Setting up an emergency fund

Setting up an emergency fund

May 29, 2018

Read any book on personal finance or managing your money and one common thread will the emergency fund. Almost every single one will tell you the first thing to do is to open and contribute to an emergency fund. The recommendation is to prioritize this above all other non-essential payments. Here are the basics of the emergency fund: The first is to decide how much you want to commit to the fund. The basic idea is that the fund will be able to handle all expenses in the event of unemployment or an emergency. When factoring the amount, the recommendations are for either three or six months of total expenses. Obviously, six months is better than three. However, if finding employment is not going to be an issue, then three months will suffice. The next is to open the account. Since the funds need to be liquid avoid term deposits or any form of long-term savings vehicle. Those are better suited for retirement. Ideally, we are looking at a high rate savings account that has a low number of withdrawals allowed. This way the interest will contribute to the fund itself. Finally, figure out how much of your income can be contributed to the fund. The sooner the fund hits the target; the sooner you can start contributing to retirement or something else. Remember that once you hit your target, you can sleep well knowing that you can survive for a few months without dipping into your savings....

Important financial terms small business owners should know

Important financial terms small business owners should know

Apr 29, 2018

Small business owners should have an understanding of financial terms, as they are the nuts and bolts of a business operation. If you have an accountant or are handling your own financials, knowing these financial terms will help you understand how well your business is functioning. Here are a few terms small business owners should be familiar with; P and L – This is a statement, usually completed every month, will give you an understanding of how your business is running. Balance Sheet – This is an indication of your businesses assets and liabilities. This statement will provide valuable information for decision-making. Assets – These are items such as cash, real estate, land, equipment, tools, computers, and furniture. Liabilities – These are loans outstanding and monthly bills your business owns. Equity – This is the money you and any other owners have invested in the business. Bottom Line – This is the net income or earnings that a company makes for the month. Markup – This is the additional price added to the cost price. Gross Margin – This is the difference between total sales revenues and total cost of goods sold. It can be stated on a per-unit basis, in dollars or as a percentage. Gross Profit – This figure is your “Cost of sales” minus your costs directly associated with sales, such as materials, labor, and delivery. Net Profit – This is your profit after costs such as overhead, materials, wages have been...

How to get a business loan if you have bad credit?

How to get a business loan if you have bad credit?

Feb 5, 2018

If you need funding to start or grow your small business, but you have bad credit, you may feel that you will never be offered a bank loan. However, if you are not able to improve your credit in time to apply for your loan, here are some tips on how to get a business loan. Small business administration (SBA) – This form of lender is accustomed to small businesses that are faced with roadblocks. It is best to approach an SBA lender at a small bank rather than bigger banks. It is important to note that even if one SBA rejects your application; you can always put through your form to another. Most SBA loans are approved with a personal guarantee which is usually on the owner’s home. Revenue-based loan – Revenue-based loans are offered to businesses that have a steady cash flow and make regular bank deposits. Most banks will provide a loan of 10% of your annual deposits. Merchant cash advance – This form of loan is offered in exchange for future credit card sales. Internet lenders – These alternative lenders operate only on the internet and offer quick funding. Most of these lenders use analytic software and non-traditional means of assessing applicants. Often businesses that have been rejected by banks and SBA’s will receive funding from these sources. However, it is important to note that these loans come with extreme interest rates and feature strict terms....

6 Quick tips to spring clean your finances

6 Quick tips to spring clean your finances

Jan 2, 2018

Finances can be a messy and misunderstood subject for most. However, understanding how to save, invest and attain what you’ve always wanted is a rewarding experience and is a great way to progress. Here are six quick finance spring cleaning tips. Easy budgeting – Tracking your expenses is a great way to understand where and what you spend on. There are some simple apps available at the moment like Mint.com, and You Need a Budget which are simple to use, yet very useful. Emergency fund – Having an emergency fund is a safety net for you and your family if you lose your job or you are ill and need to take time off work. Look at saving a percentage of your earnings every month for this purpose. Big-ticket purchases – Big ticket purchases are what eat up savings but if you have budgeted for it before you can look at putting something away for it every month. Comparison shop – Comparison shop will help you compare insurances for auto, life, home, and even health insurance and it takes minutes. Reduce credit card interest – Interest on your credit card is unnecessary. Look for credit card offers that provide zero interest for 18 months. Check your credit – Always check your credit reports for errors and make a point to check your credit score. Keeping track of your score means that you will always know how much you can take on credit in an emergency without adversely affecting your credit score....

How to Improve your finance and accounting department’s efficiency?

Finance is a core function and the heart of a successful business. A well-functioning finance department will streamline business operations and help the business reach its objectives. Here are some tips on how to increase your finance and accounting department’s efficiency. Communicate to the team – Speak to your finance team and ask them what day-to-day activities can be improved to eliminate unnecessary work, to get things done faster and how collaborating teams can help efficiency. Training and development – Cross training your finance team will mean that everyone knows what their team members have to do and this means that if someone is not at the office, another person can fill in. Leverage technology – Cloud technology makes data safe and allows multiple people with access to data when they are not at work. Establish deadlines – Deadlines help to create a culture that work has to be presented on time. When financial information is on time, key decision makers will have the data they need to make informed decisions. Batch processing – Batch processing will help your finance department gather, consolidate and process invoices and receipts in one go. Utilize accounting systems – Accounting systems are easy and will help accountants manage their information and time. Utilize process metrics – Process metrics will help to create benchmarks and compare activity in previous periods. They can also be used to create accounting ratios, cycle time and the number of documents in process....

How to keep your financial resolutions for 2017

How to keep your financial resolutions for 2017

Jan 1, 2017

Article Written by : Business and Finance Net Many will make new years resolutions and then forget them by the end of January. However, a new years financial resolution could mean that you are free of debt and have savings that will improve your financial health. Resolution No. 1: Setting a monthly budget – Budgeting is a good way to build long-term wealth, but getting started can be a difficult process. Here are a few tips: Know how much you make – You should take your final figure after all deductions have been made. Calculate how much you spend – Use a spend tracking app or use an excel sheet and this will help you log every dollar spent over a 3 month period. Know where you can cut back- Fixed expenses like rent or your mortgages are areas that will remain the same. But you can look at other areas like grocery bills, dining out, shopping, utilities, subscriptions etc. Adjust your numbers – Every month will be different and you will have to adjust your figures to stay focused on your goals. Resolution No. 2: Building emergency savings – Your emergency fund will see you through if you loose your job. Ideally, this fund should cover your expenses for at least 3-6 months. Here are a few tips: Monthly savings goal – Take a percentage of your income and ask your bank to directly transfer this amount to another account each month. Save windfalls – If you get any extra money in the form of gifts, bonuses or rebates directly transfer this to your emergency account. Earn more. – Look for ways to make extra money, like engaging in freelance work or getting a second...