5 Things To Know Before You Review A Budget

Regardless of whether you opt to become a leader, or prefer to remain an involved, concerned and committed member of an organization, your ability and effectiveness will be positively enhanced, and your actual degree of personal responsibility, is often directly related to your willingness, ability and understanding of the essentials of organizational budgeting. While nearly … Continue reading “5 Things To Know Before You Review A Budget”

Regardless of whether you opt to become a leader, or prefer to remain an involved, concerned and committed member of an organization, your ability and effectiveness will be positively enhanced, and your actual degree of personal responsibility, is often directly related to your willingness, ability and understanding of the essentials of organizational budgeting. While nearly every group mandates creating and approving an annual budget, very few do so in a way that actually makes the group more effective. Wouldn’t it make sense, therefore, if groups dedicated time and effort, to training their constituents, and especially their leadership (and most involved and concerned members), to all the essentials and necessitates of the various aspects of budgeting, and how to use it effectively? With that in mind, this article will briefly discuss five things you should know and understand, before you prepare, consider and review a budget.

1. What are the needs, priorities and goals for the organization? Budgets should never be created in a vacuum, but rather must be tools for evaluating needs and priorities, and allocating the best proportion of time, money and other resources, in the most efficacious manner. Since effective groups constantly evolve, this is a significant reason why the method most used for creating budgets (which, unfortunately, is generally merely taking the previous year’s document, and adding a certain percentage). Great budgets address how a group should operate and create plans and programs, etc.

2. Carefully evaluate both revenues and expenditures: Are you optimally and efficiently raising revenues, as well as spending as you should, rather than falling into the trap of, too much, too little or just right? Is your fundraising performing as it should, and running on the proverbial, all cylinders? Avoid being myopic, and just cutting across the board, but rather, use zero-based budgeting, so you

How to Manage on a College Budget

Leaving for campus or college is one of the most exhilarating experience for any youngster. It spells out freedom, new and fun experiences and independence; a different world from the authority of parents. But of course, no coin is one-sided, with freedom responsibilities always tag along; it is inevitable. One of the main challenges for a college student, especially one who is straight from the parent’s or guardian’s care, is managing their finances. It is imperative for each and every student to learn how to manage their budget and live within their means. Poor financial management may lead to dire consequences including bad debt and engaging in various illegal activities. So here are some few tips on how to make your budget work for you.

Some tips on how to move on a college budget :

1. Many are the time that the pocket-money is barely enough to see a student through an entire semester. Of course most of the time when drafting the budget with the parent it is enough for a complete semester with even some little surplus. But a little parting here and there, two or three designer shoes and the money mysteriously disappears. Discipline is key. Make a realistic budget at the beginning of the semester and stick to it.

2. There are a number of companies that have introduced student discount cards. For only $20, students get to enjoy amazing discounts for some of the most basic commodities. And of course for a student, a nice flashy phone and tickets to major events fall in the category of necessities.

3. Eating food in restaurants or cafes on a daily basis may be quite expensive for a student. Most dorms have common cooking areas and hence one need not have sleepless nights worrying about gas and electricity bills. Cooking

Ways To Budget Your Money Carefully

There are literally hundreds of article and books devoted on budgeting money carefully. I will write on two methods that help me budget money carefully in hopes that others may be able to use this knowledge to help them in their future endeavors.

Method #1: If You Use A Credit Card, Always Check Your Statement Online At Least Once A Week

Most Americans probably own and use a credit card whenever they make purchases, either because it’s convenient and/or because they can get reward points for it. Most Americans are probably aware of the countless stories and articles about credit card debt. However, most credit card debt could be avoided if one pays attention every week to their credit card statements every week.

Whenever I look at my credit card statement every week, I can see how much my balance is as well as what I am spending my money on. When you take a look at what you are spending money on, you can see what expenses you are acquiring that are not always necessary such as eating out or buying things you might not need. It is always important to keep track of your purchases so you can understand where your money is going and if you are making purchases that you can try and trim down a little. The main takeaway from this method is always be aware of how much you are spending.

