Photo: JypsyQ

Access to financial advice seems to be everywhere, Internet, magazines, TV, etc, but how do we get the best financial advice around while avoiding falling into the traps of an unscrupulous advisor? Let’s start by explaining what a financial planner does. A financial planner is an investment professional who evaluates the personal finances of an individual on short-term and long-term financial goals. Unlike specialists such as lawyers or tax preparers, a financial planner will analyze your entire financial picture such as taxes, investments, insurance, education goals, housing goals and retirement. Start your research by looking into self-regulatory organizations such as the Certified Financial Planner Board of Standards, here you can find board certified and recognized financial planners. If you are interested in planners who also sell insurance products, you can visit www.naic.org which is The National Association of Insurance Commissioners. The FINRA, Financial Industry Regulatory Authority is the largest independent regulator of securities brokers. Their website, www.finra.org offers a broker check tool where you can look up the professional background of a securities firm or broker. The information made available through BrokerCheck comes from the Central Registration Depository online registration and licensing database. It lists background professional information on about 660,000 currently registered brokers, 5,100 registered securities firms and thousands of previously registered firms and brokers.

There are a few questions you can ask planners when you are searching for the right one. For example, ask what kind of education, formal training or credentials they have, what licenses they hold and if they are registered with the Securities Exchange Commission (SEC), the state or the Financial Industry Regulatory Authority (FINRA).  According to the SEC, an advisor that manages $25 million or more of client assets must be registered with the SEC and if they manage less than that, they must register with the state securities agency in the state where the business is located. Ask how long they’ve been practicing or whether they are licensed as an investment or life insurance broker. Depending on the type of advice you are looking for, knowing what financial products they are licensed in, will help you decide whom to choose. You can also ask them for references of some of the clients they have advised. Ask how they are compensated, if and how they earn commissions and by who. Another important question to ask is if they will be responsible for evaluating and updating your plan on a regular basis or if others will be involved such as other partners in the firm. Asking these and other questions in advance will help you narrow down the advisor you want to work on your financial plan and who you feel most comfortable with.

There are four ways financial planners earn their fees. Commission only planners make their money by the investment or insurance products they sell their clients. So the plan they outline for you is free, but any products you sign up for will cost you. A fee-based planner or broker charge upfront fees for services provided and a commission for securities traded or insurance products purchased by you. Fee-offset planners charge an annual or hourly fee, however if you buy any financial products from them, the commission earned on these products will be reduced from the fee. Fee-only planners charge only based on the services they offer. Their fees could be based on a percentage of the client’s annual assets or on a per-hour rate. These planners do not sell financial products and earn no commissions.

When looking for a planner, you can look at some of the professional organizations mentioned earlier or others like the Chartered Financial Consultant (ChFC , (PFS) Personal Financial Specialist, Accredited Financial Counselor (AFC) http://www.afcpe.org or Registered Investment Advisor (RIA). It’s important to do thorough research when selecting a financial advisor. The research will pay off when in 10 or 20 years we see our lifelong savings are intact and growing.

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roland

Peter Griffin is the latest in a long line of stereotypical television dads: dense, crass, jealous, impulsive, eager to drink and constantly living in the past. It would be easy to ignore anything this man had to teach us about money, or anything else we value, for that matter. But perhaps to think this way would be oversimplifying. After all, it was the sophisticated, smooth-talking financial “experts” who kept us all in a lather while the economy was secretly imploding. In light of their failures, maybe the unpretentious straight-talk of an true American family man is just what our wallets need, once again, largely in the form of, “do the complete opposite of this guy:”

Value Based Shopping

Peter: I hope this isn’t a ripoff like that breakfast machine I bought.
(Cut to Peter in his kitchen activating his breakfast machine. A ball rolls activating a series of devices soon reaching a balloon attached to a string attached to a gun. This pulls the trigger and shoots Peter right in the arm.)
Peter: AAAAHH!! WHAT WAS THE POINT OF ALL THAT?! THIS JUST SHOOTS YOU IN THE ARM! IT DOESN’T MAKE BREAKFAST AT ALL!

Cash is scarce in a recession, and many of us exacerbate the problem by spending what we do have on inferior or unnecessary products. The road to recovery begins here. Whether you are being targeted by a fast-talking salesman or feeling the tug of your own whims, it’s time to institute a new policy: don’t buy something you do not need.  Simply purchasing something because you see it in a store and it “looks cool,” might sound hilarious at first but that can turn to mild depression upon receipt of your credit card statement. Discipline yourself and scrutinize every purchase beyond the bare necessities. Find customer reviews by people that have used products you’re interested, and you can learn from their disappointment rather than your own.

Peter: I’ll give you $40 for that coffin.
Store Owner: Sir, this casket is $1,000.
Peter: I’ll give you $2,000.
Store Owner: Sir, that’s double what it costs.
Peter: $60.
Brian (to the store owner): He doesn’t know how to haggle.

But what if there’s something you really do need – say, a new car? In situations such as this, negotiation is key. You wont get very far using a bone-headed haggling strategy like Peter’s. To shave every last dollar off your final purchase price, you will need to arm yourself with pertinent information prior to arriving at the dealership. The sticker price is not enough. To achieve real savings, you need to know the invoice price, which is what the dealer pays Ford or Chevy for the car. Between the sticker price and the invoice price is your room to negotiate. (It also helps to tell the salesman that you are fully aware of the invoice price and what it represents at the start of negotiations.)

Wise Credit Use

(At a lemonade stand)
Girl: I can’t take a credit card sir. I need real money.
Peter: Oh yeah? Whatcha sellin’? Meth, ex, crack, dust, coke, block, crystal? IN MY NEIGHBORHOOD? I DON’T THINK SO!

