Article by www.entrepreneur.com

As an entrepreneur or business owner you know the truth of the old saying that sometimes you have to spend money to make money. But, you also have to save money to have money! And saving more money consistently ranks as a top financial resolution people make each New Year.

We all need to do it — whether to build a robust emergency fund, secure our retirement, or create the equity we need to build a business and lifelong wealth. But, how many people actually succeed?

According to some reports, up to 80 percent of people who make New Year’s resolutions fail to keep them. Yet we know that people who make resolutions are 10 times more likely to attain their goals than people who don’t.

For many people, the start of a new year is the trigger they need to change their behavior patterns to set themselves on a lifelong journey toward financial security and self-sufficiency.

What does it take to be one of the successful few? What can you do this time around to increase your likelihood of remaining on track when next New Year’s Day rolls around?

1. Understand that real, permanent change comes from within, rather than from outside pressure.

In their groundbreaking book, Changing for Good, three psychologists looked at 130 different techniques that people used to try to give up smoking. They discovered it is not a lack of potent and effective quitting techniques that defeats so many smokers. Rather, it is the internal thought processes that prevent (or enable) permanent, life-enhancing change.

Their discovery captured the attention of leading academics, clinical psychologists, life coaches and authors looking into why certain people are able to set a life-changing goal, meet it and keep themselves from relapsing.

The good news: Researchers have discovered that we all have it within us to modify our behavior and cross the “Resolution Finish Line,” regardless of how ingrained our habits are. When you consider how mindset affects everything in our lives, it’s no surprise that it’s the key to achieving our financial goals.

2. Enlist allies to help you stay on track.

Many people require outside support when they decide to get serious about holding themselves accountable for their financial resolutions.

M. Kathryn Seifert, Ph.D., a Maryland psychologist who operates three mental health clinics, says a coach — whether a professional for hire, a friend or a religious leader — can help people reinforce their commitments.

Dr. Seifert’s clinics see about 2,000 distressed individuals a year, many of them struggling with financial crises. For most people, the right motivation coupled with persistence and the aid of a coach provides what they need to achieve their goals, she says.

3. Set incentives and consequences for sticking to or breaking your commitments.

Consider using websites such as www.stickk.com that allow you to give yourself incentives for sticking to your commitments, and set up penalties for breaking them.

This carrot and stick approach relies on three factors: a goal, stakes, and a referee, according to an article a few years go on commitment contracts.

When you make a commitment binding in this way, it will make you think twice before backsliding. Even better, the rewards that come with sticking to your commitments establish a feel-good pattern of positive reinforcement. And that will make staying on track easier as you move forward.

4. Skip the pity party when you fall short.

Don’t wallow in self-blame when you fail. Instead, pick yourself back up, learn from your mistakes, and go right back to work toward your goal.

Steve Siebold, author of How Rich People Think, says one of the key differences between those who are defeated by financial roadblocks and those who knock down barriers along their path, is how they respond to disappointment.

Siebold estimates that 40 percent to 60 percent of today’s most successful investors, entrepreneurs and executives have failed multiple times. Those who rebound the fastest and most successfully set aside emotional thinking and put their minds to the task of plotting a logical pathway forward.

5. Don’t set yourself up for failure by insisting on an all-or-nothing change.

Judith A. Belmont, a psychotherapist and author of the “The Swiss Cheese Theory of Life,” has described New Year’s resolutions as “a setup for failure” because they embrace an all-or-nothing attitude toward change.

Belmont cautions against perfectionism and advises patience and persistence instead.

“It doesn’t matter where you are on the journey, what matters is the direction you are going,” she says. “Learn from the past, accept shortcomings, realize where you made errors and build on them like stepping stones.”

One final piece of advice: Give yourself reminders to keep your focus on where you are going and your long-term goals. One of my favorite ways to do this, especially when it comes to holiday shopping, is to wrap my charge cards in my goals. Every time I take a card out, I see a picture or some words that remind me of why I am saving. This is a trick to make yourself pause a moment and consider whether what you are purchasing is more important than your goal.

Remember, when it comes to keeping your financial resolutions, you are the key. You make decisions every day, every week and every month throughout the year that all add up when it comes to building savings and wealth. Only when you set your mind and heart to the task can you successfully create long-term change in your fiscal direction.

Article by www.entrepreneur.com

Watch Graeme Saggers’ presentation from the Tax Roadshow.

With all the twists, shifts and turns the economy has taken this year, it certainly hasn’t been easy-going for cash-strapped South Africans. Now that we’ve kissed the winter blues goodbye, it’s time to welcome the warmer season with open arms and there’s no better way to do it than with a spring clean… of your finances!

“Take this opportunity to get organised. The more organised you are, the more in control you are. You want to be in control of your finances – not the other way around,” says John Manyike, head of Financial Education at Old Mutual.

While it sounds easy in theory, in practice there are often unexpected curveballs that can throw even the most prudent of budgeters off the straight and narrow.

“Changes in both the economy and your personal life affect your budget, which is why it should be revisited on a regular basis,” says Budget Insurance’s Susan Steward.

In September, petrol prices are expected to rise by 59 cents a litre and diesel by 56 cents a litre. Electricity tariffs are expected to increase by more than 20%. And as August stats indicate, South African consumers remain under tremendous pressure to clear debt.

Preliminary statistics from Stats SA reveal that there have been 48 169 civil summonses issued for debt in June, valued at more than R350 million.

