Archive for 'Money'
Credit cards are useful financial tools that can help you manage cash flow but can run you into debt if you are not careful. Before you swipe your first credit card consider the following do’s and don’ts, so you gain all the advantages without the headache of a tarnished credit rating.
There are several actions you can take that will help you manage your credit card. Follow these rules:
- Try to repay the whole amount owing by the due date to avoid interest mounting up
- Switch up your payment methods with debit cards to keep your credit owing manageable
- Be selective about the credit card you apply for
- Arrange your money so you can reap credit card benefits like frequent flyer points by paying on your credit card and then transfer the money across to your credit account
Credit cards can accumulate debt with ramifications for your credit score and loan applications down the track. Avoid these standard blunders, so you do not end up regretting your credit card:
- Do not pay the minimum repayment amount as you will incur interest which can become unmanageable if it compounds weekly or even daily
- Do not have multiple credit cards if you are new to credit as managing accounts and deadline dates can be difficult
- Do not max out your card
The expenses of running your office and paying for rent add up to a significant cost to your business. There are several key ways you should consider to reduce costs, without sacrificing conditions in your environment contributing to your employee’s productivity.
Consider the following tips to help you better your bottom line on your office space.
Get a second opinion
Another set of eyes and a fresh perspective will spot savings that may be hiding in plain sight. Get someone who has experience in running an office who will assist you by spending a day in an office and working out what is necessary and what can be culled.
Allow flexible working arrangements
Where it is possible and beneficial to both the employer and employee working from home is a great way to minimise the number of bodies in the office, and makes a smaller office space with lower rent a more viable option for your business.
Rent your office space on weekends
If you own your office space and want to find ways to finance your mortgage, consider renting out your office space when you are not using it. You could potentially rent it to organisations who run workshops or classes on weekends.
Negotiate a fixed fee
Certain office spaces will entice you with low rent options but your amenities costs like electricity, internet and water bills will be significantly higher. Including all the services that your landlord provides in and renting the actual office space in a fixed rate, will help you stay in control of your costs and avoid any nasty surprises when your bill rolls in for the month.
When it comes to saving money on anything from home loan interest rates to new appliances for your house, haggling is critical.
Master some of the haggling skills below to reap some saving rewards.
If your timing is not right many of your haggling skills will be wasted. Make sure you are bargaining when the salesperson has adequate time to consider your proposal or when the appropriate moment presents itself. For example, negotiating in a fixed term of your contract have low prospects of success in comparison to when your contract is up for renewal.
Compare to competitors
If you have done your research and know who the relevant competitors are, you are on track to achieve the best deal. Many business’ price match or seek to beat their competitor’s on value so by being educated, you may get the two business’ to drive the price down while they compete for your business.
Building a rapport with the salesperson is vital. Many forget that bargaining is a negotiation process and that coming in and demanding your price will not be effective. It is better to get the business’ representative onside so that they genuinely want to help you.
Talk to the right person
An employee higher up the corporate ladder is often the one who makes the calls. Cut out the middleman and speak to them if you can, as they are a more direct and efficient route to bringing in your purchase under budget.
Working capital is the money needed for day-to-day business operations and is often a measure of a business’s liquidity, efficiency and financial health.
To ensure your business has adequate working capital, the working capital cycle should be applied. The working capital cycle is the length of time from the purchase of inventory to the receipt of cash from customer sales.
The cycle comprises four elements: cash (funds available), creditors (accounts payable), inventory (stock on hand), and debtors (accounts receivable). Maintaining good cash flow requires control over each component. Ways to improve working capital:
To collect payments from debtors early, consider:
– establishing a credit policy
– invoicing early
– reducing payment terms
– stop supplying credit to debtors that do not pay
– following up on overdue accounts
– offering early settlement discounts
Inventory can tie up a large sum of your working capital; reducing inventory through the just-in-time model can increase efficiency and eliminate waste. The just-in-time inventory model is beneficial as it allows for quick changes to customer needs and frees up working capital to better meet financial obligations.
