Posts Tagged ‘Organizing your finances’

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The Power of Stating your Intentions Out loud

May 11, 2011
Amgen Tour 2009© waynepowellphoto.com

Amgen Tour 2009© waynepowellphoto.com

Tomorrow I leave on a 330-mile, 4-day cycling adventure: the NorCal AIDS Cycle. I’m a little impressed with myself. “Athletic” is not a word frequently used to describe me. As a kid, I wasn’t picked last for team sports, but I was never picked first. And until three months ago, I had never cycled more than 10 miles at a stretch. My last training ride was an easy, fun, quick 30 miles. I have good reason to be self-impressed.

Do you have a big financial goal? Something that feels unattainable, that you can’t see yourself ever reaching? Would you like to be self-impressed?

Say it out loud.

When I first uttered that I was considering the ride, it wasn’t a fully formed thought. But I’d said it out loud, first to a friend that serves on the Ride’s Board of Directors, and then to my daughter, and then to a best friend. It snowballed from there. My daughter wanted to do the ride with me, and then her godmother, and then a best friend, and then a client.

Ask for support.

One of my life’s intentions is to be physically fit. That’s not my sole reason for doing this ride; a long-time passion of mine is raising desperately needed funds for HIV/AIDS. But the ride was a goal that I could speak out loud, ask for support from my family, friends and colleagues, and be lovingly held accountable to completing my goal. The first $100 donation I received sealed the deal; there was no going back. Someone gave money in support of me. I was accountable.

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15 Days til New Year’s Eve…The Time is Now

December 16, 2010

Countdown to New Year'sWhile everyone else is busy counting days until Christmas, accountants are busy counting days until New Year’s Eve. And here’s why:

Do you itemize your deductions? If yes, look at your spending plan for charitable contributions. You have 15 days to maximize your gifts. Plus your favorite nonprofits are busily trying to meet their year-end goals, so gifts that come in during December are hugely appreciated! Have you spent out your Health/Flexible Spending Accounts? Now is the time.

Are you a business owner? If yes (and you file cash basis) then every dollar you spend in the next 15 days saves you in the neighborhood of 25 to 40 cents. Our advice to clients at year end: Any equipment you plan to buy in the next six months, buy it now. Any bills scheduled to pay at the beginning of January? Pay them now. And on the income side, for every dollar you put in the bank, you’ll be sending 25 to 40 cents to the IRS on April 15th. This is the one time of year you ease up on your receivables calls, slow down your invoicing process, walk to the bank very slowly.

And for my nonprofit clients? You have 15 days to maximize contributions for the year. Call one key donor every day until the 31st. You can ask for support, or just wish them a happy holiday and thank them for their support. Craft one last personal email solicitation. People want to give this time of year, and it’s your job to remind them.

Happy New Year!

(The accountant’s disclaimer: this is clearly generalized advice. It’s something to be discussed with your trusted advisor. If you don’t have a trusted advisor, we know some great ones!)

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2011: Is your plan in place?

December 10, 2010

Winter is a time of reflection, both personally and for our businesses. How did this past year go? Did I meet my goals? Um, did I have goals? What do I want next year to look like? What do I have to do to get there?

At Creating Answers, it is the time of year we are busy working with all of our clients on 2011 goals and budgets. It is one of my favorite times of the year because you get to do two really fun things: analyze how last year went, and draw the financial road map to follow next year. It’s financial art at its most fun.

If you think of this work as a chore, I invite you to reframe your beliefs about planning and numbers. I invite you to think of it as a game, or a puzzle. Make it a date with yourself. Go to your favorite coffee house, or pour yourself a bottle of fine wine. And then…start asking yourself questions.

What percentage of your total income goal did you reach this year? 120%? Great! 85%? Not so great. What do you need to do differently in 2011? What amount of marketing dollars would have closed that 15% gap? Do you need to increase your networking time? Upsell existing clients? Raise your prices?

“If you think of this work as a chore, I invite you to reframe your beliefs about planning and numbers.”

Take a look at your discretionary areas of spending? How much did you spend on marketing and advertising? What were the financial results? Professional development? Results? Equipment? Results?

How much did you spend on staffing and/or outside consultants? Did they work at capacity? Did you generate revenue from your staff? How much? A great rule of thumb to start with is three times their cost.

While it is difficult to assign numbers to each of those questions, the exercise of trying will create answers. What if you spent nothing in each of those areas? What if you spent three times as much?

Most importantly, don’t overdo the process. It’s more effective to do a really thorough look at your 15 most critical spending areas consistently than it is to look at all 60 of the expense accounts you have in Quickbooks. (And if you have 60 expense accounts in Quickbooks, you should give us a call!)

Find out more about what we do at http://CreatingAnswers.com.

Here’s to a prosperous new year full of financial clarity!

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Late charge, latte charge, at least you’ll know.

June 21, 2010

$3.35 a day

Microsoft Money has this cool new tagline: “Late charge, latte charge, at least you’ll know.” I love it.

When you’re an accountant, people talk to you about their money. Not just your clients, but your friends, relatives, acquaintances, and even people you stand next to waiting in line. It’s kind of fun, because its this secret little window into peoples’ worlds that most don’t ever get to see.

So why do I like Microsoft’s tagline? Because the overwhelming first step to tackling one’s money issues is know how much money is coming in, how much is going out, and where it’s going. Most people have no idea. Even those that use software like Quicken or Money often still have very little idea. They can look it up, but they don’t know. I must admit that there was a point in my life that I realized I was tracking all the data, but not often enough to really use the information in a constructive way. More on that later.

