The most important factor when choosing to manage your personal finances effectively is time. A greater time investment will almost always result in a greater financial return.

Therefore the sooner you start to manage your finances, the greater return and financial ease you will feel in the future. Many people fail to plan ahead, which results in struggling to juggle finances at a later point in life.

Money management should focus on four primary questions:

1.       What financial goals would you like to achieve?

2.       When can you expect to achieve them?

3.       What finances do you currently have?

4.       What level of risk would you make to achieve these targets?

Choosing somewhere to live is an essential in everybody’s lives, and therefore, buying a house will be the biggest financial purchase that people will make. The financial investment into a home will affect all your other finances.

Making big decisions on your lifestyle will affect your financial goals. If you consider a luxury holiday to be one of life’s essentials, you will have less money left over for savings and investments.

When do you want to retire? What expenses do you currently have? Deciding what your priorities are will help to determine what money you will have left.

It is worth assessing your current liabilities, as these expenditures and assets could be reduced or sold and free up money for the future.

Calculate how much spare money you have so that you can form an investment plan. Investments can vary dramatically. Some are high risk for higher reward or loss, and some are low risk for a steady growth on investment. It’s up to the individual to decide what level of risk you are prepared to make.

Once these considerations have been made and your plan is in places, it’s important to assess the decisions you’ve made and how they affect you on a day to day basis. You plan may be too restrictive, leaving you with not enough money to live on, or perhaps you could make greater short term sacrifices to benefit you in the long term.

A small amount of time spent on your current finances can be highly rewarding for your future.

The US economy saw its first growth in over a year, rising to an annual rate of 3.5% between July and September.

Experts believe that a major spending plan by the US government which featured a scrappage scheme to encourage the car sales market has been the main cause of the upturn.

Some economists believe that there could be more setbacks lurking ahead, despite the official statistics showing that the recession is over.

A spokesman at the White House announced that recent economic progression was “a welcome milestone” but it would take more time for a full recovery to be recognised.

The US economy had risen 0.9% in relation to the previous three months, whereas the UK economy remained in recession, unexpectedly dropping 0.4%.

Hugh Pym, the chief economics correspondent for the BBC, revealed that the growth rate of 3.5% was greater than the 3.3% predicted by most experts.

He continued:”The sheer scale of the stimulus in the US has made a big difference, it was much bigger in percentage terms than that in the UK.”

“That the US, the powerhouse of the world economy is growing once again, is good news for the global economy has a whole.”

The last time the US economy grew was in the second quarter of 2008, by an annual rate of 2,4%.

The National Bureau of Economic Research will reveal the full extent of the US economic climb from recession when it analyses all the factors.

Some factors were significantly responsible for helping US economy during the third quarter, according to the Commerce Department.

The spending on durable manufactured products rocketed up at an annual rate of 22.3% which was the highest quarterly figure since 2001 and was spearheaded by the ‘Cash for Clunkers’ scheme helping new car sales.

Consumer spending increased on housing products by 23.4%, the greatest quarterly surge in 23 years, and came as a result of an improving housing market.

The big increase is considered by many to be due to the government’s $8,000 tax credit provided to first-time house buyers.

Government spending increased by 7.9% as stimulus spending spread and exports saw their biggest rise since 1996, rising by 21.4%.

Brian Bethune, an economist for HIS Global Insight stated that “it’s good to have the economy growing again.”

“But we don’t think that rate of growth is sustainable because it is distorted by all the government stimulus.”

“The challenge here is to get organic growth - growth that isn’t helped by fiscal steroids.”

However, unemployment is at a rate of 9.8% and a sharp fall came in September in the car sales industry as a result of the popular car scrappage scheme coming to an end in August.

Dean Baker, co-director of the Centre of Economic Policy Research believes that “you can say that the recession is over, but it sure won’t feel like that.”

“There is a lot of downward momentum that isn’t going to go.”

Plans to split British bank Northen Rock in two which would allow for its partial sale has been granted by the European Union.

The divide would result in two separate banks forming and are already being described as the “good” and “bad” banks.

The “good” bank would offer new lending, retain some of the existing mortgages and hold its savers’ money.

The “bad” bank would be used to repay the existing government loans and hold the remaining loans.

