ALTERNATE CREDIT SCORE

Alternative Credit Score acts as one of the prime criterion for loan disbursement for an individual. Credit Score has positive co- relation with income.

Many individuals have thin or non-existent credit files. It indicates that giant U.S. credit bureaus don't have enough information about finances of many individuals and hence they are not assigned any credit score, a figure generated via statistical models that examine outstanding borrowing, history of payments and debt loads. Banks use credit scores to determine eligibility and pricing for mortgages, auto and other loans.

However, this group of people having proper income but devoid of necessary credit score is increasing in number which is no less significant and opportunities are opening up for them with extensive effort from the financial institutions who are developing credit values of these people on the basis of what is today popularly termed Alternate Credit Score. It runs parallel to regular credit scores, risk profiles are updated on the basis of diversified data like rent, utility, child care, medical, and other payments. Banks are also coming up in hurried pace to tap this un-trodden territory and it may see a sea change when lot of people will shift more towards banks and move away from high interest bearing payday lenders.

However due to lack of collective data and information of either parties with each other, there remains a vide gap of co-ordination and it may happen that many among the credit seekers fall in hands of several pay day lenders or may end up consuming several products that otherwise wont have a valid presence in their port-folio. One necessary point to remember is the appropriate data should be with the banks and the degree of authenticity is worth mentionable in this Alternate credit Score method.

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Pamela

USA Insurance Sector - Slow Down

Recession in Global Economy has definitely created a huge impact on world market and insurance sector has also been hit by the financial slow down.

The catastrophic impact has become prominent with several millions being wiped out from the industry and many insurance giants witnessing sluggish growth and even negative return since last year as compared to returns booked and revenue generation analysis on quarterly basis.

Let us brush through a few points to carry forward the analysis.

Several millions were invested in financial institutions according to the portfolio set up which had badly affected the insurance sector on a whole.

Going by the available data, Hartford’s financial erosion reached around $2 billion during third quarter of 2008 as compared to $850 million gain during the same period the year before. MetLife’s accounts witnessed shooting up of costs in leaps and bounds with more than $ 1 Billion draining out to meet the claims and benefits. With rising cost and dampening effect on profit margin Insurance companies coughed large sum of money with little margin to fall back on.

Analyzing the problem from economic point of view, the gross approach of portfolio build up and direction of monetary flow boomeranged in many ways fuelling the problem. The portfolio had major exposure in fixed maturity investments like bonds mainly corporate bonds and with lesser credit liability; the insurance companies are witnessing fast erosion of asset value.

With the fall of value of the bonds, the claims and benefit payments are getting hard for the companies, drawing them to the verge of facing the problem of survival.

The most likely effect of this scenario may be total government assistance to sail through the tough period as well as several mergers and acquisitions may occur.

The question of survival now hovers around for most of the insurance companies.

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Pamela

US CREDIT CRUNCH

A credit crunch is an economic condition, in which loans and investment capital become dearer and difficult to obtain. In such a period, banks and other lenders become wary of issuing loans, so the price of borrowing rises, often to the point where deals simply do not get done. Credit crunch is a modern day economic problem which may occur at micro level (individual level) or even at macro level (country / region). Statistics reveal that USA, though one of the biggest consumer country has been in rough patch due to this credit related problem. Year 2007 has witnessed that employment news of Americans were not good and there has been lesser faith in cash market, panic prevailed all over, that fueled the credit crunch even more.

The credit crunch has become a difficult situation in USA especially for the finance corporate as well as retails investors. In the earlier phase, banks and financial institutions have been giving requisite loans to the buyout firms as the banks were able to re sell the loans to the investors. However the problem increased from mid 2007 when things dried up for several new investors as well as existing clients. Several investors who had previously taken loans could not sell their loans from their portfolio at any price, loaners were losing out the opportunity cost of money, the situation was acute with total disappearance of buyer, banks were hurled into tremendous liquidity problem.

