If these actions weren’t so downright dangerous, they might be humorous. Are you making these mistakes with your hard-earned cash?

1. They never figure out how much money they actually need each week to do better than just pay their bills. They don’t have a budget set up.

The correct definition of a BUDGET is: the calculation of the amount of money needed for an area [organization or household] to function and achieve its purpose. If you are satisfied to just  pay your bills, and you don’t pay yourself first into some type of savings plan, you will make other people wealthy and you will stay poor.

Every supplier you pay is in business to make a profit. You should run your business and your household the same way: like a business that is expected to make a profit. The income target must include a profit or the enterprise will go broke and fail.

2. They don’t work out ways to make more money than they currently need, and then do whatever it takes to execute the plan.

By UNDER estimating the amount of money needed to do better than just break even, they typically set their income target too low and lose money by living on credit instead of going into action to raise their income. Anyone can find ways to make more money; it is often the “willingness to do whatever it takes” that is the problem.

There are two classes of wealthy people. The large majority of wealthy people are working all the time. They have a purpose they are pursuing, and it isn’t money. Money is a sub-product they expect from their work. Their goals and purposes are the driving force in their lives.

The small minority is often called the “Idle Rich” and they are bored to death. They have seen it all, and done it all twice over and there is no thrill left in life. Think about it. If you had done everything you dreamed of and owned everything you could possible want, and were spending your days sitting by the pool in some swank hotel nursing a beverage with a little umbrella in it, would you wish you had some productive work to do? I’d bet my next few paychecks you would.

3. They habitually spend more money than they make.

Using money to buy the “appearance” of having more money than you actually have is a dangerous activity. I call this type of spender a Gratification Groupie. This can catch up with you quickly and eventually drown you in debt. This causes constant worry about money and makes for lots of sleepless nights. Money truly cannot buy happiness. But doing something productive and worthwhile and knowing you are appreciated for it can make you feel like a million bucks.

Most truly wealthy people are not interested in appearing to be wealthy, they are too busy having fun helping others in life and making more money as a result of that. Rich people always pay themselves first, have cash stashed in several places, are always interested in being productive and expect their productivity to produce more income. They don’t worry about money, and they sleep well at night.

4. They don’t figure out what they need to buy in the future and then set aside a little money each week so they can pay cash for the purchase later.

Buying something with a credit card that you can’t pay off when the statement arrives is committing your future earnings to the credit card company. You are then working for the credit card company as an economic slave.

The correct way to buy things, especially big ticket items, is to set aside a little each week till you have the cash to pay for the item, and then go out and negotiate a big cash discount. The guy with the CASH IS KING!

I recently did this when I bought my current car. I found the exact car I wanted. It was 2 years old, had 21,000 miles on it and was still under warranty. The dealer wanted $29,500 for the car. I got it for $17,500 and got an extended warranty thrown in on the deal. Don’t buy new cars. The second the front tires move off the dealer’s lot onto the street, it becomes a “used car” and loses about 25% of its value.

5. They buy products and services based on WANT rather than on NEED.

Buying decisions should be based on how your purchase of the product or service can help you produce additional income for you. Honestly, do you want the latest cell phone that offers text messaging and email retrieval because your friends have one, or do you need it to be more efficient because you are out of the office traveling to close the next business deal?

6. They don’t put money into a long-term savings plan so they have it for use later in life.

If you are relying on other peoples’ future production to pay you Social Security payments so you can retire, that is really taking a gamble.

Despite the fact the government says the cost of living is going up 3 – 3.5% a year, the truth is that it is going up 8 – 12% a year. You have to make that much more income just to stay even. Why does the government say it is only 3 – 3.5%? Unfortunately for the senior citizens, it’s because they government has to raise Social Security payments each year by the cost of living increase they quote. The Social Security system is already bankrupt and those living on Social Security are headed in that direction by going in the hole 5 – 9% every year. Are YOU planning on retiring on Social Security payments alone?

7. They never develop multiple sources of income. If one source dries up they are in trouble financially.

The old saying “don’t put all your eggs into one basket” holds true today, especially for income sources. Look for products or services that you can add, or business ventures you can get involved in that are ethical, and have a great chance of producing a consistent income. The best type of income is “residual income” where you create something that continues to generate income for you while you are off doing other things.  For example if you wrote a book and sold it on the internet as a download where potential customers could buy it 24 hours a day around the world.

8. They get stressed out about how little interest their bank pays on savings accounts while they are getting killed with much higher interest debt by carrying balances on their credit cards.

If you have substantial credit debt, you are better off using excess cash to reduce the debt and stop the high interest payments instead of trying to earn interest from the bank. As you pay off your debt, you should also keep enough cash on hand to cover a few months of living expenses and the unexpected emergency.

Once the debt is gone, or will be soon, then start investing the excess money where you can get real growth. I use a Certified Financial Planner to invest my money for me so I don’t have to do all the research and trading actions. I let the expert do what he does best while I am busy making more income.

Now don’t get me wrong, I think investing in real estate is great if it provides more cash flow in than what you have to pay out. The truth is that any real estate is a liability as long as you have to make payments on it. Only when it is paid off does it become a true asset.

