Budgeting

If you’re like many people, your parents probably taught you that debt is a good thing. Responsibly handling debt makes you a good credit risk, and a lender would be eager to loan to you. However, without judicious use of debt, it can quickly spiral into something much more sinister. Debt has a way of wrecking life plans from a variety of angles.

Student Debt

Student loan debt has been a contentious issue as of late. Recent generations are questioning the value of taking on up to hundreds of thousands of dollars in debt even before they graduate from college. According to a study by the National Student Loan Data System, the average student loan debt in the United States exceeds $30,000. This burden can delay graduates' ability to purchase homes, start families or save for retirement. What was perceived as almost a rite of passage into responsible adulthood is now being viewed through a different lens.

Entrepreneurial Ventures and Business Debts

Many entrepreneurs rely on debt to start or grow their businesses. While this can lead to successful ventures, it also carries significant risks. Business debt can become overwhelming, especially for small businesses facing market fluctuations or unexpected expenses. A failed business venture not only affects the entrepreneur but also employees and their families. The failure rate of small businesses, often attributed to cash flow issues, underscores the precarious nature of relying on debt for business operations.

Delayed Retirement and Absence of Long-Term Security

Debt can also have long-term consequences on retirement planning. Individuals saddled with high levels of debt often find it challenging to contribute to retirement accounts, leading to inadequate savings. This lack of preparation can extend working years far beyond what was planned, diminishing the quality of life in later years. The rising trend of retirees carrying mortgage and consumer debt into retirement is a worrying indicator of future financial insecurity for an aging population.

Relationship Strains and Breakdowns

Money problems are a leading cause of stress and strain in relationships. Debt, in particular, can create significant stress between partners, often leading to arguments and, in extreme cases, divorce. When one partner brings debt into a new marriage, resentment can build up. The situation also causes power inequalities, where one person may feel beholden, or the other may feel like they’re carrying the indebted spouse. The pressure to manage debt can overshadow other aspects of the relationship, eroding trust and communication. This dynamic not only affects the couple but can also have a ripple effect on the well-being of their children and extended family.

Lack of Access to Credit

Debt's impact extends beyond immediate financial instability, creating long-term barriers through its influence on credit scores. A poor credit score, frequently a result of mismanaged debt, poses significant challenges in accessing vital financial services. Individuals with low credit scores struggle to obtain new credit, as lenders often deem them high-risk borrowers. This situation typically leads to either outright rejection of credit applications or approvals with exorbitant interest rates, which digs a person even deeper into debt they struggle to repay. It’s a vicious cycle.

The dream of homeownership also becomes complicated, with a poor credit score significantly hindering the ability to secure a mortgage. Even if approved, such mortgages typically come with less favorable terms, escalating financial burdens through higher monthly payments. A bad credit score can even inflate insurance premiums, as insurers might view individuals with poor credit as higher risks. Not only that, but renting becomes a big challenge, as more and more landlords do credit checks, leading those with poor credit scores to face difficulties in securing rental housing, often compromising on living situations. This perpetuating cycle of restricted access aggravates the financial burden of indebted individuals, making it increasingly challenging for them to pursue life goals.

Missed Investment Opportunities

When you're buried in debt, it's not just about struggling to make ends meet today; it also means missing out on chances to grow your money for the future. Think about it: if most of your cash is going towards paying off debts, how can you save for retirement? This means when it's time to retire, you might not have enough saved up, forcing you to either work longer or cut back on your lifestyle. Also, if all your money is tied up in debt, you can't invest in things like stocks or real estate that could potentially make you more money in the long run. It's like watching a train full of opportunities pass you by. And it's not just about investing money. Being in a lot of debt can stop you from investing in yourself too. Want to go back to school or start a business? That can be tough if your finances are stretched thin. Plus, let's not forget about emergency funds – everyone should have some cash set aside for unexpected stuff, but that's hard to do when you're drowning in debt. So, being stuck in a cycle of debt doesn't just affect your life now; it can also hold you back from building a better, more secure future for yourself and your family. It's like being stuck in quicksand; the more you struggle without a plan, the deeper you sink.

If you find yourself in debt over your head, one of the best steps you can take is to hire a CPA. CPAs help manage your tax burden, your cash flow and many other aspects of your financial profile. It’s never too late to get a handle on debt, but the sooner you act, the sooner you can stop the downward spiral.

by Kate Supino

The financial side of an upcoming marriage isn’t romantic or swoon-worthy. But it’s something that must be considered and discussed in order to help ensure a smooth union for years to come. It’s not too hard; the practicalities of whether or not to mingle money after marriage can be taken care of swiftly so that the other, “fun” details of the pending nuptials can be focused on. The following pros and cons will serve as a helpful guide so that you and your intended can make an informed decision based on all the factors.

Pros of Merging Finances

First, let’s review the tremendous benefits that come from mingling money after marriage.

1. Simplified Money Management

Managing household finances can be complicated enough without the added challenges of keeping track of who spent what. Combining finances can streamline the entire process, so there is one unified account that both parties are working with. This is hands down the easiest way to track spending, track savings, budget and manage bills. If you and/or your beau don’t necessarily enjoy sitting down each week and sorting out money matters, merging finances will definitely be a welcome way of doing things. 

2. Easier to Make Money Decisions

When both parties in the marriage are “in it together” in terms of finances, they may find that the process is easier when it comes to making major money decisions, large purchases and so on. If opportunities for investment come up, or the need for major repairs, it’s much easier to make the choice to go ahead or hold back when you only have to consider shared accounts and not multiple, individual accounts.

