Finance Books

If we had our way, we would most probably find ourselves spending like crazy on anything we see and want to own. But the reality is we need cash and finances to make it happen and while we can work our way to buying and spending a lot, we just have to be practical that we simply cannot have it all.

Of course, determining where you will invest begins with researching the available types of investments, determining your risk tolerance, and determining your investment style – along with your financial goals.

If you were going to purchase a new car, you would do quite a bit of research before making a final decision and a purchase. You would never consider purchasing a car that you had not fully looked over and taken for a test drive. Investing works much the same way.

You will of course learn as much about the investment as possible, and would want to see how past investors have done with that particular investment. Learning about the stock market and investments can take a lot of time, but it is of course time well spent. There are numerous books and websites on the topic. With access to the Internet, you can actually play the stock market – with fake money – to get a feel for how it works.

You can make pretend investments, and see how they do. Do a search with any search engine for ‘Stock Market Games’ or ‘Stock Market Simulations.’ This is a great way to start learning about investing in the stock market.

Other types of investments outside of the stock market, however they do not have simulators. You must learn about those types of investments the hard way – by reading.

As a potential investor, you should read anything you can get your hands on about investing, but start with the beginning investment books and websites first. Otherwise, you will quickly find that you are lost.

Finally, speak with a financial planner. Tell them your goals, and ask them for their suggestions. I mean this is what they do! A good financial planner can easily help you determine where to invest your funds, and help you set up a plan to reach all of your financial goals.

The opportunities for stock investment is not only limited to the stock markets of your home country. With the increasingly easier access to foreign economies, buying shares of international companies is now a practical option you can consider as part of diversifying your portfolio. It is also an opportunity to take part in booming economies and faster-growing stock markets.

Like any other investment venture, investing abroad has its own set of benefits and risks. They key is to consider the pros and cons and evaluate if this fits your risk tolerance as an investor. Most investors who venture beyond their home countries are high net worth individuals who have a fund surplus after investing in local stocks, bonds, mutual funds, real estate, etc. Buying foreign shares is not limited to rich investors though. You can start with just $500 and build from there if you later decide that international stock markets suit your portfolio.

With the world economy in a crisis situation at the moment let`s look at what can be done for individuals to help get by.

Creating a Budget

First, work out your average monthly income. (Most have found that the monthly basis is the easiest to work with.) To do this, you have to add up all the incomes of all wage earners in your family: salaries, interest, tax rebates and other sources of cash to you. Subtract any deductions made for income tax and other purposes. If any of the income is earned weekly, multiply by four and a third. That gives you an approximate monthly figure. Now add them up. That is what you can spend each month-no more!

Next, add up all your recurring bills: rent or mortgage payments, lighting and heating, telephone, and so forth. Since most of these bills come in each month, you can see why there is value in calculating your income on a monthly basis. Remember to include such items as food, beverages, newspapers and other things for which you probably pay cash each week. Now, have you added up everything? What about average expenditure for clothing? trips and vacations? entertainment? home repairs and upkeep? dry cleaning? These are items often overlooked.

There are some bills that come due once a year, such as taxes, automobile license plates and insurance. Divide these by 12 to get a monthly figure. At this point, what total expenses do you have for a month?

The Value to You

Now you are at the point where you can compare the figure for your monthly income with the one for your expenses. What do you see? If you have enough to cover your bills, that is fine. But do not abandon your budget at this point! For one thing, there would be wisdom not only in setting aside needed funds for monthly costs but also in saving for the unforeseen expenses that will come along during the year. Things will wear out or break down. Allow for these.

But take a look at other expenses. What are you spending on alcoholic beverages? Others watch their paychecks go up in smoke. One person, smoking two packs a day, can easily spend $1,000 or more a year on cigarettes. Some have adopted the practice of eating at a restaurant once a week, but that can cost some families a sizable chunk out of a week’s salary. That same meat or seafood delicacy could be purchased for much less and enjoyed at home-with additional savings on gasoline, tips and parking. Could you use another $3,000 or more a year? That is what might be saved in these areas alone. Obviously, there are other ways of cutting back on expenditures, so it`s important to be realistic about your outgoings.

It`s only by knowing your precise income and expenditure through use of a budget that you`ll be better able to balance your housekeeping books.

Once the decision to divorce has been finalized, most people pass through the stages of grief associated with the loss of a loved one. While no two people experience the same journey, we all experience the stages, with some people skipping a stage while others repeat some of the stages. Those stages are Denial, Anger and Resentment, Bargaining, Depression and Acceptance. You will likely experience most or all of these stages. Google the stages of grief. Understand them. Anticipate them. Make them yours, and then let them go.

