Good Personal Financial Habits

If you have ever applied for a loan or mortgage, you know one of the first things the lender looks at is your credit score. Although, it is important to maintain a high credit score, it is just as important to have good credit habits. Good credit habits not only include your payment history, but also your savings patterns and employment stability.

The following is a list of credit do’s and don’ts. If you follow these suggestions and incorporate them into your daily credit routine, they will help you maintain a high credit score and avoid credit issues.

• Review Credit Report – Request a free copy of your credit report annually from annualcreditreport.com. Once you have received your credit report, review it for any inaccuracies and then dispute anything you find on your report that is not accurate with all three credit bureaus (Trans Union, Equifax, and Experience).

• Credit Cards – Try to limit the number of credit cards you have open, and make sure the payments are manageable according to your finances. Although, to maintain a high credit score you should have at least one revolving account. You should also try to maximize your credit scores by keeping your balances below 30% of their respective available limits. Avoid closing credit cards that have historically been paid on time. If you close an account that had a good payment history, you will be eliminating it from your credit score calculation.

• Bills and Obligations – Make sure you pay all of your bills on time, this includes: credit cards, rent or mortgage, loans, utilities, and other monthly obligations. Even though, some of these bills are not reported to your credit report by the creditor, they will still impact your overall financial well-being.

• Create a Savings Plan – If your employer offers a 401(k) plan, it is a great tax-free tool to save for the future. It is also a good idea to create a savings plan that you fund per pay period. If you deposit $25 per pay (assuming you are paid semi-monthly), this will equate to $600 annually. If you make savings a routine, it will benefit you greatly in the future.

• Employment Stability – The fastest way to derail your credit history is the threat of unstable income and constant job change. If you cannot count on your paycheck, your ability to make your regular monthly payments will be extremely challenging.

If you are trying to rebuild your credit after bankruptcy or foreclosure or have had very little to no credit in your past, a good way to start building your credit would be as an authorized user on one of your friends or relatives credit cards, or by opening a secure credit card from a local bank. A secure credit card typically requires a deposit of $300 to $500 to open, but is sometimes the only way to start to establish credit. If you have had late payments in the past, but it is not due to your financial ability to pay, you may want to set up automatic payments for your monthly obligations. This will ensure that they are paid on time and in the long run, this arrangement will have a positive impact on your credit scores

Small Business Owners: Tips for Balancing Your Business and Family Finances

Meeting the multiple demands of a job and family can be challenging for anyone, but for small business owners, the feeling of being pulled in different directions can be especially taxing. With limited time, energy and money at your disposal, finding the right mix may seem impossible – but it doesn’t have to be.

1. Make time to plan and organize. Small business owners often assume multiple roles at work – CEO, office manager and HR generalist, to name a few. It’s easy to understand why your personal finances may not be at the top of your priority list. Instead of multi- tasking, consider scheduling a regular time each month to sit down with your household balance sheet. While this may not be a relaxing activity, knowing your current financial position, and having a plan for the future, can help alleviate stress in the long-run.

2. Communicate with your family. It’s important to keep in mind that your family is a stakeholder in your business, especially if it provides a significant portion of your household income. Speaking openly and frequently about issues you’ve encountered and decisions you’re faced with can help strengthen your relationship with your spouse and children, while also providing you with different perspectives. But, while your family’s needs and wants should always be considered, make sure your final decisions also reflect what’s best for your business.

3. Be realistic. Needs and financial demands change over time. Regularly assess the profitability and growth potential of your business, as well as your household financial situation. If you must make small sacrifices in your personal life, do so, but remember that this works both ways. You may also need to make difficult trade-offs, such as delaying a business expansion in order to make a down payment on a new home or pay your child’s tuition. If you currently have the resources to invest in both, take advantage of the opportunity, but also ensure your actions support your long-term goals.

4. Don’t try to wing it. Whether you’re making decisions for your business, family or both, don’t feel like you need to go at it alone. Talk with other professionals in your network to see what works for them. Consult with a financial advisor, accountant and attorney before you make major financial commitments or sign complicated agreements. And most importantly, treat your personal financial plan and business plan with the importance they deserve – put them in writing. Not only will this help hold you accountable, it will also give you something to refer to when those difficult and inevitable choices arise.

Taking these steps – and feeling confident about your complete financial situation – may help you avoid absolute “one or the other” decisions, and be successful in both your business and personal life

Financial Analyst: A Profitable Career Option for Finance Jobs!

n the current job market, the hottest job position that is more in demand is of financial analyst. A person who can meet the new expectations of the employers in the finance area will surely find more employment and professional growth opportunities.

Who is a financial analyst?

A financial analyst also known as a business analyst is a person who is involved in monitoring the financial movements of a company. The main task of an analyst is to evaluate a company’s financial risk and drafting financial forecasts. With the assistance of these analysts, companies can make well-informed financial decisions, develop cash flows, debt strategies and maintain their budgets.