3. Strengthening Trust and Unity

There’s also a school of thought that says that mingling money builds a stronger bond between two people in a marriage. There’s an inherent trust that can build when both people have full account access, shared passwords, and so forth. It can feel more like you’re building a stronger financial future together, rather than embarking on a parallel journey where one person might come ahead.

Cons of Merging Finances

The drawbacks of merging finances after marriage can’t be ignored, either. Depending upon the situation for each party in the union, mingling money might not be in one or both people's interests.

1. Resentment Can Build

If one person came into the marriage with a lot more money than the other, it may take some getting used to sharing the wealth. In fact, over time, resentment may build up; particularly if the other person is perceived as not pulling their weight. Instead of bringing the happy couple closer, joint accounts may actually pull them apart. 

2. Loss of Financial Autonomy

For individuals who are accustomed to managing their own finances, merging accounts can represent a significant shift. It often requires adjustments in spending habits and financial decision-making. Some individuals may feel a loss of independence as they now have to consider their partner's views and preferences in financial matters. This can lead to an unwelcome feeling of constraint, particularly for those who highly value financial independence.

3. Potential For Confusion

With two people using one joint checking account, there’s more potential for confusion as far as tracking spending. This becomes more dangerous if there isn’t a lot of padding in the account to cover forgotten transactions that could lead to costly overdraft fees. Both people have to be diligent about tracking spending. Otherwise, both parties’ credit can suffer, making it more challenging to attain future life goals, such as buying a home.

4. Unbalanced Responsibility

Another, related issue has to do with the responsibility of managing the finances. If one person just spends as they please, with nary a thought to how much is in the account, or if they have no interest in balancing the checkbook, it falls to the other person to take up the reins. If the other person is happy with that arrangement, that’s fine. But if they’re feeling the extra burden of shouldering all that extra responsibility, it may lead to another form of resentment. 

5. Complexity in Estate Planning

Joint finances can add complexity to estate planning, particularly in blended families or when there are significant assets involved. It requires careful consideration and often legal advice to ensure that assets are distributed according to the couple's wishes. This complexity can be exacerbated in situations where there are children from previous relationships or specific intentions for the distribution of assets.

Other Considerations

There are other things to consider that should factor into whether or not you decide to mingle money after marriage. 

Investments

Just because you decide to mingle your checking account and/or savings account, doesn’t automatically mean you have to share your investment portfolios. For instance, if you’ve got a stock portfolio, you may not want to add your spouse to the account. Doing so could hinder your stock trading decisions, if it’s a self-managed account. It can also complicate things as far as managing investments that you started long before you ever met your future spouse. 

Debt

If you go into the marriage willing to share your money, then you and your spouse will also be sharing each other’s debt. Hopefully, you’ll be marrying someone who’s been responsible with debt management, but that’s not always the case. There’s the possibility of making an agreement that each party pays off their own debt separately, with fixed monthly amounts, and then the rest goes into the joint account. There are other viable solutions, too.

This conversation about mingling money after marriage isn’t enjoyable. But it can be satisfying to put everything on the table so that everyone’s on the same page. And you should know that talking about money matters isn’t something you should do only once. It needs to be a regular discussion topic as you each go forward in life. For help deciding whether to mix finances, and how to do so, contact your CPA.

by Kate Supino

Relocating can be an exciting adventure, filled with the anticipation of new experiences and better opportunities. But proper financial planning ahead of time is crucial to ensure that  your move goes as smoothly and stress-free as possible. From understanding your current financial situation to budgeting for your new cost of living, there are several key things to consider.

Review Your Current Financial Situation

First, assess your current financial situation. You’ll need to keep up with your existing financial obligations while taking on new ones. You should already have some kind of system in place to keep track of your cash flow, but if not, this is a great time to start. Your CPA may be able to help with this step. This assessment should include your monthly bills such as rent or mortgage, utilities, food, transportation, health insurance as well as any debt obligations you have.

Research the Cost of Living in the New Location

The next important step is to understand the cost of living in your new location, and make changes to your budget accordingly. For instance, you may be saving on gas for driving to work, but you might have additional expenses for public transportation. If you're moving to a place with lots of cafes and restaurants nearby, consider the added expenses you’ll probably incur from eating out more often. The cost of living varies widely between different cities and even between different neighborhoods within the same city. This information will allow you to build a realistic budget for your life post-relocation.

Factor in Relocation Expenses

Relocating is an expensive affair, often entailing costs such as hiring a moving company, transporting vehicles, temporary housing, and potentially even a trip to the new location to house hunt. You may also lose time from work while you’re taking on all the added tasks involved with the move. Assess and budget for these costs upfront. Also, you might need to double-pay some expenses like rent or utilities during the transition period. If your new employer isn't covering any of your relocation costs, ensure that you've saved enough to bear these expenses without straining your finances or going into debt because of them.

5. Look at Your Vehicle and Moving Insurance

Relocating involves not just a change in your address but also potential changes in your insurance coverage. For instance, your car insurance rates will likely change based on your new locale. Factors such as the area's traffic, crime rates, and even weather conditions could impact your premiums. It's important to research these details to avoid surprises on your upcoming bills. Give your insurance agent a call and find out how your premiums will change or use their online calculator. This is also a good time to compare insurance companies, as you might find a better rate elsewhere, based on your new home base.

Regarding the move itself, your possessions are at risk of damage during transit. Therefore, it's essential to confirm what the moving company's insurance covers. Get it in writing, and don’t just rely on what you’re told over the phone. If it doesn't fully cover potential damages, you might want to consider purchasing additional coverage. This way, you ensure that you're financially protected, making your move smoother and stress-free.