Push through the pain to understand your financial condition. It’s important for you to understand what that condition is, so you can be a helpful part of your legal team in looking after your best interests. No one knows better than you what is best for you, and to be a emotional wreck curled up in a fetal position won’t help your future.

Like the coach on the sidelines, you are the one person responsible for guiding your team toward its goals. Your legal or accounting teams are your quarterbacks on the field, where they call plays and physically move the team. You call the shots, however. You send in the plays. You direct the Big Picture. Be involved and stay involved.

Make certain you don’t put yourself into a position where you accept an unfair divorce settlement knowingly. Most partners who just want to walk away and avoid a fight usually do so at their own future peril. As tough an enormous emotional challenge as this is, see it through.

Take a financial snapshot of yourself and your situation soon after separating from your spouse. Inventory everything you own. If possible, make a video of as many possessions as you can.

Avoid mistakes. Trying to undo mistakes after the fact, especially after considerable time has passed, can be very difficult. If you give short shrift to any of the following, you run the risk of getting less than you deserve.

Create an interim budget based on what expenses you personally will need to maintain. Call this your separation budget. This budget will serve you (and any attorney) well when you begin discussing transferring assets with child support, alimony or any transfer of possessions.

Determine the fixed expenses you’ll incur over the short term, which will contain housing, utilities, retirement, insurance payments or auto expenses. Make lists of expenses you’ll retain, expenses your ex will retain, and expenses that may need to be negotiated. Are there any assets that are at risk if the payments don’t get paid? If so, identify them along with how long the creditor will remain open to payment. You may wish to hire a Certified Divorce Financial Analysts who can thoroughly sort out your marital accumulations.

Understand the degree of liquidity of your assets, and how they relate to the current economic conditions in society. Some assets like real estate or automobile collections can be highly illiquid if market conditions are bad, or if you and your spouse disagree on a price for those assets.

Know the liquidity difference between retirement accounts versus brokerage accounts. Retirement accounts are somewhat illiquid, in that assets removed from them result in tax consequences, and if the withdrawal occurs before age 59 ½, an IRS early withdrawal penalty.

Get a complete picture on how much cash is on hand. Make sure you include any accounts used for specific purposes (vacation, Christmas, etc).

Personal collections, which can include autos, guns and the like, can be somewhat illiquid, with valuations speculative.

When fashioning a wish list of what assets you want from the marriage, don’t take on too much illiquid assets unless you’re certain you can manage without being forced to sell those illiquid assets. If you get the house and he gets the cash, you could be at a disadvantage if you need to raise some cash in the future.

Assemble the marital assets according to cash flow from each. Here again, you may not want to assume assets that don’t produce cash flow.

If a particular asset should be sold, is the market good or not so good? In light of depressed 2009 economic conditions, one asset may be preferable to sell over another.

Be certain to identify all assets- Leave no stone unturned. Spouses have been known to conceal assets prior to or right after a marital separation. You (or your team) will need to be sleuths to be certain all assets are included. Some are hesitant to disclose a piece of art or jewelry, but if you’re forced to admit it exists and you lied to your attorney, it makes for messy relations.

On occasion a forensic accountant is hired to locate missing or hidden assets, and the costs are borne by the overall aggregate in most cases.

Be certain you have copies of tax returns. They provide the basis to begin the discovery process (most people are afraid to lie to the IRS). You or your team will want to go back 5-7 on tax returns, looking for evidence of trusts, partnerships, private placements, real estate holdings, and the like.

For couple involved in a business, tax returns can expose a spouse trying to cook the books in his or her own best interest. A common ploy is to put a friend on the payroll and, for a fee, return the salary back to your spouse.

Get copies of checking and savings accounts, going back several years.. Reviewing statements can reveal the transfer of money or the payment for a now hidden asset. Income and/or capital gains will also appear on one’s past tax filings.

Brokerage accounts offer the same paper trail. Obtain copies of these statements going back at least 5 years.

Determine if there was ever an expense account connected with employment. Examine what was paid back and how it was categorized.

Companies often grant stock options to employees. These stock options are often listed with benefits statements from the employer. Make sure your side demands to know about any stock options and the potential value of them in the future.

Are there any children’s accounts? UGMA, UTMA, 529 plans (College Savings Accounts) or other accounts? Stock dividend reinvestment plans (DRIPS)? It’s wise to get copies of these account statements too, because assets can me moved around, or accounts can be liquidated and residual value returned to the parent. These accounts can be great places to park money until after the divorce.

