WHAT IS A CREDIT UNION?
A credit union is a financial cooperative organization, not for the sole purpose of making profit but to provide service for members.

WHAT IS THE DIFFERENCE BETWEEN CREDIT UNIONS AND OTHER FINANCIAL INSTITUTIONS?
A. The difference is in the structure. Other financial institutions are owned by stockholders who seek to profit from their investment in the organization. Credit unions are owned cooperatively by all of their members without regard to the amount of money that a member has in the credit unions.

B. Credit unions are directed by the volunteers from within the membership. Credit unions return profits to their members in the form of dividends, loans, rates, fees and services.

C. Credit union does business only with their members.

HOW DOES A CREDIT UNION OPERATE?
A credit union accepts deposits from its members and offers to them a range of financial services. Members elect a board of directors at their annual general meeting. The board in turn employs a general manager to manage the day-to-day operations of the credit union. Credit union members may be elected to serve on committees in the credit union.

HOW DOES A PERSON BENEFIT FROM BEING A CREDIT UNION MEMBER?
A. A credit union member is a co-owner of his credit union.

B. Each member has equal voting power (one vote), the same as all other members in the credit union, irrespective of the amount of his savings.

C. Each member has the power to exercise his/her democratic right in determining by whom and how his credit union is run.

D. A credit union member shares in any surplus that is earned annually.

E. Credit unions now offer a range of financial services, in some instances, the same as those available at other financial institutions.

F. Members can determine the type of financial services the credit union should provide.

G. Members are helped to save through the habit of thrift that is encouraged by credit unions.

H. Members can save directly and transact business at their credit unions through salary deduction facilities that are available at credit unions.

HOW CAN I FIND A CREDIT UNION TO JOIN?
Each credit union can serve only those people who are eligible for membership. You are eligible for membership in one or more credit unions based on where you or your family members live, work or worship. This is referred to as the common bond.

For more information, contact your nearest credit union.

Many women choose to ignore financial matters by getting someone else to do it for them or even worse, simply choose to do nothing. Ladies!!! Don’t get trapped in that old, self-limiting cycle. Here are 7 simple money tips that can help you manage your finances better.

Tip#1: Pay Yourself First
This means arranging in advance for an automatic salary deduction each month, with these funds bing channeled into the investment of your choice. The rationale: if you don’t have it, you can’t spend it. Practice dollar-cost averaging i.e. the technique of buying a fixed dollar amount of a particular investment on a regular schedule, regardless of the share price. More shares are purchased when prices are low, and fewer shares when prices are high.

Eventually the average cost per share of the security will become smaller and smaller. Dollar cost averaging lessens the risk of investing a large amount in a single investment at the wrong time.

Tip#2: You don’t need a lot of money to begin investing…
There are several different investment plans that you can start investing in, check your local Investment Companies, Commercial Banks, Merchant Banks, Building Societies, Mutual Fund Companies, Credit Unions, Insurance Companies and other investment agencies.

Tip#3: Choose a Licensed and Trusted Financial Planner
When deciding which financial planner to partner with, ask him or her some of the following questions:
What experience do you have? What are your qualifications? How much do you typically charge? Have you ever been publicly disciplined for any unlawful or unethical actions in your professional career? What is your approach to financial planning? Only after you have had this conversation and are comfortable with the responses should you sign on the dotted line.

Remember, you should only do business with a financial institution that has trusted and experienced financial advisors and with whom you can feel comfortable discussing your financial history.

Tip#4: Beware of how you manage your Credit…
Too often married women get left standing in the dust because they neglected to have savings accounts of their own!!……Then, suddenly they are single once again. The only thing in life that remains constant is change. In the event that life doesn’t go as planned, make certain that you are properly managing your credit cards by paying your monthly balances in full.

Also, be aware of the financial situation of your spouse. Understand that you may share responsibility for some of the debt.

Tip#5: Create a Rainy Day Savings Account…
The rule of thumb here is to keep preferably between 6-12 months of living expenses i.e. cash reserves in order to plan for a rainy day or to take advantage of any opportunities that may suddenly arise. When life’s challenges present themselves, be it loss of a job, the loss of a spouse or lifetime deal such as paying down on a home, you will be in a much better position to rise to the occasion.

