Financial Planning Blog Posts
May 15, 2018
Best Financial Advice You're Not Doing But You Should
What if I told you that you’d have to sell your house by the end of the year and take a big pay cut next month? This is the unfortunate truth that many retirees face because they’ve spent their entire life living paycheck to paycheck. Once that steady income stops, the trouble starts.
Social Security only pays out a fraction of what they’d make during their career and they are forced to sell their home and live on a fraction of they used to. Are you part of the majority that lives paycheck to paycheck? Do you want to avoid being broke when you when retire? Gaining financial independence needs to be a top priority to make sure you can retire with peace of mind. So, how do you get started? The path to financial independence is a lifelong pursuit, but living below your means and seeking out a financial planner are some of the best financial advice you’ll ever receive to get started.
How Living Below Your Means Will Gain Financial Independence
People tend to spend exactly what they make. They get a raise, they raise their standard of living to make up the difference. Whether they make $100 or $1000 a day, most will find a way to spend all of it. To become truly financially independent, you need to consistently live below your means. Avoid the trap of spending all of your paycheck and try one of the following approaches to make sure you keep more of your money:
- Set aside a specific percentage of your paycheck to automatically go to savings. That way when you your income increases, so will your savings contributions.
- Don't upgrade if you don't need it. Want that new phone? New car? Take a hard pass if your current option still works.
- Stop eating out. It's perfectly normal to want to go out to a restaurant to celebrate an accomplishment. But don't overdo it by keeping up that dining out streak. Eat at home and you'll be amazed how much you'll save.
Do I Need A Financial Planner? YES!
What financial goals do you have? Do you have money set aside for an emergency? Are you contributing to the right type of retirement account for your needs? These are all questions that you’ll need answers to if you want to maximize your financial independence.
Financial planners can help answer these questions for you as well as establish a plan for your financial needs. At BIG, our financial planners can help you:
Determine short and long-term goals based on lifestyle and income
Choose the best investment account for your needs
Create a financial plan from scratch to start your path towards financial independence
Achieving financial independence is possible regardless of where you’re at now. At BIG, our goal is to help you get there faster.
Contact Us Now for More Information
March 30, 2018
Is your company profitable enough for a CFO? The answer is yes. A CFO can provide invaluable strategic advice that keeps your company moving forward. The problem that most small businesses face is the cost of hiring a CFO.
Because of the cost, most CEOs also function has a defacto CFO. This is fine until the company starts to grow. Then the CEO becomes preoccupied with finance-related tasks and can’t focus on long-term revenue-generating activities. This is where a CFO-like business consulting services can be beneficial. A few areas where a consulting services can be helpful are by creating a strategic business plan and performing crucial tasks like a cost and profitability analysis.
Creating A Strategic Business Plan
Improving performance should be a top priority for any company. Without continual improvement, a company fails to thrive and grow. Analyzing current business problems can expose troubled areas that need improvement. In order to develop a proper action plan, three different types of strategy need to be created.
- Business Strategy
- Market Strategy
- Pricing Strategy
By creating these types of strategy, you’ll get a better overview of where your company needs to improve and what actions are needed to improve.
Cost & Profitability Analysis
Tracking and controlling costs is the first step to improving profitability. Most businesses won’t last long without a plan. Unfortunately, the data can seem overwhelming for many business owners and they can end up with a subpar pricing strategy.
By using a cost and profitability analysis, the consulting service can provide strategic advice based on a variety of factors to help you determine the best business opportunities and pricing models to help you maximize your profits. A few include:
- Quantifying historical data
- Reviewing inventory values
- Review current pricing structures
Hiring a full-time CFO isn’t a necessity, but every company needs strategic advice that the CEO can’t provide.
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November 30, 2017
Management accounting generates monthly or weekly reports for a company or business’s employees including managers and the CEO. These reports show the available money, sales revenue, state of accounts payable, debts, charts, analysis and other statistics.
This system and type of reporting is used by company leaders to make decisions about day to day operations. Management accounting allows for forecasting the market and trends.
