Building a budget
A budget gives you control over your spending
Everyone has goals and dreams and a budget is a guide that tells you if you are heading in the right direction to achieve the things that are most important to you. A budget empowers you to see where your money is going, and to redirect it depending on your needs and goals.
The power is in the detail
The first step is reviewing your expenses for the last two to three months and dividing them into specific categories to see where your money is going. If you have not been tracking your expenses, now is the time to start.
To learn more about how to build a budget that works for you, click here for budget how-to's from Consumer Credit Counseling Services (CCCS). Programs like Quicken or Microsoft Money will also help you lay out a budget. To get a quick sense of how far your dollars can go each month, try the CCCS budget calculator.
Compare your current spending to your regular monthly income. How much is leftover each month? How can you reduce your spending to have more money each month to save or direct towards goals such as starting or growing your business?
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Savings shouldn’t be optional
If you think savings is an “extra,” you need to change your thinking. The most important “payment” you can make each month is into your own savings account or plan. Why save regularly?
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It becomes easier as it becomes a habit.
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To be prepared for unexpected expenses.
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To achieve life goals like college, a home of your own, and retirement.
Where retirement planning can fit in
Retirement plans aren’t just for people employed at large companies. Entrepreneurs can set up retirement plans for themselves and their employees.
An Individual Retirement Plan, or IRA, will allow annual contributions and may carry certain tax benefits. Options for small-business owners can include:
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SEP-IRA
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SimpIMPLE IRA
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Payroll Deduction IRA
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Solo 401k Plans
Offering a retirement plan can give you a competitive edge when interviewing prospective employees, as well as provide for your own retirement. To set up a plan, consult a financial advisor, or see the IRS website at www.irs.gov. Remember that while there are a lot of tax advantages to these retirement options, there are also rules and restrictions. Be sure to check into each option thoroughly.
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