Tag Archives: budgeting

Budgeting

Have You Started Budgeting Yet?

One of the earliest posts we wrote on this blog concerned budgeting. We started with the topic The Basics Of Budgeting as a baseline on how to get started. It’s still a pretty big deal to us, as it should be for you, which is why we’re revisiting the topic again.

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Our bet, if you did start back then, is threefold:

* your bills are under control

* you have more money in your checking or savings account

* you have more peace of mind because you’re not as worried about paying your bills
Continue reading Have You Started Budgeting Yet? →

Budgeting, Managing Money

Are Sales Always Economical?

This weekend is one of the biggest sales periods of the year, and every year around this same time it seems like the best deals of the year are coming up. Whereas it seems like the best time to save money, one has to be wary of some of the deception that takes place at the same time.

For instance, there are many smartphone deals this weekend, and all of them might seem like you’re going to save a lot of money. You might, but you need to pay attention because most of the phones on sale are already obsolete. It’s rare to see the latest models having big discounts at this time of year, and truth be told, if you see a discount it’s probably not a new discount but something that was already available with a switch in plan that’s just been renamed for the holiday.

There are also places you’ll go to where you’ll see discounts of up to 50%, but if you do some homework and look at the prices during the year you’ll see those items have been marked up and then discounted, to the point where your savings aren’t really what they’re purported to be. That’s pretty sleazy but there’s nothing illegal about it.

The biggest thing to take into account is whether the item is something you actually need versus want; that is, if it’s for you. If you’re buying gifts for someone else we’d hope that you had a budget for that sort of thing. If not, it’s worth taking some time to think about things you really need, even if it’s for business purposes, and then determine if it’s worth the purchase.

Business furniture is always a good purchase at this time of year because it’s an industry where, sometimes, moving inventory is relatively static. It also works because things like desks and chairs rarely goes out of style.

Computers are something you need to take a good look at, even if you need one. It’s good to have an understanding of things like RAM and storage capacity and chipset. For instance, if you need office computers mainly for email and bookkeeping then you don’t need anything with 8GB of RAM, whereas if you’re making 3D models and the like the extra capacity is a great benefit. The same goes for storage, since most businesses will never reach a level where they’re going to need terabytes of files. As for chipsets, there’s mainly two (the names of which we won’t mention here) and, truthfully, both are good but one has a name that gets more respect and thus can drive the price of a computer higher than needed.

Overall, it’s best to figure out how much money you’re willing to spend after you put together a list of things you want, whether it’s for business or pleasure. Also, the best thing about shopping in today’s world is that you can take some time to do a little online research to see where you can get the best price.
 

Budgeting

Setting Financial Goals

As we get closer to the new year, it’s a good time for you to start thinking about financial goals. Those goals will be different if you’re a business, an independent professional or an individual or family, but it’s still important to work on setting at least a few goals.

There’s always a debate about whether it’s better to set goals that are definitely reachable or whether thinking outside of the box and shooting for the moon is the way to go. Truthfully, the best goals are the ones where you actually have some kind of control over it because it’s easier to stay focused. For instance, if you said you were going to save $25,000 but you only make $30,000 a year right now and have $5 in your savings account, it’s probably a very unrealistic goal without some other plans that have nothing to do with finances.

All financial goals are about 3 things: saving money; reducing debt; and increasing income. You can set your goals based on one thing, or you can try to do something with all three. If you’re already doing well financially maybe you don’t have to worry so much about the last one, and yet even there the concept of income isn’t a strange one, as income is more about growing your money than about finding a new job.

Whereas when we talk about budgeting we always start with figuring out income, when setting financial goals you always think about your debt first. This is because most people have higher debt, as it pertains to percentages at least, and it’s probably the most important thing to know where you stand.

Next on the list comes saving money. This is important because it’s your first step towards becoming fiscally responsible. Saving money takes on two forms. One is actually saving money, such as in a bank, investments, etc. The other is saving money on purchases, whether it’s new items such as clothing or items such as food, which are recurring purchases. There are families that learn how to save $100 or more each month just using coupons or store coupons at stores they don’t usually frequent. Just imagine how important an extra $100 is a month without having to worry about an increase in taxes.

