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Tax Investigation: What You Need To Know

Finding out that you’re going to have a tax investigation can come as a shock, especially if you weren’t aware that you’d done anything wrong. In fact, as some investigations are carried out at random you may not have done anything wrong at all.

If you’ve never been involved in a tax investigation before it can be daunting trying to understand the jargon, getting to grips with the HRMC investigation process, and just keeping calm and staying cooperative.

Here is a brief rundown of everything you need to know about a tax investigation so you know what to expect when Mr Taxman comes knocking.

Why am I being investigated?

As we explained in the introduction as many as 3% of investigations are carried out at random, so don’t automatically assume you’ve done something wrong if you get investigated.

Other reasons for the taxman visiting are: running a business in a high risk sector, HRMC being tipped off, poor record keeping, unusual information on the database, unexplained fluctuations in your account, using round numbers in every box on your tax return, or more complex issues such as non-domicile status.

What happens if I am chosen?

Tax inspectors choose their own cases and after you have been chosen your account will be looked at so that the inspector can gain further clues to your tax activity.

The taxpayer is reviewed in depth and then is assessed on their chance of becoming a ‘good result’ for the inspector. You will then be sent a letter informing you of the investigation and requesting all your business records for the previous 12 months.

This is the time to get independent, professional financial advice. Don’t trust what your mates down the pub or at golf tell you about the taxman!

What next?

After receiving the letter and providing your records the inspector will review them and then request an interview with you. Be prepared for this to take anywhere between two and four hours and to find the process very stressful.

You will be asked questions about your records and your business to highlight any issues the inspector may have and to confirm they correctly understand your records.

It didn’t go well. What now?

If unfortunately things don’t go well and errors are found in your records then your inspector will calculate the ‘uplift’ and add it to your account.

The inspector may also consider your records for other years and any interest or penalties you may have. This is where tax investigations become very expensive, not to mention stressful, for you and your business.

What about IR35 investigations?

An inspector will use your invoices to establish how many clients you have. If it is between one and two then this may lead to an IR35 investigation.

They might discuss their findings with Revenue auditors to decide whether to undertake an investigation of your main client in order to discover other clients, or ‘disguised employees’, that you haven’t declared.

Author: By Harry Price; Harry Price writes on all aspects of modern day life and the trials of dealing with the Tax man.

Do Your Homework Before Choosing Your Home Loan

Almost everyone dreams to own a home. Earlier, the situation in India was different. People used to be afraid of availing a home loan because they used to think that only the affluent and those who belonged to the upper class could afford it. But thanks to the liberalisation and increases in incomes, a number of people who belong to the middle class also can decide to go for home loans for buying their homes.

A number of banks and non-banking financial institutions offer home loans. They make attractive offers also to inspire borrowers to avail these loans. The growth of the real estate sector in India has also been phenomenal in the recent decades. However, people should not make hasty decisions while availing these loans. They must gather all the information before choosing the perfect home loan that suits them. They must understand every factor involved in the loans, the terms that are imposed by the lending banks, the repayment options, etc.

SBI home loan, ICICI home loan, Axis Bank home loan etc and some of the loans offered by non-banking financial institutions like LIC Housing Finance Limited are quite popular. Some of these lending institutions provide loans not only for constructing or buying houses and apartments but for other related purposes as well. This means that we now have diverse products that have been designed to cater to the needs of various types of borrowers.

This seems to pose a challenge to the borrowers, but in reality, if borrowers do a good research, they can choose the most appropriate loan. Sites like BankBazaar.com are one-stop shops that provide customers with all the details. So, borrowers can visit these sites for knowing the details and making up their minds. Borrowers should take into account certain other factors also while choosing a property and while deciding on a loan.

Affordability

While choosing a property, customers should check if the property they are considering comes at a price they can afford. Though one may expect higher incomes in future, they should not commit the mistake of considering their future income while choosing the property because no one can predict how future events may turn in a person’s life. So, they should take only the present income into account while choosing a property and an appropriate loan suitable for it.