If there were previous marriages between you two, and assets were owned before your marriage, they will likely be treated differently than marital assets. Your Financial Planner or Forensic Accountant can explain how each are treated.

Know your Insurance Policies.

Home and vehicle insurance should be reviewed, and consider contacting your agent to request notice of any changes.

Life insurance annuities or other insurance contracts, including business-related 2nd to Die insurance policies or Buy-Sell agreements, should be examined. If you and/or your spouse have owned a business, be sure to explore all insurance policies.

Debt and Credit Issues. Retrieve copies of your credit report from each of the three national credit-reporting agencies. Federal law allows us all to receive one free credit file per reporting agency per year. Determine your FICO score(s) and scan each file for any unrecognizable account listed on each.

If it makes sense to do, consider placing locks or holds on credit files to prevent further credit being applied for. Speaking with a divorce lawyer on this one would make sense.

Close all joint accounts. Doing so early on in the separation and divorce process can get tricky. Closing them in most cases can be done just by yourself. If you close a joint bank account and remove cash, consider giving your spouse half, or less than half if you intend to reserve some cash for joint bills. As long as you retain, and spend the money fairly, you likely won’t get into hot water with the court. Some might be tempted to leave more than half in the account, being considerate that your spouse will use some of it for your half of expenses. Don’t assume this will happen. Many spouses will take the money, consider it all theirs, and then demand “your half”.

Your marital status at year’s end will determine how you file next year’s taxes. Whether you file married filing jointly or married filing separately can be determined by you and your spouse, or your attorneys, but in no case should be left out of your final written agreement.

Have a contingency in the final decree that should there be any penalties, interest or further taxes owed by either, that it be spelled out who pay, when they pay, and how they pay.

Retirement Accounts- Know the rules of the road.

A Qualified Domestic Relations Order (QDRO) is a court order mandating that certain assets in a retirement account be transferred from one spouse’s account to the other. You need to fully understand the many tax ramifications and penalties associated with not using a QDRO or distributing from a retirement account.

IRA Accounts. Regular IRAs, Roth, rollovers etc. Know how these accounts are treated tax-wise. Removing assets often involves taxes and often penalties before age 59 ½ and 70 ½. 401(k)s and 403(b)s are most often the accounts that receive QDROs.

Taxes. If there are significant assets, consider an accountant to determine what tax obligations would be incurred selling any of your assets.

Knowing one asset incurs a much larger capital gain tax if sold rather than another asset may cause a decision to choose one asset over the other. If either of you were married previously, and one of you moved into your spouses home, and that home is sold, a capital gain calculation will be different than if you two bought the home together. Speak with your team to determine which tax filing status is more advantageous to you, and negotiate toward that end. Insert language that spells out exactly how an asset is to be sold, how the taxes are claimed or distributed, and how any taxes must be paid.

If you sold a home prior to 1997 and rolled that capital gain over to an existing home, and then sold that home, the old rules apply to determine the cost basis for the current capital gain amount. This would increase your gain and possibly influence when and how much you might sell the property.

After the Divorce process is completed

Credit, Debt and the New You.

Begin by establishing your own credit file. Federal Law requires that each credit customer be allowed one free credit report from each of the three national credit-reporting agencies. You’ll want to request the file individually, but the reports will likely result in joint information. Requesting the report individually actually establishes an individual file.

If you have an inadequate amount of individual credit history, you’ll want to establish several accounts as soon as possible. Keep in mind that you only want credit cards that you’ll actually use, so don’t go crazy trying to accumulate credit cards.

Retrieve the budget you created during the early part of your divorce, and revise it based on your new circumstances. Make sure fixed costs appear there (housing, utilities, car payments, contractual payments, etc.) and include any new spending pertaining to your single needs.

If you don’t know where you’re going, any road will get you there

Be flexible. Your new life, especially if it includes raising children, will offer more surprises than expectations. Remember that while you personally endured the divorce, children suffered through an event too.

Attend to beneficiary concerns. You must name them as soon as possible, because if you don’t, and you die, your state will impose a will on your heirs (in testate) that can result in your wishes not going fulfilled. Wills, Trusts, retirement accounts, bank accounts and insurance contracts will need to be revised. Don’t put it off.

If you haven’t already, create a personal blueprint that lays out goals, wishes and aspirations you’ve developed over the years. Be sure to include the dreams and desires you may have developed in a marriage that didn’t allow them being fulfilled.

