People who want to take more control over decision-making to change their financial situation should read personal finance books that educate and guide for the better. It is never too late to start learning, especially when you decide to become financially independent. If you were not a student of economics or didn’t learn much about budgets, investments, and financial management at your school, personal finance books can become your trusted educations resources that are easily available. Personal finance books from industry leaders and experts are a great source of valuable information on how to manage your budget, savings, spending, investments, and debt.
So, if you want to make positive changes in your life with better financial decisions, you are in the right place. In this post, we have listed down the top 10 best personal finance books for 2021 that aim to educate you with the knowledge you need to take control of your finances. These books make you feel more empowered and independent while educating you about money with timeless lessons.
- The Wealth Choice by Dennis Kimbro
The Wealth Choice: Success Secrets of Black Millionaires by Dr. Dennis Kimbro is an outstanding read for general life wisdom and information. The book is a great inspirational resource for people who want to understand how and some people from humble beginnings have built significant wealth with their financial decisions. The book also teaches you about their techniques and how to implement them in your life to achieve financial success.
- Investing 101 by Michele Cagan
If you want to learn about investment to make money, the personal finance book “Investing 101” by Michele Cagan is your crash course in building personal wealth. The book is a great read that introduces you to everything related to investing. From stocks & bonds to ETFs & IPOs, it is your personal manual and textbook that gives you advice and working knowledge to beat the heath in the investment market.
- Why Didn’t They Teach Me This in School by Cary Siegel
The book teaches 99 useful money lessons that everyone needs in their lives for better financial understanding and decisions. As the name suggests, “Why Didn’t They Teach Me This in School” by Cary Siegel educates you about the real-life experience and working knowledge that usually we don’t find in school lessons. The book is recommended by Forbes, eBay, and Lifehacker to college students and professionals who are new to money management for the better.
- Easy Money by Gail Vaz-Oxlade
If you want the best introduction to budgeting, “Easy Money” by Gail Vaz-Oxlade is a great read to understand the budget and its elements. As a personal finance educator for many years, Gail Vaz-Oxlade walks you through the concept of budgeting, how to make it, and what to include in your personal budget for better control over your earning and spending. The book is a great lesson and gives access to budgeting methods that everyone needs in their lives to start saving for the future.
- Broke Millennial Takes On Investing by Erin Lowry
It is another outstanding read on investing lessons by Erin Lowry. It talks about the complex problems in the world of investing and how to tackle them easily. This book can benefit everyone, especially beginners who are looking for an easy guide to level up their money. If you are looking for a book that takes on investing with an easy and readable approach, your search ends here.
- Your Money or Your Life by Vicki Robin and Joe Dominguez
The book talks about the 9 steps to transform your relationship with money and achieving financial independence and control. “Your Money or Your Life” by Vicki Robin and Joe Dominguez teach you that money alone is not enough to buy happiness. It is one of the best personal finance books to learn about money and life around it. It is a perfect blueprint for anyone who wants to build wealth by creating a healthy relationship with money.
- I Will Teach You To Be Rich by Remit Sethi
A New York Times bestseller, “I Will Teach You To Be Rich” by Remit Sethi is a valuable personal finance book that talks about systems and tools to achieve financial goals. You can adapt the lessons from this book as a six-week program that really works to achieve financial freedom and totally transform your financial life.
- Dollars and Sense by Dan Ariely and Jeff Kreisler
Another New York Times bestselling book that teaches you on behavioral economics in a true sense. “Dollars and Sense” by Dan Ariely and Jeff Kreisler talk about spending decisions and how your emotions and desires make an impact on them. The book cover itself stated “How We Misthink Money and How to Spend Smarter,” to give you an impression of what you are going to learn. Dan Ariely and Jeff Kreisler take on the working of the human mind, its willingness to spend money, and why many people lose control over their spending. It not only talks about problematic behavior but also advises on avoiding those habits.
- The Simple Path To Wealth by JL Collins
“The Simple Path To Wealth” by JL Collins is your personal road map to achieve financial independence and become rich and free in your life. The book breaks down everything related to building wealth by investing in the future. You will learn about investing in any budget while cutting your expenses in short and easy ways.
