Learning the friendly way

Becoming a homeowner no matter what your income level is an achievable goal with the right amount of planning. Below are a few ideas we've put together for you to think about and implement if you're ready to start taking the steps to make your dream a reality. When it comes to learning how to save money for a house, these steps will make it seem a lot less daunting than one might initially imagine.

Financial steps to take when looking to save for a house

1. Create a realistic timeline

While different people have different timelines, it's important to set a realistic one for yourself when you're planning to buy a house. This way, you can budget and plan accordingly. For example, newlyweds are usually in more of a hurry to buy a home than someone who just graduated or started a new job. One person might be looking at 2 years while the other is okay with 5 years. There is no "right amount of time" to save money for a house, consider your individual circumstances and act accordingly.

2. Kickstart your savings

After establishing your realistic timeline, you can then determine how much you will need to save. While the goal is to put as much money as you can aside, this might be 20% - 30% of your monthly income, so be sure that this is realistic for you and adjust the timeline accordingly. 

Once you've established how much you will be putting aside each month for your goal, set up a direct debit to your savings account to ensure that that money leaves your account before you're tempted to spend it.

You can also explore the option of a savings account that offers the potential to earn interest over time. People often consider money market accounts or high-yield savings accounts. However it's important to conduct comprehensive research and base your decisions on the information you gather.

3. Don’t neglect other financial obligations

In this day and age, instant gratification is something we've grown accustomed to. Saving for a house is the opposite of this and will take time. Instead of cutting off all your expenses to try and reach your goal a year or two sooner, consider what financial obligations you might have over the next few years and be realistic in setting a healthy amount of time to get there. 

4. Ensure your goal is within your means

Becoming a homeowner is an impressive accomplishment, but being riddled with debt and high maintenance costs for decades is hardly enjoyable. Ensure that the house you want to buy is within your means to maintain after the purchase, and consider additional costs like rates and taxes, transfer fees, and consider the associated monthly payment.

5. Make the necessary budget cuts

In order to achieve your saving goals within the amount of time you set out, you will inevitably need to cut back on your expenses. Once your living expenses and bills are accounted for, what can you afford to put away each month? Are you paying for a subscription you no longer use or have a luxury item you can cut back on? It might seem like a little each month but in a year this can amount to a lot of money for your housing fund. 

6. Consider increasing your income streams

Another great way to get your homeowner dream to fruition faster is to create new avenues of income. Multiple streams of income can alleviate your cutting back on expenses and can help your savings tenfold. Consider creating online courses, writing blogs, or building a side hustle aligned with one of your skill sets. Every little bit helps. 

Homeowners checklist: consider the closing costs

Once you have reached your financial goal of saving money for a house or your down payment fund, you'll now be faced with a new set of challenges: actually buying the house and putting that down payment to work.

At this stage, it's important to contact professionals that can assist you in finding, vetting, and deciding on a worthy property for your years of savings, and who can accurately advise on the closing costs of the transaction. Remember that there are lawyers' fees and transaction costs and even private mortgage insurance monthly payments to consider on top of the home's purchase price.

Whether you rely on an experienced real estate agent or a building surveyor, ensure that they are someone you can trust and that you get answers to the questions you ask. Some helpful questions to start with include:

• Is the land government approved?
• Why are the owners selling?
• Are all the house papers/documents intact?
• Is the area prone to natural disasters like floods or fires? 
• What are the costs of utilities, etc? 

Putting your down payment savings to work

Learning how to save money for a house is the first step. When you're ready to take the next step and purchase a house, be patient and ask the right questions. Saving for a house is saving for your future, so don't try to hurry the process along too much.

Whether you'll be living in the house or using it as an investment property with tenants, understand that the journey is as important as the end goal, and have patience as you pursue your dream and get steps closer to making that first down payment.

‍

In line with our how-to-budget pieces, today we're looking at how to monitor your spending. There's no good in building an impressive budget without keeping track of whether you're sticking to it or not. Yes, it might sound tedious, but it is always worth it, especially during the festive season when things tend to get a little out of control.

Paving the road from good intentions to excellent outcomes, tracking your spending is imperative.

