Fist of all, I recommend you to read our fine article related to this post here… So basically the principal of saving is no more different then the saving guides and habits of a 3 year old kid saving guide.

So what I’m trying to say is the general guides of saving has never change, and here is the 3 yr old kids saving guides that will work well for adults too:

• Set a clear, tangible goal for savings.

Yes, this is exactly what you have to know when you start saving: What are you saving for? My suggestion is that you should know exactly what you’re saving for and keep it in mind. Figure out the exact dollar amount you need to reach. Know what the reward is for reaching that dollar amount. The more tangible your goal is, the easier it is to reach for it.

• Set up milestones along the way so you can see progress.

Take your time. If you want to collect $10,000 then you should transform your way of thinking a bit. It is a lot easier to look at it this way: set the goal into $100 a month. With that little goal each month, you can reach your big goal in a bit less than eight years. Then push yourself just to reach that little goal each month – or to exceed it!

• Keep the savings in your mind.

Put up reminders of your goals in places where they’ll have impact for you. Wrap a picture of your kids or your dream house around your credit cards. Write the dollar amount on a Post-It note and keep it on the bottom of your rear view mirror. Keep that goal in your mind and you’ll stay focused on it.

So basically that is the adult version of 3 yr old kid’s saving guides. What do you think? share your comments under

It is time for another family finance guides, guys If there’s a new family member in your house, you can bet that in his/her three year’s anniversary your beloved son/daughter will gather quite a few dollar bills from other family members or relatives for events like anniversary or Christmas.

Some of us chose to allow our kids to spend the money immediately for some low-cost toys/food such as hot wheels or something. It’s a simple lesson we teach to our son that money is something that can be exchange for goods and services.

Although I do agree with that statement, I prefer to teach my son/daughter on how to save some of them. Why? Because he once asked for a more expensive toy and if he keeps spending the money the way he is now, he won’t be able to buy the toy with his own money…

Here’s an easy example: You take your son (with 2 dollars with him) to the store, and instead of wanting a 2 dollar toy, he prefer the $7.99 toy.

So here’s how I will deal with it:

I will tell him: “the toy costs eight dollars. You only have two dollars. You don’t have enough dollars to buy that toy.” We will work through the counting using our fingers so that he understood that he needed six more dollars.

That won’t shake his interest in the toy, however. I bet that he still wants it.

Then explain to your child that if he/she doesn’t spend the dollars he has today, we can take them home and then we wait for another 6 dollars and then we buy the toy. It will take some more explanations, but do not give up yet

In your home, prepare a jar lid to store your beloved son/daughter’s money. Transparent jar lid would be better Hopefully, your son has been able to add some money to the jar – he can clearly see his savings as it builds up. He knows what it’s for and he’s excited to contribute to it whenever he can.

To put it simply, saving money has now become relevant and exciting for him. It’s very tangible – he can see his savings grow. He also has a goal that’s small enough that it seems reachable – he only needs to save up to $8, after all.

So what’s next? The near future points us to our child’s next lesson: how do you earn money? That will be a whole new adventure.

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Now after we talked about managing psychological risk in trading, now I will give you another key in trading, which is to know when NOT to trade.

Sometimes traders loose control because it is too hard to make some money, leading to overtrading. Mostly, this can be caused by the market condition changes, which is a challenge to adapt to. So as I told you in the previous post, the particular trader tends to trade for psychological reasons, not for logical reasons. There’s a big chance that this trader can reduce their own win rate, for example from 55% to 45% when overtrading.

So here’s the key: traders should limit their daily losses, and take some time out. Without limits on daily losses and a process for taking a time out, that trader can blow up in a short amount of time.

Let’s start to talk about the changes of the market, shall we? Market conditions change periodically, one’s edge in trading is never fixed. We go through periods of greater or lesser edge. For that reason, a central skill to long-term success is recognizing when your edge is eroding and pulling back from risk taking.

Now the example part. In the 2005 and 2006, there were low volatility and traders who did not adapt to those conditions and reduce their profit expectations (per trade, as well as per week and per year) fell down before the better condition in 2007 and 2008. Another example is the technology boom in the late 1990s. Many daytraders who were successful that time failed after early 2000 and lost their money and their trading careers.

The takeaway message is that successful traders are always students of markets, always learning, and always adapting. They have periods of feast and famine, and they learn to keep themselves afloat during the lean times so that they can participate when things get better. In that context, learning when to not trade is a crucial component of trading success.