The main difference in financial account and management accounting is financial accounting is important for future investors and management accounting helps executives make important decisions that impact the company and business’s future.
Management accounting can also serve as a motivator for other employees. Not only does it help the company solve problems but it can also motivate employees to reach specific goals that this form of accounting has set.
While this form of accounting encourages executives make decisions, the main purpose is to analyze information. They find problem areas within the company and suggest ways to correct these things. This in turn, leads to the recommendations for company leader’s decisions.
Management accounting comes in many different forms. These forms include forensic accounting, business check-ups, turnaround management, receivership, crisis management and more. No matter the size of your company or business, management accounting is crucial. It can help set future business goals as well as find any potential risks and stop them before they happen.
Our team at here at BIG offers a wide variety of management accounting services. To learn more contact us at http://www.bizimprove.com/contact/.
September 29, 2017
Retirement planning is more than just participating in your company’s retirement plan. You have to take an active role to achieve your goal. Here are five retirement planning mistakes you could be making and how to fix them.
Turning Down Money
About 1 in 4 participants don’t take advantage of their employer's maximum match. It’s can be due to confusing policy choices, but be sure you are pocketing the maximum match from your employer. Also, a typical plan should include a 6 percent contribution from your salary. Most auto-enrollment programs default employee’s contribution to 3 percent.
The fix: Even with auto-enrollment, it’s important to check that you are contributing enough of your salary to achieve the maximum match.
2. Contributing Too Little
Studies have shown that you should save around 15 percent of your earnings to have the income you will need upon retiring. Most people are only saving up to 6 percent and even with a matching program from employers, it is still not enough.
The fix: Increase your contribution rate by at least one percent every year if not more. Contributing up to 15 percent is key to a steady retirement fund.
3. Turning down the Roth 401(k)
Half of employers now offer a Roth 401(k) but less than 10 percent of people take advantage of it.
The fix: Focus on the payoff of a Roth 401(k) even though your contributions are made with after-tax dollars.
4. Poor Allocation Strategy
Most people are either too conservative or gamble with no awareness of the downside.
The fix: Most retirement plans offer tools to help you sort through allocation decisions. Try to create an age-appropriate mix of stocks and bonds as well. With all of these allocation decisions, be sure to benchmark it using your expected retirement date.
5. Staying in an Expensive Plan
When you leave a company, you have the option to move your money out of that retirement fund. A good test to see if you should find another option is whether or not the plan’s investment options charge an above-average annual expense ratios which could easily be found online.
The fix: If the fees on your current 401(k) are high, it’s time to figure out your next move. Before transferring money into a new plan, check to be sure that the options are low cost. Another option is to move your money directly into an IRA account.
These are very common 401(k) mistakes but following these tips will jumpstart your retirement planning success.
September 15, 2017
Retirement planning is extremely important, but some people lose all of their money from scammers. The monetary cost of financial elder abuse has been estimated to be from $3 to $36 billion. While that’s a large range, the numbers tell a frightening story. What are the scams, big and small, that seniors need to be wary of?
1. Pump and Dump Investment – telemarketers often call seniors to sell them shares of a new company which sound too good to be true (trust us, it is). Once the share prices shoot up, the marketers dump their shares and collect their “hard earned” money, leaving seniors with a boat load of worthless stock.
The best way to avoid this scam is to either do independent research on the Internet from trusted sources like Yahoo Finance or work with a licensed professional.
2. Medicare Open-Enrollment – Every fall, right before Medicare Open Enrollment begins, scammers who claim to represent the Centers for Medicare and Medicaid Services call unsuspecting seniors about new Medicare identification cards. The ploy works by having the seniors give their bank account info and their social security numbers.
This is why it’s important to never respond to phone calls asking for sensitive personal information! In addition, Medicare does not call, e-mail, or visit anyone asking for that kind of information.