Why tracking expenses is important (use your bank account to save money)

Before we get started, let's first cover the bases of why this step is so vital. First and foremost, it's essential to hold yourself accountable to your proposed budget. There's no good assigning each dollar you earn to a specific function only to disregard the budget entirely and spend impulsively.

If you're not tracking your expenses you'll land up in square one where you started a month ago. Monitoring your spending habits will show you exactly where your money is really going, and help you to make more informed decisions. The best part is that after a month or two you will get the hang of it and the process will become a lot less tiresome and feel like more of a habit.

Keeping an inventory of your expenses (and income)

First, you'll need to create your budget. Once this is established and the time frame you've set it out for has started, it's time to get tracking. You can do this through a budgeting app, a spreadsheet, or a piece of paper if that makes you most comfortable.

Step 1: track your income

In your income section, confirm all income in the columns provided. If you make money in an unexpected avenue, be sure to add this in too. This step is particularly important for those that earn irregular income through freelancing or side hustles.

Ideally, you would have listed your income avenues as a low estimate, so revel in adding the higher amounts into the columns provided. You can then enjoy reallocating those funds to various items in your expenses column. Don't think you need to be a robot with your finances, you're allowed to enjoy them too.

Step 2: track your expenses

For this step you need to track every single time money leaves your account. For the entire month. From emergency fund allocations to debt payments to monthly expenses, and any payments on a separate spending account. Each time you spend money, record it in the relevant expense categories.

When you buy groceries, add this to your grocery expenses; when you eat out, add this to your entertainment expense. Make sure that your budget is updated to reflect the new total so that you and your checking account are always in the know.

For example, if your grocery budget is $100 and you spend $23, add the $23 as an expense item under the title and ensure that your new grocery total reflects as $77.

There are plenty of expense tracker apps out there if this helps you stay on track. If you are using a budgeting app be sure to check in and review how each category is doing so that you can make informed decisions on what you spend your money on.

Step 3: make it a habit

You might like to do this daily or biweekly at first until you get the hang of it. Make yourself a nice cup of tea and make it a pleasant habit, instead of something you resent and put off. Understanding your cash flow is imperative to understanding your spending patterns and to better manage money. This is where the magic happens (and how financial goals are achieved).

Different methods of tracking your expenses

Below we outline the four most common methods used to track expenses, looking at the advantages and disadvantages of each of them. Whether you prefer paper receipts or accounting software, settle for the expense-tracking method that works for you.

1. Handwritten

There's nothing wrong with the old-school pen and paper option, if this feels right to you then go for it! Make sure you store it in a safe space.

Advantage: studies suggest that writing things down increases your retention of the information and boosts your ability to make more informed decisions. While typing is probably the preferred method, writing is actually more efficient when it comes to learning.

Disadvantage: this option is more time-consuming and will require you to physically remember all your purchases and retain your slips. Alternatively, you could sit with a printout of your bank accounts and manually write out each expense.

2. The cash process

This step requires you to withdraw the cash outlined in each budgeted category and store it in an envelope. Every time you make a transaction, you use the cash from the relevant envelope and replace it with the receipt. For debit orders, you can use your imagination. While the envelope method might be considered an old-school option for money management, if it works for you then go with it.

Advantage: using this method of tracking monthly expenses you can physically see how well your budget is going and how much you have left to spend.

Disadvantage: in these modern times paying with cash isn't always very practical.

3. Spreadsheet

Probably the more common option when it comes to tracking your expenses, using a spreadsheet can be practical and it does the maths for you.

Advantage: with tons of templates, the ability to quickly customize or revise your budget and the automated calculator, spreadsheets are a great option.

Disadvantage: you'll need to physically sit down with your laptop when tracking all your transactions. This will become more challenging the longer you leave it so ideally you;ll need to make this a daily occurrence. Remember, without monitoring your expenses your budget is simply a plan.

4. Budgeting apps

There are several budgeting apps available (for free) that can link to your bank account and automatically track all your expenses.

Advantage: It's all done for you, in real-time. Some apps might require you to assign the transaction to a category while others might automatically categorize it for you, either way, it requires minimal effort and can be regularly updated.

Disadvantage: You still need to monitor your spending, even if you're not physically putting it in. If you've reached your grocery budget, you need to be aware as the app is not going to cut your spending for you.

