Q: Do you have any year end tax planning suggestions?
A: When I work with my clients, I suggest they work their money, which can include taxes, around their dream life. I want you to be mindful of the tax implications while you work on your dream. With 11 days left in the year, I want to give you some tax planning suggestions that you can do now and some that can wait until April 15, 2011.
Have you heard the saying, “it is better to give than receive”? In the case of charitable giving, you get the best of both worlds. By your generosity, you get to give to those in need and at the same time, receive a tax deduction (if you itemize).
You can donate money or physical items to your favorite charity. You have 11 more days to be eligible for the 2010 tax year.
You can contribute to your traditional or ROTH IRA up until April 15, 2011 for the 2010 tax year.
For Simplified Employee Pension plans (SEP) IRA, you can contribute as late as the due date (including extensions) of your business income tax return.
It’s not too late to do project where you stand for your 2010 tax year. Will you owe the IRS or get a refund? Work with your CPA or financial coach to determine your 2010 standing and be “in the know” before April 15.
What do you want to accomplish in 2011? Do you have a plan to get you there? I suggest you work on a plan that will help you get what you want, while you enjoy life.
The changes with the tax laws are happening so fast. Work with a professional to help guide you on your path to financial peace.
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Q: How do you balance your wildest dreams such as traveling the world with your real world obligations such as parenting?
A: I love your dream of traveling the world. As a parent, I understand the concern you face deciding if your dream is doable now with all the day-to-day activities of parenting. I want to challenge you to consider having the best of both worlds – raising your children and living out your dream. How do you begin to unite the two?
Dream
Visualize traveling the world. What would it look like? Is it every year, every other year or once every 5 years? Does it include the kids all the time, or part of the time? Begin to involve your kids in the process. Cut out pictures from magazines of your next destination and place it where you all can see it every day.
Plan
Do your research of your next destination. How much money will you need for food, transportation, lodging, entertainment, souvenirs, etc? Once you have the total estimated cost, decide how much you can save each month to get you to your goal.
Live
Take the trip and enjoy every moment! By living out your dream, you are showing your kids how they can live out theirs.
Be bold and courageous and go after the life you have always imagined. If not now, when?
Keep dreaming,
Jennifer
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Posted on 12/13/2010 8:00 AM By
Jennifer Jaime
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Q: How much time should a new business owner spend managing their finances monthly?
A: A new business owner has a lot to juggle when they first start out, including their business money. I suggest a new business owner spend 2-3 hours a week, 8-10 hours a month working on their money. If you are a business owner and you struggle to find the weekly time, consider carving out 30 minutes a day to work on your money.
What do you do during the 2-3 hours a week?
- Know your money – Balance your checkbook. Make sure your records match the bank records. You want to make sure you have enough money to cover all bills paid.
- Break-even point - What is the minimum amount each month you need to meet your business expenses? It is important to know your break-even point so you can measure your business results. Are you profitable each month, bringing in more than your expenses or are you just breaking even?
- Purchasing goal – Create a running list of items you would like to purchase as your business grows. As your income increases you will already know what to buy next by using your purchasing goal list.
- Business budget – Create a list of upcoming expenses for the current month and one month ahead. Periodically review your list during the month to make sure you don’t forget any expenses.
- Track your money – It is important to know how your business is doing on a monthly, quarterly or yearly basis. You can use QuickBooks, Quicken or hire a bookkeeper to help keep track of your money.
Spend the time to work on your business and let the numbers tell you how your business is doing. Keep moving forward!
Happiness is not something readymade. It comes from your own actions. – Dalai Lama
Keep dreaming,
Jennifer
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Q: If we let savings fall to the bottom of our priority list it most often just doesn't happen. How do you acquire the self discipline to pay yourself first?
A: I imagine it can be frustrating to not be able to pay yourself first. As the month goes by, many other expenses compete for your attention and the savings account usually gets the short end of the stick. How to do you begin to put savings at the top of the list?
- Set enough aside for spending money. I like to call spending money “just because” money because it will have no purpose other to spend without guilt. Have an amount that you consistently give yourself each month to help you not to overspend in other areas.
- Create a cash flow plan, another fancy name for a budget. The “B” word doesn’t have to be your enemy; it can be your friend. I think budgets have a bad rep because people can feel restricted. Budgets can help you create healthy boundaries with money and help you apply more money to your savings.
- Be realistic. When you set up your budget, be realistic with your numbers. Make sure you have enough set aside for groceries, entertainment, and spending money so it doesn’t compete with the savings account.
I am proud of you for having the desire to pay yourself first. There will be times when distractions keep you from taking care of yourself but I want to encourage you to keep moving forward.
Our greatest glory is not in never failing, but in rising up every time we fail. ~Ralph Waldo Emerson
Keep dreaming,
Jennifer
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Posted on 11/29/2010 8:00 AM By
Jennifer Jaime
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Q: With everyone saying the economy is bad, do you think it is on its way back up?
