8 Important Financial Tips for You

The year is already half over … how have you done in regards to your New Year’s resolutions?

Saving money is number one on most peoples’ list, yet very few actually achieve this goal. The good news is that it’s never too late to work on your personal and business financial position, and just because it’s been six months since making that resolution, it doesn’t mean you can’t start fixing things – right NOW.

Whether you are well on your way to financial prosperity, or will only be getting started after reading this article, here are eight handy tips that will improve your finances before the end of the year.

1. Live within your means. Although it is more exciting to spend lavishly and have a lot of nice things, it is much smarter to live within your means. You don’t want to be living paycheck to paycheck, or even worse, using credit cards for general living expenses. Unless you make a conscious effort to spend less than you earn you will never get ahead. If you’re living beyond your means, whether you’re on an annual income of $200,000 or $20,000, you’ll be in the same boat.

2. Define your savings goals. Instead of a general ‘I want to save money’, specific goals with figures and deadlines work best. If you’re wondering whether to splurge out on an expensive, new T.V., knowing that the $2,000 asking price could instead make a huge contribution to that down payment you’ll need in a few months will lessen the temptation to splurge. An intangible ‘I need to save money’ doesn’t give you the same power to resist temptation.  Everybody responds differently, but in general you should sit down and write a list of your needs and goals. Appropriate goals would include an emergency fund (equivalent to at least six to nine months of living expense), a house down payment, medical expenses, college fund, baby fund, retirement fund, etc. If a fancy new T.V. is truly one of your goals, put it on the list too. Many people don’t realize that a few dollars here and there really adds up, but these are the same people who seem to be relying on that one in ten million chance of winning the lottery to provide for their future.

3. Invest in mutual funds. Don’t leave your hard-earned savings sitting idly in a passbook savings account. Invest your money in a mutual fund which has a much better return.

4. Open a Roth IRA (if you qualify). If you follow the rules correctly, with a Roth IRA you don’t have to pay tax on any gains you receive. Start one for your children by ‘hiring’ them once they reach working age, paying them $5,000 a year, and then investing that money in the IRA.

5. Slash credit card debt. In the U.S., credit card debt is at an alarming level – and generally has an extremely high interest rate. If you have a credit card, pay it off in full each month – never leaving an amount to carry forward to the next month.

6. Set up a trust and a will. Only 50 percent of Americans have wills! Without one, someone else gets to decide how your assets and funds are distributed after you pass away. Set up a trust account for your family and make a will to properly divide up your assets.

7. Insure, insure, insure. Many people do the right thing and take out insurance coverage. The problem is, needs and circumstances change over time. At least once a year, review your current level of insurance to make sure that it is sufficient to protect you and your family if the worst should happen. Some of the indicators that your level of insurance should be adjusted are taking on new debt, additions to the family, significant purchases such a taking out a mortgage, etc.

8. Don’t throw your money away! This tip may not apply to you since you are a client of ours but a lot of individuals aren’t aware of the different tax breaks available to them. The tax system may seem confusing, but you can always seek professional advice to find out what you are entitled to. Business owners are often the ones who overpay on their taxes each year. Make sure you research the tax breaks to see which you are entitled to, and keep up-to-date with any new tax breaks introduced.

Whether you have $1 in your bank account, or $100,000, these financial tips will certainly make a difference to your financial well-being. Don’t wait until January 1 to re-establish a New Year’s resolution, start today … start right now!

6 Nifty Ways to Improve Your Small Business

Regardless of whether you are a solo entrepreneur, or the head of your company
employing tens, if not hundreds, of employees, there’s no doubt about the
following. Your business is either on an upward or (hopefully not) a downward
path. The key is to ensure that you are always evolving, always improving, always
moving forward.

By focusing on the following six areas you’ll be setting yourself up for success.

1. Take your head out of the sand  Amazingly, few small business owners have even a clue about the important financial information underpinning their entire livelihood. There’s no need to be overwhelmed by the complicated details, but you should have a  system in place so that you can keep an eye on the big picture and financial trends at all times. That way, if trends flatten or suddenly start moving in the opposite direction, or there is a segment of your business not performing as well as the rest, you can easily spot it and take action.  A simple way to do this is to create a “Financial Dashboard” for your business. Instead of pages and pages of confusing financial information, this is a short report (preferably one page long) displaying the most important financial information in a way that is easy-to-read and shows, at a glance, how your business is tracking.  Successful business owners regularly track figures such as sales, gross and net margins, accounts receivables (total balance as well as days outstanding), inventory turnover, and the current ratio (current assets/current liabilities).

2. Set objectives or goals  Without a clear target to aim for, how will you ever know whether you’re headed in the right direction? It’s best to set objectives due for completion at certain points in time, such as one month, six months, twelve months, three to five years, and ten years. Before you set these goals however, it’s crucial to ensure they are reachable. You should be ambitious but realistic and set objectives that will require a concerted effort to achieve, but are not impossible. Impractical and unrealistic goals serve no purpose because the drive to reach them quickly fades once you can see that you’ve no chance of success.

3. Make your marketing/ advertising budget work for you  Successful promotion is not as easy as merely placing an ad in the Yellow Pages. It’s very easy to spend a lot of money on ineffective marketing, and then get discouraged when the results are less than you hoped for. Always trial various advertising methods and, importantly, monitor the return on your investment. This way you can learn what works for you and your particular business and concentrate your efforts there, while also letting go of the unsuccessful methods.  In a similar vein, sales skills (or lack thereof) can be a great opportunity for improvement. It’s quite possible for a simple tweaking of your sales script, process, or after- sales care, to make an enormous difference to your bottom line.

4. Employees can be your biggest asset  Face it, your employees are the ones performing the day-to-day tasks, and are probably the most likely to spot areas where efficiencies can be improved, or where processes could be managed better. Not only will an enthusiastic and respected employee work harder at their assigned tasks, but they will share their insights into improvement opportunities, which is beneficial for all involved. A disheartened, unmotivated, or just plain lazy employee may notice these opportunities yet do absolutely nothing about them.

5. Know your limits  All humans have strengths and weaknesses. The key is knowing what yours are so that you can harness and make best use of your strengths, while being confident enough to admit that there are areas with which you need assistance. By managing your resources and asking for help when you need it, you can draw upon the collective strengths of your entire network which can be beneficial for you and your business.

6. Take a Break  Often, people who start up small businesses do so with the dream of working for themselves and avoiding all the stress that comes with the daily grind of a 9-5 ‘normal’ job. However, we all soon realize that being a small business owner can be one of the most stressful things you can do and entails a heck of a lot of hard work. It can be easy to become disenchanted with the whole idea and start dreading what was once your passion. Sometimes, the best remedy is a short break, or time away from your regular routine to give you time to reflect and relax. Coming back to your small business refreshed and enthusiastic will enable you to perform at your best … which translates to improved performance for your business.