Direct financial field saw backing out of several commercial papers which promises to pay that wide variety of companies issue to acquire short-term funding , $1.2 trillion asset-backed commercial paper evaporated from market.

Going by statistics, we see that housing / real estate boom started from late 90’s, more precisely from 2000 onwards. Fresh from Dotcom bubble burst, real estate became a safer bet for many Americans, especially when the rates of interest were quite low. It created an opportunity for many lenders who became proactive and drew many home buyers alluring them with apparently lucrative deals to buy houses. Increasingly low credit worthy home buyers entered the market and lenders provided them with basket of options like exotic mortgages, such as interest only loans or flexible rate mortgages other wise termed option ARMS. These loans had characteristics of initial low payments and later came with sky rocketing interest rates. Banks had written nearly 15 % ARMS by mid 2006. One important characteristic in this whole process are the brokers who don’t hold the loan nor they maintain a life time relationship with customers rather they are motivated by the commission structure which acts as driving force for them and hence Misselling occurred frequently. Securitization of mortgages became a problem which crawled into several financial tools like Futures and Option trading (Financial Derivatives), high leverage taking hedge fund became more vulnerable being more exposed to risk. However when defaulting eventually took place the situation worsened and Financial institutions and banks faced the heat of credit crunch which became more and more complex leading to many big shots succumbing to the credit crunch pressure .

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Pamela

STUDENT LOAN CONSOLIDATION

Loan is a financial package offered to borrower from lender with a mutual or written agreement with specified terms and conditions for some fixed tenure with an expected repayment and is usually borne with an interest. We may say that loan refers to consuming or using future purchasing power in present. Student loan is a structured package meant for students to finance their educational expenses.

Even after flexible loan plans, several students fall in debt trap due to over expenses and unplanned spending. In this scenario it is often advisable to manage the loan by consolidating it in a judicial way. While maintaining numerable loan repayment liabilities

which accounts to maintaining that much interest repayment trouble, maintaining records of all at the same time, it is better to transfer them into one consolidated structure and start repaying them through one. Often this helps to negotiate interest rate changes in a good way and acts as buffer during hard pressed times of high interest rates.

Students who often take care of their finances during their educational period may find this extremely time consuming as well as deviator from their daily chores.

According to 2002 statistical data, students on an average left college with $17,000 in loan debt. With loan amount steadily increasing in the last few years, the US Department of Education and other higher-education institutions have entered into a contract with private collection agencies to collect overdue student loans.

It is always advisable to understand the loan regulations, clauses, interest rates, repayment possibilities before taking a loan and to counter any for-coming financial crisis

or any unforced errors certain steps are perennially advised:-

• Savings: Just $20 every month savings can create wonder, by the end of college, one will have almost $1,000 saved for student loans. Hence a small but regular savings can do wonder.
• Budgeting: Many college graduates exceed their cost of living; hence it is often suggested for developing a budget and sticking to it. Determine what bills and payments have to be paid (i.e. student loans, rent) and then calculate how much is left over for additional expenses and as savings.
• Ask for advice: One shouldn’t hesitate to ask student loan counselor or collector for a flexible payment plan. Many organizations are willing to develop a payment schedule that works for both the consumer and lender.

Student loan debt consolidation program can only work, if he / she introspects his / her financial standing and work out his / her repayment program accordingly.

Thanks

Pamela

SEZ — SPECIAL ECONOMIC ZONE

# What is SEZ???

SEZ is an abbreviation of Special Economic Zone and refers to a development of geo-economic condition of a country. SEZ is a dedicated geographical area enjoying more trade liberty and lesser or a few governance that otherwise would have been applicable under a country’s typical economic and trade laws.