A: Everywhere we turn we hear the reality of the current state of our economy. There is high unemployment, low consumer confidence and an underlying fear that continues to swirl around us about what is to come. What does the future hold for our country?
I believe the economy is on its way back up. It’s improving because the people of our economy have decided to take action. According to Money magazine, the personal savings rate has increased, going from 2.8% in August 2009 to 5.8% in August 2010. We, the people, are taking charge of our own money regardless of what choices the government makes about our future.
We cannot control the ups and downs of the economy; however, we can choose our own personal economic situation. We can make our money work for us even in the uncertainty of our economy.
I come with a message of hope. Hope that a brighter future is upon us and ready for us to take action.
Most of the important things in the world have been accomplished by people who have kept on trying when there seemed to be no hope at all. - Dale Carnegie
Don’t give up! Begin a life of financial freedom today.
Keep dreaming,
Jennifer
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Posted on 11/22/2010 8:07 AM By
Jennifer Jaime
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Q: My husband is self-employed and wants to ensure he has a savings when he decides to retire in about 25 years. He believes he should start saving into an IRA. We wanted to put $500 in first, then $50-100 a month. Will an IRA allow these amounts, or do we need to save more to start and place more in per month?
A: Thank you for a great question about retirement. It is worthwhile to plan for your future, especially when you have time on your side. When you are self-employed, you have many options to choose from to make sure you are in the best plan for you and your family. There are three things I want you to consider during the decision process.
- Types of IRA’s – There are three types of IRA’s - traditional, Roth or SEP. Traditional & Simplified Employee Pension (SEP) IRA’s might give you the tax deduction now but you are taxed when you withdraw at retirement. Roth IRA’s won’t give you the deduction now but they are tax-free at retirement.
- Know your limits - You can contribute up to $5,000 a year to a traditional and Roth IRA’s. There are income limitations with a Roth IRA ($176K/joint filers and $120K/single filers) and not everyone qualifies. SEP IRA’s will allow you to contribute up to 25% of your business income, not to exceed $49,000 in 2010.
- Where to invest? You can invest your IRA in a bank or an investment firm. It depends on your risk tolerance as to where you invest. The location you invest your IRA will determine whether they allow lump sum contributions or periodic contributions through-out the year. Shop around and make sure you know any hidden fees.
Starting your IRA is a great idea to secure a financial future you desire. Consult with a CPA or financial coach to help you decide the best choice for you.
Keep dreaming,
Jennifer
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Posted on 11/15/2010 12:00 AM By
Jennifer Jaime
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Q: What are the common financial mistakes new businesses make and how do you correct them?
A: I love new businesses and the creative design behind each new endeavor. I find entrepreneurs are so excited about their new venture that they can sometimes overlook certain money fundamentals.
Common Mistake: Business owners take on too much debt to start a business. When you start a business, you have so much to consider – sales, marketing, vision, leadership, money, etc. I would not recommend you add the extra stress of a debt obligation.
Solution: Start small and grow your business without growing debt. For example, if you are going to open a woman’s boutique, start buying merchandise in small quantities and selling at trade shows, online, etc. You want to make sure you have a market and enough sales to sustain new purchases, marketing and growth to a physical location.
Common Mistake: Business owners can make unrealistic cash flow projections. Once you get the sale, you then have to collect the money. Sales and accounts receivable can take time to develop and cash doesn’t always come as planned.
Solution: Have a “Plan B” for your money. If you project you would make $3,000 in the first month but end up making and collecting only $1,500, you will want to make sure you have enough cash set aside to meet your expenses.
For new business owners who are starting out, remember to be aware of the money while you keep moving forward.
Keep dreaming,
Jennifer
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Welcome to my first blog post! I am excited to bring you a safe place to talk about money and dreams. The weekly post is for you and I hope to inspire you to live the life you have always imagined.
Q: I have a dream, and am uncertain how to get there. With everyday life and two young kids, it feels like a someday dream. How can I begin creating my dream right now?
A: You can begin creating your dream by taking it one step at a time. I imagine life fills up your day with appointments, errands, to-do lists and before you know it, days go by without any progress toward your dream. When you take your big dream and break it down into small pieces, it makes the impossible seem possible.
Here are 3 steps to create your dream into reality.
Step 1: Write a list of all the small goals you need to accomplish your dream.
Step 2: Prioritize your small goals. What needs to happen first? When you focus on one goal at a time, it makes the process more manageable.
Step 3: Reward your accomplishments. As you complete each goal, celebrate the progress you make along the way.
Be encouraged on your journey and keep dreaming.
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Financial expert & possibility thinker, Jennifer Jaime, will answer your questions on her weekly blog "What would Jenn do?." Send your questions about money, dreams or life to coach@jenniferjaime.com for a chance to be featured on her blog.
Keep dreaming,
Jennifer
So many times, we are distracted from what we really want from life. Life as we know it happens. We lose our focus with the daily demands and pressures of our wonderful life. We lose sight of the dream that has tugged at our hearts for a long time.
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