In conclusion

In a nutshell, tracking your spending isn't a chore – it's your financial roadmap. Budgets are great, but without tracking, they're like plans without directions.

Imagine this: you've got goals, and tracking is how you reach them. It's not about being a money expert; it's about knowing where your money's going and making savvy choices.

Sure, it might feel a bit tedious at first, but it becomes a rewarding habit. Whether you use an app, spreadsheets, or good old pen and paper, what matters is sticking with it. Every tracked expense is a step closer to those goals you've set.

So, whether you're noting expenses in a notebook or tapping into an app, keep it up. It's your money's way of showing you its path, and your way of keeping it on track.

‍

Porter’s 5 forces is a model that helps to identify the weaknesses and strengths of an industry, empowering the potential investor with insights. In fact, the model is used by more than just investors, companies and analysts also make use of its structure, allowing them to analyze the competitive forces in an environment and build an appropriate business strategy.

Below we outline how the Porter’s five forces model works, where it came from, and how you can use it to your advantage. 

What is the Porter's Five Forces model?

Porter’s Five Forces focuses on identifying and analyzing five competitive forces within an industry that can be used to establish what the industry’s strengths and weaknesses are. The five forces analysis can be applied to any segment of the economy and can determine a company’s business strategy, level of competition, or long-term industry profitability. 

The Five Forces are:

• Competitive forces in the industry
• Potential of new entrants into the industry
• Power of suppliers
• Power of customers
• The threat of substitute products

This model is designed to help analysts and managers comprehend the competitive landscape that a particular company faces and how the company is positioned within it.

Where did Porter’s Five Forces model come from? 

The five forces analysis model was created by and named after Michael E. Porter, an established Harvard Business School professor. The model was introduced in Porter’s book, Competitive Strategy: Techniques for Analyzing Industries and Competitors.

Developed in 1979, the five forces analysis model was created to provide industry outsiders with insight and knowledge into the positioning and competitive strength of an organization. The business analysis model has become an important tool in the financial sector and is still widely used today, over 40 years later.

Breaking down Porter’s Five Forces

Below is a breakdown of the Five Forces analysis model which is universal across almost every market and industry in the world. The model looks at the company’s positioning within the market to determine how much power it holds. 

1. The competition in the industry

The first of Porter's Five Forces analysis model focuses on the number of competitors a company has and its ability to undercut them. The more existing competitors and competitive rivalry a company has, along with the number of similar products and services they offer, the less power the company holds. 

When the company has a high level of competitive rivalry, suppliers and buyers will gravitate toward the lower prices, while when competition is low, companies have more control over the prices they charge and the terms of their deals.

More power equates to a competitive advantage which typically equates to more sales and profits. Hence, why industry competition and competitive forces shape strategy.

2. The potential of new entrants into an industry

Of course, new entrants into the market also pose a threat to a company’s power. This can be measured by looking at the amount of time and cost it would take to be a potential competitor. The more resources needed, the more established the company’s position. 

The stronger the barriers to entry, the better for companies already positioned in the market. 

3. The power of suppliers

This point in Porter's five forces analysis model looks at the power the suppliers hold in terms of driving up the costs of resources. This can be determined by looking at the number of suppliers available, how unique their products are, and the cost of a company switching to another supplier. 

The fewer the number of suppliers, the more a company depends on them in turn driving up the supplier’s power. The supplier then has more control over their input costs which can result in lower profits for the company. 

4. The power of customers

The power of customers looks at how much control the consumer has to drive a company’s prices down. This looks at the number of customers a company has, the impact of each customer, and the cost of finding new customers or markets to sell to. 

The smaller the customer base, the more power they have to negotiate lower prices. While a larger customer base with many smaller clients is able to charge higher prices and in turn increase profitability. 

5. The threat of substitutes

The final of Porter’s Five Forces analysis model is the threat of substitutes and looks at the threat that substitutes goods and services can pose to a company. The more unique and more difficult a product or service is to substitute, the better the company’s positioning. As consumers will have little else to turn to, the company automatically accumulates more power. 