Infact SEZ covers a broad range which can be sub categorized into more zones:-

i. FTZ -- FREE TRADE ZONE

ii. EPZ--- EXPORT PROCESSING ZONE

iii. FZ --- FREE ZONE

iv. IE --- INDUSTRIAL ESTATES

Apart from these, there are Free ports, Urban Enterprise Zones and other categories. Jordan, Pakistan, Philippines, Poland, Russia, and Ukraine Brazil, India, Iran, Kazakhstan are among many countries to adopt SEZ to facilitate their Economic growth.

SEZ has a concept to allow ventures often private or joint ventures of government and private collaboration to improve domestic production Increasing national output, creating favorable environment for FDI and to be more competitive in world market.

Infact the laws are liberalized inclined more to waiving off taxes and duties and more friendly towards production and development.

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Pamela

DEBT---------- Views & Ideas

Debt is invariably a financial term frequently used and is created when a Creditor agrees with a Debtor to lend some money/ assets for some fixed tenure with an expected repayment and is usually borne with Interest attached with it. In Other terms we may say that debt refers to consuming or using future purchasing power in present. Standard of Deferred Repayment denotes the process and agreement on basis of which repayment shall be done having consent of both the parties.

There can be various Types of Debt depending upon the nature and characteristics:-

1) Secured

2) Unsecured

3) Private

4) Public

5) Syndicated

6) Bilateral

Apart from these there are some debts that have mixed features of the above mentioned.

Debt is often sought after and required for business purpose, investment strategies, purchasing goods and services at present with debt having used future purchasing power. However Debt has a long term effect on any country. Over volume debt has long term effect on National output and economic growth, infact there remains an impact with inflation as well as deflationary situation of a country.

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Pamela

Concept and Charges of credit card.

CREDIT CARD is often refereed to as plastic money and invariably has come up as one of the modern day variant of hard cash. It has developed a lot of convenience though it’s service does not come for free. There are a lot of charges and fees attached with it.

Let us sum up some important ones out of them.

FEES mainly include Annual fees. Annual fees depicts the charge which comes as a service charge a person pays to the credit card company. It varies anything between $15 and $ 60. Again there are exceptions to this feature since a lot of credit card companies don’t charge annual fees. It has also been seen that even after availing chargeable card, the charges have been waived off.

COST may include total annual cost which is quite important to ponder on. This follows a mathematical rule of fees (annual) plus the interest charges accrued plus any other charges. For a better usage of cards it is often said to understand the facts and figures.

RATES include Introductory Rate which is a charge applicable when a card is issued though nominal, is often variable. Talking about Annual Percentage Rate, it is an interest rate charged on any carry forwarded balance. There are two variety of APR and usually we see that fixed APR remains a bit higher than variable APR. But there always remain a problem with variable rate since it’s floating in nature, we don’t know what the rate can be.

Other fees will apply on your credit card varies due to various reasons. Late payment regularly draws late fines and charges. One should always remember the credit limit. ATM withdrawal service does not come for free and such charges have a different interest rate than a charged purchase.

However it all depend how a person realizes his strength and weaknesses and judicial approach to deal with their credit card.

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Pamela

Credit Card Reality

With high ride in market, debt has increased in leaps and bounds which had real acceleration from credit card companies and now the situation is completely different. They realize that the hard pressed Americans will not be able to pay their bills as the economy deteriorates.

The scenario is such that lenders and collectors are pushing themselves an extra yard to collect what ever they can before situations runs out of their hand. They are even forgoing parts of their money and debts due from the clients end. They are even stretching their time to extract what ever remains viable for them to recover from the debt ridden clients.

It is visible that big settlements have dried up. Banks and credit card companies are trying to gather their liquidity as much as they can. Data shows that Bank of America has constantly been waiving of debts, lowering interest rates, reducing loan balances, and this may provide much needed oxygen to the bank clients. Like wise several others like American Express, Chase Card are taking care of their clients who are on the verge of falling behind their bills and dues. It has been seen that several people are benefited with 20 to 70 percent waive off from their credit card bills. Thousands and billions of dollars are forgone with this ease out process. In past it has been seen that people are dishing out money from home equity, fetching money from retirement benefit funds / savings or by taking loans, going for help from known persons or from debt consolidation consultancy. While mortgage loans which are often big and complex, credit card issues are handled on individual basis. Also we see that credit score of the clients shooting down sharply.