Most people would not seriously try to buy lemonade from a little girl with their credit cards, but it’s not too far off from reality (i.e., @ Starbucks, Jamba Juice, etc.). Today, credit cards are used for more purchases than ever, and a 2008 study revealed that we actually tend to spend more when paying with credit than cash. According to a recent report by LiveScience.com, researchers concluded that, “…less transparent payment forms such as credit cards tend to be treated like play money and are hence more easily spent or parted with.”

[Peter has bought a sexy version of a relationship tape]

Lois: $49.95? Are you sure we can afford this?
Peter: Lois, our relationship can not be measured in nipples and dimes … nickels and boobs … money.
[runs off]

In addition to making you likely to spend more, credit cards also make it easier to buy impulse items. While the wisdom of buying adult-related content is not for us to decide, this is something all budget-conscious consumers must be mindful of. Anyone serious about intelligent credit card use should take steps to restrain these tendencies, such as only carrying cards when needed or lowering the limits on cards you do carry. In short, only use cards in emergencies or when it really makes sense.

Competitiveness

Brian: Face it Peter, you get competitive about everything.
Peter: I am so not competitive. In fact, I am the least non-competitive. So I win.

Interestingly, this is one aspect of money management wherein Peter has it exactly right. Prosperous economies mask our shortcomings with the “flab” of easy profits and raises. Simply showing up is often enough to preserve your standing in the eyes of bosses or customers. But this is nothing more than a security blanket stripped away in recession. With businesses and consumers cutting costs and scrutinizing spending like never before, continued prosperity demands that you out-compete others. Whether it’s delivering a superior product or accomplishing more in each day’s work, the key is to be seen as doing better than everyone else around you.

Retirement Planning

“Peter: My dad worked at that factory for sixty years. That’s almost eighty years.”

Peter’s liberties with numbers notwithstanding, sixty years is roughly how long the average person works. Unfortunately, many of us do not make retirement the priority that it should be. Increasingly, people do not have enough put away to retire at 65, what was once-considered the normal age of retirement. This is due to either (or a combination of) poor planning, and bad management and working for the wrong employer. In any case, more than ever, individuals need to be more proactive in preparing for retirement, and make understand that poor financial decisions today can result in a lack of financial freedom in the future.

“Peter: I have a plan so good, it’s retarded!”

If you want to save for your retirement instead of just wishing you did, you need what Peter had – a plan. Start by playing by tracking your expenses, and setting goals. Take into consideration how old you are now, when you want to retire, your yearly income, how much you save, and put a realistic plan together that you are able to stick to. You might need to start small, and as you become more ambitious with saving, you’ll learn to change your consumption habits. The bottom line is any plan is better than none, put together a savings foundation, and feel free to monitor and chart your progress, because most people do not retire financially self-sufficient by accident.

Financial Savvy

Brian: Peter, did you read the fine print on this loan contract?
Peter: Um, if by “read” you mean imagined a naked lady, then, yes.

Every family should have someone they trust with important legal and financial documents. This is the go-to-person for buying a house, a car, investing or anything with a minimal level of risk. Clearly, Peter is not that person. But, his gullibility illuminates the importance of a healthy skepticism. Never assume that the other party to a transaction is looking out for your best interest, because they usually are not. Debt consolidation or restructuring are good examples. The allure of a lower monthly payment can be tough to resist, but ask yourself: does this sound too good to be true? If the answer is yes, then it probably is. “Quick fix” debt consolidation means you make payments for longer and therefore pay more over time than if you just made the current payments. Always do your research on the implications of committing to a deal that “sounds irresistible,” – and here is the important part – and is readily available to anyone in any financial circumstance.

Peter: I don’t take coupons from giant chickens, not after last time.

Everyone loves a discount, and bargain hunting is a cornerstone of financial savvy. That being said, discerning shoppers know that many alleged “discounts” and “sales” are no such thing. Grocery stores, for example, have long been criticized for advertising “3 for $20″ type deals where $20 is just the every day price of buying three of that item. Other stores will claim that they usually sell something for one price, but are now selling it for a lower (but still high) price for a limited time. Research often shows that the item was never actually sold for the “original” price and so the “sale” was illusory. Still other coupons require buying more than you intended thereby eliminating the savings. The only way to know a deal is worth taking is to shop around and ascertain the real “original” price of the item in question.

Curbing Unnecessary Costs

Peter: Come on you guys. I gonna buy us the most expensive meal we’ve ever had.
Peter (to drive-through speaker): Yeah, I’d like 6,000 chicken fajitas please.
Drive-through speaker: I beg your pardon?
Peter: 6,000 chicken fajitas.
Brian: And a sausage McBiscuit please.

Most families only include groceries when estimating food expenses. And this may leave out substantial money spent on vending machines, coffees, convenience snacks, and yes, fast food. It’s cliché advice to be mindful of these expenses, but sometimes clichés are correct. Giving yourself a pat on the back for “only” spending $150 a week at the grocery store to feed your family deceives you about your true spending in this area. And while we assume the typical reader isn’t ordering fajitas by the thousand, most of us could stand to scrutinize and restrain our out-of-home eating expenses more than we currently do.

Financial Independence

Peter: Hey, anybody got a quarter?
Bill Gates: What’s a quarter?

One of the most common rationalizations for not saving or investing is: “I don’t make enough money.” Surely, the reasoning goes, whatever pathetically small amount you put away in a week wont amount to anything. But this ignores the real issue involved, especially if you’re young. What matters is not so much that you start saving $500 a week (although it wouldn’t hurt) but that you start at all. Recession or no recession, most people see their income rise throughout their working lives until retirement. You will eventually be able to save more. But how likely is it that you will save more once you have it if you don’t get into the habit of saving now? Saving should be scaled up in-tandem with earnings, rather than put off until earnings are perceived to be high enough to have an amount taken out for savings.

Peter: Guys, our money problems are over; we’re officially on welfare! Come on, kids, help me scatter car parts on the front lawn.