Finally comes the topic of increasing income. It’s last on the list for two reasons. One, not everyone has to deal with this one as a definite thing, although looking at different ways to invest money in higher yield returns might not be a bad idea. For some people however this will be important if they’re just barely getting by on what they make now. We’ve previously warned people about the tax dangers of part time jobs but that might be one way to go. Another way to go is to see if you can get a raise where you work. If it’s a large company where you can’t just ask for a raise, it might be time to broaden your scope of employment opportunities for something that pays better.

No matter what you do, setting goals is only the first step. No goal can be achieved without plans for how you hope to get there. Of course if you ever need help in that arena, give us a call. 🙂
 

Budgeting

Savings Vs Debt

When we or anyone else talks about budgeting, it’s with the main idea of making sure you can pay all your bills and, hopefully, have something extra so that you’re not always living check to check. This is all well and good, but it’s possible that maybe you’re not paying enough towards your bills or putting enough away for your future. And with those as your only two choices (spending every dollar you make is NOT a choice for now), which is better to deal with first?

Last year the federal government passed a law stating that your credit card vendors must supply you with not only bills 21 days before their due to be paid but estimates of how much you would need to pay monthly, without using your cards again, to get rid of that particular debt. For some people that number might seem impossible to deal with on a tight budget and they might decide to try to put some money away instead. Let’s look at some real numbers.

The first is interest rates. The overwhelming majority of credit card interest rates come in between 14% and 23%. At your best the rate you’ll earn on any type of investing or savings might be 10%, and that won’t be every year (if it is you might want to hire a consultant to see if you’re getting the Madoff runaround). If you have time, it’s probably better to put more money towards your debt, even if you can’t pay it off in 3 years, because it’s growing faster than you can grow your money.

However, what if you can’t stop spending or using your credit cards? Some people just can’t stop themselves and it’s understandable. There are wants and needs that come up, and sometimes the credit card just seems so handy. Even though it wouldn’t be recommended overall as a first choice, in this case it might be better if you can put some of your money away towards savings or investment because it might help to spur you to stop using your cards at some point and actually pay down your bills with the extra cash you might see.

The “might” is important to see because it depends on the type of savings or earnings you’re hoping to try. Traditional savings accounts don’t earn anything these days except maybe some peace of mind. CDs might pay 2-3%, while most mutual funds could, as the economy improves, grow by 5% in a year, which can be compounded if you add to the investment amount on some sort of monthly basis. Of course you have to know that there’s risk if you’re shooting for a 5% growth, so you could just as easily lose that much on your investment each month, even with adding money all the time. If you’re risk averse, paying down debt once again becomes the better option.

It’s always better not to get into overwhelming debt, but remember that every day is another opportunity to get a handle on it, and there’s always someone who can help you overcome it.
 

Accounting

The Difference Between Bookkeeping And Accounting

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To some people, the role of bookkeepers and accountants are pretty much the same. People in both professions can track the way individuals and businesses spend their money. They can both tell you whether you’re in the black or the red. Those are pretty simple functions though. Once you need more than that, an accountant is the way to go.

One thing and accountant can do is tell you about your taxes. An accountant can tell you whether you need to make quarterly payments and how much. An accountant will find ways to minimize your tax liability if possible. It’s possible you can get that from a highly trained bookkeeper, but it would be uncommon.

An accountant can consult you on business purchases and other taxable expenses that you can save on. Bookkeepers might know some of that, but there’s no way they would know as much as an accountant will know since it’s their job to know that. If you needed to spend a particular amount of money to offset your income, an accountant can tell you that. If there are certain trips that you take which you can write off on your taxes, an accountant will know that as well.

This is not to negate bookkeepers by any means. A good bookkeeper can help you figure out how to budget your money so that you can get your bills paid. A good bookkeeper will know how to categorize your spending and your income so that your records are clean when you have to give them to an accountant to do your taxes. There should be a great symbiotic relationship between bookkeepers and accountants, while realizing that an accountant’s skills and knowledge have to go beyond those of a bookkeeper. It’s like the relationship between a doctor and a registered nurse. Registered nurses know a lot about medicine, but doctors have to know more and spend more time learning it.

T. L. Wall Accounting works with both companies and their bookkeepers when it’s tax time. Bookkeepers understand how to keep expenses as well as receipts in a proper format so that accountants don’t have to spend more time than necessary getting taxes completed. Of course it doesn’t hurt having an accounting firm that does your taxes also handle your books, but this decisions should always come down to the comfort level of the consumer.