Making a money mistake is the easiest thing in the world to do, and a lot of the time we don’t even realise we’re doing it. Some of the worst mistakes are common, and these all add up to making life more difficult in the future, even if you don’t realise it at the time. Avoiding common pitfalls is key if you want to be more financially comfortable in the future. Below you will find some of the most common money mistakes we make, and ways to avoid them.

Not budgeting adequately

It’s important to be realistic when you’re budgeting, and in order to do that you need to be honest about your outgoings and the amount you need to live comfortably. Setting yourself a realistic budget means you won’t be borrowing from other sources and having to pay it back out of your wages again, which simply sets you back on the wrong track. Be honest with yourself and set an accurate budget and you will find you avoid this pitfall easily.

Resorting to credit

If you find yourself resorting to credit in order to make ends meet, then it’s time to look at your monetary situation seriously. Too many people rely on credit in order to go about their daily business, and whilst this is a quick fix to a problem, the only result is dire straits in the future. This is one of the most common money mistakes people make, and it’s important to think ahead in this situation and get help or ahead quick.

Drawing money from credit cards

You will pay a ridiculous amount of interest if you draw cash from a credit card, so if you do use your plastic, keep it for purchases only. The interest on cash drawn is usually substantially higher than that of purchases, and will be allocated first on your bill, meaning you’ll nearly pay back double of what you borrowed in the first place.

Blowing all your wages in the first week

We all know the feeling of your wages hitting the bank – you’re rich! Well, you are for that day, but do bear in mind that you need to make this last for the rest of the week, for some of us, fortnightly, even monthly. One of the most common money mistakes people make on a regular basis is getting the money red mist when they get paid, and spending too much in the first few days after pay day. Self-control!

Not putting money in high interest savings accounts

Many people don’t bother to research their options with regards to savings accounts, and just go for the easiest option. This is a mistake because you could be missing out on a higher rate of interest on your savings, which is money in your pocket at the end of the day. Do your research and seek advice if you need it.

Avoiding common money mistakes is just good common sense, and if you can manage to side-step these drawbacks, you will be much more comfortable as a result.

The team at IQ Accountants know all too much about common money mistakes and are here to help make sure you don’t make any. We prefer to see our client’s happy and enjoying life without the burden of money troubles. If you need help with accounting & bookkeeping, taxation services, or any business services, call our amazing team today on 5576 0011. Let us take a load off!

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It’s never too young to start

We all know the importance of sound financial planning when we get older, because basically we need to make our money last and stretch in order to make ends meet, but it’s also important to realise that instilling a sense of monetary worth into our children can help them develop a more positive relationship with cash as they get older. There are a few key financial lessons kids should learn early on, and this can be done through games, lessons, and fun activities, so they learn without even realising it. Helping them develop a mind-set that money is important and shouldn’t be splurged is crucial.

If you are keen to advantage your child to understand the value of money, to help them in their future, here are a few lessons you should be helping them understand early on in their lives.

The value of money

Of course we want to spoil our children, they’re our little darlings and they deserve the best, but giving them everything they want can be unhelpful in the long run. Developing an understanding that money doesn’t grow on trees is important early on, and one of the most important financial lessons kids should learn is that in order to have nice things, we have to sacrifice a little by working for it. Avoiding spoilt child syndrome is key.

If you don’t have the money, you don’t get the treat

Giving children spending money each week, which they earn by doing chores for example, is a great way to develop independence, and also helps them understand that you need the right amount of money in order to have the things you desire. For example, if they want a new game, they have to save their spending money, and not borrow it, which helps them avoid a credit focused mind-set later in life. Helping them avoid the idea that if you want something you just put it on a credit card is one of the most valuable lessons you can teach them. Being in debt is no fun!

Budget, budget, budget

Making your money last the amount of time it needs to last for is key. Another important one in the list of financial lessons kids should learn is just how to make money stretch. Pocket money is again a good way to do this, and giving them a set day as to when they receive it, and not giving extras to top it up will help them understand that what they have has to last.