Don’t take the Peter Griffin approach to solving your “money problems.” Instead, adopt the above mindset of starting to save and invest with whatever resources currently in your possession. The only exception is if you are in debt, in which case, pay that off first. A well thought-out and consistently implemented savings and investment program should minimize your need to rely on others (be it friends, family, or Uncle Sam) during financial hardships.

TV Guide

At first glance, South Park’s Randy Marsh does not seem to have the makings of someone with financial savvy. Neither his job as a geologist nor his irrational tendency to over-react suggest we should trust his judgment with money at stake. And yet, there is something this man can teach us about personal finance. For all of his sporadic obsessions and fad chasing, Randy Marsh exhibits a sincere desire to discover and (just as important) act on good ideas and principles. More of these are explained below.
Just do it

“There’s no time for your immaturity Stanley, do it!”

Many of the causes and crusades Randy commits himself to are foolish. But boy, does he commit to them, and fast! Once he gets it into his head that something (anything!) must be done to assure safety, prosperity, or prestige, Randy wastes no time getting started. In this last thought we find a bonafide gem of money management wisdom, which is simply this: all the personal finance knowledge in the world is worthless unless you act on it. In his excellent book I Will Teach You to be Rich, Ramit Sethi advocates “the 85% solution.” That is, taking the imperfect (but sufficient) steps you know rather than endlessly delaying action because you don’t know everything.

In other words, once you know that financial independence comes from sustained investment and savings, start investing and saving. You will prosper far more by simply investing $100 (or however much) per month in a plain old boring index fund than by perpetually trying to figure out what the “best” stocks are – and investing nothing in the meantime. Ditto for retirement savings. Open an IRA (preferably of the Roth variety, in which your money grows and can be withdrawn tax-free) and contribute to it every month. What matters is not whether that is the 100% best and most optimal strategy, but that you are doing it. You can always make adjustments later. And while your friends engage in fruitless debates about interest rates and ETFs, you will be the one actually making headway.

Manage your risks

Stan: “Dad, I don’t want to put my head in the sand.”

Randy: “It’s the best way Stanley, did you eat your Fruit-Roll Up?”

Stan: “Yeah…”

Randy: “Okay make sure your snorkle is working and get your head in the hole.”

Investing is full of risks. What often determines how prosperous and secure we are is how we manage these risks. Unfortunately for South Park fans, this comical exchange from the “Family Guy” episode illustrates exactly the wrong approach to risk management. Burying your head in the sand is just as ineffectual and wrong-headed in response to investing risks as it was in dealing with terrorists. The correct approach is to confront risks, understand their implications for your own wallet and insulate yourself as best you can.

For example: the Enron fiasco illustrated the risks of investing in only one or two things. In effect, Enron’s former employees “stuck their heads in sand” by putting their eggs in that one basket and hoping for the best. They had no hedge against the risk of the whole company failing – which it ultimately did. A far better approach is to diversify your investments across a broad swathe of index funds, mutual funds, foreign currencies, and other vehicles. This way, hiccups or slowdowns in one area wont decimate your entire portfolio.

Price Comparison

Stan: “How come Wal-Mart can afford to sell everything so cheap?”

Randy: “Well son, it’s simple economics…I don’t understand it all.”

People don’t always grasp the underlying reasons (volume purchasing, economies of scale, distribution efficiency) why certain stores always have lower prices. Fortunately, you don’t need to understand any of it to reap huge savings. All you need to do is comparison shop before making major purchases. It doesn’t have to be time-consuming or difficult; in many cases, simply Googling a few different retailers to check their prices will be net you significant savings the next time you buy furniture, appliances, cars, or any other major purchase. Not understanding simple economics didn’t stop Randy from saving at Wal-Mart, and it shouldn’t stop you from comparison shopping.

Develop Financial Priorities

“I was shopping at Wal-Mart all night. I was standing in the checkout line…they had these little stickers filled with glitter! They were only ninety-nine cents for fifteen of them, I couldn’t resist! Do you want one?!”

Randy’s giddiness at Wal-Mart exemplifies a trait many of us possess: mindless, impulsive spending. Don’t worry, we’re not telling you to never make spontaneous purchases (life would be awfully boring if we only saved and paid bills). The key is to establish priorities that you satisfy first. It is often the lack of such priorities – rather than the spending itself – that gets people into trouble.

In the end, your priorities will determine and depend on your financial goals. Most people would do well to put retirement, investing, and general savings on their list, and decide how much money they can contribute toward them each week or month. Most experts suggest having 3-6 months in living expenses at all times. Any planned major purchases (such as a new car or house) can be planned and saved for month to month as well. No matter the priorities you choose, the important thing is that you attend to them before letting your wallet run wild on impulse spending.

Educate Yourself

“Do you have any concept of money at all?!”

A common criticism of our schools and colleges is the lack of personal finance education offered to young students. This is blamed for the lack of financial savvy among adults young and old. But this doesn’t let you off the hook -  just because the ins and outs of money management weren’t spoon fed to you in class doesn’t mean you can’t learn them on your own.

Use Good Judgment

“These are not ’space cops’, there is no ’space jail’, and ’space cash’ is only worth what you as a planet decided it was worth.”

Randy again demonstrates the opposite of sound judgment in the episode titled “Pinewood Derby “. When visited by aliens, Randy and the other citizens of South Park were tricked into thinking that a massive hoard of “space cash” stored on board the alien’s ship was a real and valuable currency. Their naivety wound up costing Earth a membership in the ‘Federation of Planets’ and sealing them off from the entire universe. While your choices aren’t likely to determine Earth’s interstellar future, you can still take a big hit if you aren’t aware of scam artists and ripoffs. Countless Americans have poured untold millions of dollars into Ponzi schemes, pyramid schemes or dodgy multi-level marketing programs. These typically promise huge rewards for persuading others to sign up. They typically fail, little is done to stop people from promises of “getting rich quick”. In general, anything promising lots of money in a short time with little work is a scam.

Be Truthful About Taxes and Income

“Stan you have to learn to lie properly someday, it might as well be today.”