Choosing the Lending Bank

Borrowers should choose the lending bank that offers the best benefits and the most attractive features. They are advised to do their research thoroughly and shortlist at least 5 lending banks or institutions and study their features. They must study the quality of their services also. They can inquire with the past customers of the lending banks or visit their websites for assessing the quality of services they render.

Rates of Interest

Rates of interest may differ from one bank to another. Borrowers should know these details and choose the bank that offers the best rates.

Tenure of Repayment

Borrowers should choose the most appropriate repayment tenure because they should have sufficient disposable income for their monthly expenses.

In short, borrowers should take time to consider all aspects before finalizing a home loan option.

Author Bio –  S. Muthu Kumara Swamy – I have always been interested in personal finance and had an urge to explore a variety of finance products ranging from loans to investments. As a finance professional in my current role as a Content Manager, BankBazaar.com, I create video content on varied personal finance subjects for TV shows. I also manage online forum activities, social media and interactive online content initiatives.

The Smart Way to Buy a Car

The average American spends around $10,000 a year on their car. That’s a good chunk of change that could be put to better use. (Imagine all the penny candies you could buy! . . . ahem, or the contribution you could make to your retirement fund or mortgage.) If you need to buy a car, pay cash for it—every time. This may sound ludicrous, but it is possible. It just takes a little planning and strategy.

The owners of most luxury cars, surprisingly, are average, middle-class Americans who have been duped by the lie of consumerism. Consumerism tells us that if we drive that fancy, new-smelling car, we will look sexier and feel better about our lives. The strangers who pull up next to us at red lights will be disgustingly envious and we will have an absolutely defining sense of happiness and self-worth.

Really, the only thing we’ll have is an ulcer from all the stress that paying for that car will give us. Here’s why.

How Most Americans Buy a Car

  1. Lease

Car dealers offer leases hoping that you’ll focus on the low monthly payments rather than all the money that you’ll actually lose in the long run. Leasing a car is basically renting a car for a really long time. Leases trick people into thinking that they can drive a nice car for less money than it would take to buy the same car. What people don’t realize is that they actually end up paying more on their leased car, especially if the car gets even slightly damaged or they exceed the mileage limit.

 

  1. Buy It New

It’s become part of the typical American way of life to have a monthly car payment. Because it’s expected, many car buyers figure they might as well get a new car. After all, a new car will be more reliable, right? This may be true in some cases, but you could pay for the repairs on a used car several times over with the money you would save by not buying a new car. The average monthly payment for a new car is around $500. That’s $500 that you have to come up with every month no matter what your financial status is. More good news: new cars lose about 20% of their value as soon as you drive them off the lot and about half their value within four years.

Either way they go—leasing or buying new—most Americans are wasting money on their car. You know who isn’t falling into this trap? The rich. Rich people don’t get to where they are (and stay there) by just trying to look rich. They’re smart with their money, and they’re smart about buying cars. Whether or not you’re rich at the moment you’re reading this, you can be smart about your automobile purchases. Here’s how.

 

 

How YOU Should Get a Car

  1. Save $1500 and buy a used car.

Sound crazy? (And lousy?) Don’t worry, this is just the first step. You can get a surprisingly reliable car for about $1000 (the remaining $500 is for repairs). Most car buyers worry about mileage; many cars run well even after 200,000 miles. The Guinness world record for highest mileage on a car is 3 million miles.

  1. Talk to your Aunt Gertrude

Buying cars from family or friends is the way to go. You’re more likely to get a good deal and less likely to get a bad car. And if aunty does sell you a lemon…well, you know where she lives.

  1. Have the car inspected.
    Before buying the car, take it to a mechanic for a basic inspection. This will cost less than $100 and you’ll know what you’re getting into. Also get a vehicle history report for the car. You’ll want to know what kind of accidents the car has been in, just in case there are hidden damages or the quoted price is too high. Many websites offer free reports or you can sign up on Carfax.com for about $30 a month.
  2. Buy a reputable sedan.

The more common and reputable the car, the less expensive the repairs will be. Small cars tend to be more reliable, while SUVs tend to have more problems.

