Money has no power in itself to change your financial personality; it however has the power to magnify your financial nature.

Money as a Store of Energy

Money is a store of economic energy. Without the awareness, acquisition, organization, and perfection of these internal values ​​in any man, wealth creation in a sustainable manner is impossible. Poor resulting from lack of cash or tangible assets is temporary and easily curable; however, poverty resulting from lack of discovery or awareness of these internal sources of wealth is permanent and can not be cured by the acquisition or possession of money or tangible assets . Attempting to cure malaria by the use of pain relieving tablets is at best a temporary solution. Unfortunately, most people looking for money usually neglect and disrespect their internal primary source of wealth. According to Mark Victor Hansen "You do not have wealth, you are your wealth" ! The earlier you come to the full realization of this universal principle, the quicker you will be on your journey to financial success.

External sources of values ​​are those invisible assets outside a person that is reliably fixed and is accessible to every man equally. These include: Time, Problems, and Relationships. Everyman has equal access to these three variables; and they are unavoidable raw materials for the creation of every form of tangible wealth.

Money Creation Process

Three variables therefore determine the quantity of money a person can legally create over a given period of time: The number of internal sources of wealth discovered and properly harnessed; Amount of external sources of values ​​efficiently utilized; and how much of the outputs of the combination of those variables that is successfully delivered to those who need them in exchange for money. For instance, the income that an employee will extremely earn will be determined by how much of his talents, passions, and skills he is able to discover, improve, and convert to expertise. Combined with how well he is able to manage the time, opportunities, and relationships available in his work to generate and deliver the expected results consistently over a period of time.

Laws of Value

Since we now understand that, value is the source of money; and that money can not exist alone without corresponding value; understanding the principles and laws of value will enable us create and sustain money in a legal and enduring manner.

# 1 - Law of Value Flow

" In every human relationship or interaction value is always flowing but money may not"

Since value is an invisible carrier of money, you may be gaining or losing money without you being consciously aware of it. Every time you come in contact with or spend some time with people, you will either increase or decrease your cumulative value if or not money exchanged hands during such interaction. That means if you are in a high paying job, but spend a lot of time with people with poverty mind set or low expectation individuals; your net cumulative value will gradually reduce to reflect your dominant mind set. This will naturally reduce your productivity on your job resulting in stagnation or ultimate downsizing! Conversely, if every time you have a meeting with a prospect he comes out feeling he has added more value than he has during the interaction; he'll seek more opportunities to receive such values, on a more frequent basis - which means the consummation of a business relationship and the signing of contract!

On a daily or weekly basis, if your interaction or association is more with those who drain value from you without offering equivalent or more value in return, you will eventually become money poor.

# 2 - Law of Multiple State of Value

"Value like water has three states, as long as value keeps flowing, under the right circumstance and conditions, it will freeze to tangible money"

Many people get discouraged when they begin to offer value and they do not immediately receive the money equivalent of such values. Such frustration often leads to compromise, mediocrity in service delivery, untimely resignation, and quitting from entrepreneurial venture. But, think about it this way, it takes time for water to become ice in a deep freezer even under the consistent application of electrical power. Even when you are delivering value consistently, it takes some time for the value to be appreciated and recognized for its money worth by other people.

Most of the world's leading successful people have gone through times when the values ​​they offered were not immediately rewarded with money. Zig Ziglar in his autobiography stated that his first 3,000 speeches were given for free. Anthony Robbins - the restructured author and personal achievement expert said that "in his first six months as motivational speaker, all his statements were given free, and he had an average of 5 speaking engagement every day".

# 3 - Law of Value Exchange

"Value must be greater than or equal to price"

Think about the last time you paid $ 20 for your transportation fare. Was it because you liked the driver of the vehicle? Or because you believed that trekking the same distance will have more adverse effect on your health and finance. Human Beings are naturally selfish. They will not willingly give out an amount of money unless they have convinced them that the product or service will deliver to them more value than the price they want to pay for it.

Marketing is there an honorable service of helping people enjoy more value than the price they pay for the product or service that solves a particular problem in their life or business. A marketer is not a money taker; he is a value giver and a solution provider. Many technically sound people shy away from marketing their products with zeal because of psychological guilt fueled by ignorance of the law of value exchange. Not selling your product denies someone from enjoying the benefits it offers and slows down the growth of the nation's economy.

The History of Money Revealed

Throughout history a many variation of things have been money. Before the invention things like livestock, rocks, shells, beads and metals like gold and silver were all forms of money. In fact, in ancient time's people physical exported goods directly for other physical goods. For example, if I have fish but needed coconuts and in turn you had coconuts but needed fish, then there would be a mutual agreement between us and a transaction could be made. This way of carrying out exchange was known as the barter system.

The barter system however, brought with it some challenges such as double co-incidence of wants. What if we both needed coconuts? Also, there was no common measure of value and no medium to measure the value of goods so who decides if your coconuts are actually more valuable than my fish?

Commodity money was then created to address this concern. A commodity is a basic item which can be used by almost, if not, everyone. Things like seeds, tobacco, tea, salt and even cattle were considered commodities however, carrying bags of these items over a period of time proved to be extremely difficult ... especially trying to carry cattle! There were three main functions to money in these days: money must be a medium of exchange, a unit of account and, a store of value. Although these commodities were considered to be mediums of exchange it was difficult to consider them units of account and given that these commodities were also perishable items they could never really be considered to be a store of value either.

Then came the introduction of coins and paper money. However, according to Wikipedia 'due to the complexities of ancient history and because of the fact that the true origins of economic systems actually precedes written history, it is impossible to trace the true origin of the invention of money'. That-said, metal objects were introduced as money because metal was readily available, appeared easy to work with and, was recyclable. Countries around the world were mingling their own series of coins with specific values ​​making it easier to compare the cost of various items. Some of the earliest known paper money dates back to ancient China, where the issuing of paper money became common from about AD 960 onward.

Paper money began, what we would call in today's generation, trending. Nations around the world today all use paper money. Through the evolution of paper money has come a long list of functions from the previous three. Money must continue to be a medium of exchange and a unit of account however, it must also be portable, durable, divisible, and fungible, which means the dollar in your pocket is worth the same value as the dollar in my pocket. Money has always maintained that it is a store of value however, this is where things begin to turn a bit gray.

Why?

Consider that $ 100 US dollars from just a decade or two ago purchased a lot more goods and services than it would today. The same is true for the euro, the pound, and the yuan. All around the world the money of many nations are suffering what is known as depreciation meaning year after year our money is buying less and less. How then can we maintain that paper money is a store of value?

People all over the world today seem to be working harder for money that is continuing buying less. So, just like the barter system could not be maintained as a viable way of trade, the current system we use on a global scale has also become a broken one. In all parts of the world we have one major inherent problem and that is that our money does not retain its value.

There are ways to solve this problem just as our civilization found ways to solve the barter and commodity system. Take the time now to educate yourself on how.