3. Anti-Aging – perhaps not as potentially disastrous as the above two scams, bogus anti-aging products can still put a serious dent in senior financials. "Anti-aging quackery and hucksterism are pervasive on the Internet and in clinics advertising anti-aging treatments," writes Thomas Perls, MD, MPH, of the New England Centenarian Study, Boston Medical Center.
You can typically spot a bogus anti-aging product by the excessive use of testimonials and “scientific” evidence, and absurd claims that they have helped thousands of people, even though you’ve never heard of them.
Remember, don’t believe everything you read. Now more than ever, false information is floating around, and people will use it to take your money! We help seniors find legitimate means of growing their savings and do the often difficult task of sorting the bad from the good.
August 15, 2017
Early last month, The Plan Sponsor Council of America (PSCA) released results of a survey that intended to get people’s thoughts on a new tax preference for retirement savings plans.
So what does this mean?
This new plan would include reducing or eliminating pre-tax contributions to raise tax revenues and offset losses in tax receipts from lowering marginal income tax rates.
The survey found that more than 90 percent of respondents indicated that they agree that eliminating or reducing pre-tax contributions to retirement savings plans is a bad idea.
These proposals could impact millions of Americans that participate in tax-qualified retirement savings programs.
Strategic retirement planning is important and it’s never too early to start. Here at BIG, we can help you prepare for your future as well as for tax reforms. Looking ahead at future expenses is the first step to preparing for retirement. This will allow you to be ready for whatever expenses are to come and not let the cost of retirement or reforms get in your way.
Most importantly, you can work with us to create strategies to not only preserve but help grow your retirement balances while determining your spending amounts.
Tax reforms can come and go but your retirement savings should stay the same. Work with us now and we can ensure a successful financial future.
June 29, 2017
Whether you’re in your 20s and haven’t even thought about retirement yet, or in your 50s and dream of retirement every day, it’s important to either start or continue saving. A mix of universal retirement advice with some little known tricks can be used to boost your savings for what are supposed to be your most relaxing years.
Invest Aggressively – a high percentage of your portfolio should be in stocks, especially if you are younger since you have more time to endure the ups and downs of the market. But don’t invest in individual stocks. Instead, select mutual funds or exchange-traded stocks in order to add some needed diversity to your portfolio.
Sign Up for a 401(k) – this advice is not just for our clients in their 20s; many baby boomers do not take advantage of what is essentially free money! If your workplace has a 401(k), you need to participate. Most employers will match your contributions. In addition, any money you deposit into the account will not be taxed now, so less of your income will be taxed. Use a 401(k) calculator to plan accordingly.
No 401(k)? No Problem – if your workplace doesn’t have a matching 401(k), then open a Roth IRA. Roth IRAs are funded with money that has already been taxed from your normal paycheck. However, when you withdraw and use the money in retirement, it will be tax-free. A tip from the wise is to have money from your paycheck automatically deposited into your Roth IRA.
Don’t let current expenses be an excuse to keep you from saving for retirement! A little financial planning now will save you a lifetime of regret.
June 15, 2017
Don’t let the nice weather fool you; competition is heating up. And if you don’t maintain a strong awareness of your business and its finances, then you’ll no longer be able to complain about the pain and hassle of managing your business’s money; because it will be gone. So, let’s keep your dreams healthy and alive by doing the following this summer.
1. Choose the right accounting software – not every accounting software is going to work for every business. Even if you have already have software, do your due diligence and click around the Internet to make sure you’ve picked the right one. With that said, the real pressing need is to move your financial data from desktop software to the cloud if you haven’t done so yet.
2. Do you have a professional bookkeeper? –we often find entrepreneurs aren’t thrilled about doing the bookkeeping for their business, which actually makes a lot of sense. Most people aren’t numbers people, and those with big ideas typically like to focus on the forest instead of the individual trees. If you’re finding that you’re spending a disproportionate amount of time doing the accounting for your business instead of running it, it’s probably time for some outside help. In the end, you’ll make more money since you’ll have more time doing what you do best.
