Financial Survival Kit: Coupons & Financial Health

Thursday, August 25, 2011

Coupons & Financial Health

I read interesting statistics on using coupons. The majority of coupon users are households and individuals (with a college degree) with $100,000 or more in income. This means people who need savings the most, lower-income individuals and households, don't use it! It's pretty shocking, but it's easier for some people to just go with the flow, spend more than they can afford and live from paycheck to paycheck. Be smart, spend smart, save smart.

Here is a good tool to check your Financial Health:
CNN Money FH

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The BASICS

Everyone should take charge of his/her finances. There is an easy way to do so. There are several excellent software choices that are easy to use and give you an idea of how much you spend every month on various items.

It certainly changes things when all of a sudden you realize that you spent $300 a month on cigarettes, or $ 150 a month on Starbucks. It also makes you think how come your paycheck disappears so fast. Here is what you can do to take charge of your life:

Get a piece of software: Quicken is (although not my favorite, but) an excellent choice. You can get a great deal on it with a coupon from FatWallet (see Useful Links) and it should cost you about $15-25. There is a tutorial on how to use it - or just let me know - I'll make a separate post on Quicken and QuickBooks for personal finances.

Next step: make it a habit to NOT use cash - use a credit card (or, if you don't trust yourself with credit - use a debit card) for all your purchases, bills, coffee - whenever possible. The reason is simple - it is easy to lose track of cash in your wallet, but when it's in your bank statement - you will remember how, when and why.

Then, make it a habit to download transactions - it only requires about 45 of your time (on average) a month. Categories will include:

Income:
Wages, Commissions, Interest, etc.

Expenses:
Dining Out
Personal Care (Pharmacies, etc)
Medical (Doctors, Prescriptions)
Charity (donations)
Professional Services (Legal, accounting fees)
Bank charges
Household
Entertainment
Clothing
Computer
Education
Travel
Ground Transportation
Postage & Delivery

The list would be a little different if you had a small business on the side - that's a different story. Now you OWE it to yourself. Otherwise, you're just paying too much in taxes... And that's just sad. :)

Things to be considered in search for a bookkeeper for your business

Although it is the most important position in any business, a good bookkeeper is hard to find. I provided bookkeeping and accounting services on a freelance basis for several years, and often times got clients, who's books were completely out of order and they needed me to make them right. It turned out, in many cases, that prior bookkeeper didn't know what he/she was doing and vendors were paid twice, receivables were outstanding for months and etc.

For most business owners it is hard to keep track of accounting, especially if they don't understand it. So, here is a list of things one may keep in mind when searching for a new bookkeeper (by the way, the market for part-time, once a week/month bookkeeper is HUGE - and it sometimes is much better to get someone who comes in once a week, than having a full time bookkeeper):

1. Check his/her references. Call to find out the length of prior and/or current engagements with clients.

2. Knowledge of accounting principles: If he/she is a pro in QuickBooks, it does not mean he/she will be great for the job. Understanding the basics of accounting like accounting equation, difference between regular income (revenue) and Other income, Fixed Asset and Other Asset, Equity account and Loan to Shareholders - all of these can be incorporated into questions to be asked at an interview.

3. Ask your CPA to recommend someone they've used. Yes, CPA Firms charge about $90-100 per hour for simple write -up and reconciliation of the books. Something that a good experienced bookkeeper can do for $40-50/hr. There is a catch, though - technically, your CPA is responsible for thr write up done by his bookkeepers, but at the same time if you do your due diligence, find a good bookkeeper, you'll save a ton of money in the long-run. Consider this: in many instances, in-house para-professionals can do write up for you "on the side" for a lot less.

4. Check to see if a person had experience at an accounting firm. There, a bookkeepers' work is checked by accountants and they, generally, know what they are doing.

5. Have your CPA do a quick review of the P&L and Balance sheet postings 2 weeks after the new bookkeeper started. It will cost you a few bucks but you'll save in the long-run if you catch serious errors.

6. Get feedback from your CPA. Once the CPA has prepared your taxes for the year, ask him whether many changes were necessary for year-end close. Were there any serious omissions or mis-postings? Were the books reconciled properly?

7. If your bookkeeper likes "Miscellaneous" account, or uses a lot of "Ask my accountant" account - maybe it's time for you to place an ad on craigslist... Beware of bookkeepers who force bank reconciliation by posting the difference into "Reconciliation Discrepancies" account.

8. Remember: good bookkeepers (this especially applies to part-time bookkeepers) don't sell cheap. They value their time and like to get things done right.

Useful Links for Everyone

Purpose

Thursday, August 25, 2011

Coupons & Financial Health

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