  1. Create a “OneDayIWon’tOwnaCrappyCar” fund

Now imagine the car you like to have some day. Figure out how much your monthly car payment would be if you went out and bought that car new right now, and save that money in your new fund. Pay yourself as religiously as you would pay off the loan and in a few years you can buy that car—in cash. (That is, if you haven’t realized that driving an old car really isn’t that bad and you could put that money into something with a higher return, like a house.)

It may be easier and “cooler” to run out and get a new car. But there’s nothing cool about a stressful monthly payment. With just a little planning and some sacrifice, you can ensure that you’ll never have a car payment again.

 

Edson Senna is a freelance writer who specializes in finance and law. He sometimes does consulting for lemon law attorneys like Jon Jacobs. In his free time, Edson enjoys biking, hiking, and running.

The Top 3 Post-College Financial Pitfalls

With winter semesters across the country coming to a close, soon-to-be college grads will be anxiously awaiting the end of the spring. Proud students will walk away from their educational institutions with the degrees they have expended blood, sweat, tears—and hundreds of thousands of dollars—to earn, and with a wealth of knowledge and experience that will send them off into their adult lives. In a nation still recovering from several financial crises, and where the cost of higher education leaves the majority of graduates  in debt, the thought of navigating the post-grad financial waters may be a bit daunting for some–  and understandably so. Moving away from home and managing many new responsibilities—financial and otherwise—will be difficult in the beginning, and of course, some will make much worse decisions than others. The following describes the top3 most common financial pitfalls newly graduated young adults tend to make:

Moving Out Without the Means

We are all told early on that living outside of ones means can lead to trouble, but at no other time is this more true than right after completing college. Most grads will want to avoid moving back home after school, but without the help of student loans to pay their housing (quite the contrary—many loans will have fallen into repayment by then) this becomes an especially complicated issue. Rent and student loan payments are only a small portion of the equation—food, utilities, transportation, etc. have a way of piling up on unsuspecting post-grads. If living at home is an option, you will find you have much more financial flexibility when it comes time to take what you’ve saved and move into a place of your own.

Acquiring Loans

On top of the student loan debt many face after college, millions of young adults are also roped into using pricey credit cards to pay their expenses, or large sums of money in the form of personal loans. Incurring this often unmanageable debt sets post-grads up for failure from the get-go. Not understanding interest rates or built in features of a particular plan cost them much more money in the long run. Lawsuit settlements loans are a smarter investment when it comes situations in which the recent grad is unable to work or is involved in debt incurred by legal issues. This type of loan can actually help graduates pay their bills and manage their finances while complex or lengthy settlements are being reached. Avoiding late payments will also improve credit and the standing of personal financial records.

 Avoiding Effective Budgeting

For those who are lucky enough to receive relatively well paying jobs after graduation, it can be difficult to be responsible with your earnings and resist the urge to spend more than what is saved. Keeping a detailed record of your monthly earnings versus your monthly expenses goes a long way in identifying where too much is being spent, and where that much more can be saved. Emergency funds or long term savings will ensure that there won’t be any need to take out expensive or unnecessary loans, which ultimately can help recent college graduates avoid huge pitfalls and start off toward a future of financial security.

 

Author Bio: Hailey Andersen is an avid blogger who enjoys sharing her insights on financial planning and education. 

5 Ways to Save on Car Repairs

Owning a car is much more expensive than you might have thought as a teenager. In high school, you drove the “kid’s car” and filled up a few times, and in college you hardly drove at all because your roommates had nicer cars. But the costs of owning a car start to build once it becomes a necessity instead of a luxury. Car payments, insurance, gas, and repairs add up fast—sometimes too fast for the budget. Unfortunately, some of these costs are unavoidable, like monthly payments or how much gas you use to commute back and forth to work.

Other costs are somewhat negotiable. It may not seem that car repairs are one of these, but in many situations the costs of repair can be prevented or, at the very least, reduced.