These Five Forces analysis can assist a company in building a strategy that ensures well-utilized resources and boosted profits, however, this strategy will need to be consistently visited to ensure that any changes in the external environment are factored in. 

What are the downsides of Porter’s Five Forces?

The most pressing downside of the Five Forces model is that it was designed to look at an individual company, as opposed to the wider industry. Additionally, this proves difficult when the company falls into two or more industries, making the framework less impactful. 

The final downside is that the model is designed to measure all five aspects equally against each other which isn’t always the case. Some factors might be more prevalent in one industry but less relevant in another. 

Porter's Five Forces Model vs SWOT analysis

Another tool used in the business sector is SWOT analysis, which looks at the strengths, weaknesses, opportunities, and threats of existing companies. When comparing the two the most prominent differentiation is that Porter’s Five Forces model tends to examine the external environment and competitive strategy of a company while SWOT looks at the internal aspects of an organization. 

In conclusion

This business analysis model aids in assessing the competitive landscape within a company's industry. The level of influence a company wields across these factors could potentially shape future profitability.

Porter’s Five Forces forces company’s to look beyond their organization and at the greater industry structure in order to map out future plans and strategies. While this framework still plays a valuable role in the business sector, it should not be the only tool used by a company to determine its strategy. 

‍

‍

In this article, we're helping you understand the difference between the two terms: revenue vs profit. While both are imperative to a business, understanding the difference between revenue and profit is imperative to you navigating the landscape. 

The primary goal of every business is to make money. In order to do so, firms must understand how they are going to generate revenue and where their resources will come from in the future. Primary operations are those that a company conducts in order to produce, sell, or provide goods or services with the aim of making money. 

The total amount of income generated by the sale of things or services associated with the company's core activities is known as revenue. After all the costs have been subtracted, profit is the amount of cash remaining after accounting for all expenses, obligations, supplementary streams, and operational expenditures. In the quest to discover the difference between revenue and profit we break these two concepts down below.

What is revenue?

The top line, or revenue, of an income statement, is typically referred to as the top line because it sits at the top of the income statement. Before any costs are subtracted, a company's revenue is how much money it makes.

For example, the money a grocery store makes from selling its goods before accounting for any expenses is its revenue. Income is not considered revenue if the company also has income from investments or a subsidiary company, as these don't come from the sale of goods. Additional income streams and various types of expenses are accounted for separately.

What is profit?

On the income statement, profit is typically known as net income, however, the term "bottom line" is more common among people. Profits appear on an organization's income statement in a variety of ways and are used for various purposes.

There are other profit margins​ that come before net profit, such as gross profit and operating profit.

Gross profit

Gross profit equals revenue minus the cost of goods sold, which consists of the direct material and labor expenses related to creating a company's products.

Operating profit

Operating profit equals gross profit minus other business expenses that are associated with running the company, such as rent, utilities, and payroll.

At the end of the day, profit is the amount of revenue a business brings in minus all operating and production costs.

Revenue vs profit

When people refer to a company's profit, they are usually referring to the net income, which is what's left after expenses. It is possible for a company to make money but still have a net loss.

In an example below illustrating the importance of understanding revenue and profit, say a company makes $10 million in the income generated. This sounds great, however, if the company's core business operations and debt add up to $12 million, the company is making a loss. Let's take a look at this example in greater detail below:

Business revenue or Total Net Sales: $10 million

Gross Profit: $4 million (total revenue of $10 million minus COGS of $6 million)

Operating Profit: $2 million (gross profit minus other business expenses such as rent, utilities, and payroll)

Profit or Net income: –$2 million (illustrating that the company is making a loss)

Profit will always be lower than revenue as this amount is determined after deducting all the operating and other costs. 

In conclusion

Companies base their success on two very important metrics: revenue vs profit. While revenue is referred to as the top line, a company's profit is what really matters and is referred to as the bottom line.

It is crucial for investors to take both revenue and profit into account when making investment decisions, and to review the company's income statement in order to get a full view of the company's financial health.

In summary, revenue denotes a company's earnings prior to considering expenses like debts, taxes, and other operational costs. Conversely, factors in all company expenses and operating costs. When it comes to comprehending the distinction between revenue and profit, the evidence solidifies the understanding.

