We have put together 10 easy-to-follow tips to help you:
If you are finding yourself perplexed or lost on where to start with a certain sector of your finances, taking a visit to the library, listening to podcasts or checking news outlets updates can be an excellent place to start. Becoming educated on areas in your finances that you are struggling in will help you to gain a better understanding of how to confront it, therefore improving your finances. Whether you are needing insurance, looking to improve investing within your business or struggling with boosting your credit score, education is never a bad idea as you can never be over educated!
“Beware of little expenses. A small leak will sink a great ship” – Benjamin Franklin.
Creating a budget is a great way to handle your finances, this is a plan for how to spend your money each month based off of how much you or your business (Insider, 2017) Determining your income is the first step to a successful budget plan, be realistic and subtract your expenses from your income to work out how much discretionary funds you have to spend. A method to work out how much you earn and spend is by tracking your expenditure over a monthly basis and tracking how well you stuck to the budget. Without tracking and planning where your money goes every month you could be missing out on valuable opportunities for saving money and investing in your business where it needs it most. In terms of a business budget, it will help you to forecast what money to are expecting to earn, you can see where you are going wrong and what services/bills you need to cut down on and finally you can plan where you want to spend your money.
Getting in touch with the companies that take the largest fractions of your monthly outgoings such as your phone or energy providers is a solid place to start when it comes to improving your finances. With several different alternatives for the providers that you use when it comes to your most important bills, there is always a large chance that you are paying too much and that you can get a better deal. The companies that you have continually used may not be the most cost efficient anymore and most companies strive to offer new customers a better deal than they had before. The average household in the UK can save £300 per year by switching gas & electricity suppliers (Ofgem), so envisage how much you could save for your business; discussing the rates of your providers competitors to them directly can often result in them matching the rates as they would not want to lose your custom.
Increasing your credit score can help not only you, but your business in a number of different ways. It can help you to secure lower interest rates on credit cards, loans, mortgages and other borrowing practices that you may need. To get on top of your credit rating, it is best to start off looking through your credit reports and making notes of things that have affected it negatively. Some of the best credit bureaus are Experian, TransUnion and Equifax; once you have gained access to this and determined where you are going wrong, it may be your payment performance, CCJ’s or even the types of accounts that you file. Sharing your company’s information so that CRA’s can validate your data can help to boost your score, also only submitting credit applications when it is absolutely necessary is a great way to stop hard searches showing up frequently on your report. Singing up for alerts will also aid you to keep on top of your credit report, notifying you of any changes.
One of the most praised and important practices that you should implicate into your financial set up is a savings account. It can be challenging to get into the routine of putting money in reserve and not spending it, but there are several different Banks with great interest rates which will give you great results on your savings. The benefits of a savings account are not just limited to helping you not spend money, but they provide a financial cushion for when business is in downtime, the more savings that you have also mean more chances for borrowing to be successful when needed in times like these. A tip for savings consistency is setting up a direct debit each month which allows an automatic transfer of an amount of money you decide yourself to go straight into your savings. The money put aside will then grow by itself giving you larger amounts of money to invest in the future to help expand your business.
There are many perks and benefits to switching your bank account over, such as better overdraught facilities, access to better savings rates, reduced overdraught fees, better advice and support with your money and even cash bonuses for switching and cashback on purchases. Researching different account providers and comparing the benefits is a great place to start, investigate what your current bank is doing for you and observe which banks would benefit you and your business the most, you may be surprised at how much more suited a bank is to the one that you are with currently. Switching over your bank account is easy, it is a quick process that does not take more than 7 days making it flexible to customers whether it’s a personal or business account. If you have an overdraught, this can often be transferred over to your new bank provider, so it is always a good idea to find an account with low overdraught charge rates.
Investing can appear intimidating, but it is now made more accessible. Investing in the stock market is a great way for you or your business to grow it’s wealth on the side. Enrolling in classes or reading guides can be a great place to start with investing, as knowledge is very important, if you do not have time or the resources to do this yourself, hiring a financial advisor or a trusted broker to take care of this for you is also an option. During 2020, the global market cap soared to a record $95 trillion (Fortunly, 2021) which proves the incredible amount of opportunity in investing. Many small to large corporations are putting aside money for investing in high-yield securities such as speculative stocks due to it being a great opportunity for you to earn money to put back into your own business.
The benefits of planning are endless, whether it’s planning how you’re going to grow your business or how much money you want to make; it is essential for taking control of your finances and accomplishing your goals. Creating a timeline for your largest goals will help you to visualize how you are going to achieve them, so creating one for your finances is key. Including any key events such as purchasing a new office, money you want to set aside for Research & Development or Employee Expenditure is a good place to start and being realistic is also sensible. Some benefits of having a financial plan are that it will allow you to correctly manage your cash flow, reduce risks of large losses of money, track progress and it will aid you in making investment decisions.
One of the most expensive and financially detrimental things that you can do to yourself and your business is to carry around a lot of debt. Numerous credit cards and loans have extremely high interest rates so if you do not keep on top of them, you can end up bombarded with unexpected costs that add up! Paying the minimum amount of your debts will not help you quickly, and you will still end up paying out more than what you borrowed due to interest – transferring high-interest debt to a low-interest credit card (balance or transfer card) and setting up a direct debit to pay your debts every month is key. You should continually pay off the debt with the highest interest first and then move onto the next that follows. Using your financial plan to determine what extra money you have will help you to pay off debts, working this out will be beneficial to you and your company in numerous ways as your debt can then be paid off quicker.
Tax deadlines can be undoubtedly easily forgotten when it comes to your business’s expenses. Failing to meet your deadlines for filing tax returns and payments can result in fines and interest. These are the types of cost that you want to actively be avoiding as when they add up they can be very hefty so therefore keeping accurate and up-to date records will save you and your business, time and money and ensures that you are only paying the tax that is applicable for your business, and none extra. Seeing what tax discounts or schemes are available for your business is also a good idea, doing this via researching or checking the government website is a good place to start, if you have an accountant, they should be aware and up to date of any new schemes that are relevant to your business.
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