Despite Randy’s exhortations to lie, the one situation when this always comes back to haunt you is tax time. Many who neglect to file tax returns don’t hear anything from the IRS for months or even years after. They then erroneously conclude that they got away with shafting Uncle Sam and all is well. But this is rarely true. According to the book Standing Up to the IRS, this only happens because the IRS database is perpetually 12-24 months behind. Non-filers have not “gotten away with” anything, and an eventual phone call from the IRS is therefore inevitable. It’s best to simply pay all taxes owed and file all returns on time. It’s never fun, but the alternative is much worse: fines that sap your savings, time wasted with federal agents, or in the worst case, prison. Surely fulfilling your civic duty is not as terrible as this.

The Takeaway

The core of Randy Marsh’s approach to personal finance is to be active. You could also take away from this article that it is better to manage risks and educate yourself instead of sticking your head in the sand. Search for the lowest price instead of buying from the first store you visit. Let consciously chosen priorities, rather than whims, drive your spending. Don’t fall for hyped-up scams. Be honest in your dealings.

]]> http://www.mint.com/blog/finance-core/personal-finance-according-to-south-park/feed/ 9 http://www.mint.com/blog/finance-core/understanding-financial-statements/ http://www.mint.com/blog/finance-core/understanding-financial-statements/#comments Wed, 01 Jul 2009 00:59:31 +0000 Ana Gonzalez Ribeiro http://www.mint.com/blog/?p=2893 investments, do you ever wonder how the value of the companies you've put your money in is determined? What factors decide how well a company is really doing? What's the source of the company's financing? Will it meet or exceed this quarter's projections? While some consider the stock market to be little more than a house of cards, subject to the whims of individual investors, there are, in fact, some very real and measurable things that can help you to diagnose the financial health of a company. ]]>
micamica

When looking over your investments, do you ever wonder how the value of the companies you’ve put your money in is determined? What factors decide how well a company is really doing? What’s the source of the company’s financing? Will it meet or exceed this quarter’s projections? While some consider the stock market to be little more than a house of cards, subject to the whims of individual investors, there are, in fact, some very real and measurable things that can help you to diagnose the financial health of a company.

Take a statement

It’s not an interrogation but you’ll want to ask the hard questions before you invest. Only by examining and drawing conclusions from a financial statement, will you truly know how well a company is doing. At first glance, you will see that a financial statement is made up of three main sections, the balance sheet, the income statement and the cash flow statement. Each statement depicts a different aspect of the overall financial picture of a business. The balance sheet details companies’ current assets such as cash and prepaid expenses. It shows the financial position at a particular date. This statement tells you what the current liabilities or existing debt the company has, that has to be paid within that year. Examples of debt include accounts payable, salaries payable or income taxes payable. The amount of current assets over current liabilities determines the amount of working capital or leftover cash the company has to cover other operating expenses. Whether or not there is enough money left over after the current debt is paid off, tells you whether the company is on solid financial ground or might be headed for destruction.

The income statement is a summary of the profits a business has earned for a specified period of time. This is where you would see the amount of revenue or profits obtained for a companies’ products or services and the expenses incurred for salaries, supplies or income taxes. The difference between the revenue and expenses gives you the net income, which when compared over a period of say two years shows you how the net income is rising or falling, a fairly good indicator of how profitable the business is. Basically, this statement tells you if the company has revenue coming in.

The cash flow statement is particularly important when considering new ventures such as an internet startup. The ability to balance cash flow now is a sign that the business has a long and profitable future ahead of it. This reports the cash going out and coming in from operating, investing and financing activities. In this statement, changes in the net cash flow indicate the company’s ability to meet its debt obligations and pay dividends, how much external financing the company is using and its ability to generate cash flow in the future. Operating cash flow can be described as the cash effects from revenue and expense transactions. Investing cash activities comes from the purchasing and selling of properties or assets and financing cash activities shows how owners of the company have used loans from creditors to finance their business.

Know the facts

Investing should never be based on emotion. While you might be tempted to invest in a company because you like its products or because you’ve just read a favorable article about it in a magazine or newspaper, you should make sure you’ve done your research before ponying up your hard earned cash. Think of the financial statement as a kind of scorecard that helps you determine which company is the one you should invest in. What you’ll find is a hard look at the financial structure of a business that shows you what it’s really made of. Ask yourself a few questions and see if the statements help answer them. Does the revenue exceed expenses in the income statement? Does the amount of assets exceed liabilities on the balance sheet?

Notes often accompany financial statements. Read these notes carefully as they disclose information that can help you interpret the financial information on the statements. The notes reveal any changes that could have an impact on the company’s finances. It can provide some startling insights such as what type of debt the company purchased, for how long and for what purpose. For example, the notes might state that company A entered into a two year term note of which the proceeds were used to purchase the company’s out of state manufacturing facility and headquarters. Essentially, the notes are a complement to the statement providing more details. If you’re a shareholder, it’s your company. So you’ll want to make sure you know as much as you can about it.

Madonna

Anirudh Koul

For a material girl, she sure did make a silly financial blunder. She’s been coined as a marketing genius, keeping her career and her image alive for more than twenty years. Madonna faulted, however, by entering into her marriage with Guy Ritchie without signing a prenuptial agreement. Putting her $500 million dollar fortune at risk, Madonna’s divorce cost her a reported $75 million.

Lesson Learned: Keep your financial assets your own. If you have something you wouldn’t want to give away, sign a prenup’.

Nicholas Cage

totsie14

Nick Cage has never played the victim in his film career, but in real life, he seems pretty good at it. Especially, when the tax man cometh. In February of 2008, it was widely reported that the actor used his production company, Saturn Productions, to hide some personal extravagance — $3.3 million, in fact.

Lesson Learned: Personal expenses are personal expenses. Keep your taxes on the straight and narrow. Need help? Invest in a personal accountant. It’s worth the time and your fee for services can be deducted off your next year’s tax return.