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Pamela

Water

Data : Death of 1.6 million children per year.

Cause : Global water crisis.

Various arguments, meetings held for economic loss compounded by misuse of natural resources affecting economic development and crisis of water is no less significant.Europe uses an average of 200 litres of water per person, States consumes around 400 litres while developing nations consume around 10-12 litres of water though of inferior quality mostly contaminated water.

According to the Stockholm International Water Institute the degree of the crisis is at its peak. Statistics reveal that over 20 percent of global population faces acute shortage of water supply, hygiene and proper sanitation remains a day dream. In fact it acts as a accelerator for human degradation.

Passing through the phase of food crisis, economic slow down, environmental degradation sustainability of livelihood has become a real hardship for many. In fact global water consumption is doubly co-related with rise in population. With no substitute and rising cost, avoiding the burning matter shall aggravate the problem.According various apex bodies like Asian Development Bank, World Health Organization, UNO the task is quite uphill one with Sub Saharan Africa, various poor Asian countries will not witness the development in coming half a century. Economic Loss, degradation of humanity, loss of real man power if computed will account to incurring Credit Liability of Global Accounts.

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Pamela

Car Dealer : Thinking to buy?????????????????????
Person : Well well need to think over it!!!
Car Dealer : (After a long pause) OK......................!!

Recession in car sales

American car dealers are in real rough patch in this economic down turn.Will this recession eat up even more??? Will this recession be averted?? History says it is quite difficult. in fact down turn has began and car sales have taken the early hit.

The graphical representation makes it quite clear the percentage change in sales of new cars with time horizon of 1 year with 12 months before.

Adjusting it with inflation it is not positive, rather it 2% down. The down fall continued with figure slipping down to around 2.5 % by July.

A little introspection in this can help a lot. If we go back to mid 90’s

American Economy saw no happy feet in fact on contrary there has been several recessions.Even with several other indicators we cannot deny the hit of new car market. According to census bureau officials, revenue has been halved, keeping aside sales of parts, repair and services. Soaring gas prices, oil prices, liquidity crunch are just adding fuel to fire.

Thanks

Pamela

BOND MARKET


The bond market which is popularly known as Debt market, Credit or Fixed Income market is a platform where there are market participants in the form of buyer and seller buying and selling debt securities which usually are in the form of bonds. Bond market is often used as reference with respect to Interest rate or the Yield Curve graph since there is an inverse relationship between interest rate and bond valuation. Bond market usually means Government bond market & Government backed ones because of its size, nature of liquidity, absence of credit risk and hence response to change of interest rate.

Data shows that international bond market size has been around $ 50 trillion in 2006/07, while the USA bond market debt outstanding amount around $26-$27 trillion. Estimated data as of early 2007 shows that daily trading volume in USA hovers around $900 billion, transactions largely occurs around among broker – Dealer and Institutional Participants which is otherwise termed over the counter (OTC) market.
Bond/ Debt markets are mainly decentralized and absences of certain exchanges like cash, future and commodity markets. This has occurred as no two bond issues are exactly alike, and the number of different outstanding securities is far larger.

Market Structure
Market participants are essentially either Buyers (debt issuer) of funds or sellers (institution) of funds or often both.
Categorizing Participants:-
• Institutional investors
• Governments
• Traders
• Individuals

Investment in Bond market
Financial Institutions or Investment companies allow individual investors to participate in the bond markets through bond funds, funds of closed-end variant and unit-investment trusts.
To brush through Bond market often we come across Primary market, secondary market.
The Primary market deals with the issuance of new securities. Companies, governments or public sector institutions can obtain funds through bond issuance. The Secondary market refers to the stage where previously issued financial tools like stocks, securities, bonds, futures and options transactions take place. Dealers out here in this market are often referred to as Satellite Dealers and here new investors can purchase from other investors in the secondary market or the aftermarket.