Prevent and Protect

It might be a pain in your side to take your car into the shop every 3,000 miles (or however often your owner’s manual suggests) to get that oil change taken care of, but it will be worth it. Your car might not give you problems if you wait until 3,500 miles to change the oil, but that doesn’t mean that your car isn’t being damaged internally. And even if your car seems to be in fine condition, it’s always better to prevent than repair.
Make a habit of taking your car into the shop regularly just to get a quick check-up and make sure that everything is working properly. It might cost you a few dollars to have the mechanics look it over, but you’ll save money in the long run if you can catch major problems before they happen.

Don’t Procrastinate

Small and simple repairs can turn into nightmares if they are not treated promptly. It might seem that you’re saving yourself time and money by putting off repairs like a small oil leak or the laundry list of minor problems the mechanic gives you when you go in for a larger repair, but the exact opposite is true. Small, relatively inexpensive problems will turn into much more extensive, expensive repairs they longer you put them off.
When the mechanic reads you that list of maintenance items, take care of everything you can while you’re there. If your budget won’t let you fix everything they recommend, take note of what you didn’t have them do and figure it into the budget over the next few months. The sooner they get done, the better chance you’ll have of avoiding larger-scale problems.

Choose the Right Mechanic

Don’t settle for the nearest auto shop out of convenience. It can be hard to find a mechanic you know and trust, but take the time to look around. Once you’ve found a business that you feel treats you fairly, make yourself a regular customer. If they get to know your face and car, they might be more willing to offer you deals and advice.

Finding a trustworthy mechanic will not only reduce expenses—it will reduce stress. Knowing you always take your car to the same auto repair shop in Vancouver, even if the drive is farther than the place around the block, will save you the stress of wondering if the mechanics are going to treat you and your car fairly.

Buy Discount Parts

Many car shops will let you bring your own parts in to fix car problems. Find out your repair shop’s policy before you green light the repair. If you can bring in the parts yourself, all you’ll have to pay for at the shop is the labor. There will be a cost for the parts, of course, but you can usually find them cheaper than the high prices a repair shop often charges.

You can often find cheap parts at discount auto stores, online retailers, and salvage yards. If you’re getting body work done on your car, check salvage yards first for bumpers, side mirrors, and even doors or hoods. Go online to find engine parts and belts. Do your research, and with a little bit of extra time you’ll be able to keep the budget balanced and your car in good condition.

Do Simple Work Yourself

Even if you’re not car savvy, it will be worth it to take the time to learn how to do some simple maintenance. Replacing windshield wiper blades, doing oil changes, replacing air filters, and filling your fluids are all easy enough to do once you know how. Find a friend who knows what they’re doing and ask them to give you a few pointers—the money you save will more than compensate for the time and effort you spend doing your own repairs.

Author Bio: Melanie Hargrave is a wife and homemaker whose pride and joy is her family. In addition to spending time with her husband and daughters, she loves being outdoors, playing sports, and finding ways to be financially savvy. In her spare time, she blogs for companies like Minit-Tune in Vancouver.

Make Smart Investments During Your Golden Years

The retirement savings of most Americans suffered a critical blow as the result of the Great Recession. Prior to the collapse of the housing market, most middle class families built wealth by taking advantage of appreciating home values adding to the equity in their homes, recently they saw their nest egg shrink dramatically. Many people who lost their jobs had difficulty finding new employment opportunities, which meant they had to dip into their retirement savings. Even those people who kept their job realized dismal rates of return on their savings because of low interest rates and reluctance to invest in stocks due to market volatility. According the a survey conducted by the Employee Benefits Research Institute discussed in the Wall Street Journal (see Workers Saving Way To Little To Retire), 57 percent of Americans have less than $25,000 in retirement savings, which is a significant increase from 49 percent when the same question was asked in 2008. This leaves the majority of Americans with two choices…work longer or make smart investments during their retirement years.

Tips for Making Smart Investments during Retirement

Your retirement investment strategy does not have to stop working just because you do. Here are some smart investment tips so your money can work for you as you enjoy your golden years.