Hope this help and please do leave some comments to let me know what you think

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Credit cards. I know that almost everyone these days have at least one credit card. However, choosing the right credit card for you could be quite troublesome, since there are so many credit cards providers these days that offers various services and plan. However, the most important thing in choosing a credit card is realizing your repayment habits. So basically there are three types of credit card users:

• The Loan Racker

Usually this type of user rarely use their credit card, however, sometimes they make a big purchase and plan to pay in bits over months until the payment is complete. The loan racker is someone who uses his/her credit card primarily to finance a big purchase. This person should look for a low-interest rate credit card. Low interest rate cards will help this person avoid a high cumulative debt, and will avoid messing up their credit score.

• The Card Swinger

Every now and then you hear about applying for a card which gives you a 0% interest for the first few months. The Card Swinger applies for numerous of these cards every few months, and makes a big purchase on his/her first card. The card swinger than pays off the debt in monthly payments, from one 0% card to next, until he/she has paid off the debt without achieving any interest.

• The Spender

The spender uses his/her credit card for everything. They avoid using a debit card, they enjoy swiping their credit card and signing a receipt over pushing in a pin code. The spender also uses his/her credit card very frequently. They use it for clothes, entertainment, gas, food, bar nights, gummy bears, ANYTHING! The spender also pays off his/her credit card bill in full every month, and does not often pay interest charges because he/she does not accumulate any. This kind of person should get a credit card which offers some sort of points system. In college, I ran a website where people from all local colleges would join, and I was making a significant amount of money for a college student and I was a big spender. My bank offered an air miles credit card. I also received many student points such as discounts on train tickets, discounts at various fast-food and clothing stores. This type of card is perfect for the spender.

Whatever type of card user you are, make sure that your card suits your habits. Don’t settle for the first credit card you see, shop around and look for one that will benefit you the most!

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It is time for another guide in trading So for all of you who are new or unfamiliar with trading world, the key of trading is actually the management of risks. In the trading world, you will be faced with many type of risks, which you have to manage.

Many folks always think trading only related to counting and numbers, however, there is one important risk that all of us must manage to achieve optimal result in trading. That risk is the psychological risk embedded in trading. In this post we will reveal four type of psychological risk in trading, and at the end of the post you can download and read the full explanation about psychological risk in trading

So let’s just start it, shall we? Here are the list of possible psychological risk you might find in stock trading (or many other kinds of trading):

• The risk of boredom – Many traders are attracted to trading because of the possibility of large P/L moves in a relatively short period of time.  Our sound trading method offers little such excitement.  Indeed, there are long periods of relatively flat performance.  If the trader is trading for needs other than profitability (excitement, quick riches), he or she is apt to abandon the method after months of treading water.
• The risk of drawdown – Many traders equate a trading edge with a smooth equity curve.  Not so!  As we mentioned in the earlier article, even a method with a 60/40 win/loss ratio will experience a series of four losing trades 2-3 times on average per 100 trades.  In the case of our random order of wins and losses, we wound up with months of drawdown, albeit modest.  The trader who equates drawdown with failure will abandon even a good method.
• The risk of drawup – We made up that term, in case you wondered, but you get the point.  If drawdown is the amount your portfolio loses value in a period of time, drawup is the amount your portfolio rises.  In a relatively short period, we had a series of winners early in the year, putting the portfolio up 20%.  A method with 60% winners has about a 13% chance of giving you streaks of four consecutive wins.  Why is this a risk?  After a big drawup, many traders become overconfident and change their position sizing and trading frequency, negating their edge.  Their expectations raised, they find it harder to get through the inevitable periods of flat performance.
• The risk of sequencing – Quite simply, even with a demonstrated edge and prudent loss limits, we cannot know in advance the sequencing of our winners and losers.  The account is up handsomely for the year, but spent just as much time treading water as rising.  Much of the method’s gains were obtained in a relatively short period of time–but we can’t know what that precise time is going to be. That means we have to endure down sequences and flat ones in order to get to the winning periods.

As promised, you can download the free managing psychological risk in trading e-book here

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Yes. Maybe that’s the answer from many people. While there are numbers of personal finance articles that recommend us to save some money by skipping our cup of coffee or a simple brown bag lunch or see a movie, some of us might not understand yet why should you bother to skip those things that “contribute” to your quality of life.

Some of us might still think that if we arrange our life so that major expenses are not consuming all of our income and then some, we can actually eat lunch out once awhile, buy that cup of coffee, or see a movie. Quality of life goes up dramatically. At that point, if you want to save on little things also, it becomes a choice, rather than a constant necessity just to survive.

