Money likes security (hence banks, wallets etc.) In order to make more money most people need to change their relationship to it. So many people say that money isn’t important to them but if they said that about their spouse every day then they would leave… money is the same. Money needs to feel wanted and desired or it will leave and go somewhere safer to feel appreciated.
We have a team that codes bank statements, as this is the fastest and most accurate way to catch up on years of accounts. For all sorts of reasons business owners can fall years behind in their accounts. Our team gets to know the client, especially the way that money can leave. Starting with the ATM, then the online gambling and oh so many ways to spend money even when it’s a small amount –often such as buying a takeaway lunch every day, then it really grows.
If we ask a business owner what they would like, then there is usually a “house” and some comfort on retirement that’s listed. For even humble businesses this can be possible but so many business owners don’t let their money leave.
So here are 5 ways to keep it:
- Every week when you bank money in your business put your superannuation away first. Especially if you run the business by yourself. Many business owners forget to pay themselves super. No matter what, always do this, so you have put something away.
- Pay the tax every week. Sounds strange as we are trying to keep money, but if you have allowed for your own income tax and the GST of your business, you have a clearer view of what will be left. Because of this you know the surplus funds and can make further tax planning, investments or grow your business.
- Don’t draw money out of an ATM unless you have to (that cash only restaurant perhaps). If you draw cash then it will be spent. I see that there are cultures that know how to hold money, but in large, Australians are highly geared to spend money, so if you draw it out then you will spend it.
- Make your lunch, and take a lunch box to work at least 4 days a week. There is saving of $15,000 per year in this. We have calculated this amount by examining bank statements of many hundreds of businesses where the owner buys their lunch. Add this over 5 years and imagine the investment or other things you could have done with the money. (Ouch! That’s $75,000).
- Don’t rush to pay off your mortgage. Oh how un-Australian of me. Bank interest on a house is about 4%. If you start making extra payments against your house you are of course doing that with your income at a high rate of tax. Therefore, you are paying off your house at nearly 40% (the rate of tax). Perhaps you can put this money in a tax benefit investment. For instance, Super will cost you 15% tax, so you are already saving considerable money.
Once you start the journey, you will quickly pick up ways to keep money, and have a great life style as well. It’s about respecting money and planning (even at a micro level) what you will do with it.