Get out of debt using the debt snowball method

With the recent economic crisis, mortgage crisis, high gas prices and rising costs of basic living, many people are finding ways to get out of their overwhelming debts. There are a lot of people who try their options to get debt free but ..... More »

Are you unaware of any THD/CBSD account reported on your credit report?

You might find an account in the name of THD/CBSD reported on your credit report. If you are not sure about this account, you must dispute this item with the credit bureau reporting it. THD/CBSD stands for The Home Depot / Citibank South Dakota. More »

Facts about the escrow account

Every year thousands of people make big purchases on their homes. These new homes come equipped with all the latest amenities like granite counters, new appliances, the fresh smell of paint and new carpet. Borrowers are very excited to move to their new furnished home. More »

How to recover from Bankruptcy?

If we have been through bankruptcy then maximum of us think that our credit is shattered and we will not be able to regain it, but not that all times, you can regain credit through some unique ways. After filing bankruptcy your goal or motive should be .. More »

Mortgage Fraud

Mortgage fraud has been declared as one of the rapidly growing crimes (named as white collar crimes) in the country. After analysis it has been found that every fraud has some kind of material misrepresentation, misstatement .. More »

 

Powerful Tips on How to Best Improve Your Credit Score for More Trust from Lenders

Credit Score

Credit scores are important. Anyone who has dreamt of owning a home, or starting and growing their own business, will assuredly need a loan at some point in time. Credit can also be helpful – if not necessary – for other large expenses such as buying a car, furnishing a home, or traveling.

Because credit is useful for so many things, it is important to have a good understanding of what makes someone a strong borrower, and how they can improve their chances of having access to the credit they need, when they need it.

Chief among these factors is a person’s credit score, which is often the first litmus test a lender uses to determine whether a loan or credit card applicant is someone they want to help. Credit scores involve complex algorithms, but there are some simple steps that you can take to make sure your credit score does not send lenders running.

  1. Start building a credit history. If you do not yet have any loans or credit cards, apply for one or two low-limit credit cards. When you can, take out a small loan. Do not run up large balances, but use these credit facilities for daily purchases and make sure to make payments above the minimum, and on time. Try to pay off the balance each month if you are using your cards for daily living expenses such as groceries and household expenses. Credit scores rise as a person builds a history of handling credit responsibly, so you cannot have good credit score without building a history.
  2. Do not miss payments. Always, always, always make at least the minimum payment on time. Missing payments not only counts against your credit score but also brings penalties or additional interest that make it even harder to pay down your balance in the future. Many loans or credit cards that come with attractive rates will reset to much higher rates if you miss a payment.
  3. Find your sweet spot for a number of credit accounts. It is important not to accumulate too many sources of credit (loans or credit cards). Credit scores suffer if you have too many or too few. If you find that you have got too many accounts, you can close a couple. Too few, and you can add a new credit card or two (just be sure not to spend unnecessarily when you get your new cards).
  4. Do not use all your allowable credit. Credit reporting companies use your credit utilization rate – total outstanding balances divided by total amount of credit that you have access to – as part of determining your credit score. What they want to see is that you are not running up credit balances simply because you can. Try not to let this figure rise between 25 to 40% on a regular basis. If you pay off your daily-use credit cards at the end of each month, this should not be a problem.
  5. Track your score and underlying factors. Free credit reporting tools are available through some credit card providers and independent websites. Using these tools can not only keep you updated with the credit score that lenders will see but also point out areas for improvement based on your specific circumstances. They can help you determine the right number of credit accounts, keep track of your credit utilization rate, and may even remind you of loans or cards that you have forgotten. Consumers have better access to their own credit data than ever before, so use it to your advantage. credit-score

The world of finance and credit can be a tough place to navigate. Deciding how to finance a business or a large purchase can be tough enough. First, it is important that you have many options. While you have plenty of tools at your disposal, you need to make sure you have spent time preparing, so that you will look as attractive as possible on paper to potential lenders. Maximizing your credit score is one big way to earn the trust of lenders, so you can get the credit that you need to grow your business or buy a home when the time is right.

Sam Wilson

Sam is a financial specialist who’s helped people improve their credit scores and financial state across the years. Sam writes for fastcredit.repair and is dedicated to helping those in need. In his spare time, he likes to relax and take his kids to the local park.

