Monthly Archives: December 2017

Handle Sudden Wealth

If you have never managed a large sum of money before, it is much easier than you might think to squander your newfound wealth. Before you go on a spending spree or stuff the entire amount into your mattress, it’s crucial to pause and instead prepare a comprehensive plan to handle your new financial reality. Taking a calm and measured approach can help you to avoid common pitfalls and to make the most of your resources in the long run.

Traps To Avoid

HBO’s new football comedy “Ballers” focuses on Spenser Strasmore, a former NFL player turned financial adviser, and the pro athletes he advises. While the show incorporates all the heightened drama you would expect, the struggles with financial stability it depicts are all too real. And it isn’t only football players who run this risk. There is a long list of lottery winners who burned through large winnings in a few years, and 70 percent of affluent families lose their wealth by the second generation, according to the Williams Group wealth consultancy. Conspicuous consumption is the default answer, and sometimes spending unwisely is indeed the culprit. But while it is easy to judge football players who buy huge mansions and young adults with outsize tastes for designer shoes and the latest Apple gadgets, the reality is that people suddenly handling much more money than they are used to can easily fall into the trap of believing their newfound wealth will never run out, no matter what they do.

Making A Plan

So if planning is the best way to avoid the pitfalls of sudden wealth, where should you begin?

First, you should assemble a team of professionals. One of these should be a fee-based Certified Financial Planner (TM) who is transparent about his or her compensation. This helps to ensure your adviser’s interests are aligned with yours. You may also want to consider a separate accountant or tax expert and a wealth manager, depending on what services and expertise your adviser offers. An estate planning attorney will also be helpful.

Once you are satisfied with your advisers, the next step will be to determine whether your windfall has tax implications. While an inheritance or life insurance proceeds are not typically taxable, an exercise of stock options, the sale of appreciated stock and a lottery payout are all taxable events. Your accountant will be able to tell you whether you owe taxes, and if so, how much your total tax bill will be and when it will be due.

After setting aside the portion to cover taxes, a logical next step is to consider your debt. In most situations, it will make sense to pay off any outstanding “bad” debt right away. What makes debt bad? Generally, it is when you use debt to buy something that immediately decreases in value.

Qualify Leads And Prospects

If you are not selling the product or service to the correct lead, you will end up wasting a lot of money, time, energy and resources. So what you should do to qualify leads and prospects? How will you know whether a prospect is fit for your offer? Will the lead ultimately lead to a sales opportunity?

You should invest your money and time only after qualifying someone. Only then you should start selling the service or product to the prospect.

If you are not quite experienced you will jump at the given opportunity without properly studying the prospect. What happens here is you are trying to selling something on an assumption without the proper background check. It may or may not culminate in sales. Only mindless salespeople will do this kind of marketing and they will end up losing their energy and time chasing wrong leads.

Instead of talking all the time, try to listen to your prospect. Then you will understand whether he/she is a qualified prospect. If you listen to them your chances of selling will be much higher.

Spend time on qualified prospects, and you’ll achieve significantly more costly deals.

Even if you get a qualified lead you must put in a lot of effort to make him/her your customer. You must know all about your valuable prospect or else you will miss an opportunity to sell your product or service to them.

If you end up selling a product to a wrong customer or to people who should not have bought your product, it is not just bad for the customer but bad for you and your company.

To find a quality lead you must know how to evaluate a prospect. For instance, you must know what their drawbacks are. How have they evaluated your solution? What type of an organisation they belong to? These details are essential to personalise your pitch for your prospects.

Know their pain points and also about their organization and personality. If a salesman is not able to close a deal it shows that he did not know all the important details about his prospect and hence he did not properly qualify as lead.

Ask as many questions as possible to your customer and gather the correct information. There are certain qualifying questions which every salesman should be aware of. We list out the most important ones.

Customer profile

A prospect should match your ideal customer profile. How big is the company? What industry are they in? Where are they located?

Needs

You must know your customer’s needs to qualify the prospect. And you should know how to fulfil their requirements and requests. You should have an idea what result they are aspiring for, and how the result is going to impact their company or team.

Decision making process

You should also know how they make decisions and how many people are involved in the decision-making process. Are they impulsive buyers or do they take time to buy products?