Once the decision to divorce has been finalized, most people pass through the stages of grief associated with the loss of a loved one. While no two people experience the same journey, we all experience the stages, with some people skipping a stage while others repeat some of the stages. Those stages are Denial, Anger and Resentment, Bargaining, Depression and Acceptance. You will likely experience most or all of these stages. Google the stages of grief. Understand them. Anticipate them. Make them yours, and then let them go.

Push through the pain to understand your financial condition. It’s important for you to understand what that condition is, so you can be a helpful part of your legal team in looking after your best interests. No one knows better than you what is best for you, and to be a emotional wreck curled up in a fetal position won’t help your future.

Like the coach on the sidelines, you are the one person responsible for guiding your team toward its goals. Your legal or accounting teams are your quarterbacks on the field, where they call plays and physically move the team. You call the shots, however. You send in the plays. You direct the Big Picture. Be involved and stay involved.

Make certain you don’t put yourself into a position where you accept an unfair divorce settlement knowingly. Most partners who just want to walk away and avoid a fight usually do so at their own future peril. As tough an enormous emotional challenge as this is, see it through.

Take a financial snapshot of yourself and your situation soon after separating from your spouse. Inventory everything you own. If possible, make a video of as many possessions as you can.

Avoid mistakes at all costs. Trying to undo mistakes after the fact, especially after considerable time has passed, can be very difficult. If you give short shrift to any of the following, you run the risk of getting less than you deserve.

Create an interim budget based on what expenses you personally will need to maintain. Call this your separation budget. This budget will serve you (and any attorney) well when you begin discussing transferring assets with child support, alimony or any transfer of possessions.

Determine the fixed expenses you’ll incur over the short term, which will contain housing, utilities, retirement, insurance payments or auto expenses. Make lists of expenses you’ll retain, expenses your ex will retain, and expenses that may need to be negotiated. Are there any assets that are at risk if the payments don’t get paid? If so, identify them along with how long the creditor will remain open to payment. You may wish to hire a Certified Divorce Financial Analysts who can thoroughly sort out your marital accumulations.

Understand the degree of liquidity of your assets, and how they relate to the current economic conditions in society. Some assets like real estate or automobile collections can be highly illiquid if market conditions are bad, or if you and your spouse disagree on a price for those assets.

Know the liquidity difference between retirement accounts versus brokerage accounts. Retirement accounts are somewhat illiquid, in that assets removed from them result in tax consequences, and if the withdrawal occurs before age 59 ½, an I.R.S. early withdrawal penalty.

Get a complete picture on how much cash is on hand. Make sure you include any accounts used for specific purposes (vacation, Christmas, etc).

Personal collections, which can include autos, guns and the like, can be somewhat illiquid, with valuations speculative.

When fashioning a wish list of what assets you want from the marriage, don’t take on too much illiquid assets unless you’re certain you can manage without being forced to sell those illiquid assets. If you get the house and he gets the cash, you could be at a disadvantage if you need to raise some cash in the future.

Assemble the marital assets according to cash flow from each. Here again, you may not want to assume assets that don’t produce cash flow.

If a particular asset should be sold, is the market good or not so good? In light of depressed 2009 economic conditions, one asset may be preferable to sell over another.

Be certain to identify all assets- Leave no stone unturned. Spouses have been known to conceal assets prior to or right after a marital separation. You (or your team) will need to be sleuths to be certain all assets are included. Some are hesitant to disclose a piece of art or jewelry, but if you’re forced to admit it exists and you lied to your attorney, it makes for messy relations.

On occasion a forensic accountant is hired to locate missing or hidden assets, and the costs are borne by the overall aggregate in most cases.

Be certain you have copies of tax returns. They provide the basis to begin the discovery process (most people are afraid to lie to the I.R.S.). You or your team will want to go back 5-7 on tax returns, looking for evidence of trusts, partnerships, private placements, real estate holdings, and the like.

For couple involved in a business, tax returns can expose a spouse trying to cook the books in his or her own best interest. A common ploy is to put a friend on the payroll and, for a fee, return the salary back to your spouse.

Get copies of checking and savings accounts, going back several years.. Reviewing statements can reveal the transfer of money or the payment for a now hidden asset. Income and/or capital gains will also appear on one’s past tax filings.

Brokerage accounts offer the same paper trail. Obtain copies of these statements going back at least 5 years.

Determine if there was ever an expense account connected with employment. Examine what was paid back and how it was categorized.

Companies often grant stock options to employees. These stock options are often listed with benefits statements from the employer. Make sure your side demands to know about any stock options and the potential value of them in the future.