 Decisions made by the EU to accept the move are seen by Northern Rock as “an important and positive step.”

Changes to the existing setup will be made towards the end of the year.

The EU revealed that the good portion of the bank would be expected to grow and then be sold to third party, with the bad bank allowing its assets to dissolve then becoming liquidated.

The good bank may be sold prior to the general election next year with potential buyers being speculated already, with Virgin and National Australia Bank, owner of Clydesdale and Yorkshire Bank, among the interested parties.

EU Competition Commissioner, Neelie Kroes, believes that the move would make the bank a good long-term option, revealing that “this decision demonstrates once again that the EU’s state aid rules provide an appropriate framework to allow state support for a sustainable restructuring of banks without giving individual banks an unfair competitive advantage.”

Whilst Jonathan Todd, European Commission spokesman, said caps would need to be applied for the duration that the good bank remains owned by the public.

Some of the caps include a balance sheet reduced to a quarter of its size prior to the crisis, not being the market leader for loan interest rates, a cap set to limit its lending to one-third of Northern Rock’s 2008 levels and also a cap on retail deposits to be slightly lower than the pre-crisis level.

An investigation was engaged by the EU into Northern Rock in April 2008, two months after its nationalisation.

The results from the investigation showed that the UK government was kept at a “necessary minimum”.

By 30 June, the bank had paid back approximately half the taxpayers’ £26.9bn loan and will gain a further £8bn from the government during the end of year restructuring.

The EU stated that the restructuring would reduce its market share to below half of its pre-crisis level and “correct the excessive expansion of Northern Rock pre-crisis.”

Northern Rock released a statement, saying “this approval is an essential requirement of the planned legal and capital restructure, which is central to the business plan for Northern Rock.”

“The restructure will strengthen the capital and liquidity position of Northern Rock significantly, and offers value for money to taxpayers” and it would be “business as usual” for its customers.

Alistair Darling has announced that the government must borrow its way to recovery and believes that it’s the best avenue for the UK economy in the long run.

The Chancellor of the Exchequer confessed that further national borrowing “may feel counter-intuitive,” but “will mean the bills we face as a country are lower” in the long run.

However, many believe that the levels of government debt are already too high, with cuts in public spending and tax rises required. The government has already raised borrowing during the recession by high amounts.

Following Mr Darling’s speech, a question-and-answer session was held, with the chancellor finding agreement with Mervyn King, the Bank of England Governor, stating that there were “no simple answers” when it came to the reform of big banks.

According to Mervyn King, their core business may need to be divided into other practices to prevent them from becoming so big that they aren’t allowed to fail.

Mr Darling was concerned that “we cannot have a regulatory regime that excludes the possibility of failure.”

He went on to state that the banking sector needed more competition, and when the government came to selling its bank stakes that were bought during the financial crisis, it would be hoping to develop greater competition.

Many are calling for a reduction to the borrowing and spending that has caused so much debt, but Mr Darling believes that withdrawing government support would be “wrong and dangerous,” and the country would have to make a big decision.

At a speech in London, Mr Darling declared that “we can resign ourselves to a decade of austerity, low growth and low employment, or we can embrace change, turn it to our advantage and seize the huge opportunities a global recovery will bring.”

He continued by warning that withdrawing government support to the economy “would put the recovery at risk and abandon people facing unemployment.”

In a bid to encourage demand during the recession, the government has pushed billions of pounds into the economy through its £175bn quantitative easing plan, cut the VAT rate and helping ailing banks.

According to Mr Darling, a great deal of work was still required to steer the country out of the recession, including three big steps.

“First, we must support the economy until we’re sure the recession is over. Some are tempted to think the crisis is over. It’s not. Banks all over the world are still dependent on government support.”

The second step would involve raising taxes to regain financial strength and taking “tough choices on public spending for the years ahead”.

He added, that it “will mean cutting costs, cutting waste and cutting lower priority budgets, while continuing to invest in our priorities and our future.”

His third step would involve a government plan of growth.

“We need growth, because when we grow, the economy becomes bigger, we all become richer as a country, and it gets easier to pay back debt.”