  1. Preserve as much as Principle as Possible: Traditionally, financial advisors recommended that retirees limited their annual withdrawals to 4 percent of their retirement savings. In today’s low interest rate environment, along with the fact that people tend to live longer now than they did in the past, experts recommend limiting annual withdrawals to 2.5 to 3 percent of principle. Another way to preserve your savings is to invest in high quality stocks that offer dividends or to make smart investments in annuities.
  2. Adjust the Allocation of Your Savings as You Age: A smart investment mix for people who retire at age 65 is 40 to 60 percent in a highly diversified stock portfolio and the remaining portion of the savings in short-term high yielding bonds, cash, and annuities. As you age, you need to shift the allocation of your portfolio gradually until it is 10 to 15 percent in stocks if you are using a conservative investment strategy or up to 30 percent stocks if you have a high level of risk tolerance. Target date funds offer the convenience of automatically shifting the mix of your investments according to a predetermined timetable, which is referred to as a gliding path. Stocks provide the advantage of offering a means to offset inflation.
  3. Make Smart Investments in Annuities: While annuities are smart investments since they offer a guaranteed income stream for life, you need to use them strategically since they do not adjust with the rate of inflation. One option is to use laddering, which involves purchasing small annuities at set intervals, which takes advantage of the fact that the payouts from annuities increase as you age. Another option is to purchase deferred income annuities, which also help offset the effects of inflation.

By making smart investments during your retirement years, you can make you money work for you so you can enjoy your golden years.

The investment writer , Mike Hayes, has always given several helpful strategies in proliferating income and investment. Check out more interesting articles at Nick Scali Limited . Mike also likes great literature and basketball.

5 Reasons Why You Need A Good Credit Score Even When You’re Retired

Retirement is your reward for committing to years of hard work. But while you may be planning to see the world, finally write that book, or just spend lots of time with your grandkids, you may not be giving much thought to your post-retirement credit score. You may believe that, upon exiting the workforce, you can stop worrying about those pesky credit reports, but this couldn’t be any further from the truth.

Still not convinced? Here’s a look at five reasons why keeping an eye on your credit score should still be a priority throughout your retirement.

1. Credit card rewards programs

Many savvy retirees choose to utilize credit cards for everyday expenses, as a good card can enable you to accumulate rewards. As long as card payments are made in full each month, you can avoid interest while still reaping the benefits of buying with credit. If you keep your FICO score high, you’ll enjoy access to the best credit card rewards programs – including platinum-level travel cards. This can make it a lot easier for you to manage airfare, hotel costs, and other travel expenses throughout your retirement.

2. Great insurance rates

Auto and homeowners insurance agencies look to credit scores when quoting monthly premiums. When your credit score is higher, you will appear to be more responsible, resulting in lower overall insurance payments. Even if you have been insured with the same company for years, you should never stop shopping around for a better policy. Keeping your credit score high can help you to find all of the best deals, and will provide you with negotiating power with insurance agents. This is especially important in retirement, as any monthly savings can provide you with more capital for both regular expenses and making the most of each day.

3. Refinancing your mortgage

Although entering into retirement without any debt is a noble goal, the reality of the matter is that nearly 40 percent of senior homeowners, ages 60 to 64, carry a mortgage. This statistic, provided by the research of Strategic Business Insights, makes it clear that retirees should make plans for managing mortgage payments after work. Those with a high credit score will enjoy the luxury of being able to refinance their mortgages, enabling them to save significantly on monthly payments… Ultimately, this could mean the difference between being locked down by your home, or living the dream.

4. Keeping an eye out for identity theft

Retirees who believe their credit scores to be irrelevant may not take the time to review your credit reports each year. This is bad news, as senior adults are often targeted for identity theft, and unless you regularly monitor your reports, you may not realize that you have been victimized. To minimize your risk, be sure to always keep an eye out for suspicious activities or mistakes.

5. Second acts

For many individuals, the meaning of retirement has changed dramatically. Instead of viewing retirement as the closing chapter of life, a growing number of retirees are viewing this as a “second act” – a time wherein they have the ability to pursue their dream careers, and finally do the work that they love. This may mean becoming the author of a children’s book, building custom furniture, or selling crafts and artwork at trade shows. While many second act goals may not require a lot of capital investment, some do. Having a good credit score could make it easier for you to obtain any necessary loans.

