Where has your money gone? As a consumer, it is important for you to adopt prudent practices in managing foreign & local expenses. If you failed to answer this question, regarding traces of personal expenditure, do not hesitate to implement financial measures in a proper manner. A loss of employment is aggravating, but a loss of cash is disastrous – KIG Hall [2018]. Start following up on your monetary matters via five dos and dons of personal finance, helps in tracking and budgeting monthly expenses.


Do’s of personal finance

Here is an important list of the five dos of personal finance:


1. Budgeting of your expense: Loss of financial control is a calamity, get used to it. If you’ve been spending money, borrowing on credit, signing up for installment plan, or servicing monthly premium (mortgage or savings), consider detailing down every transaction on a daily basis. As you can see, the volume is overwhelming and trying to recall at month end for personal budgeting is difficult. Adopt a proactive attitude in handling spending in a strict manner.


Management of monthly expenditure is not hard. Try it on a bi-weekly, weekly or even on a daily basis, there’re accountants who are too focused on tracking finances. Observe consistency in recording your expenses on a monthly fashion, not too exaggerating as you’ve to invest time and effort in financial education – identifying opportunities to grow wealth. This included researching on various strategies in budgeting; small items, large purchases, monthly servicing plans, or income-crediting facilities.

Spending: The focal point is on learning an appropriate method in budgeting. One way is to first make a decision in taking control of your finances. Draft a list, best using an Excel spreadsheet, and begin recording all expenses for at least three months. Every quarter, implant a 3-month trailing moving average to calculate your personal expenses – the higher the moving average, the higher your consumption factor (positive correlation between spending and poor financial habits)


2. Sell off unwanted asset: “If you buy things you don’t need, very soon you’ll be selling things you need” – Warren Buffet. Such a quote of wisdom addresses every financial aspect in personal finance. Assuming you’re hoarding a pile of assets, video player, spare automobile, aged laptop, extra Youtube account, or any digital currency, it’s time to rid all of them. A good place for bargain sale (not purchase) is the flea market or dust-bustle. Proceed to list the asset class on eBay, Amazon, Commission Junction, or host a garage sale.


Management of unused or unwanted assets is simple. Certainly, you’ve to perform so mundane actions like planning of asset class, setting up an advertorial, populate pricing list, or ensuring pristine condition. These tiny movements lead to the process of financial education. After an extended period, you’ll be used to listing items and can start a small business for semi-passive income. Not only did you get a skill for managing assets, but also grows to an eventual income-generating asset. Once you’ve rid of unnecessary items, trust in you, the spending habits curbed and finally leading to self-actualization.

Listing: Before planning to list on any online platform, eBay, Amazon, C.J, Affiliate Junkie, or third-party vendor, remember not to divulge any personal information publicly and always verify buyer’s identity first. There are police cases on identity theft and loss of asset without payments – you won’t want to be in that situation. As for garage sale, do not mark up any item as it’s for sale, treat the sale as a mean of spinning off unwanted goods that is worth more than placing into a garbage bin.


3. Use a budget app: How do you manage massive daily transactions? If you’re in the following position, a CEO, a frequent traveler, a third-party merchant, a business owner, a sole proprietor, a long-term financial planner, or someone who transacted in the stock exchange, listing down transactions on a daily basis is a chore, what more in a monthly time frame. One good method is to download and install a local budget application (on a mobile phone). The budget app covers two key components; 1) convenience in mobility and 2) accurate tracking of personal finance.


Management of huge transaction volumes take time. A budget app, or multiple applications, may aid in recording expenses on the go, sometimes linking to your personal credit cards for immediate tracking. In doing so, you’re “freed” from the mundane task but the need for analysis remains as an important factor. You’ve to closely observe personal financial consumption especially for high-end traveling lifestyle – cash at hand or money in the bank is often lost along the way of spending. Small amount of losses do amount to quite a sizeable size.

Application: Nerd Wallet [2009] has a useful money-tracking app as well as high-quality spending tips (generally available to the masses). Experian [2009] is a detailed credit check agency that may help you in managing bad debts. Indeed, there’re various ways of resolving personal finance conflict and you need to be wary. The best way is to avoid new credit repair companies and stick to reputable agencies for a peace of mind.


4. Invest for positive returns: Does saving up for rainy days help in retirement? Certainly, a savings plan from a financial institution, a bank, a savings & loan association, a credit union, an insurance company, a micro-credit saving firm, or saver’s bank, does aid in building up a retirement nest egg. KIG Hall’s local retirement statistics proved that many clients don’t have sufficient savings for retirement planning, not to mention federal’s rate of inflation eroding your value of money. It’s a wake-up call to invest for positive returns.


