Financial pragmatism is often the best overall solution to money issues. Budgeting funds ahead of time and making sure to build up both credit and savings is the best way to prepare for any eventuality. Being disciplined about spending and money allocation will allow people the freedom to use it wisely.

In a way, the constrictions involved with being disciplined actually open up greater options down the road. It is an investment at heart, and is one that can pay off big in the future.

Being wise with money combines a bit of common sense with preparing for the future. If people are willing to set aside sums of money for the future and be prudent with their discretionary funds, they will find that they have much more financial independence.

Ratios are one of the most common tools used for interpreting financial statements. The first ratio you will need to know is the current ratio.

You can find the current ratio by dividing the current assets found on the balance sheet by the current liabilities, which are also found on the balance sheet. This ratio tells you whether or not a company will be able to comfortably meet all of its short term obligations.

Current assets are considered to be anything that can be turned into cash within a year without a significant loss of money. It includes things like cash, inventory, and accounts receivables.

Current liabilities are any debt payments that a company must pay within the next year. A company can generally cover its payments as long as the ratio ends up being less than one when calculated.

How do you organize your bills? Here are a few simple tips:

1- GO THROUGH YOUR MAIL EVERYDAY. Don’t let mail pile up, just like your email, you need to open mail everyday. There may be things that need to be addressed right away and you don’t want to miss any deadlines!

2- PAY ALL OF YOUR BILLS AT THE SAME TIME. Make a specific time during the month to pay all of your bills in one sitting. The interest that you would make on paying bills right before they are due is not worth the stress of waiting. Doing it all at one time, will save lots of time because you will have out your checkbook, stamps, a pen, calculator, and the focus to get it all done in a timely manner. Giving you the peace of mind that all the bills are paid. 

3- CONDENSE CREDIT CARDS. By simplifying bills, organizing your bills becomes significantly easier. Limit the number of credit cards you own to 2-3, whenever possible.

Financial Humor:

An American investment banker was at the pier of a small coastal Greek village when a small boat with just one fisherman docked. Inside the small boat were several large yellow fin tuna.

The American complimented the Greek on the quality of his fish and asked, “How long does it take to catch them?”

The Greek replied: “Only a little while.”

The American then asked why didn’t he stay out longer and catch more fish? The Greek said he had enough to support his family’s immediate needs.

The American then asked, “But what do you do with the rest of your time?”

The Greek fisherman said, “I sleep late, fish a little, play with my children, take siesta with my wife, Maria, stroll into the village each evening where I sip wine and play cards with my friends; I have a full and busy life.”

The American scoffed, “I am a Harvard MBA and could help you. You should spend more time fishing and with the proceeds, buy a bigger boat with the proceeds from the bigger boat you could buy several boats, eventually you would have a fleet of fishing boats.

“Instead of selling your catch to a middleman you would sell directly to the processor, eventually opening your own cannery. You would control the product, processing and distribution.

“You would need to leave this small coastal fishing village and move to Athens, then London and eventually New York where you will run your expanding enterprise.”

The Greek fisherman asked, “But, how long will this all take?”

To which the American replied, “15-25 years.”

“But what then?” the Greek fisherman inquired.

The American laughed and said that’s the best part. “When the time is right you would announce an IPO and sell your company stock to the public and become very rich, you would make millions.”

“Millions … Then what?” the Greek fisherman asked.

 The American said, “Then you would retire. Move to a small coastal fishing village where you would sleep late, fish a little, play with your kids, take siesta with your wife, stroll to the village in the evenings where you could sip wine and play cards with your friends.”

Here are some steps to creating your budget spreadsheet:

1. Calculate what your family’s average total wages are after taxes.  Realizing this might change from month-to-month, just get as close as you can. Calcuate any other income you plan on receiving (perhaps through stocks or gifts), and then your total estimated income.
2. Now write down all the categories/places in which you spend money each month and how much you intend to spend in each one. Examples might include the following: food, mortgage or rent, utilities, transportation, debt payments, insurance, medical, clothing, school expenses, other, etc.
3. Include a section for savings.  It’s always important to be saving each month, even if it’s not a lot.
4. Calculate what you anticipate your total expenses to be
5. Then subtract your expenses from your income.  If you’re left with a negative number you need to see what you can cut back on.

