Using Your Business Credit Card Wisely

A business credit card can be used to bankroll your small business needs in the short run, but it must be used wisely. Imprudent use of your business credit card can have long-term effects on your small business.

Lots of business people use business credit cards to flatten the creases in their cash flow. There is nothing improper in using a business credit card to help you through the rough spots. Remember, however, that your business credit card is not a single source financing tool.

*Do not overspend. If you have to carry a balance forward on your business credit card, high interest rates and penalties will be incurred. Always pay on time and strive to avoid carrying a balance forward, as it is a temptation to minimum payment.

*Do not get caught in the minimum payment cycle. The minimum payment will guarantee one thing; that you will be paying the debt, fees, and high interest rates on your business credit card practically forever. It’s a cycle resulting from overspending. You receive a statement you cannot afford to pay and decide to make a minimum payment. The minimum payment attaches high interest rates and additional fees that drive up subsequent bills too high for you to pay the balance in full, and you make another minimum payment. So it goes, month after month. This is the minimum payment cycle and it can ruin your business credit report and, consequentially, your business itself.

*Make the decision about your card based upon your business needs and not upon some rewards or bonus program. Rewards and bonus programs are often unrealistic and you want to avoid overspending as you chase points impractical to your situation.

*Remember that your business credit score can affect your personal credit score even though the business credit card is not directly linked to your personal finances. A bad credit score for your business will pull down your personal credit score and cause havoc with your personal finances.

Financing can be difficult for a small business and a business credit card offers you the opportunity to some guerrilla financing for your business. You need to be practical and reserved with the use of this card. It is a tough line to walk; deciding when to use the card to aid cash flow for your business and determining, at the same time, when to cut back on business credit card expenditures.

Always endeavor to pay your monthly balance in full and within the grace period. Making certain that you do not spend more on your credit card than you can fully pay when it cones due is one way to maintain that difficult spending balance.

About the Author

Chintamani Abhyankar, is an expert in the field of finance and taxation for last 25 years. He has written many books explaining inside secrets of the magic world of finance. His famous eBook Stop donating your money to IRS which is now running in its second edition, provides intricate knowledge and tips on personal and business finance.

How to Save Money on Gifts

Giving gifts does not have to be spendthrift. As the old adage goes, “It is the thought that counts”. This goes to show that people can start cutting back on gifts that would cost them hundreds of dollars. It is best to opt for things that may not be that expensive but would definitely bring joy and amusement to the one who will receive the gift.

So, if you want to give gifts but with a tight budget, worry no more because there are many ways to cut back on the prices but still be able to give gifts that will be deeply appreciated.

Start a Gift Closet

If you have not done this before, try to do it now. Shop for gifts the whole year-round. This would mean less hassle and less expense, a definite money-saver.

The point here is that if you do not plan in advance, you will end up spending more.

You could try buying gifts at bazaars, special sales, and out-of-town trips, which you can deposit in your gift closet. In this way, you can buy the items at a much lower price than it would be sold for during the holidays.

However, to make sure that you do not give the same gift twice, you should make an inventory of all your gifts. This will also allow you to keep tabs on what you have in your stock.

Alternatively, apart from stockpiling gifts, collect wrapping paper, ribbons, and other accents as well. A gift is better appreciated when it is beautifully wrapped.

Be Creative

Nothing could be more amusing than a gift that was specially made by the person who gave the gift. Personalizing you gifts is far better than commercially made items. In this way, you do not only create a smile to the one who will receive the gift but would also cut back a large amount from your expenses.

Organizing Tip

One of the best ways of saving money on gifts is to be organized with the process. That is, before going to the store to shop for the gifts, always bring with you a shopping list. It should be stated there the names of the person to whom you will give the gift and the budget for each person.

The bottom line is that gifts should not be expensive. What matters most is that you have thought of the person on that very special day and that’s enough to make them feel they are special to you.

About the Author

Simple Family Budget Guide Simple Family Budget Guide design to show you tips and information’s for the purposes of helping you gain the knowledge necessary to Budget and Manage your Money .

Why SMSFs Need To Hold More Overseas Assets

Australian Self-Managed Super Funds (SMSFs) are rapidly embracing ETFs for long-term, low-cost index exposure. But ATO data suggests SMSFs on average need to increase their international equity exposure to improve diversification and seize global opportunities.

Much has been made of the boom in SMSF, with the Australian Taxation Office estimating total SMSF assets were $390 billion, or about a third of Australia’s total superannuation-invested assets, on June 30. Less considered is how assets are being allocated with SMSFs and whether there is enough diversification and exposure to key investment trends.

More SMSFs are embracing exchange traded funds (ETFs). The consultant Tria Investment Partners estimates that a large percentage of ETF unitholders (up to 40 per cent in some products) are represented by SMSFs. More are starting to use ETFs because they are a simple, low-cost way to get long-term market return in the portfolio core. They are also easier for SMSFs to administer.

Judging by the ATO’s SMSF statistical report to June 30, the total SMSF population allocates just under a third of assets in cash and term deposits, another third in listed shares, and about 15 per cent in non-residential and residential property. Surprisingly, this report notes less than 1 per cent of SMSF asset allocations are for overseas shares.

Care is needed with these statistics because the ATO does not break down asset categories into product types. It is likely, for example, that ETFs are included in “other managed investments” of SMSFs, which account for 5.3 per cent of the asset allocation of SMSFs. Still, these figures suggest the average SMSF needs to increase its international equity exposure.

A terrible decade

The reasons are obvious: as long-term wealth-creation vehicles, SMSFs should have more exposure to growth assets, such as international shares. Yes, their performance has been terrible, with the MSCI World ex-Australia Index returning negative 3.6 per cent per annum over 10 years – the worst performance of any listed asset class. But most SMSFs have a long-term investment perspective, so greater exposure to growth assets, such as international shares, makes sense.

Such an exposure improves portfolio diversification because there is less correlation between assets. Having an SMSF that consists of mostly top 20 Australian stocks – and cash – may not provide adequate diversification because the largest blue-chip stocks tend to be more correlated; that is, they move in the same direction. The main way to improve correlations within portfolios is to hold different asset classes.

Long-term opportunities

Holding mostly Australian shares and cash also means the average SMSF is missing out on key long-term investment themes, such as growth in the BRIC economies of Brazil, Russia, India and China. In my view, it makes sense to have some long-term exposure to emerging markets through low-cost ETFs.

There is also a case that after a decade of underperformance, international equities are due for better returns. One thing is clear: the last decade’s experience for asset classes is unlikely to be repeated this decade. A gradual recovery in the United States and European economies and a lower Australian dollar could help international equity Australian-dollar returns in the long-term.

Talk to your financial adviser if your SMSF holds a small number of Australian blue-chip shares and cash. The fund may be exposed to unnecessary potential volatility and risk missing key trends, such as emerging markets growth. Consider a core/satellite approach, using ETFs or other products in the SMSF portfolio core to generate a market return from Australian and international shares, and satellites around the core such as direct shares, to provide a return higher than the market.

About the Author

To learn more about SMSF (Self Managed Super Funds) contact a specialist investment advisor or look online for information about exchange traded funds.

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