But wait a minute. In my opinion there’s one thing that need to be considered from the story above. Some of us tend to immediately tie events that involve spending excess money (”eat lunch out once awhile, buy that cup of coffee, or see a movie”) to quality of life. In other words, the ability to participate in a consumer economy is directly tied to quality of life in this quote.

I know that, for a very long time, I felt that way, too. I felt like my life was better if I had the freedom to go out to eat whenever I wanted, buy a video game whenever I wanted, or go out to a movie whenever I felt like it.

Today, I feel differently. While I might enjoy the experience, I no longer feel like a meal eaten out raises my quality of life at all. Instead, the things that bring what I would call “quality” into my life are experiences with my family. A quality experience is eating a homemade dinner with my children at the dining room table. A quality experience is a nap on a lazy Sunday afternoon curled up next to my wife. A quality experience is a picnic at the park or watching my son’s soccer practice.

I believe that tying quality of life to consumer purchases is a personal, conscious decision – one that often results in financial trouble. If you judge your quality of life by the things that you purchase, then you feel worse when you spend less and feel better when you spend more. This situation runs entirely contrary to healthy personal finance management.

A financially healthy mindset, in my opinion, derives quality of life from things that can’t be bought. The source of that quality can vary greatly from person to person, of course, but the real key is that your quality moments in life are wholly unconnected to spending money.

Not there yet? Look for the things in your life that fill you with joy that don’t involve spending money, then work on putting those things front and center. Once you find sources of quality that are separate from spending money, it becomes much easier to cut your spending drastically – and doing that can provide the foundation for a great future.

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It is common for us to spend some time reviewing our personal finance situation once a month. We usually get our current balances on all our debts and assets examined and included carefully and then we do other bunch of things to measure and determine our financial standing in this world.
We usually call the difference between my assets and my debts at the end of the month as our net worth, but guess what? That is NOT our net worth really is…

For many people, net worth simple definition is the sum of one’s assets minus one’s debts is a good financial indicator, but it’s far from what I would call “net worth.”

As I take a look down my list of assets, I see things like our home, our savings and checking account balances, our retirement accounts, and so on.
But are those really all of our assets?

I view our close family and friends as major assets. These people help lift us up through thick and thin. They provide great friendship and social situations when times are good, and are there for encouragement (and more tangible help) when times are bad. Certainly, they’re an asset in our lives.
I look at our health as an asset. We’re all in good health. My wife and I are able to earn money because of our good health.

There are many other things in my life that are assets, too, that don’t show up on a balance sheet: our extended social network, the body of knowledge and education that my wife and I can draw on, our talents – these are all assets that can’t be truly quantified, but they all contribute significant value to our lives.

The same type of thinking continues as I move down to the debt part of the balance sheet.

I’m indebted to a lot of people for things they’ve helped me with in life. If called, I would gladly help any of those people with virtually anything they asked for.

I feel a great deal of spiritual indebtedness to the people and things in the world around me. I feel as though it is my responsibility to do what I can to make the world a better place.

I owe quite a bit of time to various groups and responsibilities – and, as you know, time is money.

To put it simply, my real net worth is more than just a sum of financial assets and debts. Compared to the wholeness and beauty of life, one’s financial net worth is just the beginning.

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As you might have known, President Obama wants the direct student loan program to be established as the one and only provider of federal student loans. It seems that the Federal Family Education Loan Program has the same opinion with Obama and the support have been raised.

According to a report from USA Today, the popularity of the Direct Loan Program have increased significantly, it can be seen from the 50% increased number of college and universities that are originating loans through the Direct Loan Program.

Moreover, there are 1,600 schools that are offering direct loans, up from 548 schools in 2007, according to the Department of Education, while the number of schools offering FFELP loans fell by 3.6 percent during the same time period.

Currently, students are able to get federal student loans from one of two government programs: the Federal Family Education Loan Program, through which students borrow money from private third- party lenders that are subsidized by the government, or the Direct Loan Program, through which families borrow money directly from the Department of Education.

Direct Loan Program: The Future of Federal Student Loans

However, President Obama recently announced a plan that would eliminate the proven 44-year-old FFEL program, which is responsible for making three out of every four federal student loans. The move would transform the Direct Loan Program from a minority player in the student loan industry to the nation’s only originator of federal student loans.

The president’s plan could reduce the government’s student loan costs and save the government $4 billion, Obama administration officials suggest.

