In 8 Ways to be More Financially Savvy, I mentioned forming a financial support group and that, in my group, we give ourselves homework before our next meeting. On Twitter, @swcoffey asked what financial homework might consist of.
Here are ten real-life homework examples from our financial support group mixed in with some additional ideas. Keep in mind that I am not a financial advisor. You should consult a pro with your questions.
1. Reimburse yourself for business expenses. I have a bad habit of letting those pile up and am trying to get better about having my incorporated company reimburse me for expenses that come out of my pocket. I also have a bad habit of not keeping track of mileage, so this is recent homework I’ve given myself that would also pertain to your art business.
2. Update your accounting books. If it’s been a long time since you’ve entered income and expenses into the computer (I hope it’s on the computer!), this might be good homework for you. (Coming up: software to make tax time easier.)
3. Set up a system to pay off your credit card debt.
4. Check your interest rates. I was so happy to marry someone who didn’t mind taking care of household finances, that I did the Happy Dance and never looked back. I ignored all of the minutiae of our financial well-being. Bad Alyson. Don’t do as I did. Know what your interest rates are for your credit cards, your mortgage, car loans, and so forth. Also, know your return interest on any investments and savings you have.
5. Open a money market account. Another bad habit I had was hoarding money in my checking account–at 0% return interest! Look around and find the best savings rate. When I opened my money market 2 or 3 years ago, it was over 5% return. Now, because of the current fiscal environment, it’s down to 1.4% !!! Still, that’s better than zero.
6. Get a safe deposit box. This wasn’t a top priority of my husband’s, but I worried about our documents and took the lead here. What a relief to know that our most important papers are safe.
7. Write a will–especially if you have children. Ask around and get recommendations for attorneys while comparing pricing. I think you need to be very comfortable with the person in charge of your estate planning.
8. Change your beneficiaries. I was married 5 1/2 years ago, but it was only last year that I changed the beneficiaries on my policies and investments. My husband–with good reason–wondered why my parents, and not he, were my beneficiaries. It wasn't a task that was on my radar.
9. If someone besides you pays your household bills, get a grip on what your expenses are. You want to know exactly what it would cost you to continue living in the manner to which you are accustomed: garbage removal, newspaper, electricity, cable, Internet, phone, water, and everything else. You also want to be able to eliminate unnecessary expenses.
10. Track the hours you spend on a certain task. If time is money, you want to know when and where you’re spending too much time. You also want to know how long it takes you to make your work. After doing this for myself, I made the big leap and hired a bookkeeper–correctly assuming that she could get it done a lot faster (and more efficiently) than I.
I hope this helps. It's great to give yourself homework of this kind, but it's much easier to cross it off your list of you are held accountable by others.
Reading homework for financially savvy artists.
Software that will make your life (and tax time) a whole lot easier.
6 thoughts on “10 financial homework assignments”
Great information for any business. Sound financial practices will ensure you have the best chance at success. Most business fail because they continually neglect their financial records. Thanks for posting!
Sweet… I’m happy to say I’m doing all of these with the exception of the Will. I have a handwritten living will, but it needs to become an official document. When you don’t have kids other things become priority
Lucinda: I agree. My husband and I have definitely neglected this area as we don’t have kids either. Still, it weighs heavy on my mind–not daily, but from time to time. And thanks for bringing up the living will. Our families all know of our wishes, but boy things are a lot easier when you have them in writing!
I consider myself a pretty pulled-together type gal when it comes to this stuff. But you’ve got a couple there I really need to do! Thanks.
quickie on the credit card things (my major task of the last few years)… make sure you check any one-off fees for balance transfers and then compare the interest on the higher rate – and *also* compare both to your plan! A lot of cards here have a 3-5% transfer fee and if your plan is to pay something off in say 6 months that fee could actually be more than 6 months of interest at the higher rate. A good friend got caught by that.
Tina: Good suggestion! Read the fine print.
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