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A period of recession is gearing up or moving down frequently. Along with it, monetization of the market is making the ventures optimistic. The statistics say that this year is crucial for the small businesses and they look up for positive result. We have to wait and see the dramatic changes. Business and finance are two such generic terms on which people searches the maximum contents. Therefore, I am also sharing a cup of hot finance knowledge through my blog.

In the financial year of 2013, stay with me to move ahead.

Tuesday, 24 December 2013

Watch Your Savings Grow With the 80 - 20 Rule

Saving money is an important part of personal financial management. The other part of the equation is to keep your spending under check. With that in mind, there is a way to simplify personal financial management by following a rule of thumb simply called the 80 - 20 rule.

The rules say to put away 20% of your income and save it somewhere with the remaining 80% used to pay for necessities and other discretionary items. It is an uncomplicated way to budget and this puts a portion of your income into savings.

Paula Pant derived the idea for the 80 - 20 rule from Harvard bankruptcy expert Elizabeth Warren and her daughter Amelia Warren Tyagi. The mother and daughter team discussed the 50 - 30 - 20 plan in their book All Your worth: The Ultimate Lifetime Money Plan.”

Under Warren and Tyagi’s plan, you will need to allocate 50% of your after-tax income to pay off the necessary things in your life like groceries and housing or your “needs”. The other 30% can be spent on “wants” or discretionary items. The remaining 20% must be put towards savings and debt repayments.

Manage Your Spending with the 80 - 20 Rule

With the 80 - 20 rule, it is easier to budget because it frees you from the complication of differentiating your “needs” from your “wants.” This is great because the line between these two types of spending is not always clear. This is not to say of course, that your spending will fit nicely into the 80 - 20 rule and that your expenses only amount to 80% of your after-tax income.

You will need to sit down and look at your spending. It can be as simple as writing down your spending for the month on a notebook and looking at how much of these you absolute need. You might be surprised to find that much of your spending goes towards unnecessary things like entertainment expenses or for new gadgets that you might not really need. If you find that your “needs” still exceed the 80% threshold, then you might need to review those “needs” or start taking steps to further cut these down.

Grow Your Savings with the 80 - 20 Rule

Once you review your spending and find out how much of it would fall under the “needs” category like groceries, housing, and utility bills, you can find out if you the safe and consistent way to put 20% of your after-tax income into savings. You could open a savings account and put in 20% of your income into this account. After it grows a little and you find that you don’t touch this money, you could consider transferring your savings into a time deposit account to help you earn more. If you continue to roll your time deposit account into a new term, you could watch your savings grow through the power of compound interest.

The 80 - 20 Rule is just a rule of thumb and it’s useless if you don’t take steps to follow the principle. It simplifies budgeting and it works if you know how to save and if you have the will to make it work. If your office allows you to automate savings by putting 20% of your income directly into a savings account, then take advantage of that. You won’t miss the money and before you know it, you’re savings have grown immensely.

Thursday, 12 December 2013

Business Insurance –3 Tips to Choose the Best Insurance

Does your business really need business insurance? Do you have business insurance? – No, not yet, then have one now. Have a proper insurance for your company and its assets. However, if you have insurance and suddenly your insurance company goes under what will happen? How will that sudden downfall affect your company?

Better Business Bureau often answers to all these questions on what happens to policyholders’ coverage, if the insurance company goes out of business.
To make your business stay stable even in recession or downfall, business insurance is the most realistic approach. However, just acquiring business insurance is not enough you need to know, how to make better use of it.

Here are some important tips to make you aware of those minute details to make your business stay in profit with your business insurance policy. I have gathered the points from Better Business Bureau and created in my own words to make it easy for readers to grasp it.

What Happens When Your Insurance Company Is Financially Troubled?

Tip 1- According to the National Conference of Insurance Guaranty Funds the state property and casualty guaranty fund, comes into play when your insurance company faces a financial setback. Guaranty funds provide a safety to business policyholders. It meets the need of those that are least able to deal with losses when an insurance company fails.