Michael Jordan

simplistic.designs

There’s a competitive desire to win, and then there’s a desire to lose all your money to a friendly game of golf. In 1993, Jordan lost $57,000 to his gambling frenzies, and claims exist from Jordan’s colleagues and friends that he lost more than $1.25 million in one golf game alone.

Lesson Learned: Gambling should be a delightful misadventure of sorts, not an “I need money and have to win” sort of obsession. Keep it fun.

Heath Ledger

Howie Berlin

Rest his soul – his death was untimely and unexpected, which is exactly why he should have had an updated will! The Oscar-nominated star of Brokeback Mountain wrote his will leaving everything to his family in 2003. With the birth of his daughter in 2005 he neglected to make an update. When you’re worth an estimated $20 million, it’s advisable to keep your will updated and signed.

Lesson Learned: As lifestyle changes occur and relationships evolve, it’s important to update your will regularly. Set a time once a year to review and update if necessary.

Ed McMahon

Alan Light

“Heeeeere’s Trouble!” Housing foreclosure is becoming all too common of a term these days and celebrities are no exception to it. There’s an irony that exists in Ed McMahon – the man who delivered oversized checks to lucky winners of the sweepstakes – facing foreclosure. After falling $664,000 in the hole on mortgage payments, McMahon found himself in a mountain of debt.

Lessons Learned: In the words of Ed McMahon himself, “Well, if you spend more money than you make, you know what happens…” Don’t buy a house you can’t afford.

MC Hammer

superseven

We know he’s Too Legit to Quit, but he should’ve quit spending a while ago. MC Hammer is infamous for his overspending which led him to file for bankruptcy in 1996, with $13 million in debt. With a net worth of $30 million dollars, Hammer spent a majority of his funds paying over 300 people to work for him, to the tune of $500,000 in monthly wages.

Lesson Learned: No matter how popular, how successful, or how business savvy you may find yourself, a lavish lifestyle can only last so long.

Britney Spears

Cesar Pics

You’re young, you’re rich, and you’re spending it all. Britney Spears entered the entertainment world at the ripe age of eight and has been a force to be reckoned with ever since. When you earn $737,000 per month and don’t allocate a penny toward savings or investing, you are not planning for the future particularly well.

Lesson Learned: Plan now for the long-term. Living in the moment is a dangerous trend.

Examples of financial missteps are everywhere, and the celebrities have done a good job of showing us what not to do. From foreclosure and bankruptcy to investments and tax evasion, the examples are endless. Follow these lessons learned to keep your finances from putting you at risk.

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Wall Street (1987)

“The point is, ladies and gentleman, that greed, for lack of a better word, is good. Greed is right, greed works. Greed clarifies, cuts through, and captures the essence of the evolutionary spirit. Greed, in all of its forms; greed for life, for money, for love, knowledge has marked the upward surge of mankind. And greed, you mark my words, will not only save Teldar Paper, but that other malfunctioning corporation called the USA. Thank you very much.” – Gordon Gekko

wikipedia

Michael Douglas’ Oscar-winning performance in this film is not only his most memorable, but it is the reason why Wall Street is the quintessential 1980s business-themed movie. His famous monologue (above), illustrated the atmosphere of greed and corporate malfeasance so characteristic of the time. The Gekko character has become an international icon, synonymous with unchecked greed. Additionally,  many have opined that today’s economic climate is a result of the mainstream having adopted this character’s teachings.

Shawshank Redemption (1994)

“Get busy living or get busy dying.” – Andy Dufresne

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This critically-acclaimed film about a wrongly accused New England banker is one that has many messages. Dufresne (played by Tim Robbins) eventually escapes from prison, due to his commitment to a meticulously choreographed escape plan and his ability to persevere. His dedication reminds one of the focus needed to effectively plan ones’ long-term financial future, especially in today’s economic climate. This movie also illustrates that no one person ever knows where life will take him, so it is best to be prepared. Take the good with the bad, and learn to adapt.

The Godfather (1972)

“I’m going to make him an offer he can’t refuse.” – Vito Corleone

wikipedia

The Godfather trilogy is widely considered a benchmark for filmmaking, and this timeless quote could not be more appropriate. Bluntly stated, money talks. Other lessons taken from this film include, taking a bold stance in decision making, and knowing the value of things for which a high price might sometimes need be paid.

Jerry Maguire (1996)

“Show me the money!” – Rod Tidwell

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In this film about a high-powered sports agent on the rebound, Maguire learns to value people above money. His up and down path towards enlightenment teaches him to respect himself, others and the value of proper business ethics. While dissimilar to some of the films on this list, the message of this film is that there is more to life than money, and an important moment of self-awareness comes only when one realizes the value of their ability.

Field of Dreams (1989)

“If you build it, he will come.” – Shoeless Joe Jackson

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To those entrepreneurs out there: if you have a good idea that you believe in, pursue it. Everyone has to analyze risk versus reward, but for those that aspire for more, bigger risks must always be taken.

Boiler Room (2000)

“And there is no such thing as a no sale call. A sale is made on every call you make. Either you sell the client some stock or he sells you a reason he can’t. Either way a sale is made, the only question is who is gonna close? You or him? Now be relentless, that’s it, I’m done.” – Jim Young

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In business, there are winners and there are losers. Typically one’s winning is a preclusion of that of another. Even though not everyone works in sales, opportunity knocks on a regular basis. It’s those that take initiative that tend to succeed. This can be applied to personal finance, enterprise, and even in the workplace.

The Big Lebowski (1998)

“I can get you a toe, believe me. There are ways, Dude.” – Walter Sobchak

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This cult classic illustrates the absurdity with which people sometimes regard money: the things they do, the way they act, and the things they say. From those with keys to the city, to unemployed, amateur bowlers,  the film’s characters show that it is important to be creative to get what one wants. Finding alternative ways to solve problems is especially pertinent in a downwards economy.