Managing cash outflows
Managing the money you owe to creditors is just as important as managing your accounts receivable.
To ensure your cash outflow meets your obligations:
– consider early payment discounts
– prioritise suppliers
– ensure the accuracy of invoices before making a payment
– only make payments when they are due
When you run your own business, it can be hard to step back and look at the big picture. Failing to do so, however, not only harms your business; it can also make it even harder to sell.
Whether it is failing to track cash flow or not investing correctly in key staff, there are many bad habits that business owners commonly make. Here are the top three:
Using the business as your personal ATM
A common business tax-minimisation strategy is to spend business earnings on personal expenses that are not directly related to the business. The idea behind this strategy is that reducing the earnings will make the business liable for a smaller tax bill at the end of the year. However, the strategy can create complications that cost more in the long run.
For example, when selling the business, the owner will need to convince buyers that the number of expenses claimed should be added back to profits since they are not ‘real expenses’.
Not making cash flow king
Many small businesses fail as a result of cash flow issues. Problems with cash flow can be caused by a variety of factors, such as poor debt collection, unfavourable terms negotiated with customers, lazy record-keeping or a lack of regular costing analysis. Failing to manage cash flow hinders an employer’s ability to pay employees and meet suppliers’ invoices. The business’s capacity to meet unexpected debt obligations can also be significantly reduced, resulting in missed opportunities and potentially forcing the closure of business at worst.
Far too many business owners neglect to spend enough time developing formal business, financial and operational plans; instead, they spend each day focusing on their short-term to-do list. These plans, however, are vital in determining whether all the owner’s work results in business growth or if they are gaining little return.
Particular objectives need to be mapped out to monitor and measure performance. This allows business owners to identify areas of reduced productivity or activities that generate lower-than-required returns and take appropriate action to rectify this.
When the winter season commences, you might notice a spike in your bills. Although, it is no surprise that additional heating and hot water adds up, you may be surprised at how you can reduce these costs with minimal effort.
Consider the following tips to reduce your winter bills and lessen your environmental impact:
Heating and electricity
Instead of turning up the dial on your heating, look to other ways of heating up without using gas or electricity. Simple changes such as dressing warmly, closing the doors of the rooms you are not using and using a door snake can help to avoid the use of unnecessary heating.
You don’t need to make big changes to make a difference. Some small changes you can easily implement include taking shorter showers, turning off the tap when brushing your teeth and installing a dual flush for your toilet. Fixing your dripping taps and leaking toilets will also lower your water bill.
Before purchasing new appliances, be sure to check the energy efficiency rating. Switching to energy efficient light bulbs can also reduce your electricity bills. Installing a water efficient shower head and only using the dishwasher and washing machine when full can help to save water. Switching off and unplugging appliances when they are not in use is a good habit to form.
When shopping around for a personal loan, it is wise to be conscious of any potential scammers that may try and offer you a deal that sounds too good to be true.
Though a loan may look legitimate from a first glance, there are various tell-tale signs to watch out for to spot a fraudulent loan.
When applying for a loan, be wary if your lender:
– does not evaluate your credit report before approving your loan
– calls or emails you to advise that you are a candidate for a loan
– asks for an initial fee to be wired to a local or international bank account
– offers a low-interest rate
– approves an amount that is higher than you require or applied for
– emails you from a personal email address (i.e., hotmail or gmail)
– sends correspondence using an email address where the company name is misspelt
– gives you an immediate deadline to accept the loan
– has not provided a legitimate address
It is essential to ensure the company you are dealing with is legitimate. Find their number from an independent source and then call them. Never call a number provided in an email as the scam artist may be impersonating a legitimate institution.
To be more adept at identifying a fraudulent loan and to avoid being scammed, never solely rely on the advice of a lender. It is always better to do independent research before you finalise your decision.
