In this episode of Getting Money Right, we’re wrapping up answering some of the most common money questions from our listeners. Knowing the answers to some of these questions can help you tackle some of the challenging financial decisions you might face in the future with a greater chance of success.
1. I’m a business owner, how do I manage cash flow? [00:50]
- Separate your business finances from your personal finances.
- Managing the finances of a business is similar to managing your personal finances.
- Track revenue and expenses so you can reduce your taxes legally.
- In a business, you will have different expenses but you’re still dealing with income and expenses just as you do in a personal budget.
- Create a detailed budget of anticipated expenses and expected income and track every expense.
- Some business owners do the work and then also manage the books, which sometimes can be a lot of work. It’s easy to tell yourself, I’ll take care of the invoices, and pay the bills, manage inventory later after you finish a job.
- Unfortunately, not keeping up with the financials will usually result in big problems.
- Here are a few keys to managing your business cash flow:
- Don’t spend everything you get.
- Build up a healthy amount of savings; you’ll need it!
- Create margin (the difference between income and expenses) so you can leave room for the unexpected, which is bound to happen.
- “Ensure you’re putting enough aside for taxes - many self-employed or small business owners don’t set aside enough for taxes, which gets them into trouble with the IRS. It’s no fun owing the IRS 10K to 20K in back taxes!”
- Make sure you keep good records so you can deduct everything you’re entitled to deduct - keep receipts, track and record your mileage, etc.
- Don’t spend everything you get.
2. When does it make sense to go to college? When does it make sense to go another direction? [11:25]
- Depends on your career interest and whether a college education will adequately prepare you for it.
- AN MBA will not make you a business person out of the gate. There’s a lot of experience you’ll need to add to your basic business knowledge before you become an asset to a company.
- Are you going to college because someone else (parents) want you to go or is it something you want and are focused on what you’re pursuing?
- If a college degree will not provide you a clear path to your career interest, don’t do it. Find the education that will.
- With so many other options for learning today. Trade schools, online classes for photography, marketing, sales, gaming, and so many others. Some people will be better equipped to step into these careers through a non-formal education and not attend a traditional college or university.
- Entrepreneurship is not learned in a classroom. If you want to own a business, learn what it takes to start, grow, and operate one. Work for someone who is an entrepreneur, learn all you can from others who have done it.
- A college education has pros and cons, the best thing you can do is find what you’re interested and good at before you go to college. Going to college won’t teach you what you love and what you’re good at! If anything, it will make you conform to a path or career you may hate in a few years.
- Don’t rush in with the herd from HS to college. Take the time to determine your interest and what you’re naturally good at, then decide the best way to get trained for your chosen path.
3. How can I avoid student loans? [21:30]
- Grants - typically found through Free Application for Federal Student Aid (FASFA). Grants are often based on financial need and do not have to be paid back.
- Scholarships - there are scholarships for just about anything, and there are billions of dollars available for students to apply for it. You don’t have to have a great GPA or be in from a low-income situation. Billions of dollars go unclaimed because people just don’t apply for these scholarships.
- Military Tuition assistance: For active military members. It’s capped at $4,500 per year, and it is a great way to start or complete a degree. The best part is it doesn’t take away from your GI Bill.
- GI Bill: This is given to military members who serve over 90 consecutive days and provides up to 36 months of education benefits. This benefit can also be passed down to dependents.
- For those who are already employed, check with your company, because some offer tuition reimbursement assistance.
- Job or work-study on campus
- Paid intern job or freelance work in your field of industry
- Babysit or Pet-sit
- Write for online publications
- Work for Uber/Lyft
- Lower the cost of attending college
- Attend a junior college for the first two years - lower cost and electives will transfer.
- AP (Advanced Placement) classes in High School will give you college credits and reduce the number of classes you need for your degree.
- Attend an in-state college instead of out of state - less expensive.
- Take College-Level Examination Program (CLEP) exams to receive college credit without having to take the class. This is basically an AP exam for college students to show proficiency for the subject.
- Attend school near home so you can live at home.
- If you live on campus, don’t bring a car. This will save you all car-related expenses (gas, maintenance, parking fees).
- Rent books instead of buying or buy used.
- If you live on campus, find cheaper housing near the college campus.