Management of income-generating assets is epic. If you’re saving up for some time, chances of you realizing that your currency is devaluing on a yearly basis. Invest in the following highly effective money making opportunities: invest in a blue chip in a stock market for a stable dividend, invest in an ‘A’ grade bond for semi-coupon payment, invest in a real estate property for a stable monthly rental yield, invest in tax-deferred account for a tax deferment, invest in a tax lien certificate, or invest in a local municipal bond – safe investment class that ensures stability in income stream.

ROI: After learning on the above asset classes, you’ve to determine the right investment portfolio mix to adopt, primarily due to opportunity cost such as lack of resource, capital, or knowledge. It’s a risk to invest in higher income-generating asset classes but the reward is an enabler of tradeoff. Therefore, you can proceed to risk for higher returns on investment or rely on stable paying dividend stocks and coupon paying local government bonds.


5. Ask for a pay raise: Have you worked in a company for 5 years without a pay raise? Out of seniority’s virtue, your company is supposed to compensate your efforts. It’s imperative to seek redress from the company’s HR department for a timely increase in salary or simply a promotion for a higher position. The problem with most corporations is that they don’t recognize your credibility and efforts due to sheer size of employment contracts. Go ahead and demand a pay raise!


Management of increment of salary is not challenging. If your current employer is not willing to provide a valid reason for pay increment, job hunting is the right fit. Find an employment in which your efforts and time spent in growing the company are worth the pay increments. It’s necessary to take precautionary measures as well as investing in various asset classes for diversification purposes – check point 4 above. An investment portfolio helps to tide rainy days and can outgrow your current salary if you’re investing for a long period of time (about 10 years).

Salary: Asking for a pay raise is a sensitive topic. You should communicate privately with your employer on an increment of raise, due for a promotion after 3-4 years of working laboriously – there should be rooms of communication (if not the answer is clear). Exercise financial control over percentage point increase in pay wage, do not over-exclaim or compare against peers. A local benchmark standard has to be observed and negotiated in an amicable fashion.


Don’ts of personal finance

After understanding the rationale behind personal finance, it’s imperative to contain the dons of financial planning as well. A highly effective benefit plan will assist in gear you to the right portfolio mix, investment-grade bond, corporate equity, collateral asset obligation, credit information, or relevant idea. Here are five don’ts of personal finance to observe:


1. Apply for new lines of credit: Maintaining a consistent credit payment history is challenging for everyone. If you’re applying for new credit lines, be it credit card debt or housing mortgage, rebuilding credit score will get affected. There is no “exact” guideline in defining personal finance. You need to closely watch personal expenses in a monthly basis, ensuring that your credit utility ratio is in alignment with your individual spending habits – consumer consumption pattern has to be identified before marketing agencies found out.


Management of credit lines is important. Locating the flow of money is almost as important as consuming food. It’s part of the rationalization in terminating unused credit line while not cutting off useful promotions from your credit card. You’ve been aware of individual consumption factor, using personal credit card, paying of bill, servicing mortgage payment, or even forking cash out of pocket allowance. Every transaction is a cost of carry in credit ownership structure – lowest credit score does impact your future lenders in reviewing your financial background.

Consumption: Adopting new lines of credit is not advisable. In doing so, you’re signaling to your creditor that you have assumed interest in personally managing your monthly expenditure and the progress of a credit repair is good. In fact, streamlining your budgeting is the right way to go in driving up savings account and lowering unwanted consumption – building up confidence among creditors and credit bureaus.


2. Drawing up cash advance: Never draw any cash advance in order to pay a utility bill or potential debt repayment. While it’s generally accepted by masses to leverage on temporary borrowed money, cash advance feature has a daily rolling rate of interest (subjected to bank’s prime rate as observed by federal fund). The bank has imposed the interest-financing costs for you to incur in the short-run, thereby generating a profit in return and you getting the cash on credit to facilitate daily transactions. Come to think, you’ll be paying for unnecessary charges for goods that you can afford in the first place.


Management of termination of cash advance is a must-do factor. Get rid of individual ready-credit, cash-line, bank overdraft, or other credit lines that persuade you to loan for a daily interest basis. If you’re unable to terminate the lending lines pegged to your credit card, charge card, or balance-transfer account, try requesting your personal banker to remove such a function – restricting your spending pattern to mere generic lending purpose. A cash advance’s interest rate can go beyond that of your initial borrowing amount, something disastrous to be avoided.

Avoidance: Cash advance is an attractive way of drawing debts. Unpaid debts may lead to legal and financial repercussion, getting bank’s lawyer to draft legal letter, alerting creditor’s to send debt collector to your home address, termination of membership with credit union, or loss of trust between a good friend and a relative. Are you sure that cash advances or bank overdrafts put you in a good financial condition?


3. Misunderstood the concept of asset and liability: Being new to the finance industry is not an excuse. If you’re treating your home as an asset, personal credit card as a financial tracker, an auto as an asset for transportation, or a bank’s credit line for temporary debt relief, you might be in the wrong direction. Ballooning up fresh debts is a disaster! Therefore, it’s obligatory to receive quality financial education in learning the art & science of asset-liability management – furnishing relevant financial topics in classifying an asset versus a liability.


