Happy 2014! Practically everyone starts off the New Year with a resolution of losing weight, eating healthier, or exercising more. I don’t always like making resolutions because, to be honest, most of us don’t keep them. But the start of a new year is always a good time to organize and plan ahead when it comes to both your business and your personal finances.
Today I want to talk about personal finances because if your house isn’t in order, then you can’t expect your business to be. Here are some of the best ways and personal finance tips to get the New Year on the path to personal financial success:
STICK TO A BUDGET BY KEEPING TRACK OF YOUR SPENDING – Debit cards make it so easy for us to spend money when we don’t have the cash. This year resolve to stick to a budget. If you’re not sure what your budget is, then keep track of everything you spend for the next two to three months. Once you have an idea of how much money you need, try not to go over budget and use any extra money to pay down credit cards or debts. You can also start a savings account.
PAY YOUR CREDIT CARD BILLS/MAKE AN EXTRA MORTGAGE PAYMENT – Don’t just pay the minimum on your credit card, instead pay off your highest percentage credit card completely first. You should pay as much of the others as possible at the same time or try to get the percentage lowered while you’re making payments. If your debt is paid off, then make an effort to pay an extra mortgage payment every year; an extra payment every year could save you thousands of dollars in the long run.
SAVE A LITTLE EXTRA EVERY MONTH – So once your credit cards are paid off and the extra mortgage payment is made, try to put some money aside every month into a personal savings account or even a vacation fund. This money shouldn’t be part of your three-month emergency fund, but it should serve as a little extra pad in personal finances.
GET REWARDS FOR YOUR PURCHASES – If you use credit cards all of the time and pay the balance off every month, then consider switching to a rewards credit card. A client of mine recently opened up a major credit card affiliated with a major hotel. With the bonus points received for opening the card and all of his business stays, he and his family just got their winter break vacation hotel paid in full. Now that’s financial savvy!
CREATE A FLEXIBLE SPENDING ACCOUNT – This tip takes a little legwork, but it’s worth the time. Add up your medical expenses, dependent-care and commuting costs for last year, then set up or ask your employer about setting up a Flexible Spending Account or FSA. This account lets you set aside PRE-TAX MONEY to pay for things like doctor’s visits, prescription medications, daycare and even how much it costs you to commute to work. If you need these things anyway, avoid getting taxed on it and save that money for the unexpected.
DO YOUR TAXES EARLY – Corporate income tax returns are due March 15th and personal tax returns are due in April. Now’s a good time to work with your accountant so he or she can calculate your estimated tax return early. If you don’t have an accountant or bookkeeper to help you out, give one of us on the DM Accounting team a call or send us an email and we will do the calculating for you.