Glengarry Glen Ross (1992)

“A-B-C. A-Always, B-Be, C-Closing. Always be closing, always be closing.” – Blake

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This quote, taken from Blake’s (played by Alec Baldwin) angry speech is about the importance of continuing to sell – to sell harder, and to sell better – in a downwards economy. His character is brought in to coerce a group of failing salesmen into producing better numbers. While bordering on abusive, this speech was meant to inspire, to set the bar higher. The point being that no one with a high level of success is without a high level of confidence. Sometime drastic measures ought be taken, especially in order to pull oneself out of a precarious financial situation.

How to Succeed in Business Without Really Trying (1967)

“If you have education, intelligence and ability, so much the better. But, remember that thousands have reached the top without any of these qualities.” –  J.B Wiggley

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This was spoken to a man that started out as a window cleaner, and eventually climbed his way to the top, This quote is meant to express that there are always a number of ways to succeed. For those with real ability (but maybe not the credentials that society places value in) hard work, determination and creativity are key.

Trading Places (1983)

“Think big, think positive. Never show any sign of weakness. Always go for the throat. Buy low, sell high. Fear . . . that’s the other guy’s problem.” – Louis Winthorpe III

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This early 1980s comedic classic is about a high powered businessman being made into a criminal, while a street hustler is made into a legitimate businessman. Clever title, isn’t it? It’s interesting to note the different ways each character deals with the fate handed to them,  and it touches on the Shawshank notion of how to cope with uncertainty. From this quote one could also learn another important pricnipal: without comprimising the well-being of others, look after, and always think about your own finances first.  Definitely appropriate in these times.

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Trekkies get into regular phaser-fights over the merits of the two most famous starship captains, Kirk vs Picard. But at the end of the day there’s only one James T. Kirk, a man of staggering ambition and supreme confidence that went boldly into every situation. If Kirk were a real-life person living in 21st Century America (get a life!), he’d probably be a dashing business tycoon on the order of Sir Richard Branson.

Even more than his strategic acumen and his luck with the ladies, Kirk is best known for always having a quip at the ready. One cannot doubt the real-life business and entrepreneurial messages mixed throughout the “Canon of Kirk.” And while it may be a stretch to suggest that the entire Star Trek galaxy was an allegory for how to succeed in the marketplace, let’s operate from within this paradigm. Let’s take a look at what Star Trek can teach you about your money.

Risk Management

“You saw the alert light. Why didn’t you tell me?” – ‘The Corbomite Maneuver’

In an uncertain economy, knowing risks is very important. If the nature of a dubious investment or any significant financially-related maneuver can be brought to light, it should be. Subsequently, it is important to surround yourself with those not afraid to give valuable advice.

“No. Not like this. I haven’t faced death. I’ve cheated death. I’ve tricked my way out of death and patted myself on the back for my ingenuity.” – The Wrath of Khan

For those who have witnessed the market’s ups and downs, experience is paramount. Recessions come and go, and while some are worse than others, having weathered a storm or two enables an individual to reflect on past moves.

“We’ve got to risk implosion. We may explode into the biggest fireball this part of the galaxy has seen, but we’ve got to take that one in a million chance.” – ‘The Naked Time’

Risk is necessary. One of the worst mistakes individuals can make during difficult financial times is to avoid risk entirely. Of course a ‘one in a million chance’ typically ought to be avoided. The old claim, “with great risk comes great reward,” however, is axiomatic in precarious times.

Downsizing

“No more blah, blah, blah!” – ‘Miri’

Captain James T. Kirk was a no-nonsense kind of guy, the kind of guy that many companies would be happy to have at the helm of their corporation. Ready to go where no man has gone before, Kirk could be trusted to to trim the fat and to make cutbacks, when necessary. Streamlined efficiency should be the goal of any well-run Enterprise, Starship or not.

Labor

“Not one hundred percent efficient, of course…but nothing ever is.” – ‘Metamorphosis’

A leader should always strive for excellence. However, being a leader and having perfectionist standards can be frustrating and can often result in micromanagement, which ultimately is unproductive. and hinders growth. Understanding the roles of labor and management is absolutely necessary for the success of any entrepreneur.

Management

“Genius doesn’t work on an assembly line basis. You can’t simply say, ‘Today I will be brilliant.’” – ‘The Ultimate Computer’

“All your people must learn before you can reach for the stars.” – ‘The Gamesters of Triskelion’

Ever since Adam Smith outlined his division of labor in The Wealth of Nations, the merits of filling each role in a company with the desired expertise has been stressed as a necessity for economic growth. Perhaps most important is the role played by management. For every executive would be lost without their Spock, this Enterprise’s pragmatic and eminently logical first officer.

Training

“Everybody remember where we parked.” – Star Trek IV: The Voyage Home

Training is important, even in the areas not typically thought of as necessary. Acquired tools help understanding the role each individual plays more broadly, and can help a larger team succeed.

Market Share

“There are some things worth dying for.” – ‘Errand of Mercy’

Increasing market-share is the foremost goal of all businesses. To most, it is worth sacrificing greatly for. Mortality aside, this note illustrates that business success typically comes at a great price.

“I’ve always known I’ll die alone.” – Star Trek V: The Final Frontier

Hopefully, it’s not that bad.

“Conquest is easy. Control is not.” – ‘Mirror, Mirror’

With regards to market domination, it is important to understand the complexities of staying on top. Companies that make it to the apex of their industry typically find themselves the target of malicious campaigns by their competitors. This tends to make staying at the top of one’s game a constant struggle.

Strategic Alliances

“There’s another way to survive. Mutual trust…and help.” – ‘Day of the Dove’

No one said that any one man (or woman) has to go it alone. For many, a partnership such as a marriage, can be useful in pursuing economic security, working together for a common goal. In the marketplace, partnerships are formed on the supposition that two or more individuals can accomplish exponentially more working together than if they were to work independently.