Your credit will always matter. By keeping tabs on your score, you’ll enjoy a happier, more peaceful retirement.

Author Bio: This article was written by author and blogger Chase Sagum. Chase covers Economic topics for BestCreditScoreCompanys.com.

5 Ways To Offset The Cost Of Homeowners Insurance

Owning a home means planning on various types of expenses. One of those expenses is the payment each month for homeowners insurance. Homeowners will pay for their homeowners insurance by sending payment to their agent, directly to the insurance company, or having their mortgage company make the payment when it is due. If your cost for homeowners insurance is increasing, then a few tips are available that can help lower or offset the annual cost.

Shop Around

Many insurance companies operate in every state and may offer homeowners insurance. The best thing to do when searching for a new insurance company is to find an independent insurance agent. They are typically licensed with many insurance companies. Many use specific software that gives them a list of companies and their rates for a homeowner’s insurance policy. Homeowners can then the policies to see if any will provide the necessary savings. Make sure to compare policies every few years to see if there is another company that is offering a better price for a policy.

High-Deductible

Consumers can save up to ten percent or more on the cost of homeowners insurance by choosing a high deductible. The deductible is an amount that is deducted from the insurance payout whenever a claim is made by an insured. This means a higher deductible will be less the insurance company will pay out for a claim. This is why policies with higher deductibles cost less than policies with lower deductible. If an existing customer with a $500 deductible raises it to $1500 or more, then the savings will be significant when the premium is calculated.

Add Security Features

Insurance companies offer discounts when a home has certain security features. A basic discount can be provided when doors have a deadbolt lock. Another discount will be provided when a home has at least one smoke detector and a carbon monoxide detector. A home that also has a fire extinguisher on hand is also eligible for a discount. There are simple things that will lower the cost of homeowners insurance if they are not currently applied to a policy. Review the declarations page of the policy for your home and see if these discounts apply.

Combine Policies

A substantial discount is provided to customers of an insurance company when they have their house and car insured. If a home and car is insured by the same company, then a multi-policy discount can be applied to lower the cost of both policies. Insurance companies typically offer a discount that will be in a range between 10 and 20 percent.

Calculate Coverage

Insurance agents often use software that estimates the amount of insurance for a homeowner. If there is no need to have a high amount of coverage for personal property, then a lower value decreases the total cost. However, a homeowner should add up the value of items in a home such as furniture and all types of electronics to calculate a basic value.

Contact a local agent or view policy options online to see if other options are available.

Author Bio: Thomas Jay is a content writer at InsuranceLand.org. Thomas lives in beautiful Orlando, Florida with his wife a two kids. He is an avid sports fan and enjoys blogging on a variety of topics.

7 Tips To Cut Costs For Your Budget

Life would be so much easier if money grew on trees. Unfortunately, it doesn’t, and that means that most of us have to budget our finances in order to make ends meet. But budgeting doesn’t have to be a grueling task that sends you into financial despair. There are plenty of simple tricks you can learn that will help you cut down your budget, leaving you with more money to spend or save.

Know Your Limits

The first thing you need to do is know your income per month. That’s your limit. Even if you own credit cards and use them regularly, don’t calculate the credit cards into your limit, because you have to pay those cards off eventually, and that money will come out of your income. So start your budget with your income.

Calculate the Necessary Expenses

Now you need to calculate your expenses. Only worry about the necessary expenses for now—the expenses that are fixed, because you pay roughly the same amount every month. These expenses will include things like rent, utilities, credit cards, loans, cell phone bills, insurance plans, and internet use. They will also be the biggest drain on your budget, so this is where you will need to focus the most on trying to reduce.

Bundle Your Plans

Look at your necessary expenses, and see if there’s a way you can combine any of them. If you have multiple types of insurance, like auto, home, and health, see if there’s a way to bundle them all into one plan at one company, rather than three separate plans at three different companies. Another easy one to bundle is your phone, TV, and internet. The biggest wireless phone providers also carry plans for internet and TV, and it’s cheaper to bundle everything under one plan than to carry multiple plans.