If you don’t have the required amount saved, do not despair; remember that every successful person starts somewhere. Therefore, make a plan that will take you from where you are to where you want to be / ought to be.

Tip#6: Join or Start an Investment Club
If you are feeling stuck at the starting line, investment clubs are a good way to get started, as there is support in numbers. As part of an investment club, each club member contributes a certain amount each month to the investment club account. Then, using the funds collected, the club as a whole buys stock in particular companies. Over time, an investment club will acquire a “portfolio” of different stocks bought at different times. Members can be assigned various tasks such as researching specific companies and then reporting findings at the meetings of the investment club. The result: great friendships and exciting investment opportunities.
Also, consider investing in a mutual fund that is managed by a professional portfolio manager who pools all collected funds and invests in a variety of instruments. Get professional investment advice on the mutual funds that are most appropriate for you and your goals.

Tip#7: Get your Family in the Habit of Talking about Money & Keep Informed!!!
Talk about financial issues with your spouse and children. It is important to understand and appreciate the financial situation of your partner and ultimately that of your family. Ensure that the appropriate assets are held in joint names. A good understanding of the family’s financial situation on both sides can also help to build the relationship and improve both individual’s sense of security.

Good communication will also help in creating and implementing a successful financial plan. Also, by talking about money you will be able to teach your children the importance of saving and how to manage their finances at an early age.

Finally, it is very important to keep abreast of current affairs. Keep reading and educate yourself with the numerous resources that can be found in financial books, newspapers, and magazines and websites.

Some of us believe that finance is too difficult to understand. However we should all remember that all knowledge is good and can be used to improve our decision making. Keep informed and be committed to continued learning. This over time will contribute to the successful implementation of your financial plan.

Government education subsidies are reducing almost every year as a percentage of the full economic cost of the education. Student loans, which are increasingly difficult to come by, are challenging in terms of interest burdens and frequently still do not cover the student’s needs. By the time your child is nearing college or university age it is usually too late to begin making up for this shortfall. The planning process and commitment must be carried out in an informed, disciplined, and systematic manner

Why is it important to start right away?
Time is one of the most important advantages of investment planning. With the framework and discipline of education plans, you have the potential of realizing significant gains from seemingly minimal contributions. The power of compounding returns cannot be ignored. Consider the following scenario: Beginning when a child is newborn, Parent A invests $20,000 per year over a period of five years, and then stops. Parent B doesn’t start investing for the child’s education until it has reached the age of eight, but then invests $20,000 per year over the next ten years. Even though Parent B contributes twice as much as Parent A, when the child is ready for college or university Parent B’s investments will still not be worth as much as Parent A’s, and in fact they will never catch up. When the child is aged 18, the education savings will be worth $446,360 under Parent A’s plan, whereas Parent B’s will only be worth $350,400!

Taking of advantage of tax efficient instruments is of paramount importance as these investments will allow you to earn a better return on your investments over a longer period of time. These investments also encourage discipline and teach you to appreciate long term investments because of the benefits they afford.

Clearly, procrastinating can result in a costly price when it comes to planning for your child’s education. As the saying goes, time is money! You should also note that the more you or your child has to borrow for university or college is the power of compounding will work against you rather than for you.

Steps to consider in planning for your child’s education

Assessing your needs
Since the desired end result of every education savings plan is a stream of income that can adequately cover the costs your child will incur in obtaining his or her education, the first step is to estimate the outlays that you will have. You should consider tuition, books and other materials, and basic living costs. If the school to be attended is in another country, you should remember that travel costs might be substantial. You also have to consider devaluation of the Jamaican currency and you therefore need to protect your investments by investing in foreign currency instruments.

Understanding risk
When determining which financial instruments to incorporate into your investment plan, consider both the amount of risk involved and your own comfort level. Are you comfortable with taking calculated risks? Investing in stocks and mutual funds may serve you well. Or would you prefer a more moderate or low risk investment? Then you might want to consider bonds and money market instruments. Whatever financial vehicles you finally decided to put to work for you, bear in mind that experts generally recommend a balanced and diversified investment portfolio to mitigate against devaluation, inflation and risk.