Lloyds Banking Group announced on Friday that it has reached an agreement to sell its estate agency arm, Halifax Estate Agencies, to LSL Property Services for just £1.

The sale of Halifax Estate Agencies (HEA) will result in the closure of approximately 121 Halifax banking counters which are situated within the estate agency chain’s branches, potentially causing 460 people to lose their jobs as a result.

With 218 branches, HEA is the fourth biggest network of estate agencies in the UK. The lack of residential property sales saw a pre-tax loss of £2m, a dramatic drop from their £34m profit in 2007.

HBOS became acquired by Lloyds during a controversial deal made earlier this year.

Lloyds released a statement on Friday, stating that the decision to sell was made as a result of considered reviews by the bank and “concluded that an estate agency operation is no longer integral to its business model”.

The decision comes after measures were made in August by Lloyds announced it was to sell its Insight asset management business to Bank of New York Mellon for £235m.

In efforts to gain approval from the European Commission for aid from the UK government, Lloyds are expected to make big cuts.

LSL currently own a range of estate agencies, such as Your Move, Reeds Rains and InterCounty. The addition of HEA would result in 584 branches and increase their estate agency portfolio to become the second-largest estate agency network in the UK.

LSL considers HEA to have been run to primarily distribute financial services products and held great potential for their business.

“This is a significant opportunity for LSL to acquire a high-quality branch network, an established asset management business and pipeline of sales on favourable commercial terms at a low point in the economic cycle.”

Shares in LSL increased by 5% to 275p and Lloyds shares increased 3.4% to 94.52p during early Friday.

The deal is expected to be completed in January 2010, and include approximately 1050 HEA staff transferring to work for LSL as a part of the agreement.

On Friday, a statement was released by LSL suggested that the acquisition of HEA had been traded ahead of management expectations made in July, with turnover for the 8 months up to 31 August, down by 18%.

LSL revealed that they await the results of 2010 with caution, confessing that “any recovery is likely to be constrained by the availability of mortgage credit and general economic backdrop.”

Sir Fred Goodwin, Royal Bank of Scotland kingpin warned today that the turmoil in the credit markets is likely to continue for at least another year, and said the Bank’s “risk appetite is tempered”.

Discussing an “adjustment” in financial markets, Sir Fred said: “It is difficult to see it would take less than 12 months to work its way through.”

He added that “there’s clearly more bad news than good news, there’s almost exclusively bad news, but I don’t think we’re looking at the end of the world.” He saw “chinks of light” in some areas of capital markets and repeatedly reiterated that the bank “remains very much open for business”.

Sir Fred’s comments came as RBS, which raised £12bn from the biggest ever rights issue earlier this week, reassured investors in a trading update that its performance and writedowns on risky assets remain in line with previous guidance. RBS said in April that it expects a hit of £5.9bn before tax from its credit market exposures this year.

Banking shares rose on the news and were the top performers on the FTSE 100 in early trading as traders were relieved that there had not been a further deterioration in the RBS loan book. The bank’s shares climbed 4.75p to 238.5p but were down later, by 3p to 230.25p. HBOS was up 4.5p to 296.5p and Lloyds TSB rose 3.75p to 355.25p.

“The coming months I look to with caution but with a degree of optimism. It’s ’steady as she goes’ at this point. The business continues to perform satisfactorily on an underlying basis. There is business to be done and we’re doing it,” Sir Fred said, while acknowledging that the credit crunch is holding back the performance of many of RBS’s businesses.

ABN Amro, the Dutch bank acquired by RBS last year, is performing better than expected in terms of revenues and costs, it said.

Sir Fred said the bank is confident of selling its insurance arm for the price it had in mind at the start of the auction despite continued market turbulence. The operations, which include Direct Line and Churchill, were put up for sale in April with an expected price tag of up to £7bn.

“There are a number of people who would all ostensibly be good owners and capable of paying the price that we’re looking for,” he said. “We had a price in our minds that we were looking for at the start of the process and that hasn’t changed. We’re determined not to sell this for an undervalue, but at this point that doesn’t look like an option that’s going to come to pass.”

Sir Fred refused to give a forecast for UK house prices falls in the coming months but said it would “not be nearly as bad as in the US”.

