The time value of money is an important concept for all individuals to understand. The time value of money relates to the concept that money is able to gain value over time due to interest rates and compound interest. In order to understand this concept, one must understand the meaning of present value and future value. Present value refers to how much must be put away today to provide some dollar amount in the future. The future value represents what one's savings or investments will be worth after a certain time period. For example, if an investor wants to determine what an investment will be worth after a period of time, he/she is looking for the future value. If someone wants to know how much must be put away today to provide some dollar amount in the future, he/she is trying to determine the present value.
Our economy is a system of managing the resources of a country, state, or community. If the rate of production or consumption increases, the economy is in a state of growth. The economy grows and contracts over time. Business cycles tend to follow a pattern of expansion, peak, contraction, trough, meaning the business cycle depicts a wave when diagrammed. In order to track the growth of the economy, measures such as the gross domestic product (GDP), the employment report, the index of leading economic indicators, and the consumer confidence index.
Financial decisions are impacted by two aspects, personal and economic. Personal factors include one's values and goals which are one's fundamental beliefs and one's specific aims that reflect his/her set of values, respectively. Values and goals are closely related because values are the "Why's" behind goals. Personal factors also include needs and wants. Needs are essential for human existence and fulfillment while wants are desired but not essential. Furthermore, economic factors that affect financial decisions include one's income and inflation. Income is a major determinant of one's level of living, ability to reach a standard of living, and economic security. Inflation affects these factors because an increase in inflation will decrease an individual's purchasing power, therefore, decreasing the chances of making huge financial decisions.
Article 1 - Set the Stage for Your Retirement
First and foremost, women should practice the habit of paying themselves first, meaning once all bills and expenses are paid, save a non-negotiable amount to be drafted into savings per month. I have made this a habit of my own over the past year, and I have saved approximately four months of income. Having an emergency fund has already come in handy. For example, when I needed two new tires in the beginning of this year, I was able to pay off all expenses acrrued because I had more than enough money in savings to cover this unexpected expense. Therefore, I encourage not only women, but men as well, to allot a portion of each paycheck to savings no matter how small.
Women are also encouraged to take advantage of insurance plans that suit each family. Individuals should make sure the insurance company is reputable. In the case of disasters and other financial catastrophes, insurance plans can impact the ability for families to remain financially stable.
As a third step, women are encouraged to begin investing extra saved dollars into financial assets in order to work towards the ultimate goal of retirement. On top of emergency fund savings, dollars from saving should go into retirement plans such as a Roth IRA to benefit one's wealth substantially in the long run. Also, in regards to investment strategies, women should diversify their portfolios by not investing in one investment or investment type.
The last good habit towards saving for retirement is to not be afraid to plan with the end in mind. Hence, we should all prepare for the unexpected. Once established, women and men should create a living will, name their children beneficiaries, and keep all financial records, wills, and beneficiaries up to date.
Ultimately, this article describes how women should strive for financial stability and live within their means in order to prepare for a better future.
Article 2 - How to Adjust Your Financial Plan for Inflation
So how does all this affect you? Who stands to benefit from rising inflation and who does not?
Beneficiaries
Affected Negatively
(September 16-22)
Our economy is a system of managing the resources of a country, state, or community. If the rate of production or consumption increases, the economy is in a state of growth. The economy grows and contracts over time. Business cycles tend to follow a pattern of expansion, peak, contraction, trough, meaning the business cycle depicts a wave when diagrammed. In order to track the growth of the economy, measures such as the gross domestic product (GDP), the employment report, the index of leading economic indicators, and the consumer confidence index.
Financial decisions are impacted by two aspects, personal and economic. Personal factors include one's values and goals which are one's fundamental beliefs and one's specific aims that reflect his/her set of values, respectively. Values and goals are closely related because values are the "Why's" behind goals. Personal factors also include needs and wants. Needs are essential for human existence and fulfillment while wants are desired but not essential. Furthermore, economic factors that affect financial decisions include one's income and inflation. Income is a major determinant of one's level of living, ability to reach a standard of living, and economic security. Inflation affects these factors because an increase in inflation will decrease an individual's purchasing power, therefore, decreasing the chances of making huge financial decisions.
Article 1 - Set the Stage for Your Retirement
- Pay yourself first and establish an emergency fund.
- Insure for risks.
- Invest your assets and invest in yourself.
- Don't be afraid to plan with the end in mind.
First and foremost, women should practice the habit of paying themselves first, meaning once all bills and expenses are paid, save a non-negotiable amount to be drafted into savings per month. I have made this a habit of my own over the past year, and I have saved approximately four months of income. Having an emergency fund has already come in handy. For example, when I needed two new tires in the beginning of this year, I was able to pay off all expenses acrrued because I had more than enough money in savings to cover this unexpected expense. Therefore, I encourage not only women, but men as well, to allot a portion of each paycheck to savings no matter how small.
Women are also encouraged to take advantage of insurance plans that suit each family. Individuals should make sure the insurance company is reputable. In the case of disasters and other financial catastrophes, insurance plans can impact the ability for families to remain financially stable.
As a third step, women are encouraged to begin investing extra saved dollars into financial assets in order to work towards the ultimate goal of retirement. On top of emergency fund savings, dollars from saving should go into retirement plans such as a Roth IRA to benefit one's wealth substantially in the long run. Also, in regards to investment strategies, women should diversify their portfolios by not investing in one investment or investment type.
The last good habit towards saving for retirement is to not be afraid to plan with the end in mind. Hence, we should all prepare for the unexpected. Once established, women and men should create a living will, name their children beneficiaries, and keep all financial records, wills, and beneficiaries up to date.
Ultimately, this article describes how women should strive for financial stability and live within their means in order to prepare for a better future.
Article 2 - How to Adjust Your Financial Plan for Inflation
So how does all this affect you? Who stands to benefit from rising inflation and who does not?
Beneficiaries
- Fixed interest rate borrowers
- Homeowners
- Commodities
- Investors
Affected Negatively
- Lenders
- Savers
- Retirees
- Renters
- Dollar
- Variable Borrowers
(September 16-22)