Evaluate Investments and Tax Implications

Moving, especially across state lines or internationally, might have an impact on your taxes and investments. It's a good idea to sit down and have a good look at your investment portfolio. You may need to make adjustments based on tax laws in your new location. If you're moving to another country, there might be tax treaties in place that you need to know about. Your CPA can help with this step, too. They can provide you with guidance and help you navigate through any potential financial changes due to the move.

Update All Your Addresses

When you move, don't forget to inform all your banks, credit card companies, and investment firms about your new address. This is a crucial step because, without it, you might miss important mail or payments, which could lead to problems or late payments. Updating your address is also about protecting your financial information, ensuring it doesn't end up in the wrong hands. Another tip is to switch to online statements and automatic payments if you haven't done so already. It's a more efficient method, and it reduces the likelihood of any mail-related issues, making the whole transition process that bit smoother.

Consider New Banking Arrangements

You may have opened up your existing bank account because it was convenient for your home or work. But if your move takes you abroad, you'll likely need to set up bank accounts in your new country. Start by researching your banking options in the new location and familiarize yourself with the process and the documents required to open an account. Additionally, you may need to maintain your current accounts depending on international banking regulations. Proactively setting up your banking infrastructure can ease your transition, saving you valuable time and potential stress after the move, as well as currency conversion fees.

Top Up Your Checks

There are fewer and fewer instances where you need to write out an actual check, but having a stockpile of checks can help to simplify things when you’re relocating. It can take some time for financial establishments to process changes of address, and you don’t want to be waiting for checks to arrive before you can take care of a transaction. Order extra checks from your bank or third party company so you have them at the ready should you need them.

Relocating involves significant planning and decision-making, and your finances are at the heart of it all. By paying attention to each detail on this financial to-do list, you can ensure that your move is smooth and financially sound. Remember, while it might seem like just one more thing to add to your already bursting to-do list, careful preparation ahead of time will pay off in the long run.

Embarking on the journey to financial success can be overwhelming, particularly when faced with multiple goals and competing priorities. But taking the time to prioritize financial goals and then following through with them can reap tremendous and long-lasting benefits. CPAs see firsthand the benefits of establishing a clear and well-organized financial plan. Here is a step-by-step process to prioritize your financial goals and create a roadmap to achieve them. By the end of the journey, you'll be better equipped to tackle your financial aspirations head-on.

The Importance of Identifying Your Financial Goals

Imagine embarking on a road trip without a clear destination in mind. Without a specific endpoint, it would be nearly impossible to plan your route, let alone arrive at your desired location. Similarly, achieving financial success begins with identifying your financial goals.
Take a moment to reflect on your short-term and long-term financial objectives. These may include paying off high-interest debt, building an emergency fund, saving for retirement, investing in a home, funding your child's education, starting a business, or planning for a major purchase. As you contemplate your financial journey, think about your personal values and aspirations, and align your goals accordingly.

Categorizing and Prioritizing

With your financial goals clearly defined, it's time to organize and prioritize. Begin by categorizing your objectives into short-term (less than a year), medium-term (1-5 years), and long-term (more than five years) goals. This process will provide you with a better understanding of the time horizon for each goal, allowing you to allocate resources more effectively.

To prioritize your goals, consider factors such as interest rates, risk tolerance, time sensitivity, and personal values. For instance, paying off high-interest debt should take precedence to avoid mounting interest payments. Likewise, assess the urgency of each goal and prioritize those with tight deadlines.

Understanding Your Current Financial Situation

Before diving into budgeting and investment strategies, it's crucial to evaluate your current financial standing. This step involves analyzing your income, expenses, assets and liabilities to gain a thorough understanding of your cash flow, net worth, and debt-to-income ratio. By assessing your current financial situation, you'll be better equipped to set realistic expectations and allocate resources effectively. Your CPA can help you with this part if you need it.

Creating a Budget: The Foundation of Your Financial Plan

A well-structured budget is the cornerstone of any successful financial plan. It provides a clear picture of your income and expenses, allowing you to allocate funds towards your priorities. To create an effective budget, list all income sources, such as salary, bonuses, investments, and side hustles. Next, detail your fixed and variable expenses, including housing, utilities, groceries, and entertainment.

With your income and expenses laid out, allocate funds to your financial goals based on their priority level. Remember, a budget is a living document that should be reviewed and adjusted regularly to account for changes in income, expenses, or priorities. As your essential needs change, so will your budget. By maintaining an up-to-date budget, you'll be better prepared to make informed financial decisions.

Implementing a Savings and Investment Strategy

Now that you have a clear understanding of your financial goals and a working budget in place, it's time to establish a savings and investment strategy. This step involves determining the amount you need to save and invest to achieve each goal, taking into account your current resources, time horizon, and risk tolerance.

When working on your savings and investment strategy, be sure to take full advantage of any employer-sponsored retirement plans you may have access to, such as 401(k)s. These plans offer valuable matching contributions and tax benefits, so it's wise to leverage them as part of your strategy. Additionally, diversifying your investment portfolio will help to minimize risk while maximizing potential returns.

To ensure your investment strategy is tailored to your unique needs and goals, it's beneficial to consult with a CPA. With their guidance, you can create a plan that aligns with your specific objectives.

Monitor Progress and Adjust as Needed

As you progress along your financial journey, it's crucial to monitor your performance and adjust your plan as needed. Regularly reviewing your financial plan will allow you to identify any gaps, setbacks, or opportunities for improvement. Remember, your financial situation and priorities may change over time, so being flexible and open to adjustments is essential.

