Find us on Google+ My Sensible Cent: September 2013

Monday, September 16, 2013

Understanding The Basics of Employment Contracts

Recently, a job seeker wrote to me this email excerpt about employment contract. I thought it is wise to shed some light on the issue and share it with you.
“I have been working on contract basis for a few years now, and the contract period is about to end. The contract also says that unless otherwise, the employment terms continue even after date of contract ends. I would like to have it renewed officially plus also review some of my contract terms.
Please write about;
1. How to notify your employer of contract periods ending.
2. How long before the end date is it appropriate to send the reminder”
An employment contract is an agreement between an employer and an employee; which sets out their employment rights, responsibilities and duties. These are referred to as the ‘terms’ of the contract. Employment contracts can be very simple or very complicated. A thing that many people seem to underestimate and even neglect is the fact that you need to have an employer and an employee employment contract.
There are different types of employment contracts: permanent, fixed, temporary, project.
1. A permanent contract- This is used when an employee is hired on a permanent basis.
2. A temporary contract- Used when more work is expected for a certain amount of time but it is not sure for how long. It may be a few months, a few weeks and even a few days. You should absolutely state that the contract can be terminated by the employer in case there is not enough work. The reason for this contract is mainly to deal with peak work.
Employment Agreement
Understand your Employment Contract before you sign it.
3. A fixed contract – It is almost like the permanent with the only difference that it has a predetermined start and end date. The relationship between an employee and an employer ends after the end date.
4. The project contract serves well when you have a project to finish but you have no idea how long it will last. The employment ends when the project is completed. It is essential to provide incentives so that the employee does not delay the project deliberately. Also be sure to include the terms how you can terminate a contract when an employee does not perform their duties.
Components of a contract
Having a written contract could cut out later disputes and help you understand your employment rights. A normal employment contract should have:
1. Terms- The term indicates when the contract should begin and when the contract should end. Many if not most employment contracts tend to run from 3 to 5 years.
2. Specific duties i.e. job description. This is a very important part of any employment contract because it is the basis for any employers claim to fire you “for cause”. Many times this section will be generic or general in nature, but for your sake you want it to be as specific as possible.
3. Compensation- How much will you earn? This usually discusses the minimum salary as well as lays out any bonuses or stock options and things of this nature that you can expect.
4. Vacation time- How often each year and for how long can you expect to have a vacation? Can your vacation days be accrued? Will you be paid in place of a vacation? These are all things that you can expect to find in this section of your employment contract.
5. Benefits, including life and health insurance, and any sort of pension plans you can expect your company to provide will be found in this section. You can also find information on relocation expenses especially if you will be moving to your new job from another area of the country or world.
6. Termination- We don’t like to think about this but it’s good to be spelled out before hand in your contract exactly what circumstances will lead to your termination. It will probably also discuss how you yourself can terminate your employment contract; making it a very important section.
7. Dismissal pay- In the case of getting fired; you will get a downward trend/ drop in your career. The contract should specify under what circumstances will these things occur? Also it should specify the notice you should be given and the amount of money to be paid to you.
8. Disability provision- This is optional and depends on the nature of the job. It  discusses exactly what happens should you be unable to continue your employment due to disability; as well as what does and what does not constitute a breach of contract when it comes to disability.
The contract binds you and your employer until it ends; by giving notice or until the terms are changed in agreement between you and your employer. How long before the end date is it appropriate to send the reminder. Also a reminder should be made to either parties just before the expiry of the contract.
1. For the Contract Notification. This depends on whether the contract is renewable or not. If it is renewable both your employer and you have a responsibility to give a notification to each other. The period may vary from 1 month to 2 weeks before expiry of the contract. In this case you can thank the employer for his continued support and either request for renewal of course citing some reasons or you can end the contract if you do not wish to continue.
2. The contract may be non renewable, like for project contracts you can either write to thank the employer for working with you and request him/her to get to you  if another opportunity arises. However, you may choose to be silent until the contracts ends and you leave the place depending on the experience you had while  working for the company.
Dorcas is a Human Resource Consultant at Corporate Staffing Services. Website:

Thursday, September 12, 2013

3 Easy Steps of Building an Emergency Fund

When you're trying to keep control of your personal finances you want to view your credit score, examine your credit reports, and create a budged. Another of the key tools you should have in place is an emergency fund. Many people are trying to avoid using credit when it comes to paying for emergencies. Adding to your credit can actually put you in less financial control. You end up paying more in interest and then having to budget more money to repay the debt. However, having an emergency fund set aside for true emergencies can help get you through a difficult period without having to resort to using credit. Take a look at these three simple steps for how to build an emergency fund.

Setting a Goal

The very first thing you need to do is establish a goal for how much money your emergency savings fund should have. This goal needs to be realistic and useful. If you set a goal that will take you three years to achieve, you're going to become very frustrated. You may never reach the goal. If you set the goal too low, you may find that it isn't enough of a fund to deal with most of the emergencies you might encounter.
You may want to spend some time contemplating what emergencies you might encounter so that you can set a reasonable goal. Having to replace the tires on a vehicle, install a new hot water heater, or travel out of state for a funeral might be realistic examples of emergencies you might encounter. Do some calculations and come up with a realistic amount that will cover the most typical emergencies. No matter what you do, there are some emergencies for which you may not be prepared, such has having to do major home repairs or replace a vehicle. These should be taken into consideration when building an emergency fund.