4 Tips for a More Efficient Workplace

You don’t have to completely overhaul your workplace to increase its level of productivity. In fact, minor changes can often bring the best results! If you’re ready to kick things in high gear around the office, here are just four ways to encourage more output from your employees.

1. Go Paperless

It’s the 21st century, and the age of the binder is officially dead. The good news is that you’ll cultivate a much sleeker and more streamlined workplace when you say goodbye to paper. Digital memos can be passed around the office in an instant; cloud-based projects can be accessed even when you aren’t physically present in the building; computers can set all kinds of alarms, appointments, schedules and reminders so that no one ever forgets a meeting.

2. Identify Performance Gaps

This goes for both people and programs. If your employees aren’t delivering the level of results that you need, what’s holding them back? If your computer systems are lagging, how can they be optimized for speed and accuracy? You can always talk to reliability consulting services if you need help finding and fixing these problems. The key is not to ignore them when you know that they’re dragging you down.

3. Improve Break Times

This may sound counterproductive, but you can boost the work efficiency of your employees by increasing the quality of their downtime. If they come back to their desks fresh, alert and recharged after a high-quality break, they’ll be ready to give 100 percent to the tasks in front of them. Think about renovating your break room for a whole new level of productivity around the office.

4. Create A Suggestion Box

Not only will your office be better-served in general by an open line of communication with your employees, but you might also learn a thing or two about its dynamics by installing a suggestion box. Maybe there’s a policy that everyone hates or a bad seed among your department that’s causing conflict. By letting your employees register anonymous complaints, it’s much more likely that you’ll be notified of these things.

These are just a few tips for a productive workplace. There are many more, and some are more effective than others, so don’t limit yourself to what you see here. Experiment with all kinds of measures until you create a bustling office environment that reflects well on your company.

How Banks Evaluate Personal Loan Applications

personal loan

Personal loans can be a great arrow in your financial quiver for consolidating higher interest rate debts, like credit cards or short-term loans, or financing a major purchase or unexpected bill. With predictability built in, personal loans make it easy to budget for repayment for the life of the loan, and for the most qualified borrowers, repayment can extend up to several years. However, not everyone is eligible for a personal loan through banks or online lenders. Because personal loans do not require collateral – an asset, like a vehicle, a home, or a bank account the lender can use to recoup losses due to default – the application process can be stringent. Here are the most common factors banks review when evaluating a personal loan application.

Credit Score

credit-score

The first place lenders look when receiving a new personal loan application is the borrower’s credit history and score. Credit information is like a financial fingerprint in that it provides a clear picture of who a borrower is in terms of money management and timely debt payment over an entire lifetime. When credit history is clean, and a credit score is above 700, banks are more apt to offer a personal loan with the lowest possible interest rate and budget-friendly repayment term. If credit score and history are on shaky ground due to past late payment, a recent bankruptcy, or a foreclosure, lenders either decline a loan application or charge far higher interest rates to protect their potential for loss.

Employment History

employment

Some banks ask for employment history on a personal loan application, in an effort to understand a borrower’s track record of earnings. When someone has had significant gaps in jobs over the last few years or has had several different employers in a short period of time, lenders may view the borrower as higher risk. Steady employment and increased income over time is what banks are typically looking for to qualify a borrower for a personal loan.

Current Income

IncomeAbove and beyond a borrower’s past financial record, banks want to understand current income. Borrowers with steady earnings from a conventional job are perceived as a lower risk to most lenders, while those who are paid by commission or a bonus structure are less reliable in theory. Banks also want to understand the reliability of the income stream a borrower has, and how that stacks up against other outstanding debts that require a monthly payment. Even when income is steady, borrowers who have several other monthly payments due may not be a strong fit for a personal loan through a bank.

Amount and Purpose of the Loan

The last common factor in reviewing a personal loan application is two-fold: the intent of the borrow and the amount funded. First, personal loans may have some restrictions on what items or expenses they can be used to pay, typically excluding paying off another loan or financing education-related costs. The most common uses for personal loans that are deemed suitable by a bank include debt consolidation, a large expense like a family vacation or holiday spending, or business financing. Second, banks always review the amount of the loan requested and compare that to the borrower’s income and other monthly obligations. For most personal loan applications, no more than $35,000 can be borrowed at one time.

