Month: April 2018

Money Management Strategies for The Self Employed

Entrepreneurs and home-based business owners take a few extra steps to manage their money. Find out creative way's to manage your self employed finances.

After you have weighed the pros and cons of a home-based business and decided that self-employment is right for you, your next step is to develop a plan. Your business plan should define your business and identify goals. When developing your plan, research laws that may impact your business. For starters, you must find out if you need a license or permit to operate your business. A good business plan also includes financial information such as a balance sheet and income statement.

When working on your business’ financial plan, don’t forget to develop a method for managing your new personal financial situation. Unfortunately, statistics show that many home-based businesses fail often due to poor financial planning. Following are some ideas to help make self-employment work for you.

Don’t underestimate your expenses. Fortunately, more than 40 percent of all home-based businesses require less than $5,000 for startup. However, there are many other costs associated with running a business. In your spending plan, don’t forget expenses such as childcare, insurance, postage, gas, and dry cleaning.

Manage your income. Most self-employed workers have sporadic incomes. If your income varies from month-to-month, determine your average monthly income. Then, if you have a month where you earn more than average, put the extra amount into a savings fund to supplement less lucrative months.

Avoid relying on credit cards. Borrowing from a credit card can quickly lead to costly trouble. If you need to use a credit card for business expenses, open an account specifically for that purpose. If you need money to launch your business, consider a small business loan instead.

Keep tabs on your taxes. Some self-employed individuals may have to pay up to a 15 percent self-employment tax in addition to their regular income taxes. To avoid tax-time surprises, periodically review your taxes throughout the year. Don’t forget to make necessary quarterly tax payments to avoid under-withholding penalties.

Keep accurate records. Complete all of your paperwork on-time, particularly if you are billing clients or customers. Many companies will take several weeks to process invoices. Keep copies of all receipts for tax time. Because networking is so important, keep business cards and contact information in an organized manner.

Get help. Consider working with a lawyer who can help you with necessary, and sometimes complex, legal matters. You should also contact your insurance agent to make sure you have appropriate coverage.

Finally, realize there is no need to reinvent the wheel. The Small Business Administration (SBA) estimates that home-based businesses make up half of US businesses; take advantage of their resources at sba.gov.

Facebooktwittergoogle_plusredditpinterestlinkedinmail

Set Yourself Up For Financial Success: Make A Family CFO

Organizing your financial paperwork helps you see just where you stand financially.

While all members should be aware of the family’s overall financial situation, choosing one person to conduct the day-to-day financial tasks is a good way to stay on top of things. The appointed individual should be organized and a good communicator. They should be given uninterrupted time to do their tasks effectively.

Consider making the job of family CFO easier by establishing an online bill payment service (offered free-of-charge by many banks and credit unions). Even better, check with your creditors about setting up automatic bill payments.

Designate a spot in your home for organizing financial paperwork. Used office supply stores offer great bargains on filing cabinets, or consider small plastic filing cabinets instead of metal or wood. If your goal is to have a paperless filing system, make sure that you back-up your computer regularly and invest in a good security program to prevent criminals from obtaining sensitive information. To keep your most valuable documents safe, consider opening a safety-deposit box at your local bank or credit union.

5 easy steps to get organized and save money

Did you know that being organized saves you money?

• You waste money buying duplicates of items you didn’t know you had
• You waste money on late charges because you can’t find the bills you need to pay, or you forget to pay them on time
• You also waste money not deciding in the store where you should store the item you’re thinking of buying, and then not using it

So now that you know why you should get organized, let’s discuss some practical tips to show you how you can get your finances organized. It’s a big myth that organizing is difficult and time-consuming. Yes, you do have to take some time initially to set up your system but unless you want to make things really complicated, it’ll only take you about 15 to 30 minutes.

1. Put all bills to be paid in a specific folder
When you bring in the mail, throw away the junk mail and envelopes immediately and only keep the actual bill in a dedicated plastic see-through envelope in a specific place. Arrange the bills in order of when they have to be paid so that the one facing you is also the most urgent bill.

This way you and the rest of your family always know exactly where to find all the bills.

2. Automate as many bill payments as possible
We live very busy lives so if you don’t have to think about paying it, all the better for you. That said, schedule a day of the month to check your online payments against your actual budget.

3. Dedicate a specific day or days of the month to pay your bills.
Mark off a date on your calendar when you pay bills. If your bills are due on different days of the month, you may need more than one date. Because life happens, schedule the date a couple of days before the payment is actually due so you don’t incur any late fees.

4. File
Once your bills are paid, file them in the way that’s easiest for you to manage. If you’re not a file puncher, don’t fool yourself that you will start punching and filing. The road to hell is paved with good intentions! 🙂

5. Maintain
Restrict your filing space so that it forces you to clear out old bills every 6 – 12 months. This easy-to-use system will take you only a minute or two a day, and about 30 minutes when you sit down and pay your bills.