Industries that demand financial analysts

There are several industries, which require a person for handling various finance related issues. Some of these industries include:

Accounting and Auditing services industry
Aerospace and Defense industry
Banking industry
Biotechnology/Pharmaceuticals industry
Business Services industry
Computer Software/Hardware industry
Construction industry
Consumer Packaged Goods industry
Education industry
Electronics, Components, and Semiconductor industry
Energy and Utility industry
Engineering Services industry
Financial Services industry

Financial Analyst Job Duties:

Evaluate an organization’s financial risk and prepare a report describing financial forecasts, financing options and capital management strategies
Assist in preparing a company’s budget
Determine cost of operations by collecting and analysing operational data
Identify the present financial status of the company by analysing and comparing actual results with plans
Establish various policies and procedures related to cost
Recommend various solutions to improve and manage financial status by monitoring and identifying financial trends
Maintain database by collecting, verifying and backing up data
Develop automated accounting applications with an aim to boost productivity
Keep financial information confidential
Work with company officials to gain a better insight into the company’s prospects and management?

Educational qualifications:

In order to get into this job position, one must have an undergraduate degree in finance, management, economics, statistics and administration. Having certifications and a graduate degree can notably enhance an applicant’s prospects. Furthermore, an internship during studies can be really fruitful in the long run.

Skills required:

Various skills required to become a successful analyst include:

Excellent communication skills including both verbal and written
Detailed understanding of companies
Superior analytical and organizational skills
Project management skills
Ability to create financial models
Ability to work independently and take sound decisions
Better understanding of financial and quantitative concepts
Must be able to manage multiple tasks, projects
Knowledge of computers and other latest technologies

Salary overview

In India, the average salary of a financial analyst is in between INR 3,00,00 to INR 4,00,00 per year. As the experience increases in this job position, the chances of higher income also increases. Furthermore, knowledge of various factors like risk management or control, valuation, SAS, SAP financial accounting, financial modeling, etc, can fetch you a smart salary.

Conclusion:

A financial analyst job is definitely the most lucrative career choice, especially for those who are very good at analyzing financial concepts. An experience in this profile will provide you high income and other benefits. However, strong competition is expected for this job position. A deep understanding of the roles and skills and financial terms along with a relevant experience can boost your chances for getting the job

Personal and Business Banks – Choosing One for You

As you browse various banks to choose the one that fits your needs, take the time to learn about the assistance and services offered because many differences exist. By asking questions, you can learn what financial institutions offer and choose one that matches your lifestyle and investment requirements.

Location and Convenience

The way you manage your money will determine what type of institution you need for your money. If you need an organization with a convenient location to enable you to stop in while you’re running errands or on your way to or from work throughout the week, narrow your search to include only institutions with convenient locations. Don’t forget to consider the hours of the organization, also, to ensure that it will be open when you typically stop in.

Services

Ask about the services offered by any branch you consider using. Compare interest rates for all organizations you consider to enable you to receive the most return for your investment dollars. A full-service institution will likely offer both online banking and a walk-in branch to service customers. Online services should enable you to check your account balances, schedule payments, pay bills, transfer money, and make deposits. Find out if the branch has an ATM available for 24/7 transactions. Ask if the bank makes it possible for customers to use ATMs within the same network in other locations. Many banks provide foreign currency upon request for clients traveling internationally. Ask about the availability of foreign currency upon request, and find out how the branch assists customers traveling abroad.

Fees

Banks levy a variety of fees for their services. Find out exactly what fees you will incur as a customer of any financial institution before you deposit your money. Many institutions have fees associated with accounts. Ask about minimum balances required for accounts to learn whether you can avoid some fees. You may encounter overdraft fees, also. Overdraft fees would occur if your account balance falls into the red because you wrote a check or used your debit card. Some organizations will also charge a specific amount for each day an account is in “overdrawn” status. Most banks offer ATMs for their customers, but find out what fees are involved with using this convenience. It’s common for banks to provide a free ATM machine on-site for the convenience of their customers. Often, you won’t incur a fee for using the ATM located at the branch unless your usage exceeds minimums set by the institution. You can use other ATMs in other locations, but this type of usage will usually incur a fee.

A financial institution’s credentials and reputation are another factor to consider as you weigh the pros and cons of any organization. In the end, you should base your final decision on the branch that offers the most services for the least money, while prioritizing customer service and satisfaction. Any organization with these priorities should be able to take care of all of your financial needs without a problem

Building a Sellable Business: 10 Things Often Overlooked

Eventually, every entrepreneur realizes they cannot work in their business forever. For most entrepreneurs, this is the time they begin thinking of exit. Here are ten things you should think about before that faithful day.

Standardization

The first thing I will like to mention is standardizing services or products. In the onset of a business, an entrepreneur figures things out as he/she develops. As time elapses, the entrepreneur figures out what works and settles into a way of doing business. This usually happens at the $100,000 mark. The problem with this is the knowledge is embedded in the head of the owner. The owner often fails to communicate this knowledge to new hires. There is kind of an “unspoken standard” or “way of doing things”. People learn “the unspoken way” haphazardly. By not standardizing, the owner’s loses 50% of the value of the business when it is time to sell. Nobody wants to buy a business when all the knowledge is in the owners’ head and if they do there are usually lots of contingencies tied to the deal.