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Pamela

HEDGE FUNDS

While there can be numerous ways & tools of investment,let us take a snap shot of one financial product which has strong presence but not with too much fan following and it is hedge funds.
Hedge fund is an investment type of unique approach and can be said as financial tool with diversified activities quite different from any other fund type as well as it is accessed by limited number of investors as per regulation.
Considered as class investment taking into account shares, debt instruments, commodities, and various asset classes into its portfolio, hedge fund have its orientation quite different from each other visible from their objectives hence adheres to with different methodology in approaching investment.
Why Hedge??
These funds often seek to pacify potential losses in the markets they invest in by hedging their investments using a variety of methods, most notably short selling. Over the period of time, however, though said that hedging reduces risk but itself the process of hedging
actually increases risk with expectation of capital appreciation.
Hedge funds meant for certain elite society and provides them with an exemption in many jurisdictions from regulations over short selling, leverage, fee structures derivative contracts, and the liquidity of interests in the fund.
Structure of Hedge Fund
A hedge fund is a tool of investing where money is pooled. Other than fund asset portfolio and cash money there is no other asset holding for the fund investment while its investors are its clients.
Talking about the service providers they are:-
Broker: Service provided against prime brokerage includes money lending, standing as counter party for derivatives, transaction of securities for short selling, clearance and settlement. Brokers popularly termed prime brokers acted as prime functionary as that of bank.
Administrator: They function mainly as operational back bone of the fund by processing
Purchase, redemption requests, issuance of interest, computing NAV.
Distributor - They are responsible for marketing the fund to potential investors and mobilization of cash fund for investment. Frequently this role is taken by the hedge fund manager.

Impact of Oil Price

Oil is one of the most important accelerator for an economy to grow. In fact it’s one raw material for any sector which if faces supply bottleneck has a tremendous negative impact to stagnate the growth of an economy.
However according to various studies and even the reports of IMF shows that oil prices has witnessed a steady growth over a period of time. While the over all oil consumption has not reduced but the fluctuations in the oil market has definite impact on any country, be a first world nation or a third world country or emerging economy like China and India. We have witnessed that oil consumption has regular impact on GDP of any country. Russia witnessed a sharp decline in Gross Domestic Product in line with the decline in consumption of oil. There has been a rise in cost of production of goods and services along with rise in demand, profit margin has declined. It has also witnessed wage price ratio tilting towards lowering of real income.
First World Nations are witnessing several impacts depending upon the complexity of their respective economy. The inflationary impact and monetary policy response are most significant in the United States and European nations, reflecting a combination of relatively high energy consumption (which increases the inflationary impact in the United States), inertia in the inflation process (which is particularly important in the euro area, with its labor market rigidities), and differences in resistance to real income losses. However US has faced lesser negative trait on trade due their own capacity and supply of petroleum, European countries and Japan has taken a beating worse than USA.USA, European nations, Japan has faced inflationary impact out from the oil price shock which affected their respective GDP to some respect. But thanks to their resource availability and modernization and capital intensive approach towards production they have maintained resilience towards the price shock.
Developing nations and Transition Economies have faced a different scenario with respect to oil price hike over years. Two all together different aspects rounded up here, while the oil importing countries had huge dependency in importing oil. their terms of trade worsened with the hike in oil price, they benefited with certain fall in price but getting squared up with rise in domestic demand and no self reliance to improve their own production it hardly mattered, while oil exporting nations had direct impact even more to face with standing of their economy has only a base on petro dollar. It signifies their reliance on oil export heavily.
Resulting impact however has retaliated result for oil exporting countries. United Arab Emirates had a large current account surplus and that the oil price increase is expected to further increase that surplus by more than 5 percent of GDP.
Major emerging nations have been in rough with rising oil price. Asia experiences the largest negative impact on growth. Latin America, emerging Europe and Africa are less adversely affected by the oil shock owing the larger influence of net oil exporters in aggregate activity.
Oil Importing HIPC and CIS Countries have visualized tremendous pressure in the
rising oil price phase. Heavily Indebted Poor Countries (HIPC countries) have significant low world market share, their per capita income is also poor, hence their terms of trade declined and had huge current account deficit, a feature quite common with transition and emerging countries. Majority of the Commonwealth of Independent States (CIS) countries, are net oil importers and has faced similar problem of HIPC countries.
OPEC countries has improved their terms of trade, their GDP rose sharply approximately around 7% annual growth.

