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Lose Track of Your Finances and Your Breakfast May Cost Much More Than You Think

The first step if you want to solve your debt problems is to know your income and expenses. You must know how and where your money is spent. Knowing your spending is as important as knowing how much money is coming in.

You may someday be the next person who buys the world’s most expensive cup of coffee and bagel if you don’t know where your cash flow stands!

If you said five dollars for a cup of coffee at Starbucks or Dunkin’ Donuts is rather expensive, none would argue with you. Yeah no one but Jake Drehar might.

Jake looked forward to each day was a hot cup of coffee in the morning, the one thing he can’t miss in even in summer heat. Jake started it off with his coffee everyday and it would not be a good day otherwise. Jake walked to the counter at his favorite coffee shop on one Monday near the end of the month. He had known about writing a few checks that month and the balance in his checking account may be running low. He paid with his debit card as he expected his paycheck would be directly deposited into his checking account that day and he had some cash in his wallet. He’d pay cash if the debit card were declined.

When the cost of his coffee was put on his debit card, he was pleasantly surprised, thinking his paycheck had cleared. Then he ordered a bagel and paid for that with his debit card. He received overdraft notices from bank two or three days later. He was assessed a fine not only for each overdraft but he was charged a fee for the bank covering his transactions. Jake’s coffee and bagel cost over $120 because of the two fines and two bank fees!

The experience of Jake is an extreme one but it is common. Endless ways are there to lose track of our finances. We put ourselves in peril of being hit with fees and fines that cause bigger and bigger problems when we do lose track.

We all tend to overestimate how much money we have and underestimate how much we are spending. This is the reason we lose track. Our spending sneaks up on us hence we do this. Moreover, it is amazing how little, everyday expenses add up over the year.

On your way to work each day spending on one medium Dunkin’ Donuts or Starbucks coffee and plain bagel adds up to more than $687 over the course of one year.

Daily purchases have a greater impact on your total expenses than you’d think. Keeping track of what is coming in and what is going out is most important.

Do you want to keep better track of income and expenses? Read *The Road Out of Debt* which offers you simple and ideal solutions for taking control and resolving your financial problems.

Small Business and Accounting: Is Your Bookkeeping Process Screwing Up Your Business?

Accounting can help to accelerate business growth when the process is done correctly. But if you are not used to managing business finances you can put your company at risk. Let’s take a look at three common accounting blunders and how to handle them the right way.

  1. Mis-classifying transactions. Running a business solo may cause you to work in areas outside of your professional expertise. With the availability of accounting software on the market today, do-it-yourself bookkeeping is on the rise. But managing this task when you lack the proper training can do more harm than good. Lack of accounting experience increases the chance of improper transaction reporting and errors.
  2. Inconsistent reporting. Too often bookkeeping is made to be the last priority on the list of things to do. When you are busy attending to other tasks in your business it is easy to push this task to the end of year. You need consistent feedback to know what changes to make throughout the year.
  3. Using unreliable data. When it comes to generating financial reports, remember that garbage in is garbage out. In other words, your financials are only as good the data in your accounting system. In order to make the best assumptions, forecasts, and decisions you must have a system with complete information and data that is free of errors.

Now to correct the process here are some things that you can do:

  1. Learn bookkeeping basics. Managing the bookkeeping may be something that you do on your own. When transactions occur that you do not understand, get answers from the pros. Seek the advice of a bookkeeper or accountant who can review your entries at least quarterly and make any needed adjustments to the accounts.
  2. Schedule time for bookkeeping. With so much on your schedule it is easy to overlook some of your tasks. Improve management efficiency by carving out time to enter transactions. Include financial reporting and management review to your list. To save time automate as much of the process as you can with software programs and online accounting and banking tools. Be proactive and use financials regularly to determine the actions to take sooner rather than later to improve critical areas of your company.
  3. Build in checks and balances. Your financials are tools that help you keep track of business performance. If no one is tracking results, then you are playing the game for sport. It is important that the results reflect accurate transaction history. You can achieve this by using checklists for the accounting process, reminders of important tasks, and regular reviews and audits of your accounts.

As you review the accounting process what improvements will you make to capture a complete financial picture?To learn how you can clean up and organize your bookkeeping system visit http://www.tbsusa.com.