To keep your financial plan effective, consider scheduling periodic check-ins, reevaluating your risk tolerance and investment strategy, staying informed about market trends and new investment opportunities, and consulting with a financial professional for insights and guidance.

Celebrate Milestones and Stay Motivated

Achieving financial goals can be challenging and may require significant short-term sacrifices, but it's important to stay motivated. Celebrating milestones and acknowledging your progress not only fosters a sense of accomplishment but also reinforces positive financial habits. This doesn’t mean going on a shopping binge when you reach a certain savings goal. Rather, mark milestones with a pat on the back or revisiting your long-term goals and enjoying the fact that you’re closer than ever to achieving them.

Staying Focused

As you advance, it's crucial to foster a growth mindset and seize learning opportunities as they arise. Staying informed about financial news, participating in workshops, and becoming part of financial communities can enhance your knowledge and enable you to make well-informed decisions.

Additionally, it's important to maintain transparent communication with your family and loved ones concerning your financial objectives and plans. This open dialogue not only fosters a sense of accountability and support but also ensures that everyone is collaborating and working towards a shared goal.

The path to prioritizing and achieving financial goals involves having a clear understanding of your objectives, comprehensively assessing your current financial situation, and crafting a well-structured action plan. By following these steps and consistently keeping an eye on your progress, you can establish a robust financial foundation and ultimately realize your financial dreams. Don't forget that seeking assistance from a CPA can offer invaluable guidance and support throughout your financial journey.

The first step in budgeting for the perfect vacation is to be realistic about yourself, your finances and the experience you’re about to have. The budget should be based on your financial resources and your savings goals. But it also needs to take into account that life is for living. Let’s face it. Economizing at home is one thing. These days, most people can’t afford not to trim costs here and there. But economizing on a vacation can be less than ideal.

Be Realistic With Your Budget

For one thing, you’re going to be faced with a lot of temptations that you aren’t at home. For another thing, you deserve to splurge a little on vacation. The key is balance. You don’t want to face buyer’s remorse when you return home.

The crux is, don’t expect that you’ll be satisfied with a baguette and a hunk of brie while you sit on the banks of the river Seine. That makes a good one-off experience, but you’re going to want to sample the restaurant cuisine wherever you visit. Set reasonable money goals and leave a little room for extravagances.

Book Ahead
You could get much better fares if you book your flight well ahead of time. Look for flights at least six months in advance. If you use Google flights, you can access their calendar, where it shows when the cost of flights goes down or up. The more advance time you give yourself, the more flexible you might be able to be, allowing you to take advantage of low season drops in prices.

Consider All-inclusive Packages

All-inclusive packages can be a great way to budget for a luxurious vacation. These packages often include accommodations, meals, drinks, and activities; all for one fixed price. If you’re going to a large enough resort, you may not even miss not trying to find restaurants yourself, off the property. Of course, all-inclusive packages aren’t for everyone, but depending upon your idea of the perfect vacation, it could be a smart option for you and your family.

Use a Travel Agent

Remember the days when you almost had to use a travel agent to go anywhere? Travel agents still exist, it’s just that they have a lower profile than in years past. And, little known to many, it’s often more cost effective to book through a travel agent than to do everything yourself. The reason is that travel agents still have the inside track on special deals and packages. And, they get discounted rates from the transportation industry, which they can then pass along to their customers.

There are other benefits of using a travel agent, too. Your vacation from chores can start immediately, because the travel agent does all the heavy lifting. Instead of you spending hours and hours in front of a computer screen trying to save money, the travel agent is doing all that work. Plus, you might find that, with the help of a travel agent, you can afford extras, like a personal guide, or extra paid activities during your vacation.

Use Credit Card Rewards

Credit card reward programs can make a huge dent in your vacation expenses. Look for credit cards that offer airline, hotel and restaurant points for every dollar you spend. It can take a while to accrue sufficient points to really make a difference, so start now if you want to vacation in the upcoming year. The Only thing you want to avoid is spending unnecessarily just to accrue travel points. The amount you spend on credit cards plus interest can offset any potential savings. A better strategy is to use a credit card to pay bills you’re already prepared to pay for, then immediately pay down the card from your checking account.

Choose Off-the-beaten Path Locations

Tourist hot spots almost always have jacked up prices. But there are savings to be had if you’re willing to go to nearby locales that will still give you the same or similar experience. For instance, Maui is considered quite pricey. But you can split your vacation between Maui and Honolulu and still experience Hawaii. Another example is Mexico. If you stay at a Cancun resort in the hotel zone, you’ll pay more for everything, including food and transportation. But if you stay just 45 minutes south in Playa del Carmen, you’ll have access to beautiful Mexican beaches without paying the top dollar prices of Cancun.

Shop Smart

Of course you’ll want to bring back souvenirs from your vacation. But you’ll have more to spend if you shop smart. Do your big shopping trips away from touristy areas. Also, consider alternative-type souvenirs that will carry more meaning instead of mass-made souvenirs that probably weren’t even made in the country you’re visiting. Ask local taxi drivers and the hotel concierge where the local markets are. There, it’s likely you can choose from beautiful handmade goods by local artisans. Not only will you save yourself from tourist traps, but you’ll bring home something special and support the local artisans, as well.

Set Priorities

Remember, budgeting for the perfect vacation may mean that you have to make compromises. In the weeks and months leading up to your dream vacation, carefully consider all your discretionary spending. Would you rather splurge on a pizza to be eaten on your couch at home, or would you rather enjoy a handmade pizza with your loved one in an Italian bistro? Put as much extra money aside as possible toward your upcoming trip so you can worry less about spending money while abroad and spend more time enjoying your experience.