Are there any children’s accounts? UGMA, UTMA, 529 plans (College Savings Accounts) or other accounts? Stock dividend reinvestment plans (DRIPS)? It’s wise to get copies of these account statements too, because assets can me moved around, or accounts can be liquidated and residual value returned to the parent. These accounts can be great places to park money until after the divorce.

If there were previous marriages between you two, and assets were owned before your marriage, they will likely be treated differently than marital assets. Your Financial Planner or Forensic Accountant can explain how each are treated.

Know your Insurance Policies

Home and vehicle insurance should be reviewed, and consider contacting your agent to request notice of any changes.

Life insurance annuities or other insurance contracts, including business-related 2nd to Die insurance policies or Buy-Sell agreements, should be examined. If you and/or your spouse have owned a business, be sure to explore all insurance policies.

Debt and Credit Issues

Retrieve copies of your credit report from each of the three national credit-reporting agencies. Federal law allows us all to receive one free credit file per reporting agency per year. Determine your FICO score(s) and scan each file for any unrecognizable account listed on each.

If it makes sense to do, consider placing locks or holds on credit files to prevent further credit being applied for. Speaking with a divorce lawyer on this one would make sense.

Close all joint accounts. Doing so early on in the separation and divorce process can get tricky. Closing them in most cases can be done just by yourself. If you close a joint bank account and remove cash, consider giving your spouse half, or less than half if you intend to reserve some cash for joint bills. As long as you retain, and spend the money fairly, you likely won’t get into hot water with the court. Some might be tempted to leave more than half in the account, being considerate that your spouse will use some of it for your half of expenses. Don’t assume this will happen. Many spouses will take the money, consider it all theirs, and then demand “your half”.

Your marital status at year’s end will determine how you file next year’s taxes. Whether you file married filing jointly or married filing separately can be determined by you and your spouse, or your attorneys, but in no case should be left out of your final written agreement.

Have a contingency in the final decree that should there be any penalties, interest or further taxes owed by either, that it be spelled out who pay, when they pay, and how they pay.

Retirement Accounts- Know the rules of the road

A Qualified Domestic Relations Order is a court order mandating that certain assets in a retirement account be transferred from one spouse’s account to the other. You need to fully understand the many tax ramifications and penalties associated with not using a QDRO or distributing from a retirement account.

IRA Accounts.  Regular IRAs, Roth, rollovers etc. Know how these accounts are treated tax-wise. Removing assets often involves taxes and often penalties before age 59 ½ and 70 ½. 401(k)s and 403(b)s are most often the accounts that receive QDROs.

Taxes

If there are significant assets, consider an accountant to determine what tax obligations would be incurred selling any of your assets.

Knowing one asset incurs a much larger capital gain tax if sold rather than another asset may cause a decision to choose one asset over the other. If either of you were married previously, and one of you moved into your spouses home, and that home is sold, a capital gain calculation will be different than if you two bought the home together. Speak with your team to determine which tax filing status is more advantageous to you, and negotiate toward that end. Insert language that spells out exactly how an asset is to be sold, how the taxes are claimed or distributed, and how any taxes must be paid.

If you sold a home prior to 1997 and rolled that capital gain over to an existing home, and then sold that home, the old rules apply to determine the cost basis for the current capital gain amount. This would increase your gain and possibly influence when and how much you might sell the property.

After the Divorce process is completed

Credit, Debt and the New You

Begin by establishing your own credit file. Federal Law requires that each credit customer be allowed one free credit report from each of the three national credit-reporting agencies. You’ll want to request the file individually, but the reports will likely result in joint information. Requesting the report individually actually establishes an individual file.

If you have an inadequate amount of individual credit history, you’ll want to establish several accounts as soon as possible. Keep in mind that you only want credit cards that you’ll actually use, so don’t go crazy trying to accumulate credit cards.

Retrieve the budget you created during the early part of your divorce, and revise it based on your new circumstances. Make sure fixed costs appear there (housing, utilities, car payments, contractual payments, etc.) and include any new spending pertaining to your single needs.

If you don’t know where you’re going, any road will get you there

Be flexible. Your new life, especially if it includes raising children, will offer more surprises than expectations. Remember that while you personally endured the divorce, children suffered through an event too.

Attend to beneficiary concerns. You must name them as soon as possible, because if you don’t, and you die, your state will impose a will on your heirs (intestate) that can result in your wishes not going fulfilled. Wills, Trusts, retirement accounts, bank accounts and insurance contracts will need to be revised. Don’t put it off.

If you haven’t already, create a personal blueprint that lays out goals, wishes and aspirations you’ve developed over the years. Be sure to include the dreams and desires you may have developed in a marriage that didn’t allow them being fulfilled.