3. Work with a trustworthy credit union – credit unions are ideal for small business owners. Credit unions do not have to answer to the whims of shareholders, so they are able to focus on you and your business’s needs. In addition, they generally keep profits local, so there’s a higher chance of them either investing in you or other area entrepreneurs in the future.
Keeping track of your finances will enable you to take opportunities which would not otherwise exist. Like we said, just because it’s nice outside doesn’t mean it’s okay to get loose with your money or get distracted! You’ve come too far to let a little hiccup derail your dreams from coming true.
April 30, 2017
Just because you’re a small business owner doesn’t mean you have to perform every job your business needs forever! And as experience tells us, most entrepreneurs dread the monotony of accounting. So, maybe you’ve finally decided your time and money is better spent on what you excel at, and that you should leave the number crunching for someone else. The question is, who should that someone else be – a CPA or a bookkeeper?
The question may seem daunting, but it’s not nearly as complicated as it sounds. The decision basically boils down to how complex the accounting needs to be. Bookkeepers are best used for simple accounting functions like day-day transactions, run payroll, make payments for business expenses, send out invoices and collect payments, as well as monitor bank account activity. Some bookkeepers will even prepare financial statements for internal business use. With that said, it’s important to know your bookkeeper’s background, as an education in accounting is not required in order to call oneself a bookkeeper.
But when the going gets really rough, we recommend turning to a CPA for help. CPAs can help businesses obtain loans, file a tax return and help with tax planning, as well as offer general strategic financial advice. Obtaining a CPA is a rigorous process which requires passing multiple exams on tax, regulation, financial reporting, audit, economics, and ethics, but it’s still important to do a thorough background check before you spend the money on a CPA.
What all of this means, is that you must divide to conquer. CPAs are expensive, so it’s best to use their services for truly difficult accounting issues. We recommend hiring a bookkeeper who can manage the day-day finances of your business and who can work well with a CPA when needed, or look for professional bookkeeping firms who can lend a hand.
December 12, 2016
There’s no way to get around some of the challenges that come with being a small business owner. But the proper tools and support can help you navigate the world of debits and credits more smoothly. Here are a few financial challenges you may face and some small business finance tips for managing them.
Small Business Finance Tips
Many small business owners can become overwhelmed by trying to manage their cash flow. Of course, you know you need accurate and timely data to line up the resources to handle crucial transactions – such as payroll – when needed. And the longer you wait to sort out your cash flow, the greater the risk for a mistake or oversight that can potentially damage your financial reputation.
Accurate and timely financial statements are a must because they help you make important decisions and manage your fiscal obligations. They’re also a critical component to getting extra capital through a loan if needed. Unorganized financial records can be a red flag to lenders and may convey the wrong impression about the company’s fiscal health.
Having a modern, often cloud-based, accounting system is a staple of many well-run small businesses. In fact, helpful accounting apps have become quite popular because they integrate into a lot of other services for easier and more efficient use.
For example, if a sale is recorded in one department, a well-integrated accounting app can almost serve as a virtual employee and immediately make the necessary income or balance sheet adjustments to manage the transaction accordingly.
Small businesses should consider utilizing financial/accounting apps offered through their business bank or business credit card to help them keep their finances in check.
A Company Credit Card
Is a company credit card the right choice for your small business?
Naturally, there are pros and cons.
For example, a business credit card such as Ink from Chase helps keep personal and business expenses separate. The card also rewards spending. And those reward points are capital that can be easily re-invested into the business.
Burgeoning businesses can benefit from a business credit card too; this is a great way to establish credit and build financial stability.
Meeting the Financial Challenge
Even the smallest of companies today have access to financial and accounting tools and resources that can rival those of a business twice their size. These technological advances are narrowing the accounting and financing gap for small businesses.
“Small businesses are strapped for time,” said Laura Miller, president of Ink from Chase. “The more we can bring together useful tools, the more we can help them be successful.”
In the absence of a fully-staffed financial department — or even a single dedicated person — a small business owner can rely on the numerous services offered by their financial institute or business cards to help navigate any financial management challenges they may have.
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