Remember, life is meant to be enjoyed. When you budget right, you can have your cake and eat it, too. If you’d like more savings tips, talk to your CPA. They might just have more ideas about making your money work for you so you can take even more luxury vacations in the future!

If you’ve ever wondered why they don’t teach teens about money in school, you’re not alone. Chances are, either you or your friends have asked this same question. Until the school curriculum changes, teaching teens about money in the real world remains in the domain of parenting. And this isn’t something that should be left up to “life’s lessons.” If your young adult goes off not understanding how to handle money, their financial missteps will eventually come back to haunt you. Just think about your next door neighbor, whose adult son came back home to live with them after losing their job. Or your friend’s daughter and husband, who are now under foreclosure and facing homelessness. These are harsh lessons to learn when your adult child has a family to provide for. But you can help a lot right now by using the following tips to teach real world money lessons.

Keep Up On Tech

First off, you can’t afford to ignore the latest technologies quite yet. Leave that to your golden years when your kids have learned their money lessons from you. For now, you need to keep up with all the new ways that the younger generations are using to save, spend and invest. Otherwise, there’s a good chance your good intentions and good advice will be dismissed as irrelevant or passé. You don’t want to hear words like, “They don’t do stuff like that anymore, mom.” or “That’s not how people get rich nowadays.” These words sound naive to experienced adults, but the reasoning behind them should be paid attention to.

In order to be heard and for your advice to be respected and—dare you hope, actually followed—is for you to be current on the latest tech and finance terms and methodologies. This includes things like cryptocurrency, AKA crypto, fintech, Apple Pay, and more. If you can find a course at your local library or online, you’ll absorb the information you need so you can have an informed discussion with your teen about finances. Knowing about and understanding how the current generation views money will help bridge the gap between you and your teen so that you can teach him or her the basics of economics that will never change.

Take the Time

Next, you need to take the time—and patience—to spend with your teen in the real world. That means bring your teen to the dreaded grocery store, where they can learn all about money in the real world. First, bring them to the meat counter, and explain the labels; how the price per pound varies with the different cuts. Explain how the more processing is done on the meat, the more expensive the meat. Walk down the aisles and explain how the more expensive items are at eye level, while less expensive versions are placed lower and higher. Bring your teen to the bank when you need to talk to the manager about a business loan. Better yet, let your teen help you assemble your loan application documents. Explain how the organization and presentation play a role in whether the application will be accepted. Show them the loan documentation so they can see how much you’ll pay in interest over time. Your teen may not show interest in the beginning, but if you show them the respect of teaching them, eventually they’ll show the same respect by paying attention.

Be Transparent

In previous generations, household finances were a deep family secret. Children weren’t privy to where money came from or how much was in the coffers. Today, it’s really better to be communicative with your teens about household finances. You don’t have to give up all your privacy, but you should have open conversations with the family about money without excluding the teens in the household. For example, if you recently got a raise, tell your teen about it and explain how you’re going to put the extra money into an investment account instead of upgrading your lifestyle, and explain why. If you recently got laid off, explain how and why you have six month’s salary in the bank, so the family has some breathing room until you can find another position. Just being honest and open about your household finances will take away a lot of the mystery about money that teens often find so confounding. Lead by example, and be vocal about what you’re doing.

Explain the Repercussions of Bad Money Management

It’s shocking how many young adults have no idea that they have a credit score and a credit report. As a fiscally responsible adult, you know that missed payments and high revolving debt decrease both your score and your attractiveness to lenders. The only way to teach this to teens is by sharing your credit report with them. Sign up for MyFico and go through the various credit score ratings. Review your credit report and point out times in your past where a missed payment happened, or point out your stellar on-time payment record. Talk to your teen about how their credit score will impact whether or not they’re approved for an apartment lease, a credit card, a car loan and a mortgage. Explain the seven-year rule and how that’s a long time to wait for a small mistake in judgment to be cleared off the record.

One of the people in your corner, when it comes to talking to your teen about money, is your CPA. The next time you have a meeting scheduled, ask if it would be okay if your teen joins you, simply as a listener. Having the opportunity to hear how adults discuss finances and make future plans to manage budgets is worth just as much as a handful of history classes. After all, someday your teen is going to be a responsible adult, capable of making their own fiscally-sound money decisions. At least, they will with your help.

As an employee who has been loyal to your company, shows up on time day after day, and puts your heart and soul into your job, you know when the time has come to ask for a much-deserved raise in pay. Yet while most employees have this idea in their heads at some point during their careers, surveys have shown that less than 40 percent actually follow through with this request. If you've decided your hard work and dedication merit an increase in your paycheck, here are some useful strategies for how to ask for a raise and actually get it.

Pick the Best Time to Ask

First, remember that there are certain times when you'll have a much better chance of getting a raise. Generally, the best times to sit down with your boss for this discussion are after you've completed an important project for your company, you've been given additional responsibilities or during performance reviews when you're being given plenty of accolades. Also, keep in mind that it's never a good time to ask your boss for a raise when they are under lots of stress, since they'll already have plenty on their plate. Use your common sense and choose your moment wisely.

Research Salary Trends

One of the best ways you can get a yes answer to a request for a raise is to conduct plenty of research regarding salary trends in your area. If other workers who have the same type of job as you are making more money, it's reasonable that you should expect your salary to be just as competitive. If you can go into the meeting with your boss and have verifiable information about salaries, chances are you can emerge from the meeting with that all-important raise.