Using a personal loan to manage your finances can be a smart way to leverage your borrowing ability, but take note that banks are going to review your loan application carefully. Before applying for a personal loan, make sure to have documentation relating to your income, a list of previous employers, and a clean credit history to improve your chances for approval.

Geting Started Borrowing Money and Building Credit

Money

When you’re fresh out of college, you are ready to start doing big things like get your first “real” job and buy your first home. You may need to buy a car, or you may want to start your own business. But in order to do some of those things, you’re going to need financing, and as a young person, you’re likely to find the process difficult and maybe even a bit confusing. You may start having this problem even earlier, like when you try to get financing to pay for college or to buy a car.

It’s important that you know what to expect with financing. Here’s a look at some of the most common financing types to help you understand where to start and how to build your credit:

Short-Term Loans

Short-term loans like installment loans online are a common source of funding for students and other young people. Some short-term loans cause more trouble than they’re worth, such as payday loans that have excessive interest rates. Installment loans are personal cash loans that have minimal requirements. You don’t have to have any credit – you just have to have a verifiable source of income and some other documentation. You can get small amounts – up to $1,000 or more, depending on the lender – which you can use to handle emergency needs, like fixing your car or making up the difference on a semester’s tuition.

Credit Cards

Credit cards are another popular form of financing for young people since they are easily obtainable. Some providers want you to have a little credit history before they will approve you, but others provide cards with low credit limits for those with no credit. Gas cards and store credit cards are the easiest to get, and they usually have limits of just a few hundred dollars.

CreditCredit cards are also popular because they give people the freedom to buy whatever they need. However, students often overuse credit cards, so they should exercise caution with them. The high interest rates make it very hard to pay them back. Getting that first credit card can be an easy way to build credit, but if it’s misused, it can also bring down your credit.

Student Loans

Student loans used to be easier to get, but with so many defaults and the weaker economy in recent years, lenders have gotten tougher. You’ll most likely need a co-signor like a parent who has great credit to get approved for a student loan. You won’t have to pay anything on the loan while you’re in school, but six months after graduating, you could be looking at some hefty bills.

Fortunately, interest rates are typically low on student loans, but the monthly payment can be quite high if you borrowed a lot. You’ll have the ability to get on a structured repayment plan or to defer your payments if you find yourself struggling, but student loan debt can almost never be discharged. That means you’ll be on the hook for that debt until you pay it off. Borrow wisely.

Auto Financing

If you’ve used credit cards responsibly during your time in college, you may have enough of a credit history to be approved for auto financing to buy a car. Lenders will also consider your income when they review your application, so if you have a nice-paying first job and you have some credit, you have a better chance of getting approved for a moderate loan. But if you’re trying to buy a BMW on an average starting salary, you can forget about it.

Mortgage

Mortgage

Buying your first home is a momentous occasion, but you’ll have to have a lot of credit history to get approved. Mortgage lenders take a fine-tooth comb to your financial portfolio when considering your application. They will look at your job history, your credit history, your outstanding debt, and other financial issues. You must have a good history, a strong down payment, and a low debt-to-income ratio. The best thing you can do when you get out of school is start saving for your down payment and be sure to borrow responsibly.

Building your credit can be easy, but you have to take it slow. Start with small cash loans when you have an emergency, and use other credit cards and loans strategically to get what you need while building a positive payment history.

How to Improve Your Credit Score

How to Improve Your Credit Score

Do you ever think about your credit score? Chances are you have if you are in the market for a new car or even to buy a house. Your credit score doesn’t seem important when you are young and don’t have a lot of responsibilities, but it is. College students are famous for racking up credit card debt in college that will stick with them until later in their life and ruin their credit.

If you are thinking about your credit score, you are probably trying to come up with ways to improve it. Doing this is actually not as hard as you probably think it is, but it will take some work in both the short and the long term. A lot of this depends on how bad your score is to begin with, but there is no mountain too high to climb in terms of credit.

Four Ways to Improve Your Credit Score

Be Fastidious with Your Credit Report – Don’t just look at your score and throw your report away. There could be damaging things on it that are incorrect. Consumers have the right to challenge anything on their report that they thing doesn’t belong. You might be surprised at how much your score goes up when even small debts are taken care. They really add up. Credit agencies are more than willing to work with you to help get rid of these if they are proven to be wrong.