Remember, you’ll be happiest if you focus on the present moment and not allow yourself to keep one foot in the past and one foot in the future. Don’t straddle the present. Embrace it. Carpe Diem.

Easier than you think if you are willing to do the work that is necessary to get the job done. There are not many lazy or careless people in this world that are very fortunate when it comes to prosperity.

Unless you win a lottery or have a rich relative to die and leave you loads of cash, you will definitely have to put some sweat equity into your finances to make them grow. If you do not want to have to borrow money all the time from banks, credit cards, or payday loan companies, then you have to learn to manage the money you have or find ways to make more.

If you are fortunate enough to have a good education, college or better, then you already have one of the most necessary tools for advancement. Education can open doors for you that may remain closed to those who have only graduated high school or do not even have a GED. If you do not have a high school diploma, get one.

There are several ways to do this. Find some free GED classes you can attend to prepare your self for the test or you can check out books that will prepare you for the test at the library. You are never too old to try. After a GED is accomplished, you can apply for FAFSA grants to enter specialty training in nursing, computer technologies, and many other things you could decide on as a career.

If you already have a good education and a good job, but are still having difficulties making ends meet, let alone getting ahead, maybe you need to find some free financial advice. Go on line and search for others who have made ground financially and see what they have to say. Learning tricks and tips from others is always a good thing if it is sound advice.

Read up on the most current best ways to save your money. Learn what things that you can cut down your expenses on and find some things that you might be able to do without all together, like a gym membership. Exercise is free and fancy equipment is not necessary either. There might be other simple things that can be done away with that will save you money that can be better saved or invested elsewhere.

If you are not making enough money where you work, consider finding better employment and sometimes people that want to get ahead badly enough will take on a second job, even if it is only for a while in order to achieve their goals. There are not very many things in this life that are free, except maybe exercise, everything else you usually have to work for.

Loose papers, receipts, notes, credit card bills, financial statements, tax returns – these are the byproducts of owning a business.  They take up space on your desk and in your mind and every time you look at the litter you feel disorganized. 

Before I created a system to organize my business paperwork in the manner I’ll soon explain, I felt disjointed, out of whack, and like I never got anything done.  I’d walk into my office and want to turn right around and walk out. 

Is there a better way to organize your business finances? You bet.  Follow the steps below to create a simple, yet functional way to organize your business and live a more carefree life.

Step 1 – Get a Binder – Purchase a three-ring binder based on the volume of paperwork you produce annually.  A 1.5” or 2” binder would be adequate for most businesses.  You will use one binder for each year you are in business, so that every detail pertaining to your business that year is in one place for easy retrieval.  In the viewing window type a cover that shows the name of your business and the year.

Step 2 – Get a Three Hole Punch – Purchase a three-hole punch. This is to hole punch all larger receipts, documents and financial statements and have them fit neatly into your binder.

Step 3 – Get a Zipper Compartment – Purchase a plastic zipper compartment from an office supply store to hold small receipts.

Step 4 – Purchase Accounting Software – Get yourself accounting software so that you can track your finances.  Professional business owners track their profits and losses using the right tools and analyze their financials regularly.  I recommend QuickBooks, but there are others such as Peachtree, Microsoft Office Small Business, and Simply Accounting. Try to begin tracking sales and expenses from the beginning of your business or the beginning of the year.

Step 5 – THE SYSTEM: Arrange paperwork in your binder according to month.  Keep all receipts, credit card statements and bank statements (make sure to reconcile these monthly), and sales tax reports (if you sell products).  At the end of each month, run a Profit and Loss Statement and a Balance Sheet (collectively known as Financial Statements).  The Financial Statements become the separator for each month.  File small receipts that can’t be hole-punched in the zipper compartment at the back of your binder.

Step 6 – CLOSE IT OUT – At the end of each year, reconcile your accounts, print your annual Financial Statements, and close out your year.  Put the binder away and start a new one for the New Year.  Give your accountant or CPA a copy of your QuickBooks file to prepare your income tax return.

Tips:

Only handle receipts one time.  Review them.  Record them in your software program.  File them in your binder.
Use one credit card for business and one for personal expenses.  This way you can maintain separate business and personal expenses.  If you ever need to carry a balance, you can easily determine the tax-deductible interest.
Consult with your accountant or CPA regarding what is and is not tax deductible.
Make an appointment with yourself one to two hours a week to do your business finance organization.  When you have room in your budget, hire someone to come in and do it for you.