Will You Retain The Insurance Coverage?

Tip 2- Insurance guarantee associations are there in every state and are working in a way so that they can protect the policyholders during insolvent periods. The insurance company must be the member of Guaranty Association present in every state in which they raise their company.

This Insurance Guarantee Association ensures your continuation of coverage, if the insurance company whom you use becomes insolvent. They take your policies either directly or by shifts the policies to a financially stable insurer.

How To Get Sure That Insurance Company Is Safe?

Tip 3- Well, you cannot determine whether the policy bought from your insurance company is safe or not. However, there is no doubt some process that helps the business owners to know or evaluate their insurer. There are loads of businesses that are able to rate insurance companies on their financial strength and creditworthiness. Now, if you own a business then you can also confirm it with your state insurance department from which your insurance partner is licensed to do business in your state.

If these tips are worthy for your business then apply them to make your approach holistic. Business insurance are essential and you need to realize the importance of it, as it safeguards your employee benefits, profits, and assets.

Author's Bio: Moumita Dasgupta, a financial blogger and the owner of bizandfiz, shares her knowledge and expertise of various financial topics. A clear view on market, business, Forex, funds, personal finances etc. are the subjects she perfectly underlines through her articles.  Find Moumita on Google+

Wednesday, 11 December 2013

Why a Good Credit Score is Important for Loan Application?

Credit history plays a vital role in the approval or rejection of your loan application, whether you are planning to buy property, car or any other vehicle. The following article talks about the important role played by credit report in your loan approval process. Read more to know…

When a person plans to buy property, it becomes imperative to arrange for finances before finalizing on anything else. This is the time when the need to maintain a good credit score and credit history arises.

In today’s economy, it becomes challenging for a person to get loan approvals easily. Since most of the money lenders and financial institutions follow a strict process of verifying the loan application forms, a good credit report becomes the most important requirement to get your loan approved.

What is a Credit Score and Why You Need it?

Credit history indicates the credit and financial health of a person willing to take a loan. Similarly, credit score is something, which is derived from credit history of the person and ranges from 300 points to 900 points and determines your credit worthiness. These are the important tools that allow the lender to verify your delayed payments and default transactions. It also tells the lender about your repayment behaviors, credit card dues and pay back loans.

The credit score is usually calculated by software created by FICO (Fair Isaac Corporation). The important parameters that were considered at the time of calculating the respective score include types of credit used, total amount owed, payment history, new credits, delinquent accounts, negative credit record, and length of your credit history. The higher the credit score, the more are the chances of getting your loan approved at a desired rate of interest. As a matter of fact, 90 per cent of the new loan applications are now approved for a credit score of more than 700.

A credit report is maintained by credit agencies like CIBIL TransUnion. Before applying for a home loan, it is crucial to know your score to know the chances of your loan approval.

Loan Approval Process

To understand the importance and role of credit score in your loan approval, it is imperative to take a look at the complete loan approval process:

Role of Credit Score in Loan Approval

The above loan approval process clearly indicates the crucial role played by credit score. The several steps in a loan approval process include the submission of filled loan form to the bank that checks it for credit history of the applicant with CIBIL. The candidate meets the eligibility criteria of credit score, the loan is sent for document verification, else it is rejected. If the required documents such as income details, copy of tax file returns, employment details, address proof, and information on the source of down payment get successfully verified, the loan application is approved; otherwise the form is rejected.

The applicants whose report show high scores can even enjoy better interest rates and loan terms. An approved loan application with a comparatively lower score usually gets a slightly higher rate of interest and loan repayment terms.

So, a high credit score and a healthy credit report are a tool to fast-track the approval process for your loan.

Author's Bio

Swati Srivastava is an avid writer whose articles and blog posts covers a wide range of topics on personal finance, investment tips and marketing strategies. Currently sharing her insight on real estate topics, the above article discusses the importance of credit score in the loan approval process.

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