Start with High-Interest Accounts – If you have multiple loans or credit accounts you are trying to pay off, start with the higher interest ones. This makes sense because the higher the interest rate, the more money you are going to pay to get rid of it. People don’t always realize how much interest really racks up on their credit accounts.

Get a Credit Card – A lot of people have probably told you to never have a credit card because they are trouble. There is some truth to this, but in order to have a good credit score, you must have some credit in the first place. The only way to build your credit score is to borrow money and pay it off. This will also create a history that lenders can look at to see if you are a viable option for a loan. In short, you can’t have a good credit score if you don’t have any credit. This seems obvious, but a lot of people don’t understand it.

Most common mistakes made by students in terms of finance

Student finance

Many people often complain about their student loan repayments or credit card payments. There are some people who do not have their own house because of their overwhelming debts. We need to spare a thought and see how college students are going in the wrong direction.

You cannot sit down and teach a young person how to manage his personal finance. This is something that he will have to learn on his own. Over the period of time, with experience, he will come to know how to use his credit, interest, debt, saving over the period of time.

A good number of college students do not understand the consequences of excessive use of credit cards. An average undergraduate had four credit cards with a debt of $2000. Seniors had the highest balance, perhaps because it was adding with interests and fees over the period time. His average debt amount was close to $5800. They simply don’t realize that by the time they end up paying the full balance, it will be close to some $40000. That makes credit cards the first mistake made by college students.

The second mistake of the college students is the precious student loans. Many parents think that those loans are going to college expenses. But in fact, many students use it for other personal expenses, like buying a TV or a fridge for personal use.

Mistakes in student financeThe purpose of student loans is to fulfill tuition, room, board and book expenses. It is not suggested to take out more than required. If you have extra money left, you can invest it in a nice money market account and that will be useful for your next semester’s expenses.

A large number of students are not able to handle their student loan payments. There are some who are paying more than $400 a month on these loans. When you take out these loans, you pay it back in 20 years, so take them out wisely.

The third common mistake made by many college students is excessive use of credit cards and student loans. As a result, it is tarnishing your credit scores. Therefore it is important to use your credit wisely.

Your credit card debt is something that will follow you for the most of your life. If you have used your credit card too much and don’t pay it on time, you will have a hard time in getting new credit, maybe a car loan, or a home loan. In some cases, many people have a hard time in finding a job. Hence, you should know all about how to use your credit and what affects it.

Many college students find it tough to live on a fixed budget. In fact many students feel that if you are budgeting, it means that you will never have fun again. Budgeting is not a restraint; it is a good planning tool for your healthy future. You have to learn how to handle your money in the best possible ways. This will not only help you in your college days, but for the rest of your life. If you can use your finances properly, you will not only pay off your student loans in time, but also save for your retirement.

5 Less Known Features of the Health Policy Offered by Your Employer

Health Insurance

A group, health insurance policy, refers to health insurance provided by an employer to its employees. Nowadays, almost all companies offer group health insurance. Two major reasons are behind it:

  • Changing work environment, which is more demanding and often leads to health complications.
  • Increasing healthcare costs. No employer would like their employee to go bankrupt trying to stay healthy.

Group health insurance is a key employee benefit that may provide health cover to the employee and his/her family members. Though companies are not mandated to provide corporate insurance, it is viewed as a necessary perk and adds to the prestige of the enterprise.

Though, pretty much necessary, and standard, group policies do offer certain unique benefits which can be useful for the employees.

Why Offer Group Health to Employees?

You may be wondering why companies take the trouble to provide group cover to their staff it is, after all, an expense to them. Well, there are many reasons:

  • Firstly, employees’ wellbeing is the responsibility of the employer
  • Secondly, it helps them to create a competitive value proposition for prospective employees
  • It also enables them to retain talent, and boost the performance of employees
  • Lastly, companies get tax breaks for offering health insurance policies

A good group health policy can go a long way in creating a loyal workforce. There are times when employees accept better health benefits instead of higher remuneration. Moreover, a group cover makes employees feel taken care of.

Health InsuranceThe Hidden Benefits of Group Health Policy

  • Group Health Insurance Is Cheaper

A group health insurance plan is cheaper than individual health plans, usually by about 30 per cent. Premiums are lower about the sum assured, compared to individual health insurance policies. Therefore, even if you are sharing the premium with your employer, it’s still less than your individual health cover.