List Your Needs and Wants

Once you have your necessary expenses sorted out, you can take a look at everything else you spend money on per month. Prioritize these items by making two lists: your needs and your wants.

Your needs list will include everything that you cannot live without, like food and toilet paper. Your wants list will be everything else, from ice cream to video games. You can even break your wants list down even further, separating what you really want from what you would like to have. Use these lists when budgeting the rest of your finances. Plan first for the needs list, and then whatever is left can be used for a few items on the want list.

Use the Credit Card Perks

Make sure the credit cards you use benefit you. Find credit cards with rewards and perks that interest you, and then use those cards in the ways that reward you the most. This might be store bucks, a gift card, or a discount on gas. Whatever the perks, they are rewards you should take advantage of.

Make Shopping Lists

Before you go to any store, make a list of what you need, whether it’s for grocery items or clothing. Know exactly what you need before you enter the store. That way, you won’t get distracted by other items, or purchase products you don’t need. You can also cut costs even further by bargain shopping. You don’t need a particular kind of Dijon mustard when a generic store brand will do. Compare prices, and buy the cheapest you can find.

Save a Little Each Month

If you don’t have a savings account, open one. Then, set aside a certain percent each month to put in the savings account. It doesn’t have to be much—5% will suffice. If you want to put in a little extra on certain months, go ahead, but make sure you put at least the percentage you’ve stated. It may take a while for the savings account to grow, but after a while you’ll have a hefty amount in there you can use for an emergency, or possibly even a vacation.

With these simple tips and tricks, you can become a budgeting pro, always having the money you need when you need it—you won’t even have to plant a money tree.

Author byline:

Edson Senna is a business student. He enjoys applying what he has learned by writing about investing, finance, entrepreneurship, and other business-related topics. He also loves to learn about new software that helps businesses, like a business rules engine.

3 Ways To Reduce Impulsive Spending

It’s a problem that most people have. By the time we are fully grown adults with real careers, we’ve tried it all: savings accounts, setting aside money ahead of time for priorities, tracking our expenses via checkbooks or online banking, piggy banks, you name it. Sometimes it works, but too many times, it doesn’t. When the money is technically available to you, and there’s something you really want, you make up another excuse for why you deserve it. Or else you just have a hard time looking at the big picture, and a few nights at the bar turns into a major dent in your finances. It happens to the best of us. Nevertheless, there are a few tricks of the trade floating around out there that have helped many people start saving money. Here are a few good ones that might help you:

Limit Your Accounts

When you have multiple accounts, you’ll typically spend more money on a regular basis because you’re not fully aware of the total amount of money you have, and that provides a little subconscious comfort to you because you’re not seeing that total number drop down as you spend more and more, but only a number that represents a fraction of your money. The same concept goes with keeping cash on you all the time.

Think Twice Before Making Big Purchases

Studies show that for most people, the feeling of wanting something brings more happiness to them than actually having it. So before you spend half your paycheck on something you don’t actually need, wait a day or two and then decide if it’s really worth it. Consider the alternate things you could do with that money. Think about the years to come; will you still love it just as much next year? If you still think you should get it after all that, then go for it.

Budget Your Money!

Most people know about this one, but don’t actually do it. Start by thinking about the top five things you spend your money on. Do some math and try to figure out the approximate monthly amount you spend on each of those things. Or better yet, get a detailed bank statement. You’ll probably find that one or two of those things are a bit out of control. What do you want that number to be? Try setting a budget for each of those categories, and then one for miscellaneous purchases.

For the budget that you think will be most difficult for you to stick to, try this: take that money out of your account and put it in a labeled envelope. Keep the envelope in your room and take cash from it very sparingly. Using only cash will make you much more conscious of just how much you are spending, and keeping it at home will give you less of a chance to be impulsive with it. For more tips on staying on budget speak with an accountant or financial adviser

LBS Tax is a local tax accountant service that has begun a series of helpful articles to help the public better handle their financials.