The system above is one way to organize your business finances.  If you would like to go beyond this system and organize your business for financial success, you may want to consider writing a Business Plan.  I have created a plan that incorporates Goal Setting, and heavy Branding and Marketing with My Success Book – a built-in Daily Action Planner to encourage accountability and results.  Find it here: www.twopageminibusinessplan.com.

©Copyright 2008- Suzanne Muusers – All Rights Reserved  

Establish a budget: There’s no better way to manage your finances than by being keenly aware of the interplay between your net income (how much you take home after taxes) and your total expenses (including fixed expenses like bills and variable expenses like clothing or entertainment). See our companion article “Creating a Household Budget” for an easy path to a clear and cogent financial plan. Making use of software, like Budget Forecaster from Strativia, makes the task even easier.

Make more money: Indeed, it may sound simpler than it really is, but it’s by no means outside the realm of reason. Just take a look at what you’re making now and try to find ways to augment it, be it asking for a raise, working extra hours, holiday or overtime, taking on a part-time second job, applying for a promotion or for a whole new job with an entirely different employer – there are numerous ways to increase your earning power.

Pay yourself first: This is an ages old lesson that is as tried and true as they come – the instant you receive each paycheck, take 10% and sock it away in savings. Plan to live off of 90% of your income and you’ll be slowly but surely building a sizable nest egg that could end up lasting you a lifetime. But if you don’t do this religiously, first and foremost upon being paid, then there will be no money at month’s end to save at all, not 10%, not 1%.

Pay your credits cards off: Credit card debt is a brutal, self-feeding cycle that can decimate your savings faster and more effectively than almost any other financial burden. At the very least, make your minimum payments on time so that your credit report remains untainted. Good credit is priceless in today’s world. And in many important circumstances, excellent credit can even compensate for poor income and savings. The best course of action, however, is to carry no balance. Pay your credit cards off in full as soon as you possibly can. Then restrain yourself from using your credit cards except when you know you can pay off new purchases in full at your very next billing period.

Make your 401K contributions: Especially if your employer makes matching contributions, take maximum advantage of any 401K plan you have available to you. Not doing so would cheat you at the very least of the income from those matching funds, not to mention the income that can be gained from savings account interest or investment maturity. You wouldn’t turn down a company bonus would you? Then don’t let your company’s 401K plan go to waste.

Stay on top of your investments: As time passes, the economy fluctuates, and an intelligent investment today may be a foolish investment tomorrow. You need to review your portfolio regularly and readjust it regularly to avoid loss and pursue gain. Remember, though, avoiding loss – or protecting your capital – is infinitely more important than pursuing gain. Don’t let any one stock comprise more than 5% of your total portfolio, and don’t let any one industry comprise more than 20%. Remain diversified and readjust your distribution of assets as the performance of your holdings changes. Seek professional financial guidance as necessary.

Build an emergency fund: Start saving money in a separate, FDIC-insured account and build it up until it contains enough to cover six months of your expenses. Take a look at your total expenses (both variable and fixed) from your personally designed or Budget Forecaster household budget and then multiply it by six to discover how much you should keep in an emergency fund. Then leave that money alone until and unless you need it. Should the unfortunate day come that you do, you’ll be glad it’s there.

Get your free credit reports: Your credit reports can be among your greatest tools for acquiring credit or they can be your biggest hurdle. The government decision to allow consumers a free copy per year of each of their credit reports from the three major reporting bureaus – Experian, Equifax, and TransUnion – is an opportunity to take charge of your finances that should not be ignored. See our companion article entitled “Get a Free Copy of Your Credit Reports” for further details.

Review and update your insurance policies: As with bank terms and credit card rates, insurance premiums also change considerably over time. A good deal yesterday could be a lousy deal today. And with your ability to go online, you can easily compare and contrast insurance offers in an instant. Important coverage to make sure that you have on both your home and auto insurance plans is cost replacement insurance. Decent liability coverage is also of the utmost importance. And also be certain that the insurance on your home accurately reflects the true value of your home today.

Start A Business: Starting a business is easier today than ever before. There is all sorts of informational material, resources, and tools available to help you, and most of them are free. Whether it’s selling books on eBay, developing a sleek new high-tech product from scratch, or outsourcing your intellectual talents there is a market out there for almost anything. Whether you decide to go into business full time or part time, there is money to be made that will ultimately help you to keep your finances under control by increasing your income.

It’s a difficult situation, but there are ways to approach the problem that, over time, will provide some stability for your finances.

