Archive | April, 2010

Savings: The Holy Grail of Finance

by admin on 06. Apr, 2010 in Savings

When I was studying finance at the university, a lecturer of mine explained about savings and how they can change a person’s or a company’s finance completely. The only way you can enhance your financial state is by investing on productive businesses and investment opportunities, and the only way you can invest is by saving some money; get the point? This is exactly why you should always save a portion of your income.

At this point, you might start to complain about how hard it is to save some money with so many expenses to cope with and so little income to manage. This is actually not true; you can save a portion of your income in any condition. The key is to save the money right after you get your income and not at the end of the month after you deal with all expenses.

As soon as you receive your paycheck, take out a portion of your income and put it in separate account. The size of your savings may vary, but you should be consistent and do it each month. Start with saving 10% of your income, and gradually increase the portion until you can save at least 30%.

Assuming you have 10% of your income saved, you still have 90% of it to cover expenses, right? Adjust your monthly budget accordingly, eliminate unneeded expenses, and you will be able to still get everything you need with less monthly budget. After a year, you will have 120% of your income saved; can you imagine the size of that savings after 10 years?

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Individual and Business Insolvency

by admin on 06. Apr, 2010 in Tips

R3 is the major trade body for insolvency practitioners in the UK. One of its important tasks is to provide up to date information on the state of insolvency in the UK along with related matters. It announced in late March 2010 that more than a quarter of SMEs (Small to Medium Enterprises) in the UK anticipate that should the economy again enter recession, that is the so-called double dip recession, they are in severe danger of becoming insolvent. The reason is that these companies have only just managed to stay afloat during the recession and have exhausted all their resources in doing so. There is nothing left that will save them for a second time.

This is not uniform throughout the economy and some types of business are suffering more than others. The worst sector is the catering business where 47% of businesses are facing imminent insolvency. Interestingly, despite the reputation of the manufacturing sector in the UK, this is the sector that is performing best. Only 19% of small manufacturing companies are in danger of insolvency.

In the UK, 97% of businesses employ less than 20 people and employ over 12 million workers, which accounts for 58% of people working in the private sector. If a quarter of these companies really do fail and become insolvent, then up to 3 million people are in danger of losing their jobs.

Job loss is one of the major contributors to individual insolvency and, should the economy take another nose-dive as well it might do if the predicted hung parliament becomes a matter of fact, then a great many individuals along with business owners will need to face up to the stark realities of becoming insolvent. In many circumstances the best way of dealing with insolvency is through an IVA or Individual Voluntary Arrangement. IVAs are applicable to both individuals and businesses. IVA Advice and insolvency in general can be found at the IVA Advisory Centre.

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