Make Your Emergency Fund Available

This may be more problematic than you think. Your money needs to be available so that you can access it in an emergency, but it also needs to not be so convenient that you just dip into it once in a while because you've had a minor budget shortfall. Running out of money for groceries or some other budgeted expense is not an emergency -- it's a lack of planning. If you find yourself consistently running out of certain budgeted categories, you may need to revamp your budget. Whatever you do, don't fall into the trap of claiming that every little shortage is an emergency.
Leaving your emergency fund in a jar up in the cupboard is probably not the best choice. A better plan may be to keep it in a separate bank account which is accessible with an ATM or Visa card. What you don’t want to do is put it in a savings account or other controlled location where you can only get to it during certain hours of the day or days of the week. Most emergencies seem to happen during non-banking hours.

Establish a Saving Plan

An emergency fund is not the final goal of your savings efforts. It serves as a stop-gap measure to help deal with medium size emergencies so that you can avoid going into debt. It's a tool that will help achieve financial peace. It will not take care of those other problems which you know will one day appear.
Look at your budget and find places where you can trim some money. It may only be 4 or 5%  in one category and 3 or 4% in another. It is, however, how you will achieve a beginning to your saving plan. After you have reviewed your finances, you may find that your savings goals are out of reach. If gaining control over your finances is your ultimate goal, you may need to take some serious steps: getting a second job or working more hours, selling some replaceable assets so that you can pay down a bill, or downsizing a vehicle or where you live.

Whatever you do, don't give up. Budgeting and saving money can be a challenge, especially if you've never been successful at doing it before. Putting together a realistic plan is essential to achieve the financial control and stability for which you are looking.

Saturday, September 7, 2013

Fundamentals of International Bank Transfers

Today, life seems to be impossible without banks. They have become part and parcel of our lives. The new generation banks have been providing a lot of useful services apart from the basic lending and saving of money. It is because of these technological developments the banking sector is being able to spread its service across space and time.

Bank to bank transfers, be it national or international is becoming very popular among common men because of the unparallel safety and security offered during such transfers. These transfers are generally completed within a couple of hours. The transaction is done only if the sender has enough funds in his account. And once it reaches the bank at the receiving end, it will be cleared immediately and can be accessed quite easily. The banks at both the sending and receiving ends must have reciprocal accounts with each other else the transaction is made to a corresponding bank with a reciprocal account.

International Bank Transfers can not be made without the SWIFT/BIC code. SWIFT code which stands for Society for Worldwide Interbank Financial Telecommunication is also known as ISO 9362 or SWIFT BIC or even BIC code of SWIFT Id is the standard format of Bank Identifier Code. It is approved by the International Standard Organization (ISO). This code is alpha numeric and represents the bank. This code is used for interbank transfers and other interbank communication for secure transactions. 

How Does It Exactly Work?

The first step is obvious. The sender will have to approach the bank or whichever financial institution he wants to send the money from. The recipient will have to provide his/her account number along with the SWIFT code of the particular bank where the recipient has the account for transaction. 

The bank at the sending end will send a secure message to the bank at the receiving end and request for the payment as per the given instructions. 

It usually takes a few hours for the transfer to be completed and the funds to reach their destination account. But for some exceptions, it may take a few days too. 

All the bank transfers collect payment for the service offered from both the sender and the recipient. The bank at the sending end will collect the free from the sender and the bank at the receiving end will deduct the fee from the amount transferred. This will mean that the amount the recipient receives will be a bit less from what the sender had originally sent.

Money Management Myths that Prevent us From Being Wealthy

Most people make grave mistake with money which they are poised to regret later.
Bellow is a list of disturbing myths which distract people from achieving financial stability:
1.      I am doing well: Merely owning a big car, having a good salary, a nice house or title does not mean you have joined the crusade of wealthy individuals. It is very common to hear people boast of doing well just because they have managed to purchase an SUV. However, it should always be remembered that a car is not an investment but an additional expense. In fact those of us driving big cars without sound investment to back it are cruising on the highway to poverty.
2.      I will take a salary advance just this once: Most people induce poverty among themselves by spending beyond their means. Taking a salary advance does not increase your monthly income but depletes your finances for the following month. If you have to borrow money or take a salary advance, it has to be a real emergency. Now, fueling your car or taking your girlfriend for lunch is not one of them.
3.      Taking a loan because you can afford to repay: Borrowing money isn’t bad. However, there are good debts and bad debts. Good debts are those invested or put in business to generate income. Bad debts include mortgage loans, car loans and those taken for own consumption. Avoid bad debts at all costs.
4.      My home is the biggest asset: A home is not an investment. Even though we need a descent home, a big home is only good if you have income generating investments.
5.      I will save when I earn: There is no magical figure which will appear in your bank account as a saving. Saving, as we all know, is an uncomfortable choice that we have to make. The more you earn, the more you spend and therefore you will not have extra money to save if you don’t make it an obligation. Whenever you are paid, pay yourself first by transferring some small amount to your savings account. Yes, save a little from your peanut income, you won’t die. The future is soon coming and you don’t want to be caught off guard.
6.      Investments are complicated: Don’t fall prey to greedy financial advisers and traders who complicate the whole investment thing for their own gain. Learn on various investment options available. Read financial blogs, books, business news, magazines and also put interest in stock market. Get help on technical things, but learn the basics.
7.      I can delegate wealth creation: Some of us believe that investment is so complicated that they put their fate of making any cash on the hands of financial service providers like insurance firms, asset management firms and stock brokerage companies. They do not decide where to put their cash. Be in control of your cash or else you will have a lot of people to blame for your downfall. Remember, it is your fault that you are not saving or investing as you would wish and therefore blaming your boss, your bank, or your government won’t help.

8.      I have no money to invest: You will never have enough money even for your own expenditure. The cost of living keeps rising due to inflation. Hence, the additional income you will get in future will be eaten up by inflation. So, start saving now.