“Beware of little expenses.  A small leak will sink a great ship.” — Benjamin Franklin

Why improve your finances?

Money might not be the most important thing in life, but it is closely linked to your overall happiness and quality of life.  Lack of money is a major cause of stress and frustration for many, so improve your financial outlook for 2016 with our 5 simple techniques and see what a difference it can make to your life and improve finances in 2016.

Many people struggle financially and money is an emotionally charged subject as it directly impacts upon our standard of living.  For some people, having money means having more time, freedom, less cares and worries.  They’re also able to do things that other people simply can’t afford.

Whatever emotional shape money takes on, it’s clear that our financial worlds can often be in a state of disarray.  For one reason or another, we can feel like we have no control over money.  We can feel imprisoned by debt and shackled by obligation, and often there is little or no money left over as the end of the month approaches.  Here are 5 proven ways to improve finances in 2016:

1.      Set clear financial goals

One of the best ways that you can improve finances in 2016 is to set clearly defined financial goals.  Your goals shouldn’t simply be to have or make more money; they need to be specific and measurable.  You should set your goals for the short term and the long term.

Write them down with real dollar amounts and set completion dates, then look at your income and expenses to work out how you are going to achieve them.  It’s also important to be realistic – it may seem fine now to think you’ll live on beans and toast for the next 12 months, but it’s just not going to happen!  Failure will cause disappointment, so allowing for a little ‘fun’ money so you can still enjoy yourself is a realistic and sustainable way to set goals.

2.      Create financial milestones

Set small goals you can reach whilst progressing towards your big goal.  If you want to be debt free, start with your largest debt first (perhaps your credit card debt), then celebrate when you have achieved the milestone of paying it off.  Then move on to the next debt.  This makes it easier to stay motivated because you can see your progress.  When we don’t break things down into milestones, it’s easy to become distracted, procrastinate and lose motivation.

3.      Track all expenses

We often lose sight of our spending simply because we fail to track the money going out every single day, making it easier to overspend.  Keep a spreadsheet or a notebook and write down all your expenses.  This means that every single thing you spend money on in a day must be recorded, without fail.

Commit to doing this for 90 days, then sit down and review your expenditure to identify unnecessary items.  That extra coffee here or lunch there can soon add up.  These are easy things to cut out and can make a huge difference to your finances and help improve finances in 2016.

4.      Immediately open bills

One way to improve your finances over time is to open all of your bills immediately after receiving them.  This goes hand in hand with tracking all expenses.  When you receive your bills make a note of them, the amount, when they are due, etc.  It may also be worth considering whether you can do anything to reduce them.  Could you get a better deal on your mortgage?  Could you change electricity providers and save?

5.      Prioritise debt repayments

One of the biggest obstacles to making financial headway is the overwhelming debt that most people face.  When you’re faced with growing debt, it’s hard to concentrate on anything else.  How can you expect to get ahead when all you can see is mounting debt in front of your eyes?

Start by prioritising your debts.  Choose the highest interest credit card debt that you have and double the minimum payments, if possible, until it’s paid off.  Then deal with the next highest interest credit card debt, and so on.

If your goal is to be debt free, not only do you have to make a plan for repayment, but you also have to monitor your spending habits.  Many people who receive cash in the form of a tax refund, mortgage refinancing, or an inheritance, will pay off their debt but fail to change their spending habits, eventually accumulating debt again.  If you want to live a debt free lifestyle, you need to do things like tracking your expenses and setting goals.  Take a daily money minute to monitor where you are financially and where you’re going.

If you want assistance to get your finances on track, speak to us today.  The team at BSN & Co can assist you with planning and saving your money to help improve finances in 2016.

Once you and your team identify your goals for the new year, it’s essential that you set your targets so that everyone knows exactly what they need to do to achieve business success in 2016.  You also need to regularly review performance against the targets so you can take action should the need arise.

Having clear and robust performance targets for your team ensures that everyone knows what they are responsible for; it will also give you a better chance at achieving business success in 2016.  This will drive employees to achieve results in critical areas, therefore it’s important to ensure that the targets are set correctly and are in line with your desired results.

Before introducing a new target, take the time to review it in terms of the seven questions outlined below to ensure the target will drive your business forward.

Is it specific?

A target is no good if it cannot be clearly understood.  The parameters for success must be expressed in clear terms, with no room for doubt.  If a target is left open to interpretation, it will quickly become unmanageable.  It will also lead to frustration and confusion in the work place and this will hinder your chances of business success in 2016.

Can it be measured accurately?

The target must be based on something that can be measured.  For example, if there is no data available from which to derive reports, how will managers or employees know if targets are being met?  Therefore, it’s essential to ensure that robust systems are in place to measure performance before any target is launched.

Is it fair?

To ensure engagement by employees, it’s critical that all targets set have the same chance of being achieved by everyone.  If not, you may be discriminating against a particular type of employee, so always consider the impact of a target on different groups before rolling it out.

Also consider whether the employee has the ability to have a positive impact on the results.  If they feel that they can’t make something happen, they will give up and become demotivated which will almost definitely hinder business success in 2016.

This may mean empowering your staff to achieve good results.

Is it meaningful?

It’s important that a target aligns with the core aims of the business and the individual objectives set for employees.  If not, you should question its relevance because your employees certainly will.

Is it achievable?

A target must be achievable or it will negatively affect performance reports and therefore business success in 2016.  It will also be demoralising for employees, particularly if a bonus or other incentive is linked to achievement of the target.  Equally, the target should not be too easy to achieve or it will be useless as a measure of performance.

You may want to consider a staggered reward system for employees.  Basic achievement of their targets is expected, so anything over and above that will be duly rewarded.

Can it be exceeded?

