Foundations of Finance

Many times we have the desire of buying the car of our dreams or simply upgrade the car we are driving now. But in the back of our mind we think, Can I really afford it? will I have a negative impact on my saving plans?

Or what’s the right amount of money for down payment, and consequently what’s the smartest decision on the length of the car loan, and the monthly payments.

Experts recommend that the first issue to consider is how much of your financial resources at this point of your life you are willing to devote to upgrading your ride opposed to providing yourself a bigger margin of financial security. The second issue is how you should pay for a new car whatever the car you might want.

In deciding how much you would devote to buy a car, it is recommended that you check what percentage of your yearly salary your car payments would represent. If such percentage gets close or higher to 10% you are probably paying too much, despite the down payment you gave away.

So at the very least you should ask yourself how taking on this new commitment on will affect your ability to save for retirement. Will you be able to pay off the car loan while maintaining your current savings rate? Or will you have to cut back?

In other words, in order to make a wiser decision, you should keep in mind that the fact remains that you’re diverting resources that could go toward enhancing your financial security into a car. So making the right decision now, will require from you to think about the future and your personal financial goals.

Money is anything that is used by an economy to purchase goods and services. The fact that currency is issued by the government does not necessarily make it money.

For example, the 100 dollar bill is issued by the US government, but how many people in the united states actually pay for things with $100 cash? Answer: not that many. So the bill is currency, but it is hinging on the edge of not being a form of money.

Here are some interesting forms of money from all around the world:

Forms of money

1. miniaturized tools
2. miniaturized swords
3. cowry shells
4. slabs of salt
5. beaded belts (wampum)
6. giant stone wheels
7. tobacco
8. electronic transactions

As illustrated in the list above, things such as tobacco and cowry shells (which are not issued specifically as a form of government currency) are used as money in some places. They are simply used to purchase goods and services.

One of the hardest things to do as a parent may be teaching your child overtime to become more financially independent. Even though it can be difficult and could potentially cause some tension at times in your relationship with your child, it is a vital lesson that needs to be taught.
I recall talking to a friend not long ago who was married a few months ago. While we were catching up, it was obvious by the tone of my friend’s voice that he was stressed out about something. I kept asking if something was wrong, and finally the truth came out. He said that while everything was great with his marriage, financially it was tough to support themselves without the help of their parents. This is an example of why it is important that kids learn this lesson as soon as possible.
Though many people agree with this statement most of those will agree it is easier said than done. For those of you looking for help, here are three tips to help start you on the right path.

1. Give an allowance: Give you child a chance to earn the money they need to do fun things with their friends by providing them money in return of them completing certain chores or tasks.

2. Encourage a part-time job when they are old enough:This doesn’t necessarily mean a job that requires an employer. This could include something such as mowing lawns or babysitting.

3. Help your child understand the importance of saving money: If they can constantly save some money they will begin to lay a foundation that will help them the rest of their lives.