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Author Archives: Shilpa

The Money Machine 105 – Liabilities

Money liabilities

In my last post in this series, I talked about assets.  This post will cover the liabilities.  The assets are the things that have value and liabilities are the debts you owe.  I think most people understand this but here are some basic as well as more advanced concepts about it. Why Liabilities Are Bad Liabilities are the icebergs.  When things are going bad, liabilities make it worse.  Because, in most cases, you have committed to pay them even in the bad times.  If you were to lose your job, what are the payments you would have to keep paying?  And what are the assets that would keep paying you money in those hard times? So, what most liabilities represent is risk.  ...

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The Money Machine 104 – Assets

Money assets

Assets are probably the least understood part of financial statements.  Like I’ve mentioned before, I have a lot of education about finances and also work as a full time finance professional.  But even after all that technical education, I still did not have a fundamental common sense understanding of them. Firstly, standard, technical definitions of assets all orbit around the concept of how much an asset can be sold for.  The normal understand that most people have of them is that they are the big tangible things you own such as house, real estate, car, art work, tools, etc.  Both are correct …ish. The definition that I use is more nuanced than those.  I think that assets are on a scale between ...

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The Efficacy of an Emergency Fund

emergency fund

Can anyone predict what is going to happen tomorrow? Today’s merriment may end into a grave misfortune tomorrow. So what we need is to remain mentally prepared all the time. And a financial preparation for the unknown helps us to overcome the challenges in whatever form they may appear; job loss or a deadly disease in the family. This preparedness is provided by an emergency fund. Now what does an emergency fund actually mean? It is actually a monetary backup set aside for days that are an emergency. An emergency situation may arise in a number of ways and it is a situation when you need extra cash’s to come out of the fix. In theory, an emergency fund is built with ...

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Consider Savings Account for Your Kids?

Saving account

Gone are the days when a couple of dollars pocket-money would buy a bag of lollies, a lucky-dip at the toy shop and still leave some change to put in the piggy bank. Kids are growing up in a much more financially driven society where expenses are higher and money management is a survival skill. In order to equip their kids with the knowledge and skills they will need in order to lead a successful and secure life, many parents are now giving their kids a head start by teaching them about how to save their money from an early age. More and more mums and dads are opening up savings accounts with their banks for their child. But what are the ...

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