The first trick is finding out how much it actually costs you each month to live; chances are it costs more than you think it does. Add up all your expenses – food, gas for the car, rent or mortgage payment, utilities, car payments, car and health insurance, and so on. Don’t forget periodic payments like license renewals and car registrations, birthday and holiday gifts and cards, Lotto tickets – anything that costs you money. A good exercise is to carry a small notepad around with you for a couple months and keep track of everything – I mean every penny – you spend. Allow yourself a certain amount for entertainment; if you put yourself on such a strict budget you can’t enjoy yourself you won’t maintain it.

Once you’ve decided what it costs you to live each month, that’s what you live on. Open bank accounts for each broad category – monthly expenses, weekly expenses, and so on – and then deposit the amount of money you need per month into the appropriate accounts as the money comes in. Separating monthly from daily expenses actually frees you up; if you know you’ve got money stashed safely away for the rent, heat, etc., and you see a pair of shoes or a book you really want, just check out your daily expenses account; you may find that if you eat rice and beans for a few days you can spring for the impulse buy without wrecking your budget. Just don’t, under any circumstances, raid the monthly expenses account!

If you have a month where you earn more than you need to spend based on your budget, put the extra into an interest-bearing savings account until you need it during the next low income period. Don’t blow the extra on a luxury item, at least not until you’ve built up a substantial financial cushion.

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What is the secret to be happy ever after? Simple, finance the happiness, earn as much as you can, or marry somebody who can do it for you.

If you are eligible for the later category and believe in making merry on somebody else’s account, this finance advice is not for you. However, if you have failed to locate the rich one for you or are enforced by destiny to work your way around the financial management mystery, read on, because there is a crucial secret in store.

Money is important and this is a proven fact, which is not dependent upon any referrals for validation. Considering the relevance of the concept, therefore, all aims must be targeted at increasing it, to whatever levels. As the wise men said, beg, borrow, steal, but do whatever you can. In our case, we would suggest focusing on the key finance source and at the same time, working out an alternate earning source, by way of passive income.

What is passive income?

Passive income is a form of earning, which is irregular and does not requires dedicated effort from the earner. That is, it is a financial source, which once created, can be left in the hibernation mode, to generate funds. As apparent from the concept definition, passive income acts as a prudent extra earning source, which keeps adding on to the financial inflow.

How to earn it?

Passive income can be earned in a number of ways. In fact the earning options in this category, owing the tremendous popularity of internet as the preferred communication channel, have multiplied exponentially.

Online presence, currently serves as the most crucial form of passive earning. Create a website, add the desired zing flavour to it, attract reasonable traffic and forget about it. But before forgetting, make sure to list with internet advertisement managing sites, like Google ad sense, which will pay for the popularity of the portal.

Income from property or rental finance is the next listing in the category of passive income. While you might think that the investment itself is to large a component, checking out the available options in this category, can clear doubts. India presently is undergoing a massive construction drive, with societies and community centres coming up in every nook and corner. Investing in these newly constructed dwellings usually requires manageable deposits and even easier monthly instalment, which in turn can be bank financed. It is thus a matter of few years, post which the investment would perfectly fit in as a source of passive income.

Pension – Nothing much can be done here, you’ll have to wait to get retired, unless of course early retirement options are applicable.

Indulging in businesses like network / affiliate marketing, wherein initial effort yields desirable finance oriented results, over a number of years.

Other options in the passive income category are dividends / interests from shares / securities, book royalty and any other business, which does not, seeks active participation.

Students of the UK foresee a bright future ahead. However, the rising cost of education has left them let mull over how to manage the necessary fund for their studies. Of course, government does its all to cope up with the students’ monetary malaise. But federal grants are always limited to a particular section of students, meritorious students in particular. To this cause, other financial institutions too have come forward to facilitate the students’ financial issue. They have come up the concept of student finances UK. With the money package, you can cover the cost of your studies to a limit.

There are a number of things to take into account when you are living out. Your costs will be higher if you live away from home. And higher even if you live away from home and study in London. Living costs for students include the following:

Accommodation – this is likely to be your single biggest expense if you are living away from your home

food

Household bills – gas, electricity, water bills, phone, clothes etc.

travel

Leisure and sport

Study costs – such as books, materials, computer, practical apparatus, and field trips for your course

Rate of interest is announced once in a year. It applies from 1 September to 31 August the following year. Rate of interest is linked to the rate of inflation. It is in line of the Retail Prices Index. This means that the amount you repay will be broadly the same. In fact terms, as the amount you borrowed. No one makes a profit on the student finances.

So, student finances UK help you tame the rising cost of education. Students can apply for these finance products online as well as offline, though processing online is gaining ground. It saves your good amount of time and energy, and later makes your approval fast.