Financial stability is something many aim for. Knowing your finances are rock solid puts your mind at ease and allows you to fulfill other responsibilities. A recent study revealed that 61% of people in the US live paycheck to paycheck. It’s a tough pill but a wake-up call to be more financially proactive. So, here are five practical strategies to keep your income safe and sound.
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It's never too late to start saving money for the future. Whether you are saving for retirement, a big purchase, or just trying to break the paycheck-to-paycheck cycle having money-saving plans and habits will make it easier and give you some peace of mind. The following are four ways you can begin your money-saving journey today:
One way to start saving money right now is to use an old-school method. You can purchase a jar or some other type of empty container to use as the storage area for the cash you will save. Throw some cash into the jar each time you have something extra. You'll be amazed by how quickly your funds add up in that jar.
Many jobs use advanced direct deposit features so that their workers can achieve different things with their money. One feature direct deposit has is the ability for a worker to have his or her funds sent to more than one destination. That means you can have a small portion of your paycheck sent to a separate bank account that you'll use as your savings account so that you can live life comfortably in the future. You can set this feature up and then start saving money today.
A thrift savings plan might be right for you if you are a federal employee or military service member. The TSP is the Federal Government’s version of a 401k plan. If you're not eligible for a TSP, you may be eligible for a 401 K plan through your employer. What's great about a 401k plan is that your employer might offer contributions to you. You can use the money your employer adds to your 401k plan to support yourself when you retire. You may want to look into your benefits package to see if your employer provides this option to its workers. If so, you can start small and then add more money to your 401k plan if doing so is comfortable for you.
A cashback account can give you a fun and productive way to save money. Those accounts work by giving you a certain percentage back from the money you spend each month on your debit card. Some banks offer high cash-back percentages for their customers. You might be utterly amazed at how much you can get back from one of these accounts.
Try one or several of the options mentioned above if you want to start saving money. You can achieve anything you set your sights on. Don't let anyone tell you it isn't possible.
Maintaining a healthy cash flow can be important for your company’s reputation and credit approval. This involves making sure that money is coming in at a faster rate than it is coming out. If money isn’t coming in and you owe payments, you’ll likely end up missing payments or having to take out loans to cover expenses.
Sometimes a poor cash flow can be the result of running an unprofitable business. However, most of the time, this isn’t the case - your company could be profitable, but your customers may not be paying you on time or you could be failing to budget effectively. Below are just a few ways in which you may be able to improve your cash flow.
Late paying customers can be a real inconvenience. In many cases, a vicious cycle can form - you could end up paying your own creditors late.
Some customers will hold off paying you for as long as possible until you chase them up. As a result, if customers haven’t paid you, you should never wait it out. Send them an email or a text as soon as they miss a payment to remind them that money is due - and keep chasing them up until the money is paid.
If customers bill you on a monthly basis on a specific date, you may be able to set up automatic emails or texts to alert customers whenever money is not paid on time. This could be easier than having to chase up payments manually. If customers proceed to still not pay up, ring them, and try to get to the bottom of the problem.
If you’re strict with chasing up payments, you could find that a lot of customers get into the right habit of paying you on time. There may be some customers that continue to repeatedly miss payments or never pay. You may have to eventually cut off the former if it becomes a problem, while you may have to seek legal action for the latter. It’s important that you never get angry with customers and that you don’t harass customers with payment reminders - threatening or harassing behavior could be used against you if it turns into a legal battle (for most companies, this hopefully shouldn’t happen very often). You can read this guide to chasing up late payments for more tips.
Ideally, you shouldn’t have to take out loans to cover late payments. However, if you owe money and there’s no other option but to borrow money, invoice factoring may be the best solution.
An invoice factoring company immediately pays you any money that you are owed by customers so that you can finally get paid. The company then chases up your customers on your behalf and takes the money for themselves. The catch is that you will generally only get paid 90% of what you are owed. However, if you’re in need of quick cash to cover payments and you’re tired of chasing up a customer, this small loss could be worthwhile.