Method #2: Always Be Aware Of How Much Money Is In Your Bank Account

Most banks will allow you to see your statement online. This is very useful as it allows you to access how much money you have in your account at all times. You should always be aware of how much money you have so that you know how much you can spend. Financial

How To Budget Your Money For The Long Run

It is very tempting to spend your money without a second thought, but when you do this, you affect more than just your current status; you actually put your future in jeopardy. A person who cares about the future will take every measure to try and secure that future financially and this makes budgeting very important. Contrary to what many people think, you do not need to be a genius for you to be in a position to handle and manage your money. You simply need to put a few things into perspective and you will have an easy time putting your money into good use.

Know your current financial status

Before you can even start planning for how you will spend your money, you really need to know what your current status is. This means taking a closer look at your debts and even expenses. Student loans, home loans and credit cards should not be forgotten including any other kind of debt you might have. When you know where you stand, you get a clearer picture of what needs to be done. You then must calculate the fixed expenses and enter them into your budget before then creating a strategy on how you can start paying up debts and managing extra expenses without getting yourself into more debt.

Go through your monthly spending

Now that you know what your real financial status is, the next thing that you should do is to take a look at how you spend your money on a monthly basis. You will be surprised to find out that poor spending is probably the reason why you have not managed to make any savings. The best you can do is to make a list and then get down scrapping out unnecessary spending. Budgeting means living within your

5 Reasons You Need To Save Up Money for Your Future

At the end of every month, it’s always the same question – How much did you manage to save? But then, the thought also crosses your mind… Why the need to save, when you earn to spend? If you find yourself cash strapped, there’s the always the option of borrowing some money.

Different people save for different reasons. We’ve discussed 5 reasons you need to start setting aside a few dollars each month.

1. Emergency Funding –

Emergencies are unexpected and uncalled for. A family member might take ill, your roof might start leaking or your drain pipes might get clogged, your car might be involved in an accident or you might have to make an emergency trip. It’s worse if you get laid.

It is impossible to tide over these unexpected expenses if you don’t have any savings to fall back on. So, that’s one reason you need to start saving money.

2. Retire in peace –

This is why most people save money. After working everyday of your life, you dream of living those days of retirement in peace and comfort. You don’t want to be paying up debts until the end. Neither do you want to take up a part time job to make ends meet for your family.

You can always consult a financial advisor or coach and chalk out a savings plan for your retirement. You can invest your money in places with high returns.

3. Fewer debts –

Credit is easy to obtain today, but it’s not without the condition of repayment. If you keep borrowing for every unexpected expense, you take on more and more debt making it hard to meet those monthly payments. With reserve fund, you can pay up a few expenses against your credit card and the rest from your savings. At the end of it, you will

How Can You Save More Money

If you want to save more money, you have to start using your common sense. If you are trying to keep up with the Jones’s, stop; because you will go broke. Always try to live within your means, or better yet, try living slightly below your means.

I’m not talking about going to Sam’s Club to get the free food samples that they hand out and consider that your super. I’m talking about taking an assessment of where you are spending your money and whether it is totally necessary to buy the things you are buying. It boils down to your needs versus your wants. Just make sure that the things you buy are truly important, and don’t spend more than you make.

I have friends and family members who will go out and buy their kids a pair of basketball shoes that cost, are you ready for this, $650 dollars or more. There is a big disparity in the cost of basketball shoes; they could have purchased a cheaper pair in the $50 to $100 dollars’ range, but if you listen to your kids, quite naturally they are going to want the most expensive pair.

I played basketball, and believe me, if you have talent, the shoes aren’t going to make that much of a difference. Try steering your kids away from designer shoes and clothes. This buying the most expensive scenario happens often to families that can least afford it.

Whether you want to buy a new laptop or save for retirement, it is vital to learn money saving techniques. People, who are trying to lose weight, tend to be more successful when they alter their lifestyles, instead of trying the latest diet pill.

Similarly, people who want to reduce their outgoings find it easier to save when they adjust their lifestyles

3 Reasons Why You Need A Budget In Your Business

The first month of the year is over and now it’s time to compare how you did last month. But you can’t because you don’t have anything to compare to since you haven’t yet completed your budget for the year.

It is important that you prepare a budget, no matter how small or large your business is. It’s almost impossible to experience growth and profitability without one.