Management of asset liability management is a skill. You’ve to invest some time to digest the pros & cons of credit repair while getting appropriate financial concepts to steer the “ship”. In doing so, you can identify what an asset class is truly about and not investing in liabilities (thinking of them as asset classes relevant to you), burning a hole in your pocket. There are many ways in fishing out information in the finance industry. One way is learning via a classic book-reading method. Reading books aid in stimulating your financial muscle and re-thinking on the various debt enhancement schemes created by your local bank.

Books: Asset-liability management, physical or electronic books, does reveal the “dirty” tactics employed by banking corporations and local governments. For instance, an in-house bank’s auto loan attracts lower financing interest but you’ll be tied to the bank’s strict penalties. Another good example is housing mortgage debt; your monthly mortgage servicing ratio is pegged to the bank’s prime rate and subjected to change not at your will.


4. Increase spending on credit cards: In order to rebuild bad credit, the first phase is to stop increasing credit utility ratio or simply using borrowed money to finance purchases. Your local credit card companies are closely tracking every transaction being spent on good’s variant – performing monthly breakdown analysis on personal consumption factor. If the bank’s analytics division confirmed on your reckless spending behavior, acquisition rate is going to drop and unlikely promoting quality banking products to service your individual needs.


Management of credit card debt is mandatory. A short burst of debt consumption might jeopardize you in exceeding the coverage limit, enhancing personal gearing ratio, decline in credit card transaction, potential fraud in identity theft, being unable to finance impromptu circumstance like a medical fee, facing financial distress – exposing you to negative credit score reduction. This is a no-go for your credit portfolio mix, unhealthy gearing ratio reviewed by creditors and disapproved by credit repair companies.

Debtor: The purpose of financial planning is to help you in recovering from a bad financial condition. It’s you who must act appropriately, converting existing badly tattered credit report into a high quality scorer, getting creditors to regain confidence in lending you the right amount of borrowed cash and facilitating your spending needs. There is a need to observe your credit score along the way too.


5. Financing of low quality items: A questionable topic rises when your claimant, a rightful owner to your personal asset, inquiries on your credit report listing. The company may demand an answer to your expense whereby you’ll be obliged to provide a valid reason. Failure to respond in a satisfactory manner might land you up with harsh penalties such as fines or even losing confidence from other financial lenders. Buying of low-quality asset class is a strict no. It detriments your financial health; increase monthly interest financing, or foreclosure to another property.


Management of personal finance habit has to be regulated. If you’re in the process of negotiating a credit dispute case, a sudden fraudulent theft, or seeking a credit score check, any of the 3 credit bureaus may review your current consumption variables. Undergoing a stringent review, probably defining of spending patterns, the appointed credit bureau officer might reject your application due to poor credit rating score. Therefore, many creditors and unions may avoid dealing with your future requests when it comes to borrowing.

Delinquency: One appropriate way of mitigating credit risk is avoidance. Since you’re aware that financial institutions like banks, credit unions, savings & loans association or micro-credit lenders, yield the ability to approve or disapprove your loan application, why not avoid engaging dangerous activities like financing low-quality asset classes; a new auto loan, costly mortgage servicing ratio, excessive insurance premiums, or a hobby collection.


Good to know in handling financial discipline

A short summary of the do’s & don’ts of personal finance, you’ll be actively involved in improving your financial discipline – constantly repeating the above do’s of personal finance and avoiding the don’ts (as best as possible). The need to adopt asset enhancement initiatives is imperative while educating on potential legal repercussions.


Observe the following financial disciplinary measures to further enhance your credit repair:

  • Remain adamant in controlling personal expenses
  • Keep track of purchases especially smaller sums like grocery shopping
  • Pay attention to promotional pricing listed by merchants
  • Initiate a sell-off campaign
  • Download mobile coupon apps for quality discounts
  • Never consolidate your credit cards to loan more
  • Incurred unwanted expenses
  • Don’t file a dispute to avoid debt payment or claim
  • Avoid investing in an unknown asset class
  • Mitigate risk of an identity theft fraud

The above stated financial disciplines shall help you in improving your credit score report, personal consumption factor, or fetching higher valuations to your well-being. It’s important to adjust according to the do’s and don’ts of personal finance as who knows, you might need an urgent personal loan or credit extension from your creditor – the reviewer do not expect to receive a shocking answer of 20 dispute cases or a duplicate identity case confirmation. For those who wanted to an answer mitigating financial risks, search: do’s & don’ts of credit repair.


Quote of the Day: “Pegged your financial planning to an industry benchmark – KIG Hall [2013-2018]”


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This article was originally published on February 11, 2014. It has since been updated.