- Debt Free Degree by Anthony ONeal
If you are a college-going student and want to make some savings out of your student loan, this is your personal finance book to avoid any debt during college life. Debt Free Degree by Anthony ONeal is also a great read for parents who wants to prepare their kids for debt-free college life.
Even though you can learn many things in your school and college but we need to accept one fact that education is not enough to learn everything about economics and finances. You will need to learn from the personal experience of industry leaders and experts to empower yourself. We have listed above the top 10 personal finance books that could help you in your life with more financial independence and control.
Today, what many small businesses lack is a full financial plan. A complete financial plan is crucial to the long-term success and growth of a business. According to a survey, organizations that had a complete business plan for their venture successfully grew their business than those that had no plan or an incomplete financial plan.
What is a financial plan, why is it so essential?
A financial plan is an overview of your current business financials and a forward-looking projection for growth.
A financial plan helps businesses set realistic expectations regarding the success of the business. A thorough financial plan also makes your business more attractive to investors.
Six Components of a Successful Business Financial Plan
All business plans, whether you’re planning an expansion for an existing business or just starting a business, should include the following:
- Sales Forecasting
A sales forecast is a projection of what you think of your future sales in a given period. It is a crucial part of a business plan, especially when investors are involved.
There isn’t a one-size-fits-all kind of sales projection – every business is unique. How you segment and organize your forecast depends on the type of your business and how you want to track your sales. Generally, it is better to break down sales projections into segments beneficial to you for planning and marking purposes.
- Expense Outlay
An expense plan includes:
- Fixed Expenses
These are current ongoing costs of business, including operational costs like rent, payroll, and utilities. Make a list of fixed expenses as it will make it easier to distinguish critical expenses from expenses that can be reduced or eliminated if required.
- Variable Expenses
These are also known future costs, such as promotional expenses and advertising. Plan for variable expenses to ensures that your business is financially ready via budget reduction, increases in sales, or financial assistance.
- Cash Flow Statement
A cash flow statement gives you an account of how much cash the business brought in, how much money it paid out, and its ending cash balance. Without this information, you won’t be able to run a healthy business.
If you are running an existing business, you should have historical documents to base these forecasts on. And if you’re starting a new business and don’t have financial statements, project a cash-flow statement breaking down into 12 months. When compiling this cash-flow projection, you should choose a realistic ratio for how many invoices will be paid in cash, 30 days, 60 days, 90 days, and so on.
- Profit and Loss Statement
It is a financial statement that explains how your business made a profit or incur a loss over a period of time. There are different formats for P&L statements, depending on the type of your business and the structure of your organization.
Things you should include in the profit and loss statement:
- Your revenue
- Your cost of sale
- Your gross margin, which is revenue less cost of sale
Also, list your operating costs, which are the expenses related to running your business that isn’t directly associated with making a sale.
- Statement of Financial Position (Balance Sheet)
The balance sheet is a snap of the financial position of your business. It is essential to have an estimated balance sheet. You also have to deal with assets and liabilities that are not in the profit and loss statement.
You may get confused about dealing with assets and liabilities that don’t show up in the P&L statement. Firstly, start with assets, and estimate what you’ll have on hand, month by month for cash, receivable, and substantial assets like land, equipment, and buildings. After that, figure out your debts, such as account payable and outstanding loans.
- Break-even Analysis
Break-even analysis is a calculation of how much sales you require to cover all your expenses. To determine the break-even point, you need to figure out the contribution margin of what you’re selling. It is a crucial analysis for potential investors who want to know that they are investing in a rapidly-growing business with an exit strategy.
It is easy to feel overwhelmed with a financial plan when starting, but it is a crucial business plan, which you need to understand.
As an entrepreneur, one is really focussed on the “idea”. However, success of a start up is 99% execution and 1% idea. Part of the execution is managing the company’s finances so that there is sufficient cash flows to manage expenses while revenue streams are still being built up. The ultimate goal of any new business or start-up is to generate a profit and that is possible only if prudent financial decisions are made. It is important for any business, especially start-ups, to know about their financial position, money management, and cash flow to be successful.
