What’s so special about financial awareness that 24 hours is earmarked to celebrate National Financial Awareness Day on August 14?
That’s when business owners, consumers, and others consider the best ways to improve their finances. By using money smarter, they inch closer to financial independence by learning how to make solid financial decisions.
Are You Financially Aware?
Plain and simple, financial awareness means you’re financially literate. It maximizes your success whether you’re the CEO of your home or business.
Here’s a quick quiz to check if you’re financially aware.
- Do you know how to manage your financial resources to make the most of the money you do have?
- Do you seek ways to save finances?
- Are you fully aware of how you earn and spend money?
- Do you protect the money you already have?
- Do you borrow money at the appropriate time?
Did you answer “yes” to all of these questions? If so, then you are financially aware. If not, don’t worry, you can easily get there.
When you fail to develop financial knowledge and skills, you feel like a fish flopping around aimlessly on a shoreline. That’s because when you aren’t in control of your finances, there’s not enough money to retire, credit cards are maxed out, and emergency funds don’t exist.
So, how do you improve financial awareness?
Since everyone uses money, it’s important to develop core financial skills so you thrive rather than survive.
10 Ideas To Improve Your Finances
You should make it a habit to educate yourself throughout your lifetime on how to navigate in a financially-driven world.
On National Financial Awareness Day and throughout the year, you can take an in-depth look at how well you manage your finances.
In addition to devoting one day to analyze your finances, we are sharing with you 10 tips so that you can establish better money habits and build a prosperous financial future.
1. Improve your credit
If you apply for a business loan and are turned down, you will find out quick enough about the importance of your credit score and history.
New business opportunities, the ability to acquire inventory, and expand your operations can all hinge on creditworthiness.
Paying your bills on time, establishing lines of credit with suppliers, and applying for a business loan are examples of how to boost your credit score and build a credit history.
2. Reduce debt
Decreasing debt may seem like a no brainer, but uncontrolled debt is like a runaway train. Unless you apply the brakes to curb debt, you’re headed for financial disaster.
To keep spending under control, you can transfer balances to consolidate debt or get a fixed payment loan to pay off debt quicker.
Remember, your goal is to find actionable ways to control spending so debt doesn’t overtake your pocketbook.
3. Create a budget
You can control spending by setting up a budget to make sure income exceeds expenses.
To help you make that happen, accounting software is an invaluable tool when creating a budget. When you pay bills, you can allocate expenses to find out where you overspend. Then, going forward, you can see problem areas that need attention.
If this is your first time setting up a budget, it’s a good idea to go back 12 months and enter expenses and income. A year’s worth of history makes you financially aware of how well you manage money.
Entrepreneurs know it’s a better financial decision to keep personal and business expenses separate when running a business to avoid the risks of commingling funds.
Likewise, customers have a more professional view of your business and your chances of getting a loan application approved increases. Plus, a business checking account simplifies gathering information to prepare annual tax returns. Depending on the type of business checking account you set up, you can withdraw cash at ATMs, pay bills, or transfer money using a smartphone.
While you’re at it, open a business savings account to deposit any surplus you have in your business checking account. You can save for unknown expenditures that crop up in the future.
5. Prepare for taxes and increase income
Many business owners are unaware of common tax deductions which could save them tax dollars. By planning ahead and taking advantage of these legitimate deductions, it’s possible to reduce your taxable income and thereby pay less tax.
This is an active way to increase your income without generating additional revenue.
6. Get a business loan
Borrowing money may be the last thing on your mind when, in fact, applying for a small business loan can help your business succeed. An infusion of money via a business loan can provide sufficient cash to expand your business or provide more working capital.
For example, rental space at a bargain price and ordering inventory in bulk may be once-in-a-lifetime opportunities you can’t pass up. A small business loan can help you take advantage of these opportunities, which will, in turn, benefit your finances.
7. Improve cash flow
If cash stagnates rather than flows, you can’t pay your bills, employees, or suppliers.
When that happens, business owners either close their businesses or find ways to improve cash flow. A proven financial awareness tip is to contact a professional accountant who can help you learn the importance of cash flow management. If hiring an accountant doesn’t fit within your budget, there are some ways you can manage cash flow.
8. Make investments in your business
At some point, most business owners who are serious about growing their businesses allocate cash for investments. They may need to purchase equipment, hire additional employees, improve technology, or market their products and services.
When the added cost generates a positive return on investment without working capital taking a hit, investing reaps tangible financial rewards.
9. Have your attorney draft a power of attorney
Along with business succession planning, a power of attorney legally appoints an agent to handle your personal and business affairs should you become incapacitated.
Without a POA, you put your finances in serious jeopardy when business partners and family members can’t act on your behalf. You can work with your attorney to clarify the scope and limitations of your agent’s responsibilities.
These simple forms aren’t expensive and lessen stress when you’re unable to make decisions.
10. Become educated about finances
Brush up on financial awareness by visiting financial websites, like CaminoInsight, where you can learn about identity theft, the importance of a good credit rating and scores as well as financial information for students.
By exploring these financial resources, you can set financial goals, assess your financial well-being, and get answers to questions to make informed decisions to manage your money.
It’s Important to Implement These Financial Tips
Whether you stash away cash regularly, apply for a business loan, or take steps to improve your credit history, you’re well on your way to growing your financial awareness skills.
Remember: The more knowledge you have means you’re better equipped to perceive what financial changes you should and can make.
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