It’s important to include a “stretch” factor in a target so that there is a way to exceed its expected outcome.  Without this, you have no way of differentiating between employees who are just doing the bare minimum to hit the target and those that are going the extra distance.  The only exception to this is a target with no varying degrees of achievement.

Does it drive desirable behaviours?

Consider what effect a target will have on an individual’s behaviour and whether that is desirable or not.  A target that introduces some healthy competition is good, but not if it comes at the expense of employee relations.  For example, it wouldn’t be advisable to introduce a target that has a detrimental effect on customer service, nor one that has a negative environmental impact.

Considering these questions when designing a performance target will guarantee you don’t create a monster.  The target will be challenging but achievable, aligned with individual and business objectives, and clear to understand and measure.  The result will be employees who feel inspired and empowered to achieve success.

If you would like help to establish goals and targets to achieve business success in 2016, talk to the team at BSN & Co.  We can help you review your business, where you are now, where you want to be and how you can get there.

Many people include investments in their plan to help them achieve their financial goals and we often hear the question ‘are my investments working?’  Investments are a great way of achieving a far better return on your money than simply leaving it in the bank.  However, with better returns come greater risks.  This means that you need to keep a close eye on your investments to ensure you understand the returns you are getting.  Below we have outlined the two main sources of investment income and how to calculate your actual returns.

When you’re reviewing your investments, it’s important to remember that income comes from two main sources – capital gains and interim income.

1.    Capital gain (or loss)

This is the difference in the overall value of an investment from date of purchase to now (or the date that you sold it).  You can work it out using this formula:  (Current or sale price per unit – purchase price) x number of units) – fees and taxes

For example, let’s assume that you purchased 100 shares in Amazing Blue Widget Co. for $50 each (totalling $5,000) and then sold them for $80 each (totalling $8,000).  You had to pay fees of $10 to buy and $10 to sell plus 15% tax on the profit, which works out to: (($80 – $50) x 100) – $20 – $450 = $2,530 or a return of 50.6% on your original $5,000 investment.

2.    Interim income (dividends, interest etc)

This is the amount that you’ve received in interim payments over the life of your investment.  It’s calculated as:

(Interim % x value of investment) – taxes

You would need to work this out for each interim payment that you receive.

For example, let’s assume that you’ve held 100 ABWC shares for three years, and that they paid dividends of 3% a year.  In the first year the shares were $50 each, in the second $60 each and in the third $80 each.  Your return would be:  3% of $5,000, $6,000 and $8,000 less tax, which works out to be: $485.

Your total return

This is equal to your capital gain (or loss) plus your interim income.  You can then compare this to your original purchase price to understand what percentage gain or loss you’ve made.

For example, your purchase price of ABWC shares was $5,000; over three years you’ve made $2,530 in capital gains and $485 in interim returns (dividends) for a total of $3,015.  That’s an increase of 60.3% over three years or 20.1% a year – not bad!

You should compare your total return with your targets and life goals.  This can help you decide whether you should keep your investments or sell them.

Investments should be part of your overall financial strategy, so it’s important you seek professional advice and also make sure that you have a plan that accounts for your financial position and goals.  Speak to the team at BSN & Co – we can help you review your investments, advise you regarding the tax implications of any returns and how you can structure your investments to minimize your tax liability.  We can help answer that burning question ‘are your investments working for you’?

The start of the 2016 year will be a great time to reflect upon your achievements in 2015, take stock of your business, identify areas where you didn’t achieve your goals and take action to ensure that you achieve them in 2016.  Here are some tips to make your business planning Perth more productive.

Get your team involved

Business planning works best when it’s a team effort.  Involve your key staff and advisors such as your accountant, your mentor (if you have one) and others who can make a meaningful contribution to the planning – e.g. an IT expert if you envisage a major website overhaul.

Organise a business planning meeting and ask your staff to bring their ideas along; also, try to hold the meeting away from the business to avoid getting caught up in daily activities or other interruptions.

Review your business

Start with a review of your business as it currently stands, focusing on these key questions:

What’s working well for us at the moment that we should continue doing?

What’s not working − what should we drop or do less of?

What has the most business potential for the future?

Decide on changes

Your combined sharing of ideas may identify some required changes – e.g. you may need to adapt your existing products and services, seek new markets or distribution channels, or change your business model entirely.

These changes are more likely to occur if there is a consensus.  Bear in mind that resistance often arises when people feel that their comfort zones or their jobs are threatened.  Address these issues right from the start to allay any concerns.

Figure out capacity

Some of the agreed changes may require the business to invest in new equipment, products, services or staff.  If so, you’ll need to know how much extra business must be generated for a reasonable payback and whether you’ll need a larger credit line or new capital.  Ask your accountant to assist by completing a return on investment (ROI) analysis.

Get everyone on board

Once you’ve established where you want to take the business, concentrate on the next 12 months by setting some end-of-year goals, then create stepping stones to achieve them.  Your role now is to get all staff on board by clearly communicating the plan to them.  Once you have done this, you’ll be on the way to succeeding with your business planning Perth strategy.

Consensual goals are more motivating than imposed goals, so at least get your key staff involved in the goal setting process.  Immediate goals are easier to focus on than longer term goals, so make sure each person understands what they’ll be required to do.

Follow up

A major challenge with all business planning is that it is often done at the beginning of the year when optimism and motivation levels are high.  However, this can quickly fade as staff become caught up with their daily activities and/or tackling new projects.

Business goals won’t be taken seriously unless you set regular dates to review progress – e.g. every 90 days.  Once your staff know that you’ll be asking them to report at regular progress meetings, they’ll be more motivated which, in turn, will keep your planning on track.

If you would like help with business planning Perth for the year ahead, talk to the team at BSN & Co.  We can help you identify key objectives and how you can achieve them in 2016.