Here are three reasons why you need to have a budget for you business.

1. Plan for Profit. The number one reason you need a budget is so you can plan for profit. You can’t just say “I’m are going to make $500,000 this year” without documenting how you are actually going to reach it. See within your budget you will have detailed out where this income is going to come from such as the different services and/or products you offer. You will break down which months will have higher revenue then others so that you can plan your spending. You with chart out the new opportunities and program launches costs as well as the offsetting and expected revenues. Listing out all of the way you can bring in revenue will help you determine if you goal is actually achievable or not.

2. Avoid Overspending. The second reason you need a budget is to avoid overspending. Having a budget helps keep you on track with your spending. When you do not have a budget you are more likely to spend money whenever you want just because you have it. Then when costs come up that need to spend money on you can’t or you scramble to try and generate or “find” it because you don’t have it. Once you get into this cycle it is very hard to get out of it. Having a budget forces you

3 Simple Steps to Reduce Your Taxable Income

“The hardest thing in the world to understand is the income tax.”- Albert Einstein

Albert was right: The U.S. tax code is difficult. In 1913, it was 400 pages long. Since then it’s exploded to 73,954 pages of complex language designed to extract as much money as possible from your wallet.

Who reads all of that? No one. The code is so complex that U.S. tax preparation is one of the major growth industries… not just in America, but globally.

But while you must pay the tax man his due, there are some important escape hatches for Americans. It may be too late for 2014’s tax year, but there’s plenty of time to prepare for next year… if you start now.

The Golden Rule: Reduce Your Taxable Income

The fundamental element of any short-term tax strategy is to reduce your taxable income for the calendar year. There are three basic ways to do this.

1. Gifting

Property acquired by gift or inheritance isn’t included in the taxable gross income of the beneficiary. That makes gifting an ideal way for a family to save tax.

For 2015, you can make tax-free lifetime gifts and bequests of up to $5.43 million. (For gifts or bequests to U.S. citizen spouses, the lifetime limits don’t apply.) Due to the concept known as “portability,” a surviving spouse can use a deceased spouse’s unused gift/estate tax exclusion. You could allocate some of your estate to your heirs, perhaps by creating a tax-deferred offshore private insurance policy.

Bear in mind that the first $14,000 (or $28,000 per married couple) that you gift in 2015 is tax-fee, and doesn’t apply towards your lifetime limit.

Payments made on behalf of another person to an educational institution for tuition, or to a medical provider for medical costs (including insurance), are also excluded from the gift tax, and don’t affect your

Tax Tips For Investing In Mutual Funds

There are some tax downfalls linked with trading mutual funds that should be given consideration. Awareness of these downfalls will reduce taxes and stop surprises from happening while visiting your CPA firm.

One thing to be aware of is, that it is possible to sell a mutual fund unknowingly or what one client called a “Stunner” sale. This may arise if your mutual fund has an option to issue checks out of your investment in the fund. Whenever checks are deducted from the investment, a partial sale of the investment is being executed. A taxable gain or deductible loss arises from each check written, with the exception of funds that have shares that are always one dollar values (e.g. money markets). Furthermore, each sale needs to be listed on the annual income tax return as a line item.

Some clients are also surprised when taxable sales results from rebalancing the portfolio of fund investments. Most mutual funds allow investors make modifications and allocate the way the account is invested. Rebalancing and reviewing an investment portfolio is a basic principle of money management. The rebalancing and transferring of money from one mutual fund to another mutual fund is a taxable sale of the mutual fund that was transferred.

Maintaining records is also important. Investors should save all the official tax receipts and correspondence such as Form 1099-DIV, statements and trade confirmations. The statements are helpful when the time comes to calculate the costs of investments that have been sold. Most fund companies allow investors to reinvest their dividends to purchase additional shares or fractional shares when the dividend is paid. These documents are necessary to calculate the amount of taxable gain or deductible loss when the investment is sold. This paperwork has extra valuable during an IRS audit. Some clients receive statements at the

Tax Consideration of Converting Your Home Into A Rental Property

Analyzing the decision to rent the property combined with the prospect of selling the home down the road may affect your decision. We usually look at the hypothetical sales transaction from the perspective of selling the property at gain or loss.