‍

‍

We know the cryptocurrency market has a reputation for being volatile, however, these last few months have been particularly nail-biting for many investors. As markets swing in wild directions, some have made impressive gains while others have lost out. In this article, we explore whether crypto markets will ever overcome volatility and what one can do to gain financial stability in turbulent times. 

What causes the markets to be so volatile?

Due to a lack of central authority, the markets more accurately present investor sentiment, rising and falling as a result of the actions of people actively buying and selling. While volatility has a bad name and is certainly a hinder in terms of mainstream payment method adoption, it is valued by traders as it poses an opportunity to make big gains. Traders have created full-time jobs that benefit solely from the crypto market's volatility.

Regulatory frameworks are likely to positively affect the volatility prevalent in the digital currencies markets, but until that is implemented let's explore the biggest factors behind the volatility.

Entirely digital

Due to cryptocurrencies being digital and not backed by any commodity or real-world currency, their prices remain dependent on supply and demand. Essentially relying on faith: the prices will rise based on people believing in the product and accumulating more, while prices will drop when investors lose faith and sell. The markets remain volatile as investors are not concrete in their positions.

In its infancy

Cryptocurrencies have been around for just over a decade, a relatively short time for an asset of such influence. As the technology remains in its earlier years there is still plenty of development that needs to take place. So while Bitcoin has built an incredible market capitalization, there is still a long way for the cryptocurrency to go. 

This contributes to the market's volatility as markets tend to rise when new developments (upgrades, discoveries, implementations) take effect, while markets can fall when deadlines are missed or errors occur, leading investors to lose faith in the technology. 

Outside speculation

Arguably the biggest contributor to the market's volatility is the speculation surrounding cryptocurrencies. Predicting price swings and then acting on them has caused many an upward and downward spiral. From buying in just before the price rises to short just before a crash, speculation plays a large role in the market's swings and increased volatility. Speculation management is a key ingredient when it comes to successfully trading crypto.

Increased media coverage

Another great contender to volatility in the market is the media. Having a great influence over investor sentiment, the media has been behind many price swings in the market. With the power to launch or crash a market, the media plays into the narrative by encouraging investors to quickly buy or sell with attention-grabbing headlines.

Easy accessibility

The final factor to consider in the causes behind the market's infamous volatility is its accessibility. Stock markets and real estate typically attract a certain calibre of investors, while the entry requirements for trading crypto are very low. It does not require any licences, degrees, lawyers or heavy capital. Anyone can enter the market with a small amount of money and internet access.

The market has typically been dominated by retail investors, however, in recent years institutional investment has been on the rise. The simple way in which anyone can enter the market provides an open invitation for volatility. 

All playing their own role, these factors contribute to market prices being thrown in seemingly random directions at unpredictable time intervals. Understanding the fast nature of price swings and what might be behind them will contribute to investors and traders gaining a tighter grip on what might happen next. 

Can the market stabilize?

Now that we've explored what factors are behind the volatility, let's dive into whether the markets could stabilize. Bitcoin maximalists claim that once Bitcoin reaches a level of adoption, the price will stabilize. While there are no clear criteria for what "adoption" is, the theory remains true. 

According to this data, Bitcoin is currently the 14th biggest currency in the world, sitting comfortably between the Swiss Franc and the Thai Baht. This illustrates the cryptocurrency's affirmative dominance despite its volatility. 

Will it improve with time, or will a seismic shift in the way people perceive cryptocurrency ultimately solve the volatility issues. At this time, one can't say for sure. So in the meantime, continue HODLing if that's what you came here to do, or leverage the swings as you trade, in the end, you can make gains either way and still come out smiling. 

How to maintain financial stability in volatile markets

First and foremost, never invest more than you're willing to lose. This is the golden rule of trading across all asset classes. The next universal rule is to not act on emotions, do not make impulsive decisions when it comes to your trading portfolio, rather expect volatility and have a plan. Below we outline several tips on how to remain calm in stormy markets.