Virtually all investments carry some level of risk. Even cash held in a savings account runs the risk of losing value due to inflation. Persons planning for their child’s education should consider that the younger the child is, and therefore the longer they have until college or university, is the more risk, relative to their own inherent tolerance that they can safely take on. This is more important in ensuring that the education fund is secured prior to the parents approaching pensionable age. This means that there will be more education funds available to the child along with higher returns due to the longer investment time period. This allows the parents to invest more and also benefit from the compounding effect of their investment. However, this also means they should be careful to consider reducing the risk level of their investments as the child gets closer to the tertiary level.

Investing
Once you have an idea of what you will need to provide for your child’s education, it is now time to explore your investment options and the options you choose will determine the expected returns. Your investment advisor will assist you in deciding how to allocate your investment dollar among the various options to achieve the highest possible return based on your risk appetite. Once the advisor has discussions with you with regards to your objectives, he or she will be able to recommend a diversified portfolio to assist you in attaining your objectives.

Ten tips to planning for your child’s education:

1. Save money as early as possible to help pay for your child’s tuition. Remember the power of compound interest and tax efficient products.

2. Encourage your child to make high school count, preparing academically for higher education. These years will determine what options and career paths are available later on. They may also determine whether your child qualifies for scholarships that would defray some of the costs of education.

3. Assist with honing your child’s skills and interests early in his development; introduce to him career options and the schools he may be interested in attending.

4. Meet with the high school guidance counselor to determine what schools match your child’s academic abilities.

5. Gather information about the schools your child may be interested in attending including information on available financial aid.

6. Assist your child in applying for admission at various and help him or her to manage expectations concerning acceptance into a particular school.
7. Explore scholarships, grants, bursaries and work-study programmes; complete any necessary applications or forms on time.

8. Consider education and/or student loans only after you have done the necessary research of all the sources of free financial aid. While a loan may be expensive, lack of education is even more expensive.

9. Research the loan programs available to you and your child which may include those offered by the Students Loan Bureau, loans by private lending institutions, commercial banks such as First Global Bank or credit unions, or loans offered by the school or organizations related to it.

10. Help your child to manage his or her student loan debt by deciding how much you and your child can afford to borrow and repay.

1. Carlos Slim Helu – telephone tycoon with a net worth of $53.5 billion
2. William Gates III (Bill Gates) – the man behind Microsoft; net worth – $53 billion
3. Warren Buffett – America’s favorite investor; net worth – $47 billion
4. Mukesh Ambani – owner of Reliance Industries, India’s most valuable company; net worth – $29 billion
5. Lakshmi Mittal – owner of ArcelorMittal, the world’s largest steelmaker; net worth – $28.7 billion
6. Lawrence Ellison – founder of software company, Oracle; net worth – $28 billion
7. Bernard Arnault – fashion icon, maker of Louis Vuitton fashion; net worth – $27.5 billion
8. Eike Batista – Brazilian owner of mining giant Companhia Vale do Rio Doce; net worth – $27 billion
9. Amancio Ortega – owner of the Inditex fashion empire; net worth – $25 billion
10. Karl Albrecht – owner of Aldi Sud, a dominant grocer in Germany and Europe; net worth – $23.5 billion

Or is it a situation where you overspent during the Christmas holidays and therefore, you’re in a financial rut, unable to find an open door? Well, don’t panic. There are ways to rid yourself of debt and start your financial plan for this year and the next decade. It is not too late. You must however be committed, persevering and relentless, as the accomplishment of your financial goals requires great sacrifice, especially in these harsh economic times.

Step 1: List Your Expenses: DO NOT BE AFRAID! This process requires you to be completely honest with yourself. Find somewhere quiet to sit and gather your thoughts.