When it comes to charging in installments or billing customers on a monthly basis, you can often avoid taking on chronic later payers by running a credit check first. This can help to evaluate a customer’s credit score and determine how likely they are to pay on time. A customer that consistently misses payments is more likely to have a poor credit score - hence, you may want to avoid taking on customers with poor credit scores for this reason.
You can check customers’ credit scores by signing up with a credit reporting agency. This is free for small businesses - larger businesses that require more frequent credit checks may have to pay a fee.
There are a few other ways in which you can discourage late payments. These methods include:
Charging late payment fees: Many customers will pay up if threatened with the prospect of late payment fees. When a customer fails to pay on time, provide a warning telling them that a fee will be charged if they do not pay by a certain date. It’s important that these late payment fee guidelines are followed.
Offer early payment discounts: You may be able to encourage customers to not only pay on time but to pay early by offering early payment discounts. This could be a useful incentive for customers paying in installments.
Allowing payments via credit card: A customer may not have to pay you installments if they can pay by credit card. This allows you to receive the full amount upfront, while also allowing them the convenience of paying installments to their credit card provider. Consider looking into accepting credit cards if you don’t already.
Sending payment reminders before payments are due: Sending customers a payment reminder a couple of days before a payment is due could encourage your customers to check that they have enough money in their account so that the payment isn’t missed.
Late payments aren’t always the cause of cash flow problems. Unforeseen emergency costs such as machinery repairs may cause you to have to spend money you hadn’t budgeted for. This could then leave you unable to pay creditors. Alternatively, you may run a business that has seasonal lows, in which case you may have to struggle through certain months with little income.
In either case, it can be useful to have savings set aside that you can dip into. This could allow you to continue paying creditors when you haven’t got enough money coming in.
The best way to set aside your savings is to put them in a business savings account. This allows you to set aside funds for dealing with cash flow problems. You’ll also generate some interest on your savings, potentially giving you some extra income. Which leads to the next useful cash flow tip...
If your income is unpredictable or you receive more work during certain seasons, it could be worth finding a way to bring some regularity to your income so that you can more easily budget from month to month. For instance, if your company sells ski equipment, you could struggle to make money during the summer months, leading to cashflow problems.
Seasonal lows may be able to be addressed by broadening your products or services. For instance, you could consider selling mountain biking or hiking equipment alongside ski equipment.
Alternatively, you could try investing in savings and making a return off of them. This could include making interest off savings, making interest off of peer-to-peer lending, or even making a return off of stocks or property. By using this APY calculator, you may be able to forecast exactly how much money you’ll make over a certain period of time. Higher returns may involve making riskier investments.
It’s also possible that you may be able to earn money by renting out office space or equipment while not in use. For instance, some companies sublet out spare rooms to other small companies or rent out printing services to other companies.
You may also be able to make a passive income off of ad revenue or sponsorships by pouring energy into a business blog or vlog. If your blog or vlog is successful and you get a lot of readers/views, you’ll get paid money for advertisements and will likely attract the attention of sponsors.
If you tend to live off of only a few large payments per year, you could consider promoting installment plans as a way of spreading out payments - this could allow you to budget more effectively than getting paid a large amount every few months. Alternatively, you may be able to promote subscription or continuous services over one-off services (if you own a cleaning company you could try to promote more regular office and house cleans as opposed to living off of one-off deep cleans).
Cash flow problems can also occur if your outgoing costs are difficult to keep track of. If you have different payments coming out at different points of the month, consider organizing all of these payments to go out on the same day so that you can more easily budget. You may be able to move payment dates simply by talking to creditors - while some creditors may want to stick with a certain date, most creditors will be willing to move the payment date if it prevents late payments.
Avoid setting a large payment date a couple of days before you get paid. If you regularly get paid on a certain day, it may make sense to set your outgoing payments for a couple of days after this date.
In business, it’s incredibly important for us to ensure a routine and deliberate goal of optimization. Optimization may mean being able to review our staff every year to ensure they’re functioning as promised and trained, and if they’re not, we may decide to make adjustments to our ranks.
