Internet entrepreneurial tasks
Instead of working for “the man”, some people chose to utilise their own abilities and, in effect, give themselves a job. If you are self-employed you can apply for a business loan whether you are a sole trader, partnership or
limited company (these are the most common types of start-up company). You can use the cash to actually set up the business, based on the business plan, or to help fund business expansion.
The bank or other financial institution will consider whether it is a good idea to lend the money. For example, if you have a good track record of making profits, or if you’ve never defaulted on a loan. If you’re business plan is for a company selling sand in Saudi Arabia, you are unlikely to get the cash.
Don’t worry – very few people, whether employed or self-employed, are able to get through their lives without borrowing money in some form or other. Even large companies and banks borrow money; so it’s perfectly normal to need a little help here or there, when your budget has gone up the spout.
Equally, people feel buying a home is a very sound financial move but at the end of the day, this is merely another means of borrowing money. On the one hand you may have a house worth £500,000; on the other you may owe the bank £450,000 for the privilege.
So who really owns the house when all’s said and done? Your financial dealings will involve cash flying in and out of various accounts, and all banks accept you will need to borrow money from time to time – it’s all part of the evolution of the financial world.
Above all it is important to keep a cool head when borrowing money. Always do the maths to work out what you will have to repay and that you can afford to do this. If you remember nothing else in this chapter, remember not to borrow more than you can afford to repay. If you stick to this basic rule your life will be much happier.
2- Ah yes, the most sensible thing you can
do with your cash aside from knitting it into a neat scarf, or else betting the lot on the odds of Elvis Presley flying a UFO into the Loch Ness Monster’s head. No kidding - you can actually make that bet, and the odds are better than winning the National Lottery.
Go figure or, as our American cousins might say… you do the math! The variety of ways to part you from your cash are endless. When you start earning money, as detailed in Chapter 1, the general idea is that your income for the work you do will be higher than your weekly expenses.
As suggested, it’s best to draw up a budget detailing income and fixed outgoings, such as rent, food, travel etc. Whatever’s left after you’ve paid all that out is your disposable income, and as well as disposing some of it in the local chip shop, it is also an extremely good idea for you to start stashing some of this away, as savings.
Because of the interest the bank will pay you for the honour of looking after your money, this pile will increase – plus, it may not be so easy for you to lay your paws on it and blow it all on bonkers Elvis-related bets and cod fritters.
3- SAVE 10% OF YOUR INCOME
You are probably at an age now where you will have some form of income. This might come from your parents or a part time job you have. A really useful tip is to try to learn to save 1/10th of your income. Once you have learned to do this, it becomes a habit.
You will be amazed at how quickly your savings will add up. If you want to be rich one day, then this little piece of advice could take you a long way to achieving this goal.
When the evening news comes on and the chap behind the desk starts talking about Bank of England interest rates, don’t switch off because this will affect the rate of interest you will ultimately be paid on these savings. If you have a mortgage and owe money based on those interest rates, it is bad news if they go up.
Conversely, if you’re saving your pennies, it’s good news, because your little pile will be piled a little higher. Sometimes you need interest rates to be low; sometimes you need them to be high; sometimes it feels like you can never win.
If you’ve done well with the interest on your savings, proceed immediately to your local confectioners and buy a big box of choccies for a mate with a big mortgage,because he is not going to be in a good mood at all. So, the point of saving is not boring and miserly, it just means your money will accrue (build up) for your future.
Then, when you need it for something really big, like a car, holiday or deposit on an exotic tortoise, you can tap into those savings and find they will be worth more than the sum that you have put in. For many people, it’s simply a
comfort to know that money is there, if they need it for a rainy day. Putting money away for a rainy day is something you will be aware of from your days dropping pennies into your piggy bank (and then smashing it open about a day later when you realise the new Beano has come out and you already need those pennies back). Of course the piggy bank offers no interest rates…
in other words, you’ll get the same number of pennies as you put in (as long as your pesky kid brother hasn’t figured how to lever some out with some Bluetac and a piece of string). Some people are happy to keep that philosophy, only later in life they don’t bother with a piggy bank, they just shove it in a shoe-box and hide it under their bed, or save with the local
Christmas fund. However you’re already reading this book, so we know you’re wiser than that. Most people with spare cash appreciate the value of putting it into a bank, building society or one of the other methods explained here. Then you can kick back and relax, as your money works for you. Easy money
4- TYP£S OF SAVING:
There are many different forms of savings, beyond piggy banks and stuffing it in your mattress. These include:
- Bank and Building Society Deposit
- National Savings
- Individual Savings Accounts
- Pensions Remember, saving is simply an easy way to make your money make more money. What you need to consider are things like: what amount of money you can afford to save and how long you will be able to do without it.
These factors will direct the method in which you can save, and what will work best for you. Depending on what you want to see your money doing, we will consider each of the saving types in turn:
When you have saved up some money you will want to start thinking about investing. This might still be someway off but remember the following tips: 1)
Invest with caution, only take risks once you understand more about what you are investing in. 2)
Seek advice from professionals and more experienced investors. 3) Always do your own research. The Internet is a particularly useful tool for this.
6- NATIONAL SAVINGS:
The National Savings and Investments was founded in 1861, as the Post Office Savings Bank. The aim of the bank was to allow your average person a way to save, and also to provide the government with access to that cash, to do whatever bonkers scheme they had up their sleeve. The bank’s name later changed to National Savings Bank and later to National Savings and Investments (NS&I).
7- Easy Money Stat The NS&I
manages around £72 billion in savings (some 10% of the UK savings market). This accounts for 17% of the UK’s national debt – in other words, a shed load of cash.
As funds from the NS&I are a relatively cheap source of government borrowing, the bank sets interest rates to attract savers and so the feeling on the street is that the Post Office is a safe and secure place to keep your money
8- NATIONAL SAVINGS PRODUCTS:
It’s like going to Footlocker and choosing a new pair of trainers... make the same choices when it comes to your cash because if you play the game right, you’ll be buying two pairs instead of one. For instance, NS&I offers a wide range of savings and investment products, such as tax free saving certificates, tax free savings accounts (ISAs), fixed rate, fixed term bonds and also income replacement bonds.
Most of these tend to be tax-free and income generating products – much more efficient things to do with your money than betting on Elvis or opening a shop selling chocolate-covered fish and chips. Because it’s a government gig, a unique selling point of NS&I products is a 100% guarantee by the Treasury for any deposits, savings or investments placed with
NS&I. So you’ll never have to worry with your cash disappearing in a puff of smoke, as you may do if you get your fingers burnt on the stock market. Bottom line – Gordon Brown says he’s got it locked up safe and who wouldn’t trust a politician?
The most popular of all the products is the premium bond. Introduced in 1957 they quickly became very popular. You can own up to £30,000 in Premium Bonds - currently sold in multiples of ten, with a value of £1 per bond and a minimum purchase of £100 bonds.