• Go through the essentials: Food, shelter (mortgage / rent), electricity, water, clothes, basic school fees for children, transportation (and related costs such as car insurance, gas, toll, bus fare, taxis, etc.), loan payments (including credit cards) and your savings.
• Go through the “nice to haves” by evaluating your living costs: Consider taking in a boarder, can you save more money switching from a full-time helper to a part-time one? Lunch money, personal insurance, cable, entertainment, extra clothes, help in the home (helper/gardener), brand name consumer items and expensive vacations. Ask yourself these questions. Do I have to purchase lunch everyday, or can’t I just pack lunch and take to work? Do I have to take my clothes to the dry cleaner every two days, or can’t I just do it weekly or every two weeks? Asking these questions can help in reducing your expenses and manage your costs.

Step 2: DO NOT PANIC if your income is less than your expenses. Panicking does not solve problems. Focus your energies on finding a solution. You will be surprised at how many possibilities that may exist in the marketplace that is simple and cost-effective.

Step 3: Even if your income is less than your expenses – start to think creatively. For many of us, our food bill (supermarket / market / lunch money / entertainment) is our greatest bill. Can anything be cut?

• Do you buy food every Friday night? Can it be cut down to a once per month treat?
• Do you spend money for lunch everyday? Can you take lunch to work on some days?
• Does your family eat meat for dinner everyday? Can you consider callaloo / cabbage / pak choy once or more per week? You may also use these vegetables to “stretch” meat.
• Do you go to the hairdresser/manicurist every week? What about a massage? Can you do these things less often? If so, make a plan for how it will work and stick to it.
• Do you buy only “brand name” canned meat / bleach / washing soap / bath soap? Can you buy substitutes?
• Can you buy fruit / vegetables / ground provisions from the market instead of the supermarket? If you can’t go every week, can you go once per month?

Step 4: Remember that budgeting is not an “all or nothing exercise”. Consider ways of earning more. If your vacation currently consumes most of your time, it is practical to consider additional income? Can you consider reducing costs?

Step 5: Remember that you still have control. You can still choose what you want to cut and if you want to earn more instead. You don’t necessarily have to cut out everything so don’t give into depression or doubt or worry!

Step 6: Consider ways of saving on electricity and water. Unplug those appliances that you’re not using. Do not iron each day, save one day to iron and one way to wash. Turn lights off and use your air conditioning unit only when necessary.

Step 7: Set goals, short or long term. These goals should be well-defined and concise. Spend some time thinking about what it is that you need to achieve and then write them down. Create two categories for your goals, those that are short term and those that are long term. Goals can be simple, such as saving $5000 a month towards a down payment on a house, paying off the credit card bills in a year, with a $10,000 a month minimum or putting aside money for an early retirement.

Know your weak points and how they will affect the achievement of your goals. Save at least 3 months of basic living expenses. If you’re indisciplined try to have money to be deducted from your salary or income or bank account automatically (several employees provide these opportunities for their staff, banks also provide these types of automatic alternatives for their customers).

Be realistic by starting small. As soon as you develop the habit of saving, then you can increase your increments. Just remember to be consistent. As you work towards your goals, evaluate your progress monthly to ensure that you’re on target. Remember, there are possibilities to save such as:

• Automatic transfers to bank accounts
• Transfer to investment accounts
• Choices and purchases of financial products (diversification still essential) – make sure that you invest in different asset classes. There are a variety of options that persons can choose from such as Commercial Papers, Long Term Investment Accounts, Mutual Funds and Stocks, stockbroking, funds management, pension funds management and administration and structured financing services.

The bottom line is that there is a wide array of alternatives and possibilities but you need to sit and work out a personal plan to suit your lifestyle, tastes, goals, and financial situation. The good thing about saving is that the liquidity puts you in a position to take advantage of opportunities when they are at their lowest cost/price. You may be able to buy real estate that is being offered at a bargain, you may be able to take advantage of that super sale on a cruise/vacation, you may be able to supplement that education for your child when he/she is awarded a scholarship that doesn’t cover all costs (but the opportunity is priceless). The point is that liquidity affords you choices that are not available if you are financially unprepared. Throughout good times and bad times, everyone ought to save. Work out the math; are you now in a situation to save? A little is better than nothing and will grow over time. Keep focused, this is not the first financial crisis, if we got through the ‘70s, then we can get through this decade!!

