Managing your spending is fundamental to making any progress in your financial life. Way too many people write to me to tell me that they are struggling with this issue. The best way to get a grip on spending is to set up a system that prevents you from spending money that you should be saving or using for essentials.
This method takes no skill whatsoever. It's like bowling with bumpers in the gutters. Sure, you can still somehow screw it up at the very end of the lane, the ball can take a sharp left and only knock out a few pins, but you’ll significantly reduce your chances of that with the bumpers.
So You Started an S-Corp, What Now? Everything You Need to Know /
If you formed an s-corp, it's probably not because it's something you've been dreaming of doing since you were a child. No kid has ever thought, "Gee, I can't wait to be a grown-up so I can form a corporate entity all my own!" That would be disturbing. You probably formed an s-corp because your accountant, attorney, or colleague told you it was a good idea and that you'd save a bunch of money on taxes, like maybe even thousands of dollars. Which seems like a great trade-off, right? Your accountant or attorney files some paperwork, you come up with a funny corporate name, you open up a bank account, and then you get to save money on taxes.
Read MoreHow to Manage Financial Failures with Negative Visualization /
Second to running a small business, the most I've ever learned at work was my experience working at a boutique financial planning firm. I learned tons of ratios and formulas, got good at creating excel spreadsheets, and took multiple classes on insurance. Economists made visits to our office to give us their economic predictions and how that would impact the financial markets. So I learned how to distill and communicate that dense information into digestible pieces. I learned how to go about doing all the financially prudent things one ought to be doing; that alone is a wealth of knowledge that I'm forever grateful for stumbling into.
Read MoreThings I'm Learning During A Global Pandemic - Part 2 /
Here are some more thoughts after a couple more weeks of conversations with clients with colleagues, messages, and emails from friends and strangers, observing the outside world from both big media platforms and personal social media accounts, a lot of reading, and a lot of doing nothing.
Read MoreHow to Feel Better About Spending Less /
In 1930, John Maynard Keynes, who is considered the father of modern economics, wrote an essay titled, Economic Possibilities for Our Grandchildren. In that essay, he describes his prediction for what life would be like for future generations. He predicts that economic prosperity will be so great and abundant that our need to work across all of society will diminish. And since the vast majority of people will no longer need to "sell themselves for the means of life," he warns that humanity's next great challenge will be how to look forward to and not dread the "age of leisure."
While he predicts there will be some people who have an "intense, unsatisfied purposiveness" that causes them to continue to pursue wealth blindly, he goes on to imagine that the vast majority of society will have a shift in moral codes. That we will recognize that loving money as a possession, as opposed to as a means for the realities and enjoyments of life, will finally be collectively viewed in the harsh light of truth; that it is disgusting, morbid, semi-pathological and semi-criminal.
Read MoreThings I'm Learning During a Global Pandemic - Part One /
n a personal attempt to try to understand and process what the fuck is going on right now, here are some things I'm learning during this crisis. Some things I already knew, but the lens of a pandemic puts it into focus.
Read MoreHow to Absorb Inevitable Financial Shocks /
Imagine that your financial life is a sandcastle you’re building on the beach. You can learn what works for building it up, and in the good times, when the threats to your progress are manageable, you take for granted that it’s easier to build in those conditions. Now imagine the tide rising, the waves start coming in, getting closer and putting your sandcastle in danger of being damaged or worse, being washed away. In this analogy, the tide is a financial shock. The thing about the tides - and economic shocks - is they will always come in. Sometimes very quickly and suddenly as if out of the blue and other times, you can feel it gradually creeping in. Experiencing a financial shock is not a matter of if; it’s a matter of when and to what severity. Shocks can come in the form of global recessions, pandemics that freeze the economy, you lose your job, your kid getting very sick, a parent dying, the industry you’ve worked in for decades slowly getting cannibalized by new technology or war.
Read MoreHow Not to Freak Out About Your Finances During a Global Pandemic (or Any Crisis) /
In the financial world, we call things like the current pandemic a black swan event. A black swan is an unpredictable event with potentially severe consequences. The name comes from the rare sightings of black swans in nature. They exist, but seeing them is exceptional. So while the financial world has terms for these types of events, how we deal with them isn't always the same. Take the 2008 housing crisis. It was the result of a perfect storm of things: sub-prime mortgages, derivatives, hubris, and the lax, or often fraudulent practices within the real estate, mortgage and lending sectors. Finding a way out of the crisis was terrifying, but pointing to the causes gave us a sense of certainty.