$39 a month

There is an axiom that goes: “What we measure, we accomplish.”

If you have financial discomfort in your life, start measuring. If you’re measuring and still have discomfort, take a step back and look at how you’re doing it. Shake it up; try it a different way. If it’s still not working, check out our Financial Boot Camps. You’ll make movement there; we guarantee it.

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The Perfect Recordkeeping System

June 9, 2010

“We never do anything well until we cease to think about the manner of doing it.” – William Hazlitt

The allegory of the centipede makes the point nicely: asked how it knew which of its hundred feet to use when, the creature found itself unable to move. I am frequently asked what I think is the best way to do recordkeeping, file your financial information, which is the best software to use, should I do it by hand or use Quicken or Microsoft Money or Excel, do I have to use Quickbooks, etc, etc. My answer is the same as Nike’s: Just do it!

It’s not that I don’t have opinions about the best way to do it. (Anyone that knows me knows I have opinions!) It’s just that when someone asks me that question, its not usually because they’re trying to refine and make better a system they are already using. The people that ask me that question aren’t using a system at all, and they’re waiting until they have a perfect system to start using it.

If you recognize yourself in this post, my suggestion is to pick the easiest system you can think of, do it consistently and with reverence for 3 months, and then evaluate how it worked.

Don’t know where to start? Here are some ideas. Pick one:

  1. If you’re starting from scratch, get a little notebook and write down everything you spend. Everything. Then, twice a month, total your spending in some broad categories. No more than 12.
  2. If you’re using financial software (Quicken, etc.) but you still feel you aren’t doing it right, or you don’t KNOW your numbers, make acommitment to update it once/week. Once updated, write by hand, on a piece of paper,your monthly spending in each of your major categories.
  3. Try the old fashioned coffee can approach. Dole out at the beginning of the month into separate envelopes your monthly spending plan for groceries, eating out, entertainment and any other area of discretionary spending. If a month is too long, use a paperclip and post-it note to identify the 1st – 15th and 16th-31st spending.

    Perfect Envelopes (top); Done is Better than Perfect Envelopes (bottom)

Ok, now that you’ve picked one, just do it, don’t think about how you could do it better, just do it for 3 months. At the end of 3 month, let me know what you picked, how it worked, and how you’re going to make it a little better for your next 3 months.

Consistently, and with reverence!

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The Power of a Salary Structure

April 12, 2010

I often begin my speaking engagements to business owners with the following:

“Hey, I have a really great job for you! You are going to be doing exactly what you love to do. You won’t have a boss. You’ll get to set your own hours. Some months I’m going to pay you a whole bunch of money! But, then there’s probably going to be some months that I won’t be able to pay you. Well, maybe a little, but not a lot. But I’m sure I’ll be able to catch up eventually. —- Will you come work for me?”

Did I just describe the salary structure you have in your business? If you laughed,  I’m guessing: yes, it is. If so, read on.

I was working with a client of mine who has a goal of a $200,000 annual salary. She works in a field where it’s possible; it will take some hard work, but it’s possible. What kind of salary would that be? $16,666 per month. Her business will need to generate well over that to produce a net profit of $16,666 on a monthly basis.

So why would I advise her, for now, to pay herself a $1,000/month salary, no more, no less? Because it is an amount that she can successfully practice doing. She’d been paying herself big chunks of money when money came in, and then barely any at all for weeks, sometimes months. You don’t get into shape by exercising a whole bunch in one week and then not at all for another several weeks. When our businesses pay us large amounts during one good month, and then don’t pay us enough to meet our monthly needs in other months, we get out of shape, out of sorts, out of hope. Knowing what your monthly salary is, and sticking to it, no matter what, gets you and your business into shape.

She kind of thought I was crazy, or stupid, when I gave her the assignment. She did it imperfectly at first, and then she started doing it perfectly, and then, all of the sudden, she got it. It all became clear to her. It is the simple and mindful acts, taken consistently, that propel us forward in our lives, and in our businesses.

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Date night with your finances?

March 28, 2010

Have you ever noticed that most people follow the statement “I have to pay bills tonight” with the word “ugh” or “yuck” or, something that rhymes with “yuck”? Those are often the same people that will sheepishly tell you they haven’t reconciled their checkbook any time in the past decade. And those same people probably couldn’t tell you how much they spend on groceries every month, or eating out, or healthcare.

When you look at the order in which our personal or business finances are done, it’s really no surprise most people consider it drudgery or despise it all. First, hunt and peck and gather everything we need to pay our bills. Second, pay the bills (i.e. give some or most of our money to others). Third, well, there is no third, because by then, we are physically and/or emotionally done with the monthly finances. Many aspire to continue on to: third, update their account balances, fourth, reconcile, and fifth, look at the totals of spending categories. But there’s no time or energy left to do the third, fourth or fifth steps.

My advice: try, just try, to make it fun.

Make it a date night; schedule time every month to just focus on your spending plan and financial goals. Light a candle, open a special bottle of wine, or go to your favorite café. Divorce the bill paying monotony from the important work: providing yourself clarity about your finances by keeping your numbers, looking at your numbers, and planning for the next month. It doesn’t have to be drudgery! Numbers can be fun, when you allow your mind to open to the possibility.