Impact in financial Status of the countries
In the Stock markets, an increase in oil prices would be expected to lead initially to a weakening in the earnings of firms producing energy intensive output and in their market valuations. Rise in cost of production, fall in profit margin and consequent decline in GDP. Oil price rise has been directly responsible for the recent turbulence in advanced country financial markets and movements in currency markets.

While the impact accounts a lot for any country, developed nations moving miles ahead, riding on technological accelerator, time has arrived to accept the over riding
impact on financial sector and slow but steady approach to plug in alternative energy.

Thanks
Pamela

Investment & Risk Appetite

Investment in general terms relates to putting in money in some variety of financial tools with an aim to appreciate the valuation of the capital invested. However a lot of factors are involved in the scenario. Every financial product has its own variety of risk attached with it, market risk being an inherent one. Talking about financial products under major parts it includes equity, bonds, mutual funds, debentures, government securities, municipal bonds, fixed deposits, insurances and lot more. Degree and nature of risk varies from product to product and it also shows the risk appetite and individual’s perception towards the product. 

Let us talk over some major investment products. While Equity is company issued shares and carries maximum risk, the risk return ratio of equities is also high. Capital loss risk being viable out here, it requires a lot of understanding and research. Difficult yet most important sought after component being understanding when to buy in and when to come out. However given the choice of convenience, liquidity, cost of investment and total opportunity of creating a tailor made equity portfolio, cash market witness maximum churning of money and forms the back bone of any country’s financial health. Equity market performance thus reflects the out come of equity investments both at micro and macro level. The most regularly quoted market indices are broad-base indices comprised of the stocks of large companies listed on a nation's largest stock exchanges, such as the British FTSE 100, the French CAC 40, the German DAX, the Japanese Nikkei 225, the American Dow Jones Industrial Average and S&P 500 Index, the Indian Sensex, the Australian All Ordinaries and the Hong Kong Hang Seng Index.

Here we can say that given time frame of a long horizon [> 1 year] equity returns are positive but obvious proposition lies beneath is the investment value of time associated with it: opportunity cost of investment.

Bonds are one of the safer bet among various instruments of investments being issued by financial institutions, government sector, corporate bonds, high yield bonds, mortgage bonds, public sector companies. Bond market closely relates to market movement quite similar to cash market, bonds carries a certain amount of promised return, however it carries it own variant of risk. Issuer default risk, bond market risk, interest rate risk (IRR). Even though less liquidity, longer time frame and more cost of investment, on risk return analysis bond is less risky, low income generating than equity investment. Mentionable US bonds can be Lehman U.S Aggregate, Saloman Big, Merrill lynch Domestic Master, CPMKTB- The capital market Markets Bond Index.. A few government bonds index like- Saloman Smith Barney World Government Bond Index, J.P Morgan Government Bond Index and lot more.

With lesser fluctuations compared to cash market or equity market, investment in bonds can be a well measured step.

Mutual Funds investment may be observed as good option with risk lover and averter simultaneously given the nature of fund to strike the investment. Carrying the variant of equity funds, debt funds, liquid funds, gilt funds and sub categorizing them even further gives a handsome amount of choice to deal with. While equity funds carries maximum risk compared to other category, income generation is also maximum. However other variants, market risk when taken into consideration, most variety of choices can be made in mutual funds, depending on the time horizon..