Starting a new business means making the right business plan with a clear mission, vision, and goals. The state of financial affairs of your business should be at the top of your priorities as it is where most businesses feel uncomfortable in the beginning. With the right approach and financial planning, you can avoid unforeseen business debt and common financial mistakes by utilizing capital, and other resources effectively.
When you are living your dream of becoming an entrepreneur by establishing your own business, it’s is essential to keep your expenses, investment, cash flow, and taxation in proper order. Here are a handful of financial hacks for new entrepreneurs that they can follow in their journey for optimal performance.
Start-ups should be clear about their financial goals as part of their business strategies. Any business needs to set its financial goals and break them down into short-term, mid-term, and long-term goals. It establishes a clear understanding of its financial situation after each term and helps in achieving targeted goals efficiently.
Entrepreneurs should also aware of their financial options such as investments, loans, assets, taxation, and repayment options for the smooth flow of business activities. They need to align all their business activities in accordance with financial goals and options to be successful.
Cash flow management is the key
The key to a successful business is the proper money management to avoid any shortage of money when required. Running out of money is the key reason why many businesses fail and it happens because of poor cash flow management. When you fail to manage your cash flow, you are not going anywhere near to success. You should be aware of where every single penny is coming from and where it is going. It helps you know your current cash available to make the right financial decisions within your budget.
Track and monitor all expenses
There will be expenses in all directions in various forms, and you need to maintain the books to understand your financial position. You can use online tools, accounting software or hire a full-time staff to handle your books and accounts to remain organized. It helps you with better cash flow management, taxation, and other financial decision with up-to-date information about your financial affairs.
Outsource when you can
You need to limit your fixed expenses within your budget in the beginning. You can adopt many strategies to keep your transactions in check and cut unnecessary business costs. Identify the business areas where you don’t need to assign full-time resources and staff for daily management. You can outsource some of your business processes to a third-party partner to save some money on wages, allowances, salaries, and taxes. Outsourcing when and where you can is a well-known and cost-effective business practice that many companies opt for to increase their profitability.
Calculate a break-even point
It is extremely important to know your break-even point on a monthly as well as an overall basis while running a business. It helps you shuffle things around depending on your financial positions to make the right decisions at the right time with the right strategic choices.
By incorporating these five financial hacks, an entrepreneur can follow a path to success with more confidence. Start-ups can grow and flourish with careful management of their financial positions, especially at the beginning of the business.
Do you pay only the minimum payment due on your credit card bill? If yes, either change your strategy now or get ready to pay hundreds, if not thousands, more in the long run. We understand that you might find it more tempting to pay the minimum payment and feel financially secured. But this false sense of financial security that ‘your debts are paid each month’ can be extremely expensive.
Experts recommend that you should never ever make only the minimum payment on a credit card. Otherwise, you will eventually end up with a balance so high that you might find it extremely difficult to clear the balance even over several years, maybe even a decade, or more.
Today, we will help you understand why and how paying only the minimum payment can be a risky game for you. Besides, we will also cover what to do if you can’t pay the full amount due. To make things easy for you to understand, let’s start from the basics.
How is the minimum payment calculated?
The calculation of minimum payment varies from bank to bank. Typically, a floor limit is set, which is the lowest minimum payment you are required to pay to avoid late fees, and penalties.
Generally, in the UAE, the minimum amount due is calculated as 5% of your outstanding Credit Card Account balance every month-end.
What happens when I make only the minimum payment on credit card bill?
The concept of minimum payment may look lucrative, but it comes with a catch.
Let’s assume you have a balance of AED 10,000 and the Average Interest Rate on the card is 2.9 % per month – which equates to an Annual Percentage Rate (APR) of 40%.
Based on the 5% minimum payment rate, the minimum amount due would-be AED 500 – which is a much less amount than the balance. When you see it, you feel like you can afford it and decide to make the minimum payment only. As you pay off your debt and the card balance decrease, your minimum payment will continue to decrease, until it hits the minimum payment allowed by the card (which is usually AED 100 in the UAE).
But, what you might not realize is that you are leaving 95% of the debt each month unpaid.
If you keep using your card, the minimum amount will keep increasing each month. Since interest starts compounding on the unpaid balances, when you continue to make only minimum payments on a card regularly, your current balance will start to grow very quickly. Before you know it, you will be left with a debt that is about multiple times the original balance of AED 10,000.