Additionally, we must manage our own skills. For instance, we may be expertly technically proficient, or able to run accounts carefully, but the other skills that ensure your leadership value include being able to manage people, and stay calm in the face of struggle. We may choose to optimize ourselves in this direction through careful training and reflecting on our experience.
Savings are, of course, also important to optimize. This is because by reducing your costs, your revenue has further room to help you break even or contribute to your profit levels. This means that looking to cut costs in a way that isn’t as indiscriminate as randomly letting people go, nor harmful to the overall operation of your company is important. In the following advice, we’ll discuss how to cost-cut wisely:
Loyalty
Over time, the loyalty you hold with a particular supplier or business to business connection can help you grow goodwill. This may result in particular discounts given only to you, or the ability to purchase extras to your order for a fraction of the price. You’d be surprised just how much businesses are willing to help one another out, even through a few complimentary items with each order, provided it keeps a regular and trustworthy client or connection happy. Provided you reply with the same goodwill in turn, you’re sure to achieve bulk business savings with your best supplier.
Bulk Orders
Crafting the inventory requirements necessary for bulk buy and storage of orders can help you gain massive discounts when regularly supplying yourself. Economies of scale suggests that the more products are sold, the more they can afford to be given away more cheaply. This means that negotiating with your potential suppliers in regards to bulk orders may grant you better terms than you had imagined to begin with. They achieve a large and reliable order, you gain plenty of items and some for a fraction of the cost. Everybody wins.
Pay For Use
Some services are so considerate that they allow businesses or regular clients alike to pay for what they use, not some artificially inflated fee to cause confusion or to put everyone on the same standard. For instance, when you visit Unishippers for shipping rates, you will be amazed at how clear and forthright their pricing options are, and how justified they will be through the fair use of their service. This is great pricing, and it’s important to understand that these standards can exist in other firms for other purposes if you’re willing to research your best options. To that end, you can reliably achieve savings by only paying for the value you receive.
With this advice, you’re certain to reliably achieve bulk business savings in the best possible context.
Expenses in the world of business are a fact of life, but sometimes they can creep up on us, eating into our profits and damaging the growth of our business. As a solo-preneur or small business owner, you may not be able to cut down on your key business expenses but you can control your own spending. So here are some simple ways that you can cut back on your personal expenses.
Before you can effectively cut down on your expenses, you’ll need to first recognize where it is you are spending your money. You should be keeping a record of all business expenses for tax purposes, so take a look at where your expenses are adding up, and make a note of regular expenses that you could cut back on. If you haven’t been keeping proper records or your expenses, or want to cut down on some personal expenses that may not be entirely business-related, then spend as normal for one month but write down everything you spend during the month, whether it be $1 on a chocolate bar or $500 on a hotel room. Write everything down and then use this as a basis from which to form your analysis.
It’s often easier to see large expenses and to focus on cutting back in those areas, but more often than not it’s actually the smaller expenses that tend to add up over the course of the year and cutting out a small, simple expense such as your morning coffee can make as much difference over the course of the year as changing your travel plans or downgrading your gym membership.
Top tip Many banking apps now let you filter your statement by transaction, why not type in some of the names of the places you think you visit frequently, such as Starbucks and you may be shocked by how much you spend there on a monthly basis.
So you need to travel to Paris for a business convention, ok, but do you really need to book a first-class ticket? There will be times during the year that a little luxury may be called for, after all, we all deserve a treat every now and then, but if you keep opting for luxury options when a more cost appropriate option would have sufficed, then you’re just eating into your business profits and ultimately harming the growth of your business. We’re not saying you should always take the cheapest option available as sometimes a little upgrade to business class can provide you with better wifi, a chance to work in the lounge, and will leave you more refreshed for your business convention ahead, but unnecessary luxuries should be cut out. Some luxury things to consider swapping include:
Expensive hotel rooms for AirBnB’s
First Class tickets for Business or Economy alternatives
Taxis for public transport
Top tip Before booking a trip or upgrading your travel, look at what you could save by choosing a cheaper option and then allow yourself to visualize what that money could do to help you grow your business.
