Do You Need an Accountant?

November 12th, 2008 — Diversification, Financial Security, Income Streams, Investing, Money, Personal Finance, accountant 

accountingThe average person usually tries to struggle with their finances year after year and only visits an accountant a few days before their taxes are due. By this point, it’s up to the accountant to try to piece everything together and they won’t be able to offer much help when it comes to managing your money. The fact is, most of us could use the help of an accountant or a financial planner. The question is – do you NEED one?

Let’s take a look at a few scenarios that answer this question. Accountants and financial planners definitely serve a purpose but they may not be necessary if you already have a good grasp of solid financial techniques. But, before we go any further, let’s get to the scenarios.

Scenario #1 –

You’re just starting out on your own. By this point in your life, you’ve got a new job, a boat load of student loans and your whole life is years away, right? Wrong! If you don’t have a basic grasp of good financial practices, this is the worst time of your life to sit idly by. An accountant or a financial planner is incredibly helpful during this stage in your life and can start you on the path towards financial independence. If you have trouble balancing a checkbook let alone planning for the future, there really is no question – you need an accountant.

Scenario #2 –

You want to get into investing, but you’re really not sure how to get started. Many people make the mistake of hooking up with a broker that may not have their best interests in mind. You would be better served by visiting a financial planner or an accountant that specializes in handling investments to get an idea of where you need to start and where you want to end up in a few years. By taking the right step at this juncture in your life you can save yourself a lot of heartache and financial woes.

Scenario #3 –

You already have multiple streams of income coming in and you’re pretty much a whiz at finances. In this case, you may not need an accountant, since you’re already capable of handling most things. However, you may want to seek out a financial planner to determine whether or not you’re missing out on some opportunities that could increase your wealth further. If you have not yet diversified, this is a very important step to take. We still recommend using a certified accountant for tax preparation, even if you are a whiz at finances, simply because they have more experience in handling the complex US tax code.

Scenario #4 –

Finance???? I’m lucky to have money by the end of the month! If you’re just getting by, you may not be able to afford an accountant just yet, but you definitely need some help. Your best bet is to visit your local library and start reading everything you can about the art of managing your money. This will help you start out on the right path until you can afford to get an accountant to help you.

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Double the Income or Double the Expense Till Death Do Us Part

November 11th, 2008 — Personal Finance 

marriedGetting married is stressful and emotional, but when it comes to handling finances, things can get really scary. You’ll be combining two incomes in most cases and many people get the impression that they can start spending twice as much. This usually leads to double the expenses and a lot of heartache. If you’re just starting out on your path of wedded bliss, there are a few tips that will help you use these first few years to create a solid income for your future.

1. Business is business.

Too many relationships end up spoiled due to money problems. The best way to approach this is to understand that business is business. Your money should never be handled emotionally. Think of it this way – you are dealing with two banks. The manager at the first bank is sobbing and pulling out his hair. The manager at the second bank is calm and collected. Who are you going to trust more? Find a way to separate your finances and financial discussions from the rest of your life and create a zone where no emotion can enter. They’re cold hard numbers and they won’t appreciate your outpouring of emotion anyway.

2. Start thinking about your future right now.

You may be lost in the throes of wedded bliss, but now is the time to start planning for the rest of your lives. You need to develop multiple streams of income that will make it easier to save for your retirement and achieve your financial goals. Set up a path on paper of where you want your finances to be in 5, 10, 15 and 20 years. Set up definitive goals and then take the steps to make those goals happen. Chances are, neither one of your jobs are going to cut it.

In today’s economy, multiple streams of income are vital if you want to get ahead. This usually means making smart investments, purchasing property that will bring in returns and finding new ways of making your money work for you. If you don’t have the money to invest now, consider taking out a small loan to get started. This is a powerful method known as debt leveraging and it is used by millionaires throughout the world.

3. Avoid the Bad Debt Trap.

Leveraged debt is good debt. Overspending on things you don’t need is bad debt. Learn to separate the two and train yourself to stop before purchasing something you don’t need. Ask yourself – should I spend $5k on a new television or $5k on some stock that is going to pay be back four times over? This makes it a lot easier to get your priorities on the right path.

Too many couples end up trapped in the endless cycle of bad debt. Consider taking a course together that discusses debt leverage and learn more about it as a married couple. You’ll have more time to bond and you’ll be learning techniques that will carry you through the rest of your lives together.

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