A personal loan can come in handy if you need some extra cash to fund a purchase, but it may not always be your best option.
Before you sign away, you will need to understand how personal loans work and if they are appropriate for your circumstances.
A personal loan is when a person borrows a set amount of money over a time period, along with interest, fees and charges from a credit provider.
There are generally two types of loans: secured and unsecured. Secured loans are secured by an asset, i.e., a car or home, in the case you would default on the loan. These loans have lower interest rates as the asset could be sold if you cannot repay the loan.
Unsecured loans, on the other hand, are not secured by an asset and therefore generate higher interest rates. A credit provider has the ability to take you to court if you cannot repay the loan.
One of the first things you should check when deciding on a loan is the interest rate. You can calculate how much interest you will pay over the lifetime of the loan by multiplying the annual interest rate by the term of the loan. For example, if you are borrowing $5,000 with an annual interest of 3 per cent over 2 years, you would pay $300 in interest in total.
Another important consideration is fees and charges as these can vary substantially between credit providers. The fees and charges will depend on the amount of money borrowed.
If you plan on making additional payments, you should also check to see if there are any extra fees for doing so.
Before you commit to a loan, shop around for the best deal, ensure that you have read and understood the terms and conditions, and are confident you can make the repayments.
Most people, at some stage or another, will need to save money. Whether it is for a large purchase such as a house deposit or money for a rainy day, similar savings principles apply.
Consider the following tips to boost your savings account:
Automate your savings
One of the easiest ways to get into a saving habit is to automate your savings when you get paid. Create an account that is separate from your everyday expenses such as bills and groceries and allocate a set amount to be transferred each payday to this savings account. Having the money in a separate account will help to avoid the temptation of spending your whole pay packet.
Hold onto small cash
Holding onto small cash, i.e., $5 dollar notes, can significantly add up over time. Challenge yourself to keep a hold of small notes or coins left over after running your errands or a night out; you might surprise yourself as to how much you can save with little to no effort.
Save extra sources of cash
Anytime you come across an extra source of money such as a raise, bonus or a tax return, consider banking it. If you have managed to get by on your salary or wage up until now, you can continue to live off the same amount and you will thank yourself later when you can afford that holiday or car, etc.
Whenever or however you choose to invest, there will always be risk involved. Luckily, there are strategies you can adopt to manage this risk in the best way possible for you and your investment goals.
Unfortunately, volatility in financial markets can cause an investor to lose their confidence. The Australian Government has provided Australians with a number of tips on how to minimise the risks involved in investing, to ensure they remain confident and their investments stay strong.
Consider the following:
Goal setting is particularly important in a volatile market. Without a plan in place, when the market drops, an individual can be quick to panic and pull their money out. Reacting like this can cause you to lose out, so ensuring you have a goal and a plan will help you handle these times, without losing your head.
A profile that is diversified is much more secure in times of market volatility because it is less exposed to the negative impacts of a specific economic event. Investing in a number of different industry sectors, asset classes and even geographic locations will see your portfolio become more diversified.
Knowing what is going on with your investments is important, as a significant loss in one or more of your assets could cause your portfolio to become unbalanced and less secure. You should receive periodic transaction statements that indicate the value of your investments, as well as the fees and taxes paid. Analysing and responding to this will help you stay involved.
Look out for scams
When markets are volatile, investors are more vulnerable and this is the time that scammers will arise and try to take advantage of the situation. Many scammers catch people out by offering something that sounds too good to be true, by saying they are a representative of a well-known company when they aren’t, or when they contact you in a way that seems suspicious, like a random phone call or through social media. Scammers may offer you investment options that provide high and quick returns, tax free benefits, no risk or low risk investments or even a discount for investing early before a public float. Be weary of all of these. If you are interested, you should always say you need time to think about it and do your own research before committing.
Financial advisors are there to offer you assistance and to help you make the best possible decisions for your investment portfolio. Find a professional that you feel confident with, and don’t hesitate to contact them for help and guidance.