You've Got Another Offer

If you are looked at by your boss as being indispensable to their company's success, telling them the competition has made you another offer that features higher pay may be just the thing that gets you that raise. Since managers and business owners realize how hard it is to hire and keep great workers in today's economy, this can give you a tremendous amount of leverage during negotiations. However, don't make the mistake of telling your boss you have another offer when you really don't. Otherwise, you may be put in an awkward position should they wish you the best of luck in your new job.

List Your Accomplishments and Qualifications

While your boss may know you have brought plenty to the company since you were initially hired, they may tend to forget specific things you have done over the years. When you decide to ask for a raise, go into the meeting with an extensive list of your accomplishments and qualifications. Once your boss is reminded of everything you've done and how well-qualified you are for your current job, they may be more likely to give you that raise. If your meeting goes especially well, you may even get a promotion as well.

Have a Specific Number in Mind

When asking for a raise, don't do so until you have a specific number in mind. If you do, things probably won't go as well as you would hope. On average, studies indicate employers in 2023 expect to give out raises of three percent to their employees. While at first this may not sound like much, it may make a bigger difference than you realize. Remember, you will be going into your meeting to negotiate a new salary for yourself. By having a number in mind beforehand, you'll be able to negotiate a more favorable outcome.

Act Confident

When you ask for a raise, it’s important that you act confident during the meeting. However, this does not mean you should come across as if you’re trying to bully your boss into giving you a raise. To walk this fine line, remember to always thank your boss for agreeing to meet with you, be willing to listen to their side of things, and always be cordial as you are negotiating your raise. Once your boss is able to see for themselves how valuable and polite an employee you really are, you may soon find yourself with a much bigger paycheck.

Be Ready For Pushback

Unless your boss has already given thought to offering you a raise in the near future, you will likely get some pushback. The instinctive answer from your boss will be no, followed by one or more reasons why not. Before your meeting, put yourself in you boss’s frame of mind. Imagine all the reasons why they might refuse your raise, and then come up with answers for all of them. This way, you’ll be better prepared to respond to excuses, which will make it harder for your boss to deny you.

Don’t be Greedy

Once your boss acquiesces, don’t be greedy and try to get more. You might think you asked for too little if they agree right away. But being greedy will make you look very bad. If the raise is paltry, however, and not in line with what the market is paying for your job, it’s okay to ask your boss to step it up a bit. But don’t go “whole hog” and try to get much more than what you truly deserve. In other words, be gracious, accept a fair number and continue to do a brilliant job so you can get another raise in the future.

Once you finally decide to ask for a raise, it’s vital that you keep each of these steps in mind. The more documentation you have about why you deserve a raise, the better. When you combine this with a positive attitude, an air of self-confidence, and a willingness to let your boss know you understand their perspective as well, chances are all of this will result in a higher salary.

Your credit score impacts everything from how much money you can borrow, to what interest rate you’ll pay, to whether or not your application for a home or apartment rental will be accepted. Without proactive steps, your credit score can easily fall into a range where it makes it hard to succeed financially. If your credit score is less than ideal, here are some ways to raise it.

Check For Misinformation

Negative entries on your credit report prevent your credit score from going higher to a certain degree. Negative entries include things like late credit card payments, vehicle repossessions, late rent payments, bankruptcies and collections reports. Getting rid of them can instantly raise your credit score by a few points.
Credit reporting agencies won’t delete negative entries that are accurate. But they will delete them if there is wrong information. The good thing for you is that the wrong information can be anything from serious inaccuracies to innocuous incorrect addresses.

Pore over the negative entries on your credit report and look for misinformation. Check the accuracy of noted address and telephone numbers, dates and currency amounts. If you see something that’s wrong, even something small, you might be able to have it removed from your credit report. Any removal of negative entries will raise your credit score.

Every credit reporting agency has their own negative entry removal process, but in general, you will submit your report of the negative entry, along with the reason and any backup information you have to support your reason. The credit company (your credit card company, car loan loan company, etc.) has 30 days to dispute your claim. If they can’t prove that the negative entry is indeed correct, it will automatically come off your credit report.

Pay Off Credit Cards

Your credit score is calculated in part from your debt-to-income-ratio. Any reduction in your debt will result in a few points being added to your score. Therefore, if you pay down one or more debts, such as credit cards, your score will go up. You don’t even have to pay off the entire balance to see an increase in your credit score. But the more you pay down, the more points you’ll be rewarded. Remember, your credit score is constantly being recalculated based on current information. So once you pay down a credit card, don’t rack up charges on it again. Pay it down and keep it down in order to achieve the highest credit score possible.

Ask For a Credit Line Increase

Leveraging the same debt-to-income-ratio calculation, you can get a few points added to your credit score by getting a credit line increase on your credit card. Even if your debt balance remains the same, a credit line increase will raise your score because your debt-to-income-ratio will go down. Keep in mind that if you immediately charge against that new credit line increase, your score will not go up.

Pay on Time, Every Time

Your credit score is also partially calculated by your history of on-time payments. You can’t go back in time, but you can ensure that future payments are received on time, every time. While this may be a no-brainer, there are pitfalls to be aware of that didn’t exist years ago. First, some credit card companies, primarily those for “bad credit” customers, only accept online payments before 5 p.m. in the designated time zone. So if you go online to make a same day payment after 5 p.m., it may be recorded as a late payment, arriving on the next day. Another pitfall is using online bill payment services like BillPay.com. These companies send out your payment so you don’t have to, but they take extra days to arrive. This makes it very difficult to time your payments so that they arrive by the due date. If you have trouble getting payments in on time, take total control and set up your calendar and reminders and then pay your bills by yourself online, by the day before they are actually due.