Here are a few guidelines from the experts on how to balance our budgets between September’s petrol hikes and increasing consumer debt and living costs.

1.First things first: get rid of debt

Make sure to pay off the most expensive debt first. “This is the debt that carries the highest interest rate and is costing you the most. For example, if you have a bond at a 10% interest rate and a personal loan at a 20% interest rate, consider paying off the loan first,” says Manyike.

Winter shopping splurges on credit may have accumulated, but if you received an annual increase in July, you may have a little more in your bank account and – as much as it can be tough – use it smartly by paying off outstanding debt, Steward advises, or strategise a smart budget plan to make the necessary payments.

2. Cut costs

This isn’t about scrutinising every cent you spend but rather establishing spending patterns to identify possible areas for saving. A good way to do this is to look at your monthly bank statement and see where most of money is going. You may be surprised at just how much you’re spending in certain areas and how by making small changes you could keep your spending in check.

3. Less is more

Examine your monthly budget and if your expenses exceed your income, cut out things you can do without. Just like cleaning out your closet or selling old equipment that is taking up unnecessary space, try to eliminate all expenses and purchases that are not essential. Be very clear on the difference between needs and wants.

4. Remember your saving goals

If you didn’t stick to your New Year’s resolution to save more money this year, it’s not too late to start now. Make a plan to set up a monthly debit order to an investment account or open a tax-free savings account, increase your pension fund contribution and request the 13^th cheque option from your employer, if available to you.

5. Save for the unexpected

The amount you save towards an emergency fund depends on your personal circumstances. Ideally an emergency fund should cover three to six months’ living expenses, says Steward, adding that while this might seem like an insurmountable amount to save, just by putting aside R250 a week, for example, you have yourself R1 000 at the end of each month.

“If you don’t have savings, you aren’t getting ready for the day when you must pay out more money than you have. This day can come in the form of an unexpected medical bill, or family emergency, and it is at times like these that your savings can save you,” Manyike points out.

6. Track your spending

Try establish where unnecessary spending goes and how you can reduce it by making small changes to save big. Keep track of expenses in your statements and find a pattern to re-strategise saving methods.

7. Outdated fees must be phased out

You could be paying subscription fees for magazines you don’t read, a gym you don’t go to or paying for a bank account you no longer use. End subscriptions and use the money in more efficient places.

8. Payments that don’t reap rewards

Always read the fine print or terms and conditions when it comes to gaining loyalty points from reward programmes. Falling for a quick programme can have you overspending for smaller returns. Sometimes it’s just not worth it.

9. Know the money lingo

Research, read and seek advice on the best methods to save your money and make it go further for longer. Understanding investments, pension funds and the best account to save and spend your rand can certainly take you a long way.

Article by: www.moneyweb.co.za

How much does your business really cost to run? You get the financial reports at the end of each month; you know the overall figures. But how much does it cost to produce a finished product every day? Are you charging too much or not enough? And what are the costs you don’t even realise you’re incurring?
A survey in Canada revealed that many business owners are out of touch with their own expenses. Almost 40% of them said that they don’t think they are selling their goods at market value. A quarter of respondents felt they were undercharging.
The report says small business owners are missing opportunities and risking their chance of success over the long term by not knowing how to accurately value what they sell.
“If you are undercharging for something you put your blood, sweat and tears into you are undermining your business,” says Rob King, director of small business at Intuit Canada.“That means not being competitive or as profitable as possible.”

In order to accurately pinpoint the right price for your goods, however, you need to have an accurate idea of your costs. It is here that many businesses come unstuck. If you’re battling to determine exactly how your expenses are adding up, we recommend outsourcing financial management. Your appointed financial executive will look for hidden costs in the following areas:

Insurance

Insurance is a necessary cost for almost every business, but it can mount up annually without going checked. Often, insurance companies come in with a low fee quote to secure your business, and then hike up their tariffs every year without you even noticing the extra expense. Outsourcing financial management will allow your financial specialist to conduct a cost analysis on this particular area of the business over the past five years. When outsourcing financial management, your specialist should make it a habit to get new quotes on business insurance every second year. This will ensure your fees remain competitive. Either your existing insurer will need to meet the quote of their competitor (they very often do) or you can switch to another insurer.

Utilities

Chances are, you’re paying a hefty bill for lights and water every month without thinking. We’re all familiar with the ‘guesstimates’ that take place to determine rates at municipalities. We scrutinise our bills at home and bring in someone to conduct a metre reading if the bill seems too high. Why not make this a monthly routine at the office as well? You probably don’t have the time to do it, but outsourcing financial management will mean that someone else will.

Bank fees

Banks are masters at throwing in ad hoc bank charges and incrementally increasing transaction fees. In addition to this, some areas of their fees are based on a sliding scale; for example, ATM withdrawal fees often include a flat rate and a percentage of the amount drawn.

It’s evident from these situationally-based numbers that proper planning of bank charges is difficult. Outsourcing financial management will allow someone to routinely check in with the numbers, look out for ad hoc charges and make sure that you’re using the most cost-effective bank for the kind of banking you do most.

Outsourcing financial management can help you determine, track and manage hidden costs in your company. This can help you have a better idea of your operational expenses and thus help you price your product in such a way that you stay competitive and see healthy returns. To find out more about professional solutions for outsourcing financial management, contact The Finance Team. Our associates can assist you on a full, part time or interim basis.