• Do not pay attention to short-term fluctuations and rather stay focused for the long term.
• Create a limit order that will automatically execute if markets crash. This will create a safety net should things turn south.
• Consider that typically when volatility subsides, prices increase.
• Remember why you started being interested in this asset and refer back to its potential.
  ‍

The post-pandemic working world is a different place entirely. These days, many people have given up their nine to five jobs to work from home, joining the gig economy where projects are more short-term and schedules are flexible. After all, all one needs is a reliable internet connection and a space to work.

These temporary projects allow for more freedom when it comes to creative license, time constraints and living a life best suited to the individual. And they just got a whole lot easier thanks to the electronic cash system that is Bitcoin (and other crypto assets).

The Gig Economy Meets Blockchain

There are plenty of upsides to working in the gig economy, most notably that you can pick your own hours. As you are in control of your schedule you can choose your vacation times, you’re your own boss, and you get to choose what jobs you take on.

In the UK alone the gig economy between 2016 and 2019 doubled in size, equating to a staggering 4.7 million workers. Meanwhile, in the European Union, the number of freelancers rose by 24% between 2008 and 2015, from 7.7 million to 9.6 million people.

The U.S. Bureau of Labor Statistics reported that 36% of all employees in the United States are part of the gig economy, approximately 57 million people. Unfortunately of these 57 million, 58% reported that they have not been paid for work that has been completed. 

This problem could be solved through the use of blockchain and smart contracts. Smart contracts are digital agreements that automatically execute once the criteria have been met. Say you agree to complete a project within a certain time frame, once the project is completed and submitted, the payment is released. No need to request or accept payment, the funds are cleared and deposited directly into their wallet.

Another positive to merging the gig economy with blockchain technology is the use of cryptocurrencies. 

4 reasons why getting paid in crypto makes sense

While smart contracts would need to be made in order for them to smoothen out the wrinkles of unpaid jobs, cryptocurrencies are available right now. The benefits of crypto transactions when it comes to working remotely just make sense.‍

1) Cryptocurrency transactions are fast and cheap
‍While the thought of using Bitcoin payments might sound scary, they are in fact incredibly simple to send, receive and withdraw. With the use of blockchain technology and the Bitcoin network, international transactions can be completed in minutes with considerably fewer fees. Not just Bitcoin, all digital currencies for that matter.

All you need to do is pick a cryptocurrency, share your wallet address and wait for the crypto transaction to clear. Through the Tap mobile app you can then use the funds to pay bills or sell them for fiat currencies and send them to your personal Tap account to spend as you please or directly to your bank account. 

2) Anyone can make crypto payments
‍While opening a bank account is typically a very tedious task, opening a crypto account is very easy. Anyone anywhere in the world can easily create an account, add funds, and start transacting. As the network is entirely digital, employees and employers based anywhere in the world can tap into this and effortlessly make crypto payments.

3) You can work from anywhere
‍On that note, cryptocurrencies give you the freedom to work anywhere in the world as there are no constraints on receiving payments allowing you to sell your skills in the global market. There has also been an increase in jobs looking for freelancers that are willing to accept Bitcoin, goodbye central banks and hello digital assets‍

4) Low transaction fees make small jobs worth it 
‍If you've ever been hesitant about accepting small jobs, this is the one for you. When small jobs pay less, the payments might frequently be entirely overwhelmed by the transaction fees associated with receiving your payment for the job.

That is not the case when it comes to some cryptocurrencies, with Litecoin for example charging merely $0.02 per transaction. 

How to get paid in cryptocurrencies

If you’ve decided to take the plunge, you can either request that your employer pays in crypto, or specifically look for crypto-paying jobs (more on this below). The next step is to set up an account from where you can receive said crypto.

The Tap mobile app will tick all the boxes, and opening an account is incredibly simple. First, you will need to download the app and then register. You’ll be asked to fill in some personal information and then verify your identity with a government-issued identity document. This is all very normal and is required by law. 

Once you are verified, head to the home page, select the Crypto wallet and choose a cryptocurrency you would like to receive / the cryptocurrency you will be paid in. Then select Receive and send the wallet address to your employer/contractor. You will get a notification when the funds arrive in your account. 

If you're interested in jobs that offer cryptocurrency payments, consider exploring platforms like Purse.io, Ethlance and Coinality. These platforms are part of the gig economy and provide opportunities to earn cryptocurrencies. Best of luck in your search!