Avoid Hard Credit Inquiries

Credit inquiries are notations on your credit report that indicate when a lender has delved into your credit report for the purposes of qualifying you for a loan. There are two kinds of credit inquiries; hard and soft. Soft credit inquiries are those where a lender has not “opened the door,” to your credit history, but they have taken a superficial look at your credit profile. Soft credit inquiries are not noted on your credit report. (Also, your own personal inquiries into your credit report are not noted.)
Hard inquiries are those where a lender is considering you for a loan and reviewing every detail of your credit report. Hard inquiries bring down your credit score by a few points. They indicate that you are searching for money or a line of credit, and hint that you might be having money problems.

Avoid these hard inquiries as much as possible. You may be looking for a car loan or a mortgage; this is fine and understandable. Just bear in mind that hard inquiries from places like credit card companies and personal loan lenders don’t look good on your report, and will bring down your credit score by a few points.

Note that changes to your credit score take time; typically about 30 days. Don’t give up. Taking the steps mentioned above will work. Going forward, the best way to raise and maintain your credit score is to monitor it closely so you can see firsthand how your actions are affecting your score. Consider subscribing to a credit monitoring service where you can see your credit score and report from all three credit reporting agencies. By monitoring credit and being vigilant where your credit is concerned, you’re virtually guaranteed to raise your credit score over time.

If you feel like you’re working as hard as you can and you still aren’t saving money, it’s likely that a household budget will help. Household budgets force you to take a hard look at how much you’re bringing in each month and how much you’re spending. You can use a variety of means to create a household budget, such as budgeting software, spreadsheet software or just a reliable pen and piece of paper. In other words, there are no obstacles to creating a household budget. The obstacles are sticking with it and being able to accept the fact of your own financial limitations when it comes to expenditures. Following are the steps to take to create a household budget, as well as tips for budgeting money.

Determine How Much You’d Like to Save Each Month

The point of budgeting is to save money and control expenditures. So the first step for successful budgeting is to determine how much money you’d like to put by each month. Start with a modest figure. You can always increase it after your budget is finished if you have extra money left over. But it will be hard to trim your budget if your savings figure ends up being overly ambitious.

Add Up Your Income

Add up all the money you’re taking in each month. This part will be easier, since you only have to refer to your bank statements or pay stubs. The trick here is to use your net income, not your gross. For household budgeting, you want to only consider the actual money that you have to spend, not the portion that goes to taxes and/or a retirement account.

Itemize Your Expenses

Write down or enter all your monthly, set expenses. This will include:

• Insurance
• Credit card bills
• Utility bills
• Vehicle payments
• Mortgage/rent payments

Next, list your recurring bills that fluctuate. This includes things like:

• Gasoline
• Groceries
• Medical/prescription
• Clothing
• Entertainment
• Subscriptions

A simple way to do this estimate is to look at the last three months of these expenditures and take an average. This will give you a pretty good idea of what you spend on these items each month. Now, tally up everything, and that basically gives you the amount you spend each month to live.

Allocate Your Income

Next, allocate the correct amount of your income to each category of expenditures. This will be according to how much you spend in each category, such as gasoline, rent, etc. If the figures you came up with for each category are an odd number, round up. It’s better to overestimate expenses than to underestimate them. Add a total line to the bottom so you have an idea of the total amount you spend each month.

Add a Miscellaneous Category

It’s important to add a miscellaneous category to your budget. Nearly every month, unexpected expenses arise that you need to be prepared for. Allocating for this ahead of time will help you stay within your budget constraints.

The difference between your net income and your budgeted expenses can go into your savings account. See how this final calculation compares with how much you want to save each month. You may be able to save more than you thought. If you’re shocked at how little you can put into savings, consider the following ideas for managing money in your household.

Tips For Managing a Household Budget

Each month, you should adhere to your household budget as much as you can. Here are some tips to save even more.

Save on Groceries

Food prices continue to rise and consumers have to be even more savvy in order to get by. Ideas for making your grocery allocation go further include:

Buy in bulk and freeze smaller portions. Bulk food prices are always less per pound. Invest in good freezer paper and buy the largest packages you can buy. At home, split into individual portions and freeze.

Skip the coupons and buy store brands. Store coupons are good, but it’s usually cheaper to just buy store brands. Often, brand name ingredients are simply relabeled as store brands, but it’s the same product on the inside.

Skip processed foods. Processed foods are more expensive than making things at home. Learn how to mix spices from your pantry to make your own poultry seasonings. If you “can’t” cook, buy yourself the most basic cookbook and just follow the instructions. You’ll save a lot of money just by cooking meals from scratch.

Save on Clothing

It’s cheaper to take good care of the clothing you already have than to buy new clothes each month. Ideas for this include:

• Avoid spills on clothing by eating at table for all meals
• Treat stains immediately so they don’t “set”
• Repair clothing instead of getting rid of it.
• Hang up clothes instead of tossing over chair
• Designate “work” clothing and only wear these pieces at work.

Save on Home Entertainment

The cost of home entertainment has gone up over the years. But there are ways to minimize the costs. Consider these ideas:
Cut the cable cord and stream instead. Cable is almost unnecessary now. You can stream free movies and shows with a smart TV, as long as you don’t mind a few commercials.
Consider Amazon Prime. With Prime, you get some free music streaming as well as some quality shows and movies with a smart TV. Even though the cost of Prime has recently increased, the extra cost can be saved by reducing the cost of cable services. Not to mention that you get free online shipping and access to some of the lowest prices available.