It’s easier to recognize where we are overspending when we physically hand over cash or a card, which makes direct debits and subscription services difficult to keep track of. Take a look at the payments that come out of your account regularly; are there any you no longer use? Have some of them increased in price without you even realizing it? Don’t let direct debits and subscription charges run away with you, challenge price increases, cancel services you no longer use and make sure you’re always getting the best deal.
One business service that many business owners continually overpay for is their business mobile phone. We tend to be more aware of price changes in our personal lives, but for some reason allow our business contracts to continue unchallenged. Be sure to assess whether you are using your entire business phone allowance and if you’re not, then consider changing supplier or tariff. Use a network review site to help you compare all of the different UK mobile networks side-by-side; if you could save your company money elsewhere.
Top tip: Put a reminder in your diary to look into your direct debits and subscription services once every quarter. This will remind you to screen them for any changes and to cancel any you no longer use before they rack up too much.
Quite often, many of the expenses that we need to cut down on involves a change in our habits. For example, making a coffee at home rather than buying one on-route to work, or making your own lunch at home rather than buying one every day. These are just two examples of small daily habits that soon add up to become costly annual expenses. If you were to eat lunch out of the office every day costing you just $5 per day, that makes $25 a week and $1300 over the course of a year. So take a look at your daily habits, have you become lazy? Could you change your habits to save yourself some money?
Top tip Don’t try breaking all of your habits at once as this is a recipe for relapse. Instead, focus on breaking one habit at a time and build up the habits you are breaking slowly. Try breaking one per week.
Of course, there will be certain business expenses that simply must happen to keep your business running but to help you evaluate your overall spending, try to have a no spending week for personal expenses such as eating out, shopping, transportation, and leisure. By trying a no-spending week, you will begin to notice just how often you reach for your credit card and how often you justify spending to yourself.
Over the course of the week, try to evaluate the areas where not-spending money has been positive and where it has been negative, this will help you to prioritize your spending and you may even end up cutting back some of the less important expenses altogether when you realize how little you miss them.
Top tip: It’s harder to spend money if you leave your wallet at home. Leave your cards at home and just take out some emergency cash in case you find yourself in an emergency situation.
Have you ever wondered why it seems to be so much easier to overspend on a card than it is with cash? Well, the answer lies in our psychology.
When we pay for something using cash money our brain recognizes the transaction, sees the money handed over, and notices that we now have less cash in our possession than we did before. Using a card, on the other hand, does not spark this recognition but instead hides the transaction, in essence hiding the fact that we have spent money from ourselves.
Banking apps have gotten better at updating our balances more frequently and some even provide push-notifications after every transaction, but the most effective way to remain conscious of our spending and to ensure that our brain recognizes each spending transaction is to pay using cash money. So why not try taking out a set amount of cash for the week and sticking to that as your budget? You may find it much easier to keep track of your expenses.
Top tip: After every cash transaction, make yourself count the money you have left - this may seem childish but it will help you to realize what you have left to spend for the week and will stop you from unexpectedly running out of money.
Let’s face it, cutting back on expenses can be hard, especially when some of them such as your morning coffee, your takeout lunches, and your little luxuries maybe things that bring you a lot of joy. For some people, removing these things from their life isn’t going to be easy, which is why you need to keep your business at the forefront of your mind.
Write down exactly why it is you want to cut back on your expenses - are you struggling to make a profit? Do you think it’s your spending habits that are hindering your business? Or are you worried about a tax investigation? Whatever your reason is, write it down and then keep it at the forefront of your mind. Any time you’re struggling or are thinking of throwing in the towel, then return to the reason why you wanted to cut back on your expenses in the first place.
Top tip: Some people find that placing a sticker or little note to themselves on their credit or debit card can help to prompt them to think of their reason why every time they use them. Why not try this technique or pop a note to yourself in your purse?
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