By Salim Omar, CPA
What steps have you taken to improve your financial picture for this year? When looking to improve your personal financial situation for the year, it is never too late to begin taking action. Saving more money is at the top of everyone’s New Year’s Resolution list each year, yet only a handful of us put our ideas into motion. Whether you have started to take action or are just getting started, these 10 financial tips will enable you to improve your financial situation before the end of the year.
1. Don’t spend more than you make. It is better to live below your means than right at or above. If you make $200,000 per year or more and you spend every bit of it, you are not well off financially.
2. Create a savings plan. You need to come up with a system that works for you. Many people don’t believe that they can save hundreds of thousands of dollars – but these are the same individuals who believe that they are going to grab that one in ten million chance of winning the lottery. This usually means that the money they could be saving is spent buying lottery tickets. If you would invest $50 every week for 40 years with 9% interest, you could have yourself over a million dollars. If you still fell you’ll have a hard time saving, it may be a good idea to have money automatically withdrawn from your paycheck and deposited into a savings account.
3. Invest in mutual funds. The annual return on investment can be up to 12%, which is the return that the S&P 500 has averaged. Obviously, that is better than your average passbook savings account.
4. Opening a Roth IRA. This is something you can do if you qualify. You don’t have to pay tax on any gains you receive if you follow the rules correctly. Start a Roth IRA for the kids by hiring them when they’re working age, paying them $5,000 a year, and then investing that money in the IRA.
5. Pay off credit cards. Don’t keep open balances on any of your cards.
6. Set up a trust or a will. Only 50 percent of Americans have wills. Set up a trust account for your family and make a will to properly divide up your assets.
7. Open a life insurance policy. If you love your family and/or you have debt, you will get a life insurance policy. There are many options. Only you can decide the right one for you.
8. Take advantage of all tax breaks. Many individuals do not know what tax breaks are available to them. Because of this, business owners tend to be the individuals who overpay their taxes the most. Be sure to review all existing and new tax breaks that come about each year.
9. If you tend on living in your area for a while – buy a house. Not only do you get to enjoy your home, but you are able to build equity.
10. If something sounds too good to be true, then it probably is. In this case, it pays to trust your instinct. If it is too good to be true, then it is. If something makes perfect business sense, then go for it. Don’t hold back.
About the Author: Salim Omar, author of "Straight Talk About Small Business Success In New Jersey", specializes in providing accounting, bookkeeping and tax services to small business owners and professional practices in NJ. Salim's articles are featured in various national magazines including Accounting Today, The CPA Journal, Chiropractic Economics, Wealth Manager and The Two River Times. You may request a free copy of Salim's new special report titled "How To Drastically Reduce Your Taxes By As Much As 62% This Year Alone And Put Thousands Back In Your Pocket" at http://www.OmarGroupCPA.com
Source: www.isnare.com
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