  • Low Premiums Does Not Mean Fewer Benefits

Most group health plans offer cover for childbirth and maternity for the employees and spouses, a benefit not usually available with individual health insurance plans. More than that, treatments of certain critical illnesses (again not usually covered by individual health plans) is available under group health insurance.

  • Group Health Covers Pre-Existing Conditions

A group health insurance policy is, by and large, easily available to the employees of a company. In most cases, employees need not go for medical check-ups, and the policy kicks in from the day you join the company. The best thing about group health cover is that it in many cases, it covers pre-existing medical conditions of the employees. In most cases, employees are not denied health coverage based on their age or past medical history.

  • No Co-Pay

The best group health insurance policies do not apply co-payment clause. Meaning employees are eligible for free treatment up to the cover limit of the policy. However, this may increase the premium a little, but if you seek to offer the best to your workforce, this is not at all expensive.

  • Convert Group Plan to Individual Plan

Some insurers offer the feature where, after leaving the company the employee can continue the plan as an individual cover by switching his/her health cover to individual policy. However, this may increase the premium cost, it is still better than going out in the rain without the medical insurance umbrella, especially if you have family members covered under the same policy.

There can be many other things you should know about the health policy you can offer to your employees. For instance, did you know that corporate cover is a master plan provided by companies and it includes all employees in the organization under the same umbrella? You can include dependent parents of the employees under the policy as well (if your workforce values this benefit).

In the end, corporate health insurance is an excellent provision to offer to your staff. However, you’ll need to balance between the benefits and premium payable to make it sustainable over a longer period.

How Can the Employer Select the Best for The Employees?

There are more than 20 insurance companies that specialize in providing corporate health policies. It may not always be possible for the organizations to compare and research about all of them and figure out the best. Online corporate insurance advisors such as SecureNow fill this gap very efficiently. They can help companies in analysing their needs, decide the right cover amount and manage the policies after buying.

How to Navigate the World of Finance

Finance

If you are in need of money, you must understand where you can find it and the factors that lenders will look at when they make their decisions about whether to approve an application. You should avoid taking risks that might harm your future so look closely at the advisability of borrowing against real estate or from your 401 (k) which is your retirement fund to provide comfort in your later years.

Your credit score is central to being approved for a loan and you should certainly obtain the copy you are entitled to annually from the three bureaus; if there are any incorrect entries on any, report it and get corrections done as a priority. One of the factors in your credit score is your level of debt against your available credit. If for example you pay off a credit card balance with a personal loan, don’t close the card account because you will be reducing the credit you have access to even though best advice is not to build up a balance once again.

You should only borrow what you can afford to pay back to avoid getting into trouble even if a lender offers you more; that is temptation similar to the irresponsible use of a credit card.

Your Mortgage

Where you are looking for a mortgage, try to make a significant deposit; it will mean immediate equity in the property but often a better interest rate as well. Mortgages are long term, up to 30 years, and though future income is not guaranteed you can only make informed decisions when proceeding with a purchase. Down the line your real estate may well be able to provide security towards further borrowing.

Personal financeHopefully you manage your finances well in the future and if you have been saving in a 401(k) retirement plan for some years, compound interest will be your ally. Regular monthly saving grows far more quickly than you would expect while there are tax advantages in such an investment anyway. It is your money and you have access to it if you wish, though you are obliged to repay from your taxed income. The problem is that if you withdraw any money, you will lose the growth that the borrowings will have earned you until it is repaid. There are better ways to get cash than touching your 401(k) though some will require that you have a good credit score and you make a realistic application. This is where your real estate can come in.

Refinancing

Current mortgage rates are low and refinancing is certainly something to consider. You need to look at all the elements of refinancing, including all fees for settling an existing loan (with nation21cashloans.com) and setting up a new one. If you have significant equity then you can take some cash out when you do the refinancing.

This is something that is certainly worthwhile if the sums add up. If you can get a fixed rate you will know exactly what your future commitments are while there are tax benefits as an additional advantage. As long as you accept the consequences of not making your payments on time and you can accept the term involved, there is little against refinancing if all the detail is included.

Home Equity Loan

You will be borrowing additional money without it affecting your initial mortgage that continues to run. Such a loan is for a fixed term at a fixed interest rate that will certainly be higher than you are paying on your mortgage.