When a personal residence is sold at a gain, the transaction may qualify for the “home sale tax exclusion.” To qualify for this the homeowner must own and live in the home as the principal residence for at least two of the last five years. When the taxpayer/taxpayers meet all the requisites for the exclusion, they can exclude $250,000 gain if they are single and they can exclude $500,000 gain if they are married.

When a personal residence is sold at a loss, tax law considers this a non-deductible personal expense. To deduct losses on the sale of property it must be considered a business or investment property. Converting a personal residence into a rental property means that it is business property.

This is a pretty easy tax planning situation. Some taxpayers may consider going to their CPA firm to review the effect of the decision. This will cut down on unpleasant situations later when the returns are being prepared after the events have occurred.

Rental Property Conversion

When someone becomes a landlord the rental income and expenses incurred to maintain and operate the home are combined to calculate the net income or loss. Losses are limited by passive activity loss rules (PAL). Deductible expenses include utilities, repairs, and depreciation.

Depreciation is an interesting concept that may generate losses. For example, consider a home is rented out for what it costs to run it, because the home is located in bad neighbourhood and the owner is waiting for the market to recover. Most people think they would break even when calculating the income or loss,

Concepts To Consider When You Can’t Pay Your Taxes

Not paying your taxes on time entails various consequences. If you are having trouble paying your taxes in full, don’t let it hinder you in filing your tax return timely. Consider paying as large a percentage of the amount owed or borrow money from others in order to settle your tax liability in full. Filing a return and not including full payment can save you large amounts of penalties and fees. Moreover, payment plans are available and being on a current payment plans avoids IRS collection process which may include, property seizures, garnishments etc. Most CPA firms can advise you on these matters.

These are the ordinary penalties:

· “Filing Failure” penalty

5% per month on the amount of tax due on the return to a maximum of 25%

· “Payment Failure” penalty

.5% per month on the amount of your tax due on the return to a maximum of 25%

· Both “Filing Failure” penalty and “Payment Failure” penalty apply

The “Filing Failure” penalty lowers to 4.5% per month and “Payment Failure” penalty is

.5% per month. The combined penalty stays at 5%. The maximum penalty for both is 25%. Then, the “Payment Failure” penalty continues at.5% per month another 45 more months. Both penalties can go to a maximum of 47.5%.

Besides the penalties above, interest is charged on late payments. Also when you are self-employed, you take full responsibility for paying the taxes as money is earned through the year.

Payment extensions are provided when it can be proven that unwarranted hardship exists. Inconvenience caused by paying the tax isn’t enough grounds for unwarranted hardship. The taxpayer must show that paying the tax would cause significant difficulty and/or expense. For example, a fire sale, selling property at an extremely discounted price, since the person faces the difficulty of paying taxes.

When a payment extension is granted, interest is

A Tax Break For Wrongful Conviction Victims

Of all the wrongs society does to those convicted of crimes they did not commit, taxing any restitution they receive is far from the most horrific. All the same, it is heartening that lawmakers took the time to make clear that such awards come without strings attached.

The recently passed federal spending bill includes many ancillary provisions. The portion dealing with wrongful incarceration is a small section, appearing nearly at the end of the lengthy piece of legislation and taking up less than a full page. But the language makes clear that all wrongfully incarcerated individuals, as defined by the law, can exclude civil damages or monetary awards from their gross income, whether they were convicted at the federal or state level.

To a layperson, it may seem odd that this scenario was even in question. After all, if the government incorrectly convicts you of a crime, and subsequently recognizes that it has done sufficient harm to merit making some sort of compensation for the suffering you endured, it seems counterintuitive that another branch of the government would then turn around and demand a part of that restitution back in the form of income tax.

Yet prior to this amendment to the tax code, there had effectively been no rulings and a limited number of cases specifically dealing with the federal income tax treatment of such awards.

