Out with the old, in with the new. No matter whether you apply the expression to changes in attitude or to life adjustments, the end of the year is a great time to assess your household finances and prepare for new opportunities. Here are suggestions.
Review your credit report. Request a free copy of your credit report from each of the three major credit bureaus. If the reports contain errors, get them corrected.
Make or update your home inventory. Go through your house and make a video describing what you see, along with information such as purchase dates, prices, and estimated values. Your home inventory can be vital for getting insurance claims approved in case of disaster.
Calculate your net worth. Your net worth is the value of your assets, including your house, personal property, bank accounts, car, and investments, minus liabilities such as your mortgage, credit card balances, and loans. This is a great yardstick for measuring your household’s financial growth (or shrinkage) from year to year.
Increase your savings. If you get a year-end raise, consider contributing a portion of the extra money to your 401(k) plan or other savings account.
Purge financial records. If you’re a financial packrat with stacks of old cancelled checks and bank statements that are no longer needed for an IRS audit or your own use, shred them.
Financial literacy is a vital skill in today’s world. Will your children be able to handle their finances when they became adults? Here are tips to help ensure the answer is yes.
Shave spending. Take the weekly allowance to the next level by helping your child develop a budget. Review the results to reinforce good habits.
Stress savings. Even young children can grasp the power of compound interest. A simple example is asking your child to put a dollar in a piggy bank. Offer to pay five percent interest if the money is still there in a week or a month. Make the same offer at the end of the first time period, and pay “interest on the interest” as well.
Introduce investments. Create a portfolio, either real or paper, consisting of shares of one or more stocks or mutual funds. Make a game of charting the investment’s progress on a regular basis.
Cover credit. Take on the role of lender and let your child request an advance on a weekly allowance. Charge interest.
Talk taxes. Use word search or crossword puzzles to teach tax terminology. Consider creating a “Family Economy” game using examples from your own budget.
Lessons in financial responsibility can benefit your children now and in the future. Get them started on the right path.
The IRS has launched a new campaign to encourage you to protect your tax and financial data, both digital and paper. As part of the campaign, the IRS plans to release videos and consumer friendly tax tips, and sponsor local events across the country.
Commitment to effective practices and techniques can be the key to keeping your business operating on a sound footing. Some tips: Reduce lag time– Reducing the time between sending out invoices and receiving payment may take the form of giving incentive discounts to customers who pay early. On the expense side, aim for just-in-time inventory to reduce holding costs. Establish a line of credit– To cover shortfalls resulting from excessive lag time, unforeseen business disruptions, or weakening in your particular market, set up a line of credit with your local financial institution. What to watch out for: The tendency to let short-term credit develop into a crutch that props up poor cash management. Check out new customers-Assess whether new clients are likely to pay on time before extending credit. Deadbeat clients can squeeze your firm’s cash flow quickly. Grow with caution– Expanding into new markets can bring momentum and additional sources of income. But developing new product lines, expanding facilities, hiring employees, and ramping up your marketing budget all consume cash. Be sure your cash forecasts are accurate. Review and update them on a regular basis.
Even if you’re covered by a credit monitoring service, you may want to keep an eye on your credit report – and you can still do that for free at http://www.annualcreditreport.com. That’s the only official website, so don’t be fooled by other “free” claims.
At the site, you can get one free report annually from each of the three major agencies. Why bother? Identity theft is a multi-billion dollar industry, and checking your credit rating is one of the best ways to protect yourself. You might also be surprised at the number of mistakes on credit reports. Relatives or even non-relatives with the same (or similar) last name could have their credit information jumbled with yours. Individual companies could have incorrectly reported a negative credit occurrence (in the form of a delinquent payment or nonpayment) to the reporting agencies. Reviewing your credit report is a way to find and fix those issues.
If you find an error, both the credit reporting company and the company that provided the information about you are responsible for making corrections. You’ll have to submit a written report and you’ll get written results when corrections are made.
Give us a call if you’re having problems with your credit reports. We’re here to help.