A point I would make here is to be sure to budget some money for every item, even if you have no intention of spending that money.  A good example is medical.  You may think, “I have no reason to go to the doctor this month so I won’t budget any money for that.”  But when little Susie gets a cold and you didn’t set money aside for a doctor visit, then you are in trouble.  If you don’t use that money, transfer it over to next month’s budget or put it into savings.

Lastly, you must be disciplined.  Creating a budget worksheet will never help you if you don’t do your best to abide by it.  I hope these steps are helpful in creating your family budget and staying financially stable.

Notice that this is the secret to having more, not making more. That’s the first secret. You don’t have to make more to have more. You can just do more with what you already make. And the way to do that? Spend less.

What, you wanted some obscure, unknown secret? Sorry, but it doesn’t exist. There is no magic bullet that kills all your financial problems. The only way to have more money is to have more discipline. Don’t buy it if you don’t need it.

It may sound straightforward, but anyone can do it. Anyone can spend less. You should try it. Eat out one less day a week. Make lunch one more day a week. Inflate your tires to spend less on gas. Change your bulbs to be power savers to save on you energy bill. Don’t buy new clothes. Get the generic brand food.

There are millions of ways to spend less, but that is ultimately the secret to having more money, spending less of it and keeping more of it!

So, if you want a greater chance of becoming a billionaire, I hope you were born in the fall.  That’s right, according to Yahoo, billionaires were more likely to be born in the fall than in any other time of year.  (I was born in October…) I especially hope you weren’t born in December, because that month had the lowest chance–sorry.

To become a billionaire, your parents should have had a skill and liking for mathematics and been employed as an engineer, an accountant, or a small-business owner.  Of the 657 self-made billionaires studied, these findings were the most common.

Interestingly enough, many self-made billionaires have never started or never completed college.  Bill Gates, Steve Jobs, and Michael Dell never did.  Is accounting 220 really killing your grades?  Consider becoming a billionaire. =)

Like I mentioned before, none of this was scientific, but it sure was interesting.  Realistically, becoming a billionaire isn’t in the cards for most of us, but just be smart with your money and you may surprise yourself what will come of it.  Best of luck out there!

There are a few reasons to believe that the economy is turning around.  First, Federal Reserve Chairmen Ben Bernanke said yesterday that he thinks the recession could end in 2009.

In addition, I read an article from MSNBC that reported there were 34,000 fewer applications for jobless benefits. 

“New applications for jobless benefits plunged to the lowest level in 14 weeks, a possible sign that the massive wave of layoffs has peaked,” the story said.

Still, 601,000 laid off workers applied for benefits last week.  So, progress is being made, but we still have a long way to go.

Another reason: Though you may not like it, oil prices are rising again, reaching a 6-month high of $58 dollars, which leads one to believe the economy is getting better.

“Some analysts, however, warned that the higher prices did not reflect market fundamentals but were the result of oil investors mimicking rising equity markets,” the Associated Press said.

Also, some of the first cities hit hard by the housing crisis, like Sacramento, are beginning to rebound, suggesting that the economy is turning around.

Another example we have to turn to is our president. Now, despite whether or not you like Obama, I think we must acknowledge his efforts in modifying the budget.  Sure, you can argue he’s spending lots of government money in other ways, but he is certainly trying to cut a lot as well.

In an article on Yahoo Finance, it was reported that President Obama wants to cut $17 billion from the budget.  Some don’t believe this to be enough.  The president was prepared to respond, however.

“Some of the cuts we’re putting forward today are more painful than others,” the president said. “Some are larger than others. In fact a few of the programs we eliminate will produce less than a million dollars in savings. Outside of Washington, that’s still a lot of money.”

Maybe each of us can follow Obama’s lead and do a few budget cuts of our own. $17 billion may not be a lot in the $3.4 trillion dollar government budget, and a few dollars here and there may not be a lot in our own budgets.  But every little bit counts in helping ourselves stay financially stable.

Everyone faces the current economic struggles differently–some have it worse than others–but I hope we can move forward with optimism. It may be too early to tell what’s really happening in this economy, but we’ll get through it.