This may be, in part, because exonerated individuals make up a relatively small portion of the overall population. That is not to say the problem of wrongful convictions is small. In an opinion column for The Washington Post last summer, Samuel R. Gross cited a study he co-authored showing that just over 1 in 25 defendants who receive the death penalty in the U.S. are later found to be innocent. Gross, a law professor at the University

Tips for Independent Contractors and Self-Employed People on Filing Annual Taxes


Anyone who works for themselves is considered self-employed by the IRS and required to file a Schedule C tax return on all income they receive. That includes everyone from someone already receiving social security who is paid in cash for mowing neighborhood lawns to the person who takes in money through sales, the carpet layer contracting with local stores for installation work and any others who bring in income. Some people even need to file more than one Schedule C.

The secret to making a business work for you lies in keeping receipts for every penny spent so that you can offset that income, and filing properly. Most independent contractors don’t have the time to do regular monthly bookkeeping so they’re stuck trying to organize everything when they tackle that disorganized pile of receipts at the end of the year. And if you know the IRS rules for your industry that can be enough, but you need to know what is considered normal for your industry.

Although it’s easy to find someone to prepare a Schedule C small business tax return for you, unless you know exactly what the IRS expects of a self-employed person that tax return will not be accurate and you’ll never get every tax deduction allowed.

Surviving a tax audit is very easy with organized records. Independent contractors will want to start by following these four simple rules:

    • Never mix business income with personal income and expenses. The IRS can disallow otherwise worthy deductions if you mix them with personal business so always deposit all business income into a separate bank account.
    • Keep a detailed diary of all business miles, especially if you use a vehicle also for personal miles. This is required in order to take the mileage deduction which is often a big one for independent contractors.
    • When deducting meals

Start Planning For Your Retirement Income Now

Here are some of the major ways that retirees support themselves after they say goodbye to the full-time work world.

Social Security

Although the vast majority of Americans above the age of 65 do receive monthly payments from this tax-funded federal program, it’s unwise to plan too heavily around it. In order to remain viable, the system will have to undergo major changes that will likely result in a smaller payout for many future beneficiaries.

401(k)s (and similar plans)

These employer-organized plans-whereby companies deduct a portion of their employees’ paychecks to be withdrawn after they leave the workforce-is one of the most tried-and-true means of generating retirement income. Since the money is deducted before taxation, the employee doesn’t have to pay taxes on it until after withdrawal. Similar plans include the 403(b) for employees of non-profit organizations and the 457(b) for government workers.


An IRA is an account set up directly between an individual and an insurance company using money that has already been taxed. The individual has more freedom of investment with an IRA than with a 401(k), but there’s also a much lower maximum annual contribution. Many Americans diversify their savings by using a combination of both methods.

Company pension plans

A pension is different than a 401(k) in that the employer contributes to the fund directly rather than setting aside a portion of the employee’s paycheck. The employee has no control over how much is contributed or how the money is invested. Pension plans are still used, but they’re considered increasingly dated.


An annuity is a fixed amount that individuals receive every year, usually from a sum of money they’ve set aside for themselves or an inheritance they’ve received. There’s no annual contribution limit (a useful quality for people who’ve gotten a late start saving), but it’s important to be on the lookout for

Merging Finances When You Begin A Life Together

When a couple makes the decision to bring their lives together, it’s inevitable that their financial lives will become intertwined. Even though the sentiment that “love conquers all,” tends to overshadow financial concerns early in the relationship, the reality is that how each partner handles money could have a significant impact on your collective financial future.

This is a more significant issue today than it might have been in the past. It’s more common for couples to choose to marry or live together at a later age than was typical for previous generations. Or, couples may be coming together after one or both partners went through a divorce. In situations like these, both individuals are often bringing more financial assets and their own financial priorities into the relationship.

Here are key topics that every couple should discuss before merging their finances:

Income and expenses

One of the biggest decisions you should agree on is how much of your income will be directed to individual accounts or to a joint account. Individuals who are used to managing their money may want to maintain their account, or have a separate account for discretionary spending. If this is your preference, have a plan for who is responsible for each expense. Opening a joint account that both parties contribute to is a common way to pay for shared expenses, such as rent or mortgage payments, utilities, food. If you decide only to have a joint account, discuss how you’ll handle discretionary spending. Many couples agree to discuss any purchase made above an agreed-upon amount, so both partners feel involved in the decision.

Existing debts

If one or both of you is bringing debt to the relationship, such as student loans or credit card debt, it is important to agree how those will be paid off. Will both of you