Commenting on the £12bn rights issue, Sir Fred said “It was a good opportunity to be interacting with our shareholders but it won’t go down as an enjoyable experience,” referring to the “gyrations” which he said weren’t surprising given the size of the cash call and the “very exceptional market circumstances”.

In an effort to ensure there is no repeat of the Northern Rock fiasco, the Bank of England will have to draft in a panel of eminent City figures to ensure it is more alert to looming financial trouble, revealed chancellor Alistair Darling on yesterday.

Mt Darling has instructed City insiders to sit on the shoulder of the Bank’s governor Mervyn King, as part of an overhaul designed to put financial stability “right at the front” of its operations.

It is expected that, while Mr King may not welcome such oversight, there were signs that it could be a quid pro quo for him winning a related tussle with the treasury over the choice of a new deputy governor for monetary policy to replace Rachel Lomax.

Mr King has argued strongly that she should be replaced by Charles Bean, the Banks chief economist, on the grounds he needs a deputy with a strong monetary policy background to lead the fight against inflation. Mindful of the Banks weakness on financial stability issues, some Treasury officials have been promoting the claim of Paul Tucker, the head of markets.

Although Mr Darling has made it a priority to boost the Banks financial stability expertise, Treasury officials said the now expect the chancellor to back Mr Bean for the job. For this to be acceptable, the chancellor will demand that the bank accepts more external advice on city issues and formal oversight of its decisions on financial stability.

This reflects a considerable departure from the Treasury’s initially limited plans for reform of the Banks role in financial stability, set out in January.

Mr Darling told the Commons on Thursday “we should learn from the example of the monetary policy committee”, where outside experts were drawn in to help in making interest rate decisions.

He said there should be “a similar approach in relation to financial stability so that we can bring in outside expertise to advise the governor and of course the appropriate deputy governor”.

This reflects the Treasury view that the Bank is underpowered in the financial stability area; however Mr Darling’s team denies this because, after Gordon Browns shake up in 1997, much of the expertise in that area was transferred to the FSA.

The full details of the new system have not yet been finalised, though Treasury and Bank officials said the new financial stability advisers would not acquire the decision-making powers of the MPC.

“It would not be a hard operational role, it might involve scrutinising decisions but potentially it’s more than that,” said one Darling ally.

At this point it is unclear how the Treasury intend to find panel members who were both credible yet had no conflicts of interest.

Mr Darling’s aides say giving the Banks enhanced City expertise would not mean he is ditching his plan to give the FSA controversial new powers to intervene in failing banks, which is the centrepiece of new banking legislation.

The bank is concerned however, that it will have responsibility to foster financial stability but few powers. Mr King has proposed having the power to intervene progressively in the supervision of banks as their financial positions weaken.

Independent Financial Advisers (IFA) and the charges which they will take from you have always been something of a controversial issue with many looking to sort out their financial security. To many people they are just the gap between those who need a service and those who offer a service, but is there more to it?

Many people seem to be under the impression that IFAs are simply there to take you money and pass you on when this is certainly not the case. On the whole they offer an excellent service and a service which many people will ignore at their peril. The financial markets and the number of financial products on the market is a minefield for the general public, but when fees are mentioned many people suddenly become experts!

The problem for many people is the fact that the IFA industry has, and continues to (to a lesser extent than years gone by), attract rogue traders and those willing to cut corners to get the fee income in. At the end of the day you get what you pay for, so if you are looking to cut costs to the bone, but still expect a high level of service, then you are taking a chance.

The subject of commissions has always been a rather contentious area with some IFAs in the past concealing the fact that they were receiving commission when guiding you towards a certain products or a certain company. Those days have gone and under law each IFA is now required to confirm what commissions they will be receiving with regards to any transactions they organise for you.

The services offered in general are of a standard which is far higher than in years gone by, and one fact which many people seem to forget, if it all goes wrong and you lose money through “bad” advice, there are ways and means to claim compensation. Not only can you sue the IFA involved but there are also a variety of industry funded compensation schemes which may be available to those who have suffered financial loss.