For instance, some companies take almost a year to purchase products. But if you have a sales target to achieve in the next four months then they are not your qualified prospects.

Competition

It is said that you should keep your friends close and enemies closer. So you should know about your competitors. You must know whether the lead has worked with any of your competitors and also what are the decisive factors on which they will base their decision on.

If you are informed of these things, you will be able to easily find out whether he/she is a qualified prospect or not.

Manage Your Money

To be able to effectively manage your money, you have to cultivate some attitudes; the more you translate these attitudes to habits, the better you are with your money. Fortunately, you do not need to be an accountant or have any financial knowledge to be a good manager of your money. You can develop effective money management habits by taking the following simple steps.

1. Set up a budget and most importantly, stick to it. The rule is to spend less than you earn. Having a budget helps you track your spending, i.e. you know what you spend money on, on a daily basis. You may be amazed that those little amounts you spend on certain routine adds up. One good way of tracking your spending is to open a bank account.

2. Understand the flow of your income: Know what you earn from your job or your business. Know your true income. If you are a salary earner, your true income is your earning minus compulsory deductions such as tax, pensions and other statutory deductions required to be taken out at source by your employer. If you are a business man, place yourself on a salary and discipline yourself by living within the salary as though you are an employee by following the rules highlighted above. This is what accountants refer to as net income. Budget on your net income. You cannot manage your financial resources properly if you do not have a clear idea of what those resources are.

3. Actively manage your bank account. Some people do not pay attention to what goes on with their bank accounts. Keep a record of all additions to your bank account and all that you have withdrawn from it either directly from the bank, checks or the electronic channels like ATM machine and POS terminals. At the end of the month, make sure that what you have in your account tallies with what you expect to have based on your calculation. Where you are not able to explain any differences in the number, contact your bank immediately for an explanation.

4. Start saving: You have a budget; you track your spending and you are probably spending less than you earn; now it is time to begin to save. You should have a savings account and once you received your monthly salary or earn income from your business, put away a portion of it in the savings account. An easy way to save is to give a standing order to your bank to transfer a certain amount of money to a named savings account once your salary account is credited.

5. Invest: By investing part of your savings, you are actually getting your money to work for you. Set aside a portion of the money in your savings account for investment on a regular basis. There are many options available to you to start investing such as stocks and mutual funds. For a beginner, mutual funds are a safe and easy way to begin investing.

Handle Your Finances After Marriage

It is important that you make any significant financial decisions jointly as a couple to avoid creating financial frustration and aggravation in your marriage. The first thing you should do with your spouse is to establish a joint budget. To do this you will need to be completely honest with your spouse about your income, debts, assets, and credit history. The easiest way to create a joint budget is to itemize your monthly income and all your debts. This information should include all your monthly bills from your rent or mortgage, auto loans, student loans, installment loans, and credit card balances. Both of your individual financial plans have just become one joint plan, so it is important to know exactly what both you and your spouse spend your money on. Whether you decide to share in the bill paying responsibilities or to entrust one spouse, both parties should be aware and able to find out what the household income is being spent on. When creating your new joint budget, you will find that there are many areas that you will be able to save money. Most households can save quite a bit of money by combining insurance, utilities, consolidating debts, and eating at home more often. Your joint budget will help you cut down on your monthly expenses and allow you to save money. Once you’ve decided on your new budget, it would be in your best interest to put aside any savings that you have towards an emergency fund for future unforeseen events or possibly save the excess money towards the down payment on a house. You could also use any excess funds in your joint budget to pay down debt. The best place to start would be high interest credit cards, installment loans, or student loans. Paying off debt will improve your overall financial picture in the future.

Most financial advisors state married couples should have enough savings in an emergency fund to cover three and six months of expenses. Also, all the assets that each of you have should be discussed, these include: checking accounts, savings accounts, 401(k)s, stocks or bonds, or other valuable assets. It is important to discuss not only your current financial situation, but also your personal goals with your spouse, such as: homeownership, eliminating debt, vacations, and even retirement.

It would also be in your best interest to pull and review your credit reports at least annually for both you and your spouse. The three main credit reporting agencies have set up a website where you can obtain a free copy of your credit report annually.