Delegation

Most entrepreneurs have this false belief that they are the best: No one can do anything as well as they do and without them the business will fail. This false belief enslaves them into believing they have to work harder than anyone to achieve success. They have a hard time even getting away from their work for one hour. The biggest problem with this, is you limit your business growth. They are people smarter than you and people who can do the job better than you if you just let them. If you have standardized your systems, delegation becomes easier: All the new person has to do is follow the systems you have created.

Knowledge Management

Knowledge management is not an issue that can be ignored in the information age. How we share information with staff, customers and vendors should be very well defined and preserved for consistency. Whether you use an intranet for communication with your staff and external stake holders or simply a cloud database, is irrelevant. What is relevant is that the method you use is efficient in capturing and transferring relevant information.

Innovation

Innovation is the development of a new idea or developing a more effective design or process. Innovation could be in the form of redesigning your workforce, upgrading your technology, restructuring your offerings to match customers taste, etc.

Every product has a life circle. A product goes from growth, to mature phase and finally hits a decline. Innovation is required to stay competitive, if not your product life cycle becomes your business life cycle. Keeping tap of the external environment lets the entrepreneur see what processes, products or services need to be developed. As an entrepreneur, you should be a member of a trade association in your industry, read their magazines, and keep track of new developments. Keeping track of industry trends is important to your future existence. The external environment is consistently changing and the only way to build a sustainable business is to innovate.

Financial Systems

The financial plan of most business owners goes as far as purchasing QuickBooks and once a year completing their tax return. If they are more prudent they might look at the financial reports developed in QuickBooks monthly. While this is better than nothing, business owners can do a lot more in improving their financial position by investing in better financial systems. For instance what controls do you have in place to ensure the information in QuickBooks is accurate? Just like anything else, if you put garbage in, you get garbage out. Moreover what about the structure of your financial accounts, are they capturing the information you need. When you look at your financial reports, do you have answers to the most critical factors affecting your business? All of these questions are addressed in the way your financial system is designed. Investing in having a professional design the system is worth the headache you will save down the road. Moreover, be careful not to commingle funds and keep your financial records as clean as possible. Good financial records are worth a lot when selling your business.

Planning and Budgeting

Planning and budgeting is the process of telling your business where you want it to go rather than it telling you where to go. Small business owner fall into the trap of thinking that they cannot control what direction their business will take so they do not plan. Planning and budgeting go hand in hand. A budget is simply the numbers behind the plan. Having a plan and delegating the responsibilities of certain aspects of the plan is crucial. With a plan and a budget you can plan and execute on your business goal. Also business buyers like to see a history of business planning and budgeting. This increases the amount they are willing to pay as they are less anxious about being handed down a sham.

Developing key metrics

Once you have a plan and budget in place, you need a way to determine if you are on track. Metrics are used to measure how things are going. Usually metrics are measured against a budget developed using a strategic plan. Monitoring metrics on a regular basis can point you to where your business is failing before it actually happens. Some metrics you may want to track are: productivity rate, net margins, customer retention rate, customer acquisition rate, etc.

Tax Planning

Taxes have a big impact on what percentage of your net profits you keep. Tax Planning should be done before you sell. By structuring transactions differently you might be able to save more money on taxes. Do not wait until after selling to decide what you will do for taxes: When you get your cash after sale, you will be rest assured you have taken the best possible steps to minimize your taxes.

Exit Planning

Most business owners do not plan for the day they will leave their business. They work until the day they determine they are burnt out. The problem with this is the business owner does not leave the business with the best value possible. Working with a consultant should be done couple of years before you plan to sell. If you wait too long your business may become unsellable. The top two factors that affect business value are:

what is going on in the economy and,
how it particularly affects the industry you compete in.

If you hit a time of decline, no one will want to buy your business. Selling in a timely manner, will help you take your time to identify the best buyer who might be able to take your business to a level you were not capable of doing on your own.

Another mistake I see is because business sales rule of thumb are usually based on a multiple of industry revenue, entrepreneurs think they will hold on to the business till they reach a revenue mark and then sell. This is a false thought because you never know what bad fortune may befall your business before you sell. Moreover, if you try to manipulate sales to increase revenue, a smart buyer will discover this during the due diligence process which will kill the sale.

Lifestyle Planning

Business owners have the propensity to work without giving much attention to their personal lives. Lifestyle design should be integrated into the lives of business owners if not burn out is certain. This includes what kind of lifestyle you want after you exit your business. Do not neglect to take care of you or you will burn out and be no good to anyone. You should have a system of rewarding yourself at specific timelines in your business. For instance, I take frequent vacations and this helps me renew the love for what I do.

Do not make the mistake of thinking you will retire from your business and spend the whole day on the beach or playing golf. If you have spent your life working hard to build a business, you will get bored with just sitting on the beach doing nothing. Moreover, people die faster after retirement if they choose to do nothing.