9. They worry about “the economy” in general.

I’m amazed that people are actually more worried about “the economy” than they are about their business or household failing financially. They worry about what the media is reporting about “the economy” which is something they can’t control, while never looking at how they are can affect the economy of their own business or household, which is something they CAN control.

A rise in unemployment is no reason to worry. Small business creation of new jobs far outweighed the loss of jobs in big corporations, according to the latest ADP report. A failing bank is no reason to panic. Banks get bailouts from the FDIC and other investors. No one is standing by to bail out your failing business or household. That is entirely up to you. So stash some cash in a safe, in a bank, or better yet, a tax deferred retirement plan, and sleep well at night while the bad news about “the economy” rages around you.

10. They expect to survive financially without taking full responsibility for controlling their financial future.

There is a very simple solution to money problems. Cut expenses, increase your income, and correctly manage what income you do get. It’s not only about how much money you make, it’s what you do with your money that determines your financial condition.

Correct money management is something educational institutions don’t teach. People get false information and bad advice about how to handle money. Then they make these silly mistakes, get into trouble, try to solve the problem using credit, create more trouble, and then go looking for debt relief.

Fortunately there is a proven, inexpensive, easy-to-install, easy-to-learn, easy-to-use money management software system that can reverse all the money management mistakes a person has made in the past, and keeps them from making those same mistakes in the future. It is an old-school system that your great grandparents used before the days of credit cards. Very wealthy people know and use this system today.

Sandra Simmons, President of Money Management Solutions, Inc. specializes in helping business owners and individuals manage their money to achieve financial freedom. For more information about her system, claim your complimentary copy of the Debt Reduction Solutions Guide.

© 2008 Sandra S. Simmons. All Rights Reserved.

You know your business money management plan should include a retirement savings plan for your financial security. Here’s how to start one FAST!

The old saying, Pay Yourself First, is some of the best business money management advice you will ever get. If you don’t pay you into a retirement savings plan, who will? How do you do that? Here’s how.

Your Business Money Management Planning Should Include A Savings Plan

Out of every bit of income that comes in the door, immediately carve off 10% and put it in a savings account that you have designated for your long-term wealth building plan. I know that is a scary idea for a lot of business owners who have debt and past due bills to pay. My advice? JUST DO IT! As the weeks and months go by you’ll find you have adjusted to operating on 90% of your income.

The biggest benefit of this self imposed retirement savings plan is the financial security and peace of mind it gives you just knowing that cash is there. You will find that you actually stop worrying about money.

Think you cannot possibly put away the whole 10% to start with? Then take a look at your business money management plan from this point of view. Look at all of the suppliers you pay out of your income every month and get the idea that these suppliers are all on your personal payroll. Is there anyone you can fire and not really miss? Is there anyone you can cut back from full time to part time status? Just look at the bills that come in every month, or those checks, debits and automatic fees deducted from your accounts and you’ll see exactly who is on your “payroll”.

Here is an example. I was working with a business owner who was having a hard time cutting expenses 10% to put away in his retirement savings plan. We looked at every expense from the viewpoint that the supplier was on his business“ payroll”.

Playing The Business Money Management Wealth Building Game

Suddenly we were playing a game of shopping for alternative suppliers for things like telephone services, internet services, web hosting services, and credit card merchant services. We reduced the “pay” of some of the local service providers. We “fired” others and replaced them with less expensive, high quality services that didn’t hold him hostage with lengthy, punitive contracts. That saved a lot of money every month. He cut the phone company’s pay by getting rid of his dedicated fax line and got him a very low cost internet based fax service. We even fired his bank and got a new one with no monthly account charges and got the old bank off his payroll to the tune of $25 a month.

You can make this a fun wealth building game with your business cash flow and with your personal finances just by changing your viewpoint. Be the Donald Trump of your own organization. Take a hard look at who you are paying out of your hard earned income. Don’t be afraid to say “You’re Fired!” and change your business money management plan to pay yourself first by putting that money in your own retirement savings plan.

Leave a comment and tell us where you discovered you could save some money to put towards gaining your financial freedom.

P.S. Don’t forget to claim your FREE Formula To Increased Business Profits Report

Ever wondered how to take charge of your business money management and control your cash flow so you have no worries about money? Are you working hard to reach your financial goals and feel like you are running in quicksand? Are you spending more than you make and going deeper in debt? You CAN reverse that trend!

The first thing you need know is this: if you are making financial planning decisions based on how much money is in the bank right now, then you are being controlled by the money, and this usually creates a constant worry about money problems. You need to control the cash flow to achieve your financial goals; not the other way around.

Fortunately, there is a business money management software system that you can use to control your income and debts to get on the road to financial freedom. Unfortunately, too many business owners are still completely unaware that it exists.

The 7 Steps of The Business Money Management System

Are you ready to take charge of your financial future? Okay, then here are the seven steps of this business cash flow control system that you can use to get in control of your cash flow.