Such a loan is fairly simple and can bring tax advantages yet you will need to have a good credit score and you should understand how much you will be paying back in total.

Home Equity Line of Credit

This is a facility that also offers your real estate as security. It is flexible and you can take money as you need it and again there are tax benefits but the interest rate charged is variable. Be certain that you understand everything because sometimes you will be offered an interest only start with your monthly repayments rising after a certain period. Just as with credit cards, there is temptation to spend when you have a credit facility like this. Think about the number of people who have succumbed to temptation and now have expensive debt on their credit cards.

Emergency Savings Fund and How to Save for the Unexpected

Life can throw you a curve ball at any moment and you won’t know what hit you. This unpredicted curve ball can come financially as well when you need lots of money very urgently. Setting aside money every month can contribute to making an emergency savings fund and makes it easy to have cash during the times of need.

Meaning of emergency fund

When you have a financial shortfall and have a fund to lean back on which can support your life even further for more time and in the case of emergencies is an emergency fund. Having a savings account is thus important when you fall short of cash or in the case of unforeseen incidents.

When you start saving and not use it for a long time it makes up for a long-term savings fund as you would have accumulated lots as you wouldn’t have needed it in the past. So the idea is to have two funds which you can use depending on the type of crisis.

Double planning

Money matters are always stressful and you must have a plan to fall back on if something goes wrong. Therefore you can use plan A and plan B in terms of emergency funds with the following emergency fund tips.

Divide your funds into two which will make up for your plan A and B. Having two emergency funds does the trick to lessen your burden and they are given below.
Short term emergency fund – Use this short-term emergency fund when you have an immediate requirement of cash and when you have none of it. When there are immediate emergencies like a car accident or breakdown or making an emergency payment use this short-term fund to keep you going and not falling behind on anything.

Long term emergency fund – In the long run somewhere down the line you will need a huge sum of money for meeting up with unforeseen expenses like when there is a natural disaster and damages your home or a family member falls ill and needs an immediate operation. With this case, you must remember to have sufficient emergency fund allocation in your account.

These two steps become a stepping stone to save for any unexpected situations.

How to save?

In this growing world, everyone has various needs and wants and satisfying them can take a whole lot of money so the question one often asks is how to save. If one wants to create an emergency fund consider to cut down your expenses and wastage of money. Saving little every month makes a big difference if it is too much then consider putting money aside every three months or six months. You can also consider emergency fund investment option where you invest in a fixed deposit. With these measures, one is sure to build their savings and use when required.

How should the fund be?

Your fund must have certain qualities that will make it easy to use and you must not have any trouble in getting the cash and hence your fund should have the necessary qualities.

Low risk – When you are making long term savings by investing in bonds or shares you need low risks as you cannot afford to have a loss when you are trying to save money.
Liquid cash – Your savings must be in liquid cash if not all some of them as emergencies can crop up anytime. Assets like bonds and shares must be able to convert into cash easily.

Accessibility – One must be able to access cash in a short notice for which short-term funds need to be created and the long-term funds can be accessed when you have a bigger emergency.

Steps to start saving for the unexpected
Getting started is the most challenging part in saving for the unexpected but with the breakdown of the steps one can easily get started and gain momentum. Here’s how you can build your fund.

Crack it to the basic step – Select what type of fund you want long or short term after this see how much you can contribute towards your fund every month and how you can achieve the target.

Cut down on the unnecessary – If one can cut down on unnecessary expenses like buying things you already have and eating out this can lead to more contribution towards your fund.

Automatic transfer – If you find it troublesome to manually make your emergency fund create a separate account and make an automatic transfer to that account.

Transfer investments – when you invest in shares and get the returns directly make it transferable to your emergency funds.

Reward yourself – When you achieve the given target of your savings reward yourself by doing something other than the usual for yourself. This will encourage you more and bring in confidence.

Summing it up

Savings are a blessing in disguise in case of emergencies, be it big or small. It is important to have money set aside for any type of unforeseeable situations. Start saving now and not worry later is the biggest point of having an emergency saving fund.

Peter Christopher is the finance blogger at Finance Care Guide and a guest columnist for many blogs that deals with personal financial management. He has devoted himself to full time speaking, writing and consulting on personal finance management. Visit him on Google Plus and Twitter.

