Financial Fundamentals Archives

Basic Statistics and Other Finance Terms

A brief explanation of various statistics used in finance and how to understand them.[lwptoc] Average, Mean, Median Average (Generic Term)The term "average" is a generic term that refers to a central value of a dataset. It is most often used interchangeably with "mean," but in broader terms, it can also refer to other measures of central tendency, such as the median and mode.There are several types of averages that can be used in finance and each has its strengths.Mean (Arithmetic Mean)The mean is a type of average, often called the arithmetic mean. The Mean is most likely what most people…

How Much You Should Have in an Emergency Fund

Imagine you walk into a party and you see two groups of people deep in conversation. The first group is in a spirited conversation about the latest financial trend or fad that could lead to massive profits. The second group is talking about how much to have in an emergency fund.Which group would you join?If I were to guess, most people would likely choose the first group. But let's be honest, how many times is there a group of people talking about their emergency fund outside of a Dave Ramsey course. Not many.Despite its lack of pizazz, an emergency fund…

29 Ways to Reduce Expenses without Reducing Lifestyle

Whenever a conversation about reducing expenses comes up, it inevitably leads to discussions around how many lattes you should drink, times you eat out per week, or other ways to reduce expenses by cutting costs. While that part of the conversation can have its place, the first place I like to start when reducing expenses are in those area's that don't impact your lifestyle one bit!Here is a list of 29 ways to reduce your expenses without reducing your lifestyle! Eliminating Junk Expenses 1. Stop Paying for Things You Don't Use! Take a look at each charge on your credit…

Using a HELOC as an Emergency Fund

Establishing an emergency fund is one of the fundamental steps in building a firm financial foundation. Emergency funds provide you with a buffer for when, not if, but when life throws a curveball your way. Traditionally, such funds are maintained in highly liquid assets, accessible at a moment's notice to cover unforeseen expenses or to provide a financial buffer in times of income disruption. Most emergency funds consist of a checking, savings, or money market fund and perhaps some cash on hand that is easily accessible.A question I often get is should you use equity in a home as an emergency…

How to Monitor Your Credit Score

Understanding your credit score is crucial for financial well-being. It plays a pivotal role in determining your ability to secure loans, credit cards, and favorable interest rates. Fortunately, checking your credit score has become easier than ever, and you can do it for free. In this guide, we will walk you through the process, providing information on contacting credit agencies, using reliable websites, and exploring alternative monitoring methods. The Three Credit Agencies There are three major credit reporting agencies in the United States: Equifax, Experian, and TransUnion. These agencies play a crucial role in the financial system by collecting and…

Budgeting Part 2: Income and Expenses

With the basic budgeting techniques covered in Part 1, we will now cover your income and expenses in more depth. In this article, I'll cover some common questions about each high-level category and provide tips on navigating, finding, and budgeting for each side of the equation. If you missed Part 1, check it out here: Budgeting Part 1: The Basics – Gilbert Wealth Determining Your Income This is the fun part - how much money you have coming in the door! Your income is the first step in developing a budget because it tells you how much you have to budget.…

Budgeting Part 1: The Basics

Knowing how to budget is essential skill for financial success. It is the first step towards understanding your overall financial picture and planning for your future. Unfortunately, budgeting can be intimidating and overwhelming due to the sheer number of methods and techniques that exist. In this introduction, I will break down the fundamentals of budgeting, discuss some popular approaches, and provide a summary of key takeaways. With a solid understanding of budgeting basics under your belt, you'll be ready to tackle any challenge that comes your way!If you need convincing that you should budget, check out the 8 Benefits of…

8 Benefits of Budgeting

Budgeting is simply tallying up your income and expenses to ensure you are living within your financial means. I rarely find someone who doesn’t have some positive or negative reaction to putting together a budget. When you hear the word budget, what words for feelings come to mind? Most people fall into two categories: those that cringe and those that get excited. Regardless of your feelings, a budget is important for people in any financial situation.For those who cringe, you might think of a budget as being restrictive, taking too much time, being too complicated, or not enjoying your hard-earned money. However,…