Business Money Management Step 1 – Budget Correctly

Accurately predict how much money is needed to operate the company this week and in the future. Figure out exactly what has been spent, by category, over the past year and then add in increases for cost increases, future expansion and that all important wealth building plan. This becomes the budget. The correct definition of budget here is: the amount of money it takes for the organization to function and to attain its goals. That is also called the “better than break even point” and tells you the  amount of income required to survive, not just to stay afloat. This is the first step in effective cash flow management.

Business Money Management Step 2 – Get Paid Well For What You Do

Figure out how to collect the amount of income needed, and more, to do better than just break even. Review costs and your prices to maintain or increase profitability. Establish cash flow policies to insure  you get paid, like not accepting checks if you get a lot of bad checks, and sending invoices to collections that are 60 days past due. Remember, you’re taking charge of your financial future here.

Business Money Management Step 3 – Confront and Handle The Debt

Find out exactly how much you owe in bills and other debts. This takes a bit of courage to confront, but what you don’t know because you’re just not looking at it, can undermine your profit and wealth building progress. Cut discretionary spending. Figure out a plan to start knocking down the debt. (Note: for a business, spending on promotion is NOT discretionary, it is mandatory.)

Business Money Management Step 4 – Spend Less That You Make

Find out how much of your incoming cash flow is actually available to spend. Most business owners forget that when the money comes in, some of it is already committed. When you spend more than you brought in, the difference usually ends up on a credit card as debt. When you are working to achieve your financial goals, don’t shoot yourself in the foot. Spending more than your available cash flow can cripple your business.

Business Money Management Step 5 – Pay Yourself First

Set aside regular amounts of money from your weekly cash flow for your long-term wealth building plan – always pay yourself first and put the money in savings or investments that will grow over time. You cannot rely on Social Security taking care of you. So if you don’t pay you into a retirement plan, who will?. For substantial wealth building, a minimum of 10% is recommended.

Business Money Management Step 6 – Allocate The Cash Flow To YOUR Best Financial Advantage

Portion out some of your money toward paying past-due bills, debt, current bills, and then portion out a bit for future large expenses that are difficult to pay when they come due. Careful, consistent business money management can speed up your business wealth building progress.

Business Money Management Step 7 – Use Your Cash Flow To Create More Income

Use any money left over in ways that increase your ability to produce more income. Why is cash flow management important to a business owner? Your cash flow is the energy and life blood of a business. It is necessary to pump it through the income producing areas to keep it running well. Everything runs smoother when cash is available.

Seems simple, right? And it is simple. This system is easily learned, and can be used to do these seven steps of business money management planning in very little time each week. It does, however, take personal discipline and commitment to achieve the goal of financial independence so you never have to worry about money again. Done correctly and consistently, the end result is always having lots of cash on hand, all bills paid, and plenty of money in reserves to finance what you really want to do with your money; not just pay bills. Who doesn’t want that, right?

Sandra Simmons, President of Money Management Solutions, Inc. says, “Use your cash flow wisely. Treat it as a resource to use to achieve your financial goals. Correctly managing your cash flow will determine how well your company will survive now and into the future. Correctly applying these seven steps of smart business money management planning is simple when you use the Money Management Solutions software because it quickly puts you in control of your financial future.”

Most business owners have a terrific, on-going, love-hate relationship with their accounting software system. The reason for this, in my opinion, is that accounting software systems actually have a dangerous little betrayal mechanism built into them that is secretly masked as something that is “supposed to help you.”

What is this betrayal? Accounting systems cannot help you with money management: using your money to your best advantage. They only tell you, after the fact, if you did well or made mistakes. This means  the ‘agreed-upon financial system’ that we rely on to help us, only has the ability to tell us what happened in the past – not how to handle our money in the future to fix money management mistakes and get better results.

You might think the subject of accounting seems complicated and mysterious. Accounting software is simply used for recording what occurred after money came into a company or a household. It keeps track of how much money came in and where that money was spent; pure mathematics, no thinking involved.

Accounting Software Is Just A Record Keeping Tool

Accounting software keeps you behind the 8 ball by only looking at the past

Any standard accounting software system is actually a look back into the past. It tells you how much was made or lost, and how much money is currently owed. While this is important to know, it can put the company or individual in a position of being controlled by the money – always making financial decisions based only on how much money is left in the bank.

Money Management Software Is A Planning Tool

On the other hand, money management planning is done by looking toward the future. Planning occurs BEFORE the money comes in and BEFORE it is spent. This puts the company or individual in control of the money. If you can control the money, then you can control your financial future.

Planning how to get in more income and implementing those plans is essential for everyone. Nothing stays stable for very long. It either goes up or goes down. Income is at the mercy of this natural law. An individual or company has to continue to push income up, while cost of living increases, rising prices and taxes eat away at income growth.

To be profitable and create wealth, reducing expenses so you are operating within your income is sometimes necessary. But, be careful to make sure you don’t cut expenses in areas where it would reduce your ability to produce income. Careful spending on items that bring more money back in than was spent is the goal for responsible financial planning.

Many business owners make the mistake of cutting back on marketing and promotion when that is the only way they will get in a constant flow of new and repeat customