Understanding your finances

So much is written about our money, our economy, markets, productivity, wages, salaries, bankers, bonuses, riches and poverty – how do we wade through this quagmire of data to find the nuggets of information that can transform and help us in our everyday lives?
Who is right? Is anyone right?
In the midst of online arguments between such “greats” as Robert Kiyosaki of “Rich Dad, Poor Dad” and Suze Orman, a financial coach and author – criticizing one another’s approaches to money and finance; in the midst of countries like Iceland, Ireland and Greece being bankrupt to whole states in the US such as California and Michigan being on the verge of bankruptcy – what can you as the average person do?

Here are some simple rules of thumb which can help guide you through:

1. Don’t believe all you see and hear in the media. Most everyone has an agenda and you must analyse carefully the information they are giving. For example, recently, George Soros publicly announced that gold was in a bubble and was likely to fall in price soon. The minute he did this, the price of gold did fall and he was reported to have purchased a huge amount of gold at the cheaper price.
2. With any books you read, remember that no one person has all the answers, and what they are writing about – whilst it may appeal to the majority – may not be applicable or relevant to your personal situation.
3. Most of us don’t like change, but in the current economic climate, we need to be ready to turn on a dime. Governments around the world are bringing in new laws every week, laws are changing on taxes, employment…you need to stay abreast of these changes in order to be one step ahead of possible disaster.
4. Be conservative. Make sure you have planned for the worst. Ensure you have at least six months living expenses in cash, six months food and water stored up and some physical gold and silver. Pay off all your debts and only if you have some money left over after all this preparation, should you consider investing in more risky ventures such as stock markets or property. I have so many clients who want to be full time traders on the stock market. They seem to see it as a quick way to get rich. I see too many people losing more than they can afford and they unnecessarily put their families and homes in jeopardy. Best to play it safe. Life moves in cycles – as long as you are in tune with the cycle, then you can benefit from the changes. If you go against that trend, then you may end up in severe financial difficulties.