If your monthly salary is not covering the extra burden created by the increased food costs, gas and electricity bills, council taxes and water rates then what are the other options? For many UK families it is time to find that extra money to overcome the present difficult situation. Credit card providers are also using the ostensible ‘zero percent rate tarts’ to lure their customers to spend more through their credit cards. But, you should be aware of the rate charged by the credit card provider after the initial zero percent rate phase as the company will try to recover the money that they have lost earlier by charging higher interest rates.

The standard credit card rates these days are at 17.01 percent and the average unsecured personal loans are offered at 8.44 percent. So, the consumers should make a wise decision if they need extra money. If the credit history is good, then they can take personal loans than meeting the expenses with their credit cards. On the other hand, this is not a permanent solution to your tough financial situation and hence you need to work out some new methods to balance the income and expenditure graph.

Most of the borrowers are also embarrassed by the non-availability of cheaper mortgage deals. It is estimated that as many as 1.4 million people wanted to remortgage their loans which have higher rate of interest this year. But, the financial crunch has made the building societies and banks to pick their customers with caution. These institutions are carefully evaluating the customer’s credit record and equity before lending any mortgage loan. So, many householders are finding it difficult to switch over to another cheap deal. Also, those who are paying variable rates for their mortgages have to pay more from their pocket as the rates are hovering around 7.5 percent at this time.

The UK consumers are also facing increased car insurance premiums due to the raised petrol prices which had increased the cost of motoring. It is estimated that the premiums have gone up by 5% and you should think of some other cheaper deal if your insurance company is increasing the premium every now and then. Many insurance providers also charge for providing the monthly direct debit payment facility. So, you should add up the costs to your premium to calculate the exact amount that you are paying and then only you should sign up the car insurance deal from some other company.

To find a solution to the financial crunch you need to make a budget of the expenses that you have to meet and also try to note every penny that you spend. This will help in reducing frivolous spending and you can cut on the unnecessary expenditure. But, never take some hasty decision on a panic mode as this will further worsen the situation. Don’t get lured by the attractive offers that the financial institutions are offering; think twice prior to borrowing and calculate your repayment capacity before signing up the loan.

Bank policymakers of UK are concerned about the expected high inflation levels and the consequences the industry will face. It is feared that the inflation will increase over the period. Bank of England is struggling with the rising price pressures and slow growth rates and the soaring inflation expectations will also affect the interest rates as it will come down more slowly than expected. Bank of England in its February survey stated that the public expect the inflation to be around 3.3 percent in the coming year and also the current inflation levels have jumped to a record level of 3.9 percent.

Bank of England setters have also warned that the impending inflation originated by the rising and falling cost of worldwide commodities will worsen the situation further and the actual threat to UK’s economy will be further price hikes and more expectations of the public which may lead to higher inflation levels.

BoE has reserved the rates at 5.25 percent during the first week of this month however shareholders are making a bet that the rates will fall as low as 4.5 percent within this year. This kind of predictions also makes the position of the Monetary Policy Committee more difficult as this dampens the interest rate cut in the near-term. It is believed that the workers may demand higher wages to meet the rising prices of commodities and the industry will be forced to increase the wages to retain them.

Many economists feel that the consumer’s inflation expectations are overly influenced by the increased price of essential commodities such as petrol and bread. According to the economists, because of the latest price hikes and the increased rates of food price the public tend to expect the inflation to grow at a higher rate and the fact that this piece of information is widely exposed further supplements the belief.

The CPI inflation as per the last reading was 2.2 percent in January. The retail price index which also comprises of mortgage payments was 4.1 percent during this period and the news has created much concern for BoE as the high inflation expectations will reduce the chances of quick cut in interest rates. Since December, Bank of England has undertaken two quarter-point cuts and has kept the standard rate at 5.25 percent. So, for the moment the economists feel that the Bank’s apprehension about inflation has balanced its growth fears.

The prime factors that affected the CPI had also affected the RPI and the mortgage interest payments had a downhill effect on the RPI during this month. Also, the RPIX inflation on all the items excluding mortgage interest payments had risen to 3.4 percent in January from the 3.1 percent mark in December. Moreover, the largest growing pressure on RPI is due to the raise in the price of fuels. With oil prices at 110 dollars, the inflation rate may further rise to record prices and economists are also voicing their fears to the Government.