For more on organizing your finances, I invite you to my private Facebook group, Cocktails, and Coins where I recently did a live broadcast about organizing your financial paperwork. How do you keep your financial paperwork organized? Let me know in the comments below.

Facebooktwittergoogle_plusredditpinterestlinkedinmail

6 Easy Steps To Raise Your Credit Score

With these 6 steps to raise your credit score, you can't go wrong.

Your credit report is essential in building a strong financial foundation. In the spirit of National Financial Literacy month let’s discuss some things you can do to raise your credit score. The better your credit score, the less you have to pay in interest. Just about every bill you pay is tracked by the three credit bureaus, TransUnion, Equifax, and Experian.

Your credit score is based on a risk measure invented by a company called Fair Isaac and is called your FICO score. This number lets companies know how good or bad a credit risk you are. Your score can range anywhere from 300 to 850. All credit bureaus use this scoring method as a basis to rate you as a good or bad risk.

There are six easy steps to getting and getting your credit score healthy.

Pull Your Credit Report

See what the three bureaus have to say about you. You can to http://www.annualcreditreport.com and order your reports from all three bureaus for free.

Check For Inaccuracies

Given your age, your credit report spans decades of your borrowing activity. It’s no surprise that errors sometimes occur. Some common credit-reporting mistakes include: outdated addresses, closed accounts being shown as open. Misspelled names are common mistakes as well. One last mistake happened to my husband, he had one of his brother’s accounts on his credit report, because they have the same last name and similar social security numbers.

Mend Your Uncreditworthy Ways

Those self-inflicted credit wounds, such as a history of late payments, defaults, or judgments will fade from your record over time. You won’t be able to wipe out accurate information from your credit report, nor can any firm who offers to do so for a fee, no matter what story the spin.

Pay On Time

Now that you have looked at your credit reports and corrected in inaccuracies, make sure to pay everything on time, every time. Also keep your debt level low, compared to credit available.

Credit Card Usage

Remember, a credit card is a credit card, not cash. Even though you may have been deemed worthy by some entity to borrow $50K doesn’t mean you actually have $50k, nor do you need to spend $50K.

Acceptable Level Of Debt

Your debt-to-income ratio is the measure of debt you carry to how much money (after taxes) you have coming in. In the world of lending, it is acceptable to carry 25% of your income in debt.

As you can see, it doesn’t take much work to keep your credit healthy, Just keep your spending under control, pay your bills on time, and don’t apply for extra credit too often.

If you are having trouble with your credit, I am taking appointments for consultations. Feel free to book your here.

Facebooktwittergoogle_plusredditpinterestlinkedinmail

Financial Literacy Basics

Financial literacy basics make for a strong financial foundation.

When I was in school, the most we learned about personal finance was how to write and check, how to balance a checkbook, and how compound interest works. Did you know that as few as 13 states require high school students to take and pass a personal finance course to graduate? I know that some of these may seem pretty basic, but you would be surprised the number of people who don’t know or understand these personal finance basics. Here are five personal finance basics everyone should know.

1. How To Budget

I was well into my twenties before I learned how to budget and I am not ashamed to say that. Budgeting is as simple as learning to prioritize. The best way to decide where your money goes is to create a monthly budget. First, calculate how much money you have coming in. Next, identify your needs, i.e. food, shelter, insurance, transportation. Finally, add those up and subtract from your monthly income. You may want to add your monthly savings to your needs, just to make sure that you are making saving a priority. Once this is done, you will know how much you have left over for discretionary spending. If you need help with setting a budget, you may want to participate in my beta test for the new Money Makeover Planner. 

2. The Time Value Of Money

Saving a small amount each day can do a world of good for your finances. Instead of spending that $8-10 a day on lunch try putting that amount in an interest-bearing savings account and let it sit. This concept is something that is beneficial to all ages but can be super beneficial to younger people, who can accumulate a lot of money over the years from learning simple steps to cut their daily expenses.

3. Checking Account versus Savings Account

Okay, I know this is super basic but I am going to cover it anyway. A savings account is an account in which you deposit money into and watch it grow to accumulate interest. Some banks may require you to have a minimum balance in order to keep the account open. Since you won’t be using this money daily it can grow. Daily use money is to be kept in a checking account. You can use the checks to pay for expenses such as bills. You can also get a debit card to go with the checking account so that you can make purchases or withdraw money from the ATM.

4. Debt

I understand some debt is unavoidable. Accumulating massive amounts of debt such as with student loans, credit cards or car loans can wreak havoc on your personal finance and credit score. The average household carries $16,000 in credit card debt. If you miss a payment on any of your debts it may be hard to recover.