Critics of the president’s proposal — which include private student loan lenders — contest the government’s $4 billion savings estimate and fear that the Department of Education won’t be able to handle the surge in loan volume that would occur if the Direct Lending Program became the only originator of federal student loans. Families could be forced to endure poor customer service from an overburdened system, and could encounter difficulties in getting the funds they need for school, critics say.

Besides excellent customer service and a long-running track record of success, private lenders have another advantage over direct lending, says Barry Feierstein, executive vice president of Sallie Mae.

“Private lender and loan guarantors have a system to help borrowers avoid defaulting on their loans,” he says. “That level of outreach doesn’t exist in the federal direct loan program.”

So what do you think about the new financial aid scheme for students?

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I’m sure all of you American students out there know the Free Application for Federal Student Assistance (FAFSA). Now you might be interested with the calculation of financial aid based on the information done by the college you will be attending.

To be honest, each school has their own way of process. However, they share the same basic method of calculating students’ financial aid. Therefore, the more you understand about the process, the more comfortable you will feel with the timeline.

Information Received

So usually within 1-3 weeks the college will receive the information from the FAFSA. So after the information arrived, the college may actually contact you and ask you to provide additional documents or information that may not have been included with the FAFSA application. In order to make certain the process goes as smoothly and as quickly as possible, it is important for you to respond to these requests right away. Once the college receives all of the necessary information, it will review the information in order to determine the type of financial aid you can receive from the college.

Determining Your Need

If you are a student who is still living with your parents, your financial aid will be determined based upon how much your parents should be reasonably expected to contribute as well as how much you would be expected to contribute toward your college expenses. After subtracting this amount from the amount of the tuition and fees, the college can then determine the maximum amount of financial aid you can receive. This is not the amount of the financial aid package you will receive, however, as the outside aid you receive such as assistance from the Federal Pell Grant, scholarships and other grants will be deducted before the school determines the amount of financial aid it is willing to provide.

Helping with Expenses

The college you are interested in attending may provide you with a variety of different ways to help you pay for your college expenses. For example, you may qualify for a scholarship or a grant from the college. Or, you may be able to participate in a work-study program that will help you with off-setting the cost of attending the college. As such, the financial aid package you receive may actually be a combination of loans, grants, fellowships, work-study and scholarships that, when used together, will help you pay your college expenses and finally earn the degree you have been dreaming of getting.

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As you might’ve known, the college education fee is pretty expensive. In fact, two-thirds of 4-year undergraduate students have graduated with debt (2003 NPSAS report). As all of us predicted, the number is steadily increases each year. So bottom line is: almost all students need financial aid.

However, many students are complaining the tricky process of getting the financial aid. But it doesn’t have to be like that, you know? There are lots of available grants, scholarships, and loans out there, just waiting to be used.

Unlike scholarships and grants, a loan is borrowed money hat must be paid back with interest. Think carefully about how much money you need to borrow before you take out a loan…eventually, you will have to pay it all back!

Federal loans are one of the more popular options for college students because almost everyone is eligible to receive one! The U.S. department of education offers two types of federal loans:

• Stafford Loans – are for undergraduates, graduate, and professional students. The best part about Stafford Loans is that you don’t necessarily have to be in dire need of financial aid in order to qualify. In the case of Stafford Loans, the lender is typically a bank or credit union that works through the U.S. Department of Education.
• Federal Perkins Loans – are offered to students who demonstrate the greatest financial need. When you accept a Perkins Loan, the lender is your school. Therefore, the amount of aid that you receive depends on the availability of funds at your school and other scholarships that you might be getting. Undergraduates can receive as much as $20,000 in Perkins Loans, while graduate students can receive a maximum of $40,000. Another added benefit is that the government will pay your interest on the loan as long as you’re in school!

If these options sound confusing to you, don’t worry! When you accept a federal loan, you can combine several different types of federal loans into one easy-to-read payment plan. Known as Consolidation Loans, this option makes repaying your loans so much easier!

You are probably wondering what the process is for taking out a loan. If you’re applying for a federal loan, you need to check out the Free Application for Federal Student Aid (otherwise known as the FAFSA). This little form is used for all government lending programs, and oversees roughly $500 billion in student loans!

If you’re worried about skyrocketing interest rates, there is hope for student borrowers! The government has set a standard maximum interest rate for student loans, so you won’t be charged any additional fees. In fact, lenders often compete over who is offering the lowest interest rate to attract more borrowers.

Never be afraid to ask for help! There are lots of resources out there for students looking to take out educational loans. College can be affordable to EVERYONE.

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