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The Proper Way of Allocating Your Finances

Following rules of thumb can guide you for making sensible decisions, especially on the financial matters. There are literally countless of financial rules that you can find today and all of which are aiming to grow your finances and at the same time, to keep you on track. While we all have different situations in life, knowing and following these “rules of thumb” can be of help.

So right before you use the financial services offered by https://mycaraccidentcashadvance.com/, better take these things into account.

If you are serious to turn your life over and have peace of mind on your finances, then make sure to read the entire thing.

Budgeting 101

On the subject of budgeting, there are many households that are having a hard time on how they can successfully pull it off.

As a matter of fact, there is this 50/30/20 rule that is used by financial experts. Whether you believe it or not, this is quite a popular rule when it comes to breaking down your budget.

The 50/30/20 rule means allocating a portion of your money into the following:

·         50% – this means that your income should go to the necessities such as utility bills and mortgage

·         20% – for this one, it needs to go directly to your financial goals such as saving for your retirement or paying off debt and;

·         30% – simply, this indicates that 30 percent of your income has to be allocated to your “wants” which include entertainment or dining

There’s also another variation to this rule such as the 80-20 rule wherein you put 20 percent of your income for all your financial goals while the remaining 80 percent should be spent on everything else.

Why this is Effective?

Are you unsure how to start figuring out your budget? Well then, breaking it up following these categories can help big time. Following those percentages will help in striking balance among your leisure, goals and responsibilities.

When not Apply it?                                                               

On the other hand, you may be in trouble using such principle if you are having a hard time in separating your wants and need. Living in low-cost area? Then putting 50% of your money to bills and housing may be too much. If you are not earning that much, then you may not even have the luxury of spending half of your income towards necessities.

Regardless, having these rules of thumb is a nice start for your spending.

 

 

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Capital and credit for entrepreneurs

As a self-employed person, you may need credit at different times.

  • At the start of your business, you may need starting capital for the purchase of material, a car, IT equipment …
  • As your business grows and opportunities arise, you may want to invest more in the future of your business.
  • Sometimes it may also happen that you have a financial setback and that you have to bridge a difficult period.

Financial Wisdom For Entrepreneurs

Borrow from the bank

In addition to a founding capital, which you need to set up a certain legal form such as a private limited company or a company, you can borrow an amount from the bank that you use as starting capital, for example, to buy material with. The banks have different credit formulas for starting entrepreneurs.

To be eligible for a loan, most banks ask you to submit a detailed business plan. You will also need a certain amount of own resources that you can invest in your business. You can also apply for loans even through guarantors.

Help from family, friends or acquaintances

If you do not have sufficient resources of your own to get a loan, you may be able to appeal to family, friends or acquaintances. Maybe you can involve people from your area, the so-called ‘Family, Friends & Fools’, in your project. This can be done, for example, by making them a co-shareholder: in this way, they become the co-owner of your company and contribute to their own capital contribution.

Another possibility is that they lend you an amount, which increases your own capital contribution. The government stimulates such loans and gives them a tax reduction through the ‘Win-win loan’ system.

Venture capital

The bank may not give you a loan because the risk is too high and there are not enough guarantees. This is possible, for example, if you start with a highly innovative or risky company.

In such a case, you can look for venture capital. The brochure “You are looking for venture capital?” from the Agency for Innovation and Entrepreneurship gives you an overview of the risk capital offer in Flanders.

You can also turn to the government for help. This assistance can take the form of capital participation (shares), a guarantee or a loan.

Help from the government

The government helps starting entrepreneurs with subsidies and support measures. You can find an overview of all subsidies and support measures in the Grant Database of the Agency for Innovation and Entrepreneurship. Through the SME portfolio, the Flemish government offers support to small and medium-sized companies that want to invest in training, advice, knowledge and international business.

The government also offers support by offering affordable loans. As such, it is easier for entrepreneurs to obtain other financings with such cheap loans.

There are also municipalities and cities that try to promote entrepreneurship with subsidies. It is worth checking whether your municipality does that too.

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