However when talking about risk, it actually refers to monetary loss, capital depreciation, opportunity cost of investment on a definite time frame. All said it remains a personal call to choose from, to invest in, time, risk appetite and an obvious introspection and analysis.



Investment and Financial Management - All about investment financial Management - How To invest & financial analysis techniques.

Misselling of financial goods and services

Marketing of financial products actually determines the sole objective of any company ----PROFIT.

Sales and Marketing have narrow difference but in reality there is a vast one. Successful marketing is always followed by successful sales and not the other way round. Marketing actually promotes the product and proper sales hit actually fulfills -

The desired result- Profit.

My point revolves around this approach of every financial company we come across fortunately or unfortunately. We all are experienced with the telesales executives calling up always at the wrong time, wrong place. But what about the products we have gulped up actually of no use or not at all required. The useless plastic money you own and burdened under the debt of it which otherwise couldn’t have tempted you on the spending spree. Have given a thought about the premium you pay which initially looked lucrative but now that you realize it as a blunderous thing to do and that it does not match your requirement at all. All this actually happened to you or any body among us because of the sales pitch of the financial agents we generally succumb to. Instead of proper guidance they end up selling products of their revenue generation and also due to the sales pressure they face but we actually face the heat. Classic example in this regard can be loans which get approved which actually costs us a lot of invisible interest charges and hidden costs adhered to it. The proper lack of communication on the part of the sellers or the lack of interest to do so actually costs us quite dear. After a lot of hazard even if we end up with a counselor who may actually help us, a lot has been over never mind your quite a handsome amount of hard earned money has indirectly been robbed already.

With due respect to all it needs mention that we need to assess our need by ourselves at first hand before moving to a counselor which can always be better than to succumb to lucrative offer to grab on without actually examining the real purpose of the product or service. Hence we all should atleast look into the offer document of any financial product before doing anything—

It’s always better to look before you leap………………..!!

Thanks

Pamela

Manage Your Money



Hello every one, here goes my best wishes for the New Year. We all hope the year fulfills all the dreams and wishes.We all love to make resolutions every year and this year too shall be no exception.
Well, coming to the statement of trying to achieve the dreams we should plan our aims needs and requirements according to our budget. This is simple to listen but really needs care.
Let’s revisit the basics again. We all thrive to establish ourselves in a good financial position and “Every penny saved is every penny earned” as goes a famous saying should be well remembered. We all have a limited source of income and this includes accrued income from all viable sources. Next prudent approach requires jotting down expenses:--
Under two heads—Planned (regular) expenses and Unplanned(irregular) expenses. However before approaching this method we all should keep aside 25% of entire earnings initially into any mode of secured savings then to approach Expense budgeting as mentioned earlier.
Coming back with planned expenses, it should entire house hold expenditure (Taxes, Rent, Bills, Fooding and Lodging, Emi, Premiums).Apart from this money should be kept for other possible expenditures like entertainments,Eating out).
This entire process should take into around 80% while remaining 20% should be dedicated towards irregular or forced expenses. It includes accidental requirements, sudden needs and lot more which are unforeseen requirements. Let us see a hypothetical illustration for better understanding.

Mr. Y earns 10000/- US dollar every month and has no other source of income apart from the salary he draws every month and he follows this method of money management every month to meet his needs.

Steps................................................ Amount

i) Money kept aside................................ $ 2500 [25 % of earnings]
ii) Money Left...........................................$ 7500 [75 % of earning]
iii) Regular/ planned expenses.............. $ 6000 [80 % of money left]
iv) Irregular/ Unplanned expenses.......$ 1500 [20 % of the remaining amount]

However this is solely personal approach towards managing money, I am waiting for further views and inputs from my fellow bloggers.
Cheers enjoy the new year bash to the fullest and my heartiest wishes to all once again.



Thanks
Pamela