1. Compare prices – the wise shopper compares prices as well as the quality of goods and services, BEFORE going ahead with a purchase.
2. Buy affordable brands – the same item may cost significantly less based on brand (yes, the same product is often rebranded and repackaged and sold at different prices). Don’t be a slave to brands; go ahead and shop around, be a smart shopper.
3. Car pool – this is an effective way to save on petrol, and by extension, save money.
4. Buy in bulk – grocery bills add up when you don’t shop in bulk. Places like Costco should be your friend.
5. Shop around for the best deals – visit those quaint tucked away stores on the side streets where you’re likely to find bargains that are unlikely to be available at the more prominent stores.
6. Force yourself to save – investigate investment and saving plan options which require compulsory monthly or weekly savings (for e.g. via salary deduction).
7. Ask yourself, “DO I REALLY NEED IT?” – when shopping for clothing, household appliances and personal effects, always ask yourself if the item being purchased is to satisfy a ‘need’ or a ‘want’.
8. Shop wisely – by items that are durable and will last; for e.g. clothing and household items.
9. Know your rights – when buying items, ensure that you’re getting a guarantee/warranty, check for servicing and the availability of spare parts. etc.
10. Demand a receipt – demand a receipt for each purchase, and keep that receipt for as long as possible … supposed you need to exchange or return it … you need the receipt. Money saved right there!

Your investment advisor can guide you to long term wealth creation, but the operative word is guide. They are simply a resource tool to help you reach where you want to go – to help you set realistic investment goals. Lets take a look at some of the questions investors should think about when deciding how to invest their funds – with the help of their financial advisor.

Investment Policy Statement

1. What are the real risks involved, especially in the short run?

2. What are the most likely emotional responses I will have if my investment loses value?

3. How knowledgeable am I about investments and the markets in general?

4. What other capital or income sources do I have?

5. How important is this particular investment to my overall financial position?

6. What, if any, legal or regulatory restrictions affect my investment needs?

7. What, if any, unanticipated fluctuations in portfolio value might affect my overall investment goals?

When you have the answer to these questions (preferably written down and filed with your investment advisor), the next step is to identify the investments that are right for your circumstances. Constructing an investment policy statement is part of the overall portfolio management process.

Step 1:
Create Investment policy Statement
Focus: Short term needs
Long term needs
Knowledge about investing
Expectations

Step 2:
Examine current and projected financial, economical, political and social conditions that will affect investments. (Your financial advisors’ research department can help you with this.)

Step 3:
Implement the plan by constructing the portfolio by meeting your needs with the minimum risk levels.

Step 4:
Monitor and update as the investor needs and environmental conditions dictate.

Remember, financial planning is a partnership between you and your financial advisor, with the ultimate responsibility in your hands. Are you serious about setting realistic investment goals?

Consider this … electric bills, car loan payments, rent, school fees, groceries; these are all immediate bills that must be paid NOW, in the present. If these are not dealt with the negative impact is immediate: lights off, additional interest on car payments or if really severe – you cannot register for school or there is no food to eat at home. The negative effects of not providing for these imminent bills are clear & present!

It’s not as obvious when the impact of an action is not immediately evident – for example, making your life insurance policy lapse. The effect of this is in the future and therefore does not appear to be as important, as the impact is not felt now!

This period of life requires planning today in order to reap benefits tomorrow. Retirement is typically defined as the point where an individual stops employment whether they are self-employed or employed to an organization. When this new stage of life (retirement) is attained there are a number of changes to which one has to become accustomed. Most important of all, is not receiving your regular stream of income, which you have had for the past 40 years of your working life! Effective Retirement Planning can provide the support you require for your retirement years.

But what is effective retirement planning? It is taking the necessary steps to sit with a financial advisor and ascertain the best way to effectively plan for what you want in your future. One of the simplest and most convenient ways of doing this is becoming a part of a pension plan. Pension plans offer significant tax-advantaged savings towards retirement.

If you are employed to a company, ensure that you are a part of the employer-sponsored pension plan and maximize your contributions to this fund. However, if you are self-employed or employed to a company that does not offer a pension plan, then you can become a plan member in an Individual Retirement Account.