While paying only the minimum amount keeps your credit score intact, overspending or not paying in full for long will leave you with unmanageable debt. When your credit card repayment ratio is not good, it can drop your score eventually.
In your credit card bill, there are generally three amounts you can opt to pay:
- The statement balance – the total balance of your account for that billing cycle
- The current balance – the total amount of your most recent bill along with recent charges (if any)
- The minimum payment due – the smallest amount you have to pay to keep your account in good standing
Ideally, you should pay your statement balance in full each month to avoid high interest charges and debt.
What should I do if I struggle to pay my statement balance in full?
There may be times when you can make only the minimum payment. For those situations, you can pay the minimum – but don’t do it for the long-term. As soon as you have funds available, pay it in full.
If you can’t afford the full balance, you should try to pay more than the minimum to reduce the total amount to be paid and the time required to clear the balance.
However, if you are having trouble paying your balance in full regularly, you need to review your cash flow and spending habits to see where you can cut costs to pay the balance.
Besides, look for a credit card with 0% APR on new purchases or transfer your credit card balance to a new credit card offering no interest for one to two years. Remember, such schemes have time-limits. So, you won’t be able to enjoy these benefits for a lifetime.
Thus, use your credit cards responsibly and prepare yourself to pay balance in the full or at the very least – to pay more than the minimum.
Financial planning is usually referred to as money or wealth management through budgeting and other financial management practices. It is a step-by-step and planned approach to meet life goals, both short-term and long-term. It is the process of managing income, expenses, and investments through the administration of money flow. When you manage and control your money in a systematic manner, it helps you evaluate your current and future financial standing.
Financial management is like creating a road-map for your expenses, investments, and savings – both fixed and unexpected. There is one factor that connects everything during your financial planning – that is money. To achieve any of your financial goals, you need to have enough money or wealth, especially when you need it the most. It is why wealth management is crucial to meet all your life’s goals.
When we talk about financial management, there are no specific rules or conditions. You don’t need to be a professional financial planner to know about the basics to control your money. It is all about setting smart goals, budgeting your expenses, investing in the right assets, and saving for retirement. You can follow the following rules for your financial management:
- Define your financial goals
- Maintain a personal balance sheet
- Start with a budget
- Regulate your expenses wisely
- Select right asset allocation and investment strategy
- Create a personal investment portfolio
- Plan for retirement
- Manage your debt wisely
- Cover your risks with insurance policies
- Planning your taxes
- Keep a contingency reserve
- Review your financial plans regularly
Importance of Financial Planning
There are numerous benefits of wealth management to control your finances in all forms. It is important for the following reasons:
Increase your savings
Saving is an important part of financial planning while regulating your incomes and expenses monthly as well as for the long-term. You can increase your savings by cutting costs on unnecessary bills and expenses as well as finding the right investment vehicles with high returns.
Wealth creation with the right investment plans
It helps you decide on the right investment strategy with the money available. You can allocate your investment on the right kinds of assets to maximize your returns to create a family wealth to pass on to your next generation. Right kinds of assets vary from one individual to another. It depends on an individual’s risk appetite and investment goals.
Be prepared for emergencies
Financial planning in a systematic manner keeps you ready for emergencies. Creating an emergency fund is the key aspect of money management. It helps you during a family emergency or job loss situation. As a rule of thumb, one should at least have six months expenses as liquid cash to manage any unforeseen emergencies.
Plan for your retirement
Planning for your retirement is another basic consideration of financial planning. It ensures that you have the funds and saving to live a standard and quality life after you decide to retire from your work.
Keeps you out of debt
Financial planning is also about saving taxes, timely payment of credit bills, and regulating your expenses. It keeps keeps you out of debt through proper budgeting and money management.
Gives peace of mind
When you have enough funds in your hand to cover all your expenses, bills, and taxes, you don’t need to worry about anything for yourself and your family. It gives you peace of mind to live a happy and comfortable life.
If you don’t know how to begin with financial planning, then take advice from a reliable financial planner and consultant. It will help you achieve your financial and life goals with the right knowledge and approach.