The important difference between ‘I want’ and ‘I need’

These two beasts are not the same, and it’s important to help your child understand the difference between the two early on. One of the most important financial lessons kids should learn is that wanting something is definitely not the same as needing it, and that things you want should only be bought when you have the adequate money to do so, with needs always coming first.

Money isn’t everything

Financial security is extremely important in life, it’s how we make sure we have enough money to pay the bills and put food on the table, but having a huge amount of cash doesn’t guarantee happiness, and this is something we should be teaching our kids early on also.

The above five suggestions are some of the most important financial lessons kids should learn as early as possible, and if you can help instil this mind-set, you can be sure they will have a happier, healthier relationship with money in the future.

At IQ Accountants we’re all about being smart with money, and think it’s a great idea to learn as early as possible the importance of money and savings. If you’re not that great and need a little helping hand with money and numbers to get your finances in order, we can provide the key accounting and business services advice and support you need. Call us today on 5576 0011.

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You may be asking, what’s so important about cash flow? That’s a good question, with a lot of answers. Having healthy cash flow in a business is probably one of the smartest decisions you can make, especially if you working with a small to medium sized business. You may be really profitable on paper, but having cash flow is the proof that your company is actually succeeding. You’ll need cash flow to be able to invest quickly and borrow money at lower interest rates, two things that are sure to keep you neck-to-neck with the competition. So, how are you going to ease your business cash flow?

The first thing you need to do to ease your business cash flow is understand what it is exactly. A lot of new businesses think that they can take a quick look at their profits and earnings and know the exact state of their cash flow. Not quite. A few more numbers go into the Profit and Earning statement. You have to consider that the P&E accounts for transactions done on account, transactions that will take place but haven’t yet (like paying your employees), depreciation, etc. Cash flow only records the actual movement of cash in and out of your business. So, a cash flow statement won’t record when you purchase new office furniture on account, but it will record you’re expending the cash to pay off that furniture.

Now that you understand cash flow, here are our tips to easing your cash flow so that you can use that hard-earned profit to expand your business or make healthy payouts:

1. Collect your receivables! This seems obvious, but it can go overlooked quite easily. When you are looking at your P&E statement, you can see where you performed a service or delivered a good, and what you expect your client to pay you for that good. That’s great on paper, but you haven’t actually made any money until that client gives you the cash. So the first way to ease your business cash flow is to actually collect what is owed to you. There are several ways to give your clients incentives to pay you quickly: have a “bonus” or discount option for quick payments, make it easy for them to get the payment to you either by having a designated mailing location and working through one bank, or using an online payment method.
2. Evaluate the credit worthiness of your customers. When your business was starting up, the bank certainly did a credit check on you to see how likely you were to pay back the money they loaned you on time. You get to do the same thing for your customers. Before taking on a new account, run their credit and do background checks to make sure that they are going to be a responsible party. Not doing so is the same as irresponsible lending and it could give you a lot of problems in the future.
3. Expand your business. This can be a double edged sword, so be careful. Any business expansion is going to require cash, but it is also going to increase sales and bring in more money. Make sure that you are doing your research and expanding in a prudential manner so that you aren’t investing more money in the expansion that you are going to get out of it. Expanding your business means that you should be gaining more customers or more lucrative customers, who eventually bring in that cash!

Ultimately, there are a lot of options to ease your business cash flow. We’ve detailed the top three in hopes that you can get a sturdy foundation started and improve from there. Remember that steady cash flow is the life of your business, and without it your company is worth no more than the paper it is written on.

At IQ Accountants, we understand dealing with all those numbers and all of that paperwork can get a bit daunting, that’s where we come in. We’re great with numbers and keeping things in order for businesses like yours. It’s on us to make certain that everything runs smoothly and things are looking good. We love what we do and we love helping people out, so call us today on 5576 0011 and let us know how we can help you!

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