How to Effectively Manage Your Money in the Workplace

For businesses in the UK, a future may look uncertain in the post-Brexit landscape. Last year, Britain’s decision sent shockwaves through the business landscape, with many SME owners in particular unsure if their business could survive such a change in circumstances. Shortly after the vote, business confidence fell to a 5 year low. Now, nearly 12 months on, the picture is far less gloomy for SME owners, but several threats remain.

So, with this considered, how should SME owners look to safeguard their money in case there’s a rainy day on the horizon? In this post, we take a look.

#1 Tightening the Purse Strings

Research conducted by Moody’s post-Brexit showed that UK businesses were spending less on hiring new employees. This is perhaps unsurprising. A weakening in investment comes as many businesses look to tighten their purse strings in case of stormy weather.

It may be wise to follow this approach. Until Theresa May begins the process of leaving the EU formally by triggering Article 50, we’re unsure what Brexit will look like, and how it will affect business rates. For now, it’s best to hedge your bets and keep purse strings tight.

#2 Make Data Your Friend

To keep control of these purse strings, you’ll need to make data your friend. Spreadsheets may seem a little ‘old hat’, but they can still be a vital tool for business budgeting. So make a controlled lists of your incomings and outgoings to consolidate your grip on your finances. By making a definitive list of what you’re paying for, you may find areas that you can cut, too.

#3 Outsource to Grow

Having said that, your business shouldn’t pass up opportunities to grow. However, when you’re managing your money carefully, you must be aware of the financial implications. As a result, it may be wise to outsource your growth. Rather than taking on a full time recruit who will be expensive in terms of salary and HR, consider if you can take on a freelancer at a fraction of the cost. This is particularly good in the field of IT where you receive the knowledge without the large salary impact on your business’s finances.

#4 Consider Professional Help

Finally, if you’re unsure of the best way to manage your finances in a post-Brexit landscape or cannot dedicate the time to it, then consider employing an expert in financial services and wealth management such as WHIreland , who can do this on your behalf. This is a good option if you’re not au fait with politics, economics or money management, and will give you the time to simply focus on what you do best: running your business.

The Interest Rate Holds Firm For Now, But What Does the Future Hold?

Prior to the Bank of England’s recent monetary policy committee (MPC) meeting, there were two schools of thought on what might happen to the base rate of interest. Some argued that rising inflation would force the BoE to act and increase the base rate, in order to negate the spiralling cost of living in the UK. Others suggested that such a move would be impossible, however, as the looming spectre of Brexit continued to underpin an uncertain and decidedly volatile economic climate.

A Look at the BoE’s Decision and the State of the Economy

Ultimately, the BoE decided to hold the base interest rate at a record low of 0.25%, amid a reported split between the individual members of the MPC. This internal divide was indicative of the prevailing climate, as while some members voted to raise borrowing costs immediately as a way of negating disproportionate inflation growth, others felt that the current base rate and an accompanying money-printing program was enough to support the pre-Brexit economy.

This is even accounting for sluggish real wage growth, which along with inflation hikes (and particularly the rising cost of food) is placing a significant squeeze on households and preventing them from saving their hard-earned money. The plight of the economy was drawn into sharper focus after the Federal Reserve (the central bank in the U.S.) decided to hike their own base interest rate to 1.0%, with further increases proposed for next year.

What This Means for Businesses in the UK

We may well see the BoE increase the base rate in the UK later in the year, of course, but for now it is important that business owners recognise the current climate and adapt accordingly. Now may well be the ideal time to borrow money and raise funds, for example, as the cost of borrowing remains restricted by the base rate. It is also important that businesses reconsider their pricing strategies, however, as dwindling disposable income levels, soaring inflation and the inability of households to save is sure to impact on consumer spending in the months ahead (particularly in relation to big ticket purchases such as cars, holidays and real estate).

With a keen focus on pricing and re-investment, businesses can create a flexible business model that is capable of consolidating in the pre-Brexit climate. This is also a strategy that can pay dividends once the UK has left the EU, as businesses will undoubtedly be forced to alleviate the financial pressure created by higher trade tariffs and reduced turnover. One way in which this can be achieved is through cash flow finance measures such as invoice factoring, which enables payments to be advanced from your sales ledger.