Dec 15, 2015
'Tis the season to spend time with friends and family, attend parties, share gifts, and be jolly! However, your wallet may not be sharing in the joys of the season: here are some financial tips for both individuals and business owners to help out during this joyous season. Some tips you can apply right now- others you can tuck away for future use!
For both the individual or business owner:
Make your money work for you.
The goal of managing your finances is to beat inflation and minimize taxation.
Know the Rule of 72.
Use the Rule of 72 to calculate the approximate number of years it will take for your investment to double. The Rule of 72 works by dividing 72 by the yearly interest amount.
For example, if you were to invest $100 with compounding interest at 6% per year, it would take 12 years for your investment to reach $200. However, with just 8% interest, it would take only 9 years to reach $200.
Knowing the Rule of 72 can put in perspective how much of a difference a single percentage can affect your investment over time.
For the individual:
Buy discounted gift cards.
Scour the internet to see if you can buy gift cards for locations that you already shop at regularly. Sites such as "Raise.com" can be a great place to find gift cards for grocery or retail stores. Buy gifts with your discounted cards to save even more money.
Give yourself a "raise" by cutting back on personal expenses.
The old adage "a penny saved is a penny earned" couldn't be more true. Consider whether that monthly cable cost is worth paying. Another option would be to look into whether bundling your entertainment expenses could help you save.
For the business owner:
Don't put off your accounting.
"Accounting" can seem like a daunting task. Unfortunately, no matter which way you turn, it cannot be avoided. Start tracking and managing you accounting details early to avoid having to sort through a messy situation come tax season! Use financial managing software such as "Quickbooks" to track your expenses, employee payments, and customer invoices.
Make the most of the relationship with your accountant.
While it can be tempting to simply unload of pile of receipts on your accountant, you will make the most of the time you spend with your accountant by being diligent with tracking and managing your finances. This way, you can talk strategy with your accountant on how to save you the most money, instead of having them log data that you could have done yourself.
Know what you can claim at tax time.
Track your business entertainment expenses incurred to earn income. For example, keep track of gifts, meals, and drinks.
If you use your car for business, keep records of your mileage! You might be able to claim a portion of your gas, parking, license and registration fees, insurance, repairs, and more. Track your business travels so you can keep them separate from personal use.
Do you use a home office? If so, you may be able to deduct from your household cost.
Understand your seasonal cash flow/ sales cycle.
Understand the product that you're offering, and be prepared for both slow and peak seasons! Keep a 3 month cash cushion to protect yourself during slow periods.
Have any financial tips that you'd like to share? Add them in the comments! Happy holidays!
- (no comment)