Creating a household budget offers a sense of well-being because you will have more control and knowledge over your money and where it goes. For more help with controlling your money and taxes, book an appointment with a CPA. Your CPA has extensive experience with helping people to ensure that they stay within their budget.

To succeed in business, small business owners must keep a close eye on expenses. Poor expense management can destroy your profit on a project or business venture. A component of expense management is expense tracking.

If you’re not keeping track of your expenses, it’s easy to go over budget. Even if you’re still making a profit and don’t think you need to pay close attention to them, if you don’t have good records you won’t be able to take all your allowable deductions on your taxes.

How important is it to Track Business Expenses?

Without detailed, monthly information on your business’ performance, it’s easy to be running at a loss for several months and not even be aware. Cash flows which don’t align, such as customers pay deposits or large sums before you incur expenses on those projects, can mask your businesses true financial health.

Tracking your expenses also helps you know if you’re on track with your financial goals. Did you want to increase your net income by 10% this year? Without detailed bookkeeping records, you may not know if you need to up your marketing efforts to hit that target.

Lastly, without strong expense tracking and excellent documentation, you won’t be able to deduct all your business expenses. If you have reconciled your bank accounts and kept receipts, as well as properly categorized your costs, it’ll be easy to hand your records over to your accountant and maximize your deductions. If everything is still in a shoebox under your desk, you’ll spend valuable time inputting data, tracking down support, and probably miss out on some deductions.

Not all receipts contain detailed information, and you might forget why you had a business meal back in June. Note that if you can clearly tie an expense to the revenue it generated you increase the odds that the IRS will let you deduct it. Spending just an hour a month making sure your expense entry is current will save you many headaches during tax seasons.

Which Types of Expenses are Deductible?

Not every business expense is 100% deductible, which is part of why accurate expense categorization is so important. Deductible expenses those that come out of your income before you pay taxes. The IRS provides some guidance on what is and isn’t allowable, but has said that deductible expenses should be helpful, appropriate, and reasonable for a business.

Standard expenses which have been acceptable in the past include; administrative expenses, auto expenses, employee benefits, and business-related travel and entertainment. These are current and can be deducted in the year they’re incurred. Other noncurrent expenses, such as depreciation on fixed assets, can only be deducted over time.

While most expenses are 100% deductible, travel and entertainment is only 50% deductible. This is because a portion of this expense is viewed as personal.  As well, the IRS seeks to prevent small business owners from abusing this deduction.

Why does Expense Categorization Matter?

Project-based businesses can’t judge a project’s net profit if they haven’t appropriately categorized related expenses. If you pass some expenses along to the client, you might not be able to if they’ve been filed or identified incorrectly in your accounting system. And miscategorized costs could impact your tax deductions.

When entering an expense into your accounting system, you should make sure that the individual responsible categorizes it correctly. It will help gauge your business’s profitability, or show you were you need to trim costs or find another vendor. Putting an expense in the wrong bucket could mean you might not get to deduct all of it, or the IRS throws it out.

And some expenses shouldn’t be expensed altogether.

Capitalizing vs. Expensing a Business Cost

A cost which is expensed goes to the Income Statement and is deducted from your revenue in the year it’s incurred. A capitalized cost goes towards capital expenditures on the Balance Sheet, and only its depreciation hits the Income Statement. How a business chooses to treat an expense can reduce or raise net income, and thus, the taxes they pay.

There are no mandatory IRS rules that address when to capitalize versus when to expense; however, you could be asked to justify your reasoning in an audit. Most businesses make this decision based on whether or not the asset purchased with the cost incurred produces future benefits. If there is no future benefit to the asset, it’s booked as an expense. If it has an ongoing, future benefit to the company, it’s capitalized.

Typically capitalized expenses could be the costs incurred to purchase a large piece of machinery, or a new building. An intangible asset, such as a copyright or trademark, would also qualify for capitalization. A restaurant meal with a client would count as an expense.

If you have any questions about whether or not to capitalize or expense a cost, talk to your accountant. Once a decision to capitalize and only book depreciation through the Income Statement has been made, it can’t be reversed at a later date.

What Documentation does a Small Business Owner Need to Keep?

While the rest of the world has gone digital, the IRS still prefers paper. Supporting documents that they consider acceptable include;

• Paid bills
• Sales slips
• Invoices
• Receipts
• Canceled checks
• Credit card statements
• Petty cash slips

The IRS stresses that you must keep these documents to support the entries on your books. In general, you should keep all documentation for a minimum of three years.

You might not be required to produce receipts for expenses less than $75, but since the IRS can require you to provide a receipt for any expense it’s still a good idea to keep it if you have one. When asking them to uphold a deduction under $75 without a receipt, you must be able to tell them the amount, where and when you incurred the expense, and its purpose.

What about Electronic Recordkeeping?

While you can keep electronic records, the IRS holds them to the same standards as physical recordkeeping.

Apps from accounting software companies such as QuickBooks and FreshBooks allow you to snap a photo of the receipt, upload it into your records, and associate it with a transaction when it passes through your accounts.

If you run a large, complex business, you might want to buy a dedicated document scanner into which your administrative assistant can scan your records. Or you can use a cloud storage site such as Dropbox or Google Drive to scan and store information.

The Final Word on Expense Tracking

Whatever you do, put in place a system for expense tracking and periodically check that it’s working correctly. Having policies and procedures in place will protect your business from accusations of impropriety in an audit, save you time and money on your tax preparation, and help you run a better organization.