I want to be clear: what we're experiencing today is very different from the housing crisis of 2008. Although there is one similarity: we didn't have a playbook for dealing with the crisis then, and it goes without saying, we don't have one today. While it's true, the world has experienced pandemics in the past, our modern economy, in all of its globally connected glory, has not experienced something of this scale. I have no idea what is to come in the approaching days, weeks, or months. I'll do my best to help you all understand our changing reality through the lens of money, finance, and economics.
Here are my thoughts on how to not freak out about your finances during a global pandemic.
Read MoreHere Are the Things Your Bookkeeper Will Do For You /
If you haven't worked with a bookkeeper, it might be hard for you to imagine the benefits of working with one. Maybe this example will help: imagine a time you went to a restaurant with a large group of people - like twenty, or more. Everyone orders different things, and of course, when the bill comes, everyone in the party wants to split the bill according to what they consumed. If you're like me, this might sound like your own personal hell. But others might have a natural affinity for figuring out the best way to divide twelve bottles of wine unevenly shared with 27 people. That insane person, who willingly takes on this math problem, spots errors like getting charged for things that never came and can figure out how to divide tip and tax fairly would be the bookkeeper for the party.
Read MoreHere's How to Outsource Your Bookkeeping: A Practical Guide /
Bookkeeping isn't that fun. Seeing how much money your business made and watching profitability grow can be fun. But the actual act of accounting is mildly satisfying, at best, and frustrating to the point of tears, at worst. Even though bookkeeping software has become user-friendly, you still might end up making costly mistakes if you don't have some accounting chops to help you understand how to troubleshoot and fix things.
It's probably time to outsource your bookkeeping if any of the following are true:
You've tried to set up your chart of accounts, only to quit after getting stuck deep inside a Google hole.
You can't figure out why the bank balances don't match, and so you never reconciled your accounts.
Your business is doing so well that you don't have time to sit down and focus on the bookkeeping.
Everything You Need to Know About Small Business Taxes /
Disclaimer: The following is not tax advice. It's a guide to help business owners and the self-employed understand their tax obligations.
Small businesses and their owners have a plethora of ways they can and may be required to pay taxes. From Federal to local taxes, once you start to wrap your head around the American tax system, you'll realize it's kind of a hodgepodge of laws and rules put together over time. Think of it as an ugly collage of regulations, but it's much worse because percentage math is involved. Another frustrating aspect is that the laws may change. We saw this most recently in 2019 with the Tax Cuts and Jobs Act. Although a good accountant will help you navigate through the ever-changing tax code, as a business owner or freelancer, it's your responsibility to get a foundational understanding of the world of business taxes.
This guide is to help business owners and the self-employed understand their tax obligations. Once you can wrap your head around how small business taxes work, you'll be able to use this knowledge to make better decisions and to ask your tax advisor (your accountant) better questions.
Read MoreHow to Have a Smooth and Worry-Free Tax Season /
Written by Luke Frye
Tax time is coming again — you can feel it, can’t you? Like a vibration on a train track.
It’s unstoppable, yes, but that doesn’t mean you have to be flattened. Learning about how to handle your taxes is the best way to avoid a nightmare scenario. The good news is that there are some basic principles, and it doesn’t take a wizard to learn them.
Here are four ways to have a smooth tax season, no locomotives involved.
Read MoreWhat Are Business Tax Write-Offs and Why Are They Important? (Tax Deductions Explained) /
Tax season can feel like a slog to creatives and entrepreneurs. who aren’t numerically inclined. But with some patience you can learn how to be savvy about taxes, including what you need to know to make sure you’re not missing any write-offs that can save you money.
Let’s look at a run-down of the details on write-offs, also called deductions, so you can head into tax season with confidence.
What Is A Tax Extension and Is It Right For You? /
Written by Luke Frye
The IRS may seem like an unforgiving institution, always breathing down the necks of small business owners for the next payout. But the taxman is actually quite obliging when it comes to allowing extensions on your tax filings.
What is a tax extension?
It’s easy to request several more months to finish your tax paperwork. However, don’t get too excited: The extension is only for the filing of your return, not for the actual payment of your taxes.