It is time to take responsibility for our future and begin actively saving towards retirement. This benefit is no longer limited only to persons employed to an organization, as both self-employed individuals and persons employed to companies who do not offer a pension can now save in a structured pension plan. With the improvements to Approved Retirement Accounts, now being offered by financial institutions, these persons can now take advantage of the tax savings, which are an inherent feature in pension plans.

Retirement must be treated as an important aspect when planning your finances. The effects of not planning can have far reaching impact for both yourself and your family.

WHO NEEDS A BUSINESS PLAN?
Entrepreneurs Creditors
Team Members
Creditors
Investors
Bankers

WHAT IS YOUR BUSINESS PLAN?
The primary value of your business plan will to create a written outline that evaluates all aspects of the economic viability of your business venture including a description and analysis of your business prospects. Your business plan is the bible that guides your business. It gives detailed information on your business and helps you to work out and see problems well before they arrive.

WHAT ARE THE COMPONENTS OF THE BUSINESS PLAN?
Even if you do not personally write your business plan, it’s your business as seen through your eyes and you will need to supply the information that will be needed to be writer in that plan. Your business plan cannot be written without your input. This is a document that if you have the time you can write it yourself.

A business plan begins with a brief introduction of your project and how you know that your product will change lives and is different from your competitors, followed by an executive summary. This summary is written once the plan is completed, the summary is written once the plan is completed, the summary is the most important page in the plan because it will convince persons that have to read it that your business is worth considering. If the executive summary is not convincing chances are no one will want to read your business plan.

THE INDUSTRY ANALYSIS
The industry analysis is the second part of the business plan; this will detail what is happening in your industry. Here you look at the Geographic, Demographic, Psychographic and the Behaviour of the players in the industry, and to now articulate how your company can compete on differentials.

THE MARKETING PLAN
The marketing plan helps you to develop strategy to attain the goal you have for the business. Every aspect of your business plan must be detailed and this must have a realistic assessment of the external environment. The marketing plan is one of the factors used to determine the resources you will need to operate this business. This will also determine the ways you choose to promote and distribute your goods and service and will allow you to be very clear about how you handle your production, financials and human resources.

THE ORGANIZATIONAL PLAN
The organizational plan looks at the structure and design of the business, the management of the business that is designed to fit the business. It also looks at the staffing details, owners, and operators, full or part time staff, temporary staff, subcontractors, advisors, and consultants. This plan also looks at their educational background and what these people will bring to the growth of the business. You must state clearly the roll of each employee and then looking on the growth of the business, think of the employees you will need in the next two to five years.

THE PRODUCTION PLAN
This plan looks at the daily operations of the business, the equipment that will be needed, who will operate them, when they will need servicing. This area looks at the cost of the goods or service and how and when these will be presented to the customers. This plan can tell you what the company will need to do to make it survive it well into its future. The human resources will be affected by decisions made in the production plan. This will also determine the training needs.

THE FINANCIAL PLAN
The financial plan has three major components, the forecasted sales, the cash flow and the balance sheet. The forecast gives monthly figures of estimated collections that will determine how stable the business will become. The cash flow looks at estimated figures over a period of up to five years to determine how the bills will be paid. This is crucial because your business can fold if you are unable to pay your creditors. The balance sheet shows the financial condition of your business at specific periods of time. You might need an accountant to do this for you if you don’t have related accounting knowledge.

1. Take stock of your situation
   Make a list of how much you owe, rank these loans by interest rate, highest to lowest. Determine what assets were used to secure these loans, at what interest rate and for what period.
2. Get the best value out of your assets
   Use your available assets (home, car or savings) to secure lower interest rates and consolidate high cost debt.
3. Communicate and negotiate
   Keep the conversation going with the creditors. If you are likely to fall behind, let them know and work towards getting back on track with your payments. This may be the time to renegotiate your payment terms to better match your income.
4. Live within your means
   Getting out of debt is harder than getting in. Take the time to budget and manage your expenses every month. Use your credit card sparingly and pay off your balances on time and in full every month.