Work Ethic

“Galloping around the cosmos is a game for the young, Doctor.”-The Wrath of Khan

Many young men make the mistake of pursuing enterprise before they are serious about it. But wise men such as Kirk understand that such a mistake can be costly. To great minds such as Kirk, one’s leadership is the natural result of maturity, which is predicated on steadfastness and focus, among other things.

Leadership

“The needs of the one outweighed the needs of the many.” – Star Trek III: The Search for Spock

“I don’t need to be lectured by you. I was out saving the galaxy when your grandfather was still in diapers. Personally, I think the galaxy owes me one.” – Star Trek Generations

Experience, knowledge, and charisma. These traits of leadership are not learned overnight. And as a result some individuals are more important to others, at least when growth is considered.

Cross-cultural Awareness

“Well that’s simply the way they talk here. Nobody pays any attention to you unless you swear every other word.” – Star Trek IV: The Voyage Home

“Note to Galley: Romulan Ale no longer to be served at diplomatic functions.” – Star Trek V: The Final Frontier

In the last several decades high-level executives have begun to consulting with cultural anthropologists with regards to conducting business between different cultures. Most famously, there was a major trend in the 1980s of Western businesspeople learning Japanese because of that country’s rapid growth; today the same is true for China. What is important to note is that there are certain aspects of conducting business that often go overlooked by many, but are crucial to the success of business – especially in a super-competitive marketplace.

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On the Stock Market:

“Buy low and sell high; that’s my motto”.

Sounds easy right? Well, if this were the case, someone as simple as Homer would be able to navigate during the precarious times. But it goes without saying that he has sometimes failed to execute. During one episode, Homer exclaimed (in regards to his involvement in the Pumpkin business):

“This year I invested in pumpkins. They’ve been going up the whole month of October and I got a feeling they’re going to peak right around January. Then bang! That’s when I’ll cash in.”

Obviously, the humor in this situation is apparent, but the message it conveys could not be more timely: study the market as best as you can; take into consideration the associated aspects of the companies and commodities you invest in; and don’t look at the market like a get-rich-quick scheme. Simple enough, right?

Incentive Based Employment

“Son, if you don’t like your job, you don’t strike, you just go in there every day and do it really half-assed. That’s the American way.”

“Son, if you really want something in this life, you have to work for it. Now quiet! They’re about to announce the lottery numbers.”

Unemployment rates are the highest they’ve been in decades and it seems that employee productivity is more closely scrutinized than ever. Many people point to American industry (automotive, specifically) as less competitive and innovative than foreign companies. This, coupled with an overall lackadaisical approach to productivity has been pointed out as a major contributor to the poor state of the American Economy.

In the Episode “You Only Move Twice”, Homer is recruited by a ‘Mr. Scorpio’, a nice man that is the head of a secret organization consumed with world domination. Unknowingly, Homer helps Scorpio build a nuclear reactor that is used to power the latter’s weapons arsenal. From this episode we have this little gem:

“Mr Scorpio says productivity is up two percent, and it’s all because of my motivational techniques. Like, donuts. And a possibility of more donuts to come.”

In today’s economy, the employment marketplace is extremely competitive. Individuals are less likely to compare prospective employers based on incentives, but rather continued employment has itself become the incentive to hard work.

Enterprise

“All my life I’ve had one dream, to achieve my many goals.”

“If something’s hard to do, then it’s not worth doing.”

It’s no secret that a lot of wealth is created during a recession. The winners are those enterprising individuals who take calculated risks, work hard, and stay focused. Consequently, they succeed while those around them fail or struggle to stay afloat. These are those times. Homer, according to his above sentiment, would fail – flat on his face. But when you least expect it, from the vault of ‘Homer Genius’ comes this:

“All right, let’s not panic. I’ll make the money by selling one of my livers. I can get by with one.”

Sacrifice: an important virtue in enterprise and in personal finances. Much of the literature that has been created on finance in the last year has stressed cutting out unnecessary spending. Of course, this might be a stretch, but Homer shows that sometimes personal sacrifices are warranted, especially when the well-being of one’s family is at stake. Even, if we only have one liver. (Note: Mint does not, under any circumstances, endorse the selling of vital or semi-vital organs).

Business and Personal Ethics

“Marge, don’t discourage the boy! Weaseling out of things is important to learn. It’s what separates us from the animals! Except the weasel.”

This first quote would be less funny if Homer were able to weasel out of anything. The bottom line, however, at the marketplace or in your personal finances, is to live up to your responsibilities. This will help to curtail any need to weasel out of dodgy situations, ie: collections, bankruptcy loop-holes, foreclosures, et al.

“Oh no! What have I done? I smashed open my little boy’s piggy bank, and for what? A few measly cents, not even enough to buy one beer. Wait a minute, lemme count and make sure…not even close!”"

Homer’s curve is less than steep. There must be an easier solution! Perhaps it requires thinking to oneself, “What would Homer do?” Then, do the polar opposite.

Understanding Cash-flow

Homer: “Look at this Marge, $58 and all of it profit. I’m the smartest businessman in the world.”

Marge: “Its food bill today was $300″

Homer: “Marge, please, don’t humiliate me in front of the money”

Many will remember this episode as the one where the Simpsons have a elephant living in their backyard, and with which Homer has the less-than-brilliant idea to sell elephant rides at $2. After only one day, Marge wisely pointed out that the food bill for the elephant was $300 – more than the day’s total revenue. After realizing this, Homer upped the price to $500/per ride. Consequently, his customers decided to go elsewhere.

Economics 101: If a company continues to lose money, it will eventually go out of business. Marge’s explanation of the cost of food was enough to pull the plug on this business (that likely did not have a business plan anyway). This principle can be applied to an individual’s finances – if you spend more than you make, you’ll eventually be in debt. The longer you keep spending, the more you’ll be in debt.

Innovation, Marketing and Adapting to a Changing Marketplace

“Oh they have Internet on computers now?”