Read MoreHow to Focus on Changing Your Behavior and Not Your Goals /
"You do not rise to the level of your goals. You fall to the level of your systems. Your goal is your desired outcome. Your system is the collection of daily habits that will get you there." - James Clear"First we make our habits, then our habits make us." – Charles C. NobleI can see why goals get all the glory. They're aspirational and sexy. Goals can give us hope, the feeling of progress, and they can provide the aimless sense of direction. Reach a goal is social media worthy, an opportunity for attention and recognition. In our current vernacular, if you give someone props, you can do it by just saying, "Goals." And sometimes, when you achieve your goals, it can feel good - incredible, even. I don't want to hate on goals too much, but I think they get more attention and focus than warranted.
Read MoreHow to Feel Better About Your Finances: The Operating Principles /
We all operate based on our own set of internal values and principles. We make financial decisions based on them, and our choices shape our financial life.
If you aren't aware of the financial principles you're living and operating by, you might have internalized someone else's, like your mother's fear or risk. Or your father's illusory confidence in his abilities to understand complex financial instruments. Your uncle's skepticism of everyone "trying to make a buck." Your aunt's overconfidence in the intentions of others.
Since there is so much we cannot control, you have to take responsibility for what you can control. Make sure you're acting on the values you truly value.
Here are my own financial operating principles to help guide me to make the best financial decisions with limited information. But really, they are principles to help me on my path to inner peace.
Read MoreHow to Have a Better Relationship with Money /
Everything is connected. Your relationship with money impacts both your inner world and your external world. In your outer world, outside of you, your feelings about money can impact how you see the world, how you act in the world, and how you interpret experiences in the world. In your inner world, your relationship with money can impact how you feel. You cannot wholly compartmentalize your financial life; as much as you may have convinced yourself you can. How you feel about your financial life and your relationship with money, impacts how you feel about yourself. How you think about yourself affects the choices you make. And all the choices you make, create who you are, what you're able to do, and who you will allow yourself to be.
Read MoreYear-End Tax Planning Generates The Most Savings /
(Disclaimer: I am not an accountant, and this is not tax advice. Also, a caveat: this applies to folks living in the U.S.)
When I worked as a financial planner, the busiest time of the year was year-end. While every other industry (besides retail) was winding down and taking a leisurely two weeks off, we were going full-steam ahead, juggling year-end tax planning meetings for our roster of clients. Clients were always grateful that we got ahead of the curve. We didn't just prepare them for their tax bill come April 15, often, the strategies we advised, with the help of their accountants, helped save money on their tax bill. More often than not, the savings were significant and wouldn't have been an option to exercise after December 31.
If you're trying to find ways to save on taxes, don't wait until tax season. By then, it'll be too late. That'd be like trying to come up with a strategy against an opposing basketball team after the game ends. All you can do at that point is to accept victory or defeat.
Read MoreHow To Keep Receipts For People Who Hate Keeping Receipts /
I moved to LA when I was 22, having just landed a job as an assistant at a boutique business consulting firm. Part of my job was driving around Los Angeles to run all sorts of errands. I'd deposit checks for clients at various banks all over town. I'd go to the post office to send tax returns via certified mail. I'd pick up lunch for the office, and go shopping for my boss. Keeping receipts for everything was easy. I didn't have very much responsibility, so whenever I got back in the office from one of my field trips, I had time to organize all the receipts. It was easy to make it a priority, especially when I had an employer who was in charge.
If you fast forward to recent years, I had gotten considerably crappier at keeping my receipts organized. For an embarrassingly long time, I was finding faded receipts at the bottom of my backpack or crumpled up in my back pocket, or the worst scenario of all - some would be lost and never found.
Read MoreHere Are Four Reasons Why Bookkeeping Matters /
My cousin and her boyfriend each have motorcycles. And at some point, each of them had a gas gauge that was busted. When my cousin first got her bike, her gas gauge wasn't working. Full disclosure: I don't know shit about motorcycles. For reasons that are unknown to me, they didn't fix her gauge right away. Instead, they ran some experiments to try to figure out how long she could ride without having to fill up the tank. It was like an extreme version of testing out how long you could drive with the gas light telling you to refill your tank.
My cousin's boyfriend would go on short rides with her in the city, and when she ran out of gas, he'd fetch some. I remember her telling me that through their experiments, she had some general idea of how many miles - or trips - she could take before needing to fill up the tank again. If it sounds vague, it's because it was. Thankfully her gauge is fixed now, so she knows exactly how much gas she has in the tank.
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