5. Credit

A high credit score makes businesses like auto lenders, banks, and insurance companies view you as a trustworthy risk. When you are just starting out, opening a checking or savings account enables you to show lenders that you can manage money. Keeping your credit score high also helps with qualifying for that dream job you want, as many employers check your credit before hiring you.

 

Facebooktwittergoogle_plusredditpinterestlinkedinmail

The History Of Money

If you have ever wondered how money came to be, then you are in the right place. This money history lesson is a great start to a financial literacy foundation.

Money has been a part of human history for almost 3,000 years. From the origins of bartering to modern money, this is how the system has evolved.

Bartering

Way back when bartering was used in lieu of money to buy goods. As early man began to rear domestic livestock, one of the earliest forms of barter included cattle, sheep, as well as vegetables and grain.  Bartering is the exchange of a good or service for another good or service. For example, a bag of rice for a bag of beans. However, what if you couldn’t agree what something was worth in exchange or you didn’t want what the other person had?  To solve that problem, humans developed what is called commodity money.

Commodity Money

A commodity is a basic item used by almost everyone. In the past, items such as salt, tea, tobacco, cattle, and seeds were commodities and therefore were once used as money. However, using commodities as money had other problems. Carrying bags of salt and other commodities was hard and commodities were difficult to store or were perishable.

Coins and Paper Money

Metals objects were introduced as money around 5000 B.C. By 700 BC, the Lydians became the first in the western world to make coins. Countries were soon minting their own series of coins with specific values. Metal was used because it was readily available, easy to work with and could be recycled. Since coins were given a certain value, it became easier to compare the cost of items people wanted.

Some of the earliest known paper money dates back to ancient China, where the issuing of paper money became common from about AD 960 onwards.

Representative Money

With the introduction of paper currency and non-precious coinage, commodity money evolved into representative money. This meant that what money itself was made of no longer had to be very valuable.

Representative money was backed by a government or bank’s promise to exchange it for a certain amount of silver or gold. For example, the old British Pound bill or Pound Sterling was once guaranteed to be redeemable for a pound of sterling silver.

For most of the nineteenth and twentieth centuries, the majority of currencies were based on representative money through the use of the gold standard.

Fiat Money

Representative money has now been replaced by fiat money. Fiat is the Latin word for “let it be done.” Money is now given value by a government fiat or decree. In other words, enforceable legal tender laws were made. By law, the refusal of “legal tender” money in favor of some other form of payment is illegal.

There you have it, the history of money and how we know it today!

Facebooktwittergoogle_plusredditpinterestlinkedinmail

National One Cent Day

 

National One Cent Day. Find out the history of the penny and what is has to do with financial literacy

Today starts National Financial Literacy Month and what a month it is! To kick it off this month we start with National One Cent Day. Although the penny is nearly obsolete, here are some fun facts about this day and the penny.

 

What does Benjamin Franklin, the phrase “mind your business” and April 1 all have in common? The answer is the penny, which we recognize on National One Cent Day.

The United States first issued a one-cent coin produced by a private mint in 1787.  It was designed by Benjamin Franklin.  On one side it read “Mind Your Business” and the other “We Are One.”  This coin was made of 100% copper was larger than today’s penny and came to be known as the Fugio cent.

It wasn’t until 1792 that the United States Mint was first created.  The first coins struck by the newly established mint were called Chain cents, or Flowing Hair Chain Cents by collectors today.  On one side of the was coin a circle of 13 links of chain representing the 13 colonies. On the reverse was an image of a woman with flowing hair, otherwise known as Liberty.

The one cent coin was reduced in size in the 1850s to make the coin more economical and easier to handle.  In 1856, the mint produced the Flying Eagle cent with a wreath on the reverse side. This coin was soon replaced with the Indian Head cent in 1859 which quickly became popular and remained in circulation for decades.

Today’s one-cent coin is made of copper and zinc and has borne the image of President Abraham Lincoln since 1909.  From 1959  to 2008, the reverse featured the Lincoln Memorial. Four different reverse designs in 2009 honored Lincoln’s 200th birthday depicting various scenes from his lifetime and a new, permanent reverse – the Union Shield – was introduced in 2010.

Pennies Add Up

Even if you don’t possess the rarest and most valuable of pennies, you can still cash in on the ones you do have. Every penny counts and every coin is worth saving. Get a jar or one of those big plastic water cooler jugs and fill it with your loose change. After a few years have passed and your change jar is filled to the top, roll up your coins and take them to the bank. It may take time, but hey, it’s a payday worth waiting for.

Overall, if you wish to observe this national holiday known as “National One Cent Day,” try doing a little of your own research on the history of the penny. Look at how much pennies are selling for online. Count your own pennies and maybe even start a penny collection. Whatever way you choose to celebrate National One Cent Day, remember that every penny counts and when several little coins come together, they can add up to big things

Facebooktwittergoogle_plusredditpinterestlinkedinmail