Part of staying relevant, is staying on par with the development and adoption of new technology. For many businesses in the last decade, this has included developing an online portal through which goods and services may be purchased. For others, it may simply offer information and a way to contact businesses. In today’s world, this may mean an immersion to sites like Twitter, where individuals can interact with businesses and each other in new and unconventional ways.

“How is education supposed to make me feel smarter? Besides, every time I learn something new, it pushes some old stuff out of my brain. Remember when I took that home winemaking course, and I forgot how to drive?”

With learning new technology comes learning new skills. They may be one and the same, but in all circumstances, businesses, as well as their employees, continually need to evolve. For the former this may be necessary for growth; for the latter this is necessary to remain employed. The fact of the matter is that individuals across the board ought to always be on the lookout for ways to make themselves more competitive than others through their skill set. For prospective workers, an employer will likely be interested in hiring someone who can take on multiple responsibilities and is well-rounded.

Financial Solvency and Living Below Your Means

If not at home, the Simpson patriarch can often be found at Moe’s Tavern, drinking with his buddies. In fact, it seems that Homer is at the pub daily or almost daily. This begs the question: “Is this affordable for the head of a single-income family with four dependents?”

Of course the more Homer blows as a percentage of of his paychecks on Duff, the less he would have to spend on necessities for the family, such as: housing, food, clothing, a retirement fund, insurance and so forth. This is not rocket science, but if this type of behavior became the norm, frustrating intra-marital discussions (intervention) would likely be inevitable. Homer is unabashedly blue collar, and does not likely have the means to a life he is illustrated to be living.

“Bart, with $10,000, we’d be millionaires.”

Obviously not knowing the value of money can set oneself up for financial insolvency. Of course, this is not surprising to hear from the man who drinks daily, finds donuts rewarding, and steals from his own children’s’ piggy banks…

Debt Management

In a recent and timely episode, titled, ‘No Loan Again’, the Simpsons are facing foreclosure. Not surprisingly, Homer’s understanding of a Home Equity Line of Credit is far from comprehensive, and is the primary source of his financial woes:

“It’s a secret thing called a home equity loan. I get all this cash…and the house gets stuck with the bills!”

And, later when discussing the foreclosure with his mortgage broker:

“When you gave me that money, you said I wouldn’t have to repay it ’til the future. This isn’t the future. It’s the lousy, stinking now!”

All good things come to an end. And Homer’s feelings are not uncommon, especially with the credit and real estate markets where they are at. While it may be too late for others, this illustration of mindless spending can serve as a reminder, that debt does not magically go away, and tomorrow will one day come – as will the debt collectors.

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Homer Economicus: Using The Simpsons to Teach Economics” Joshua Hall, WVU, Journal of Private Enterprise. 165-177. April 2005

Don’t wait until you are too old to scale the steps of Chichen Itza to travel. The best time to see the world is when you are young. But if travel seems beyond your means or beyond your budget, you’re going to have to get creative before you get going. Are you in a rut because your current job doesn’t take advantage of your skills? Identify those skills and they can be your passport to a world of adventure.

Techie? Wire a village.

If you have a computer or technology skill set, there may be a non-profit organization that needs you to set up a network for a school system or provide farmers with an internet hook-up, allowing them to search the Wikipedia for farming techniques or shop for better grain prices-in the Amazon jungle or the African plains. Consider getting involved with One Laptop Per Child, a non-profit whose mission is to develop a $100 laptop that could revolutionize how we educate the world’s children. Organizations like Oxfam and Care, plus countless smaller non-profits, are empowering local communities with technology, an effort that can help bridge the digital divide while opening your eyes to the way other cultures work and play. Think of it as the 21st century version of volunteering for the Peace Corps. Check out sites like idealist.org for ideas.

Into Politics or Communications? Staff an embassy.

Our State Department zips sharp-witted Foreign Service Officers and Foreign Service Specialists all over the globe to staff our embassies. These seldom-heralded positions have wonderful perks-diplomatic immunity, anyone?—if you can stand the wait. (The notorious red tape of the State Department and up to one year of training makes this more of a long-term commitment.) The posts, usually two years long, could be in literally any part the world and span a range of fields, from public relations to diplomacy to economics. Speaking a foreign language, particularly an obscure or difficult one, gives you a leg up.

Foodie? Work it on a farm.

Worldwide Opportunities on Organic Farms (WWOOF) can bring you closer to mother earth by placing you at an organic farm where you can learn about organic lifestyles and share more sustainable ways of living. In exchange for a few educational weeks or months living a simple, natural, and-read this–physically challenging life, your host farm will give you room and board. WWOOF is a worldwide network of global farms. Perhaps you’ll find yourself on a rare tropical flora garden that opens to the ocean in Central America or in the tangled olive vines of the Turkish countryside or picking berries in Sweden. There’s a fee to join WWOOF but the terms of the contract are largely left up to the farm and individual, so shop around.

Finance or accounting? Go multinational.

Rather than fear our impending globalization, why not embrace it? Big Brother has a plane ticket for you. Many multinationals know that savvy young things like you want an international career, so they are starting to use their worldliness as an asset. For example, behemoth Price Waterhouse Coopers’ has the EPIC “International Challenge,” which lets you set up an international assignment in your early years with the company-while you’re young and adventurous.

Writer or language junkie? Teaching is a great gig.

As a teacher in rural Japan, I never got over the fact that people were awestruck with me for simply speaking my mother tongue. If you think linguistically, teaching the world’s second language is an enormously lucrative way to travel. But first you will be battered with acronyms; TOEFL, CELTA or TESL teaching certificates are smart ways to give yourself street cred. The foreign teaching community relies on forums and chat rooms to stay connected while on far-flung assignments, which means you can tap into their network easily. Dave’s ESL café will get you started.

Working in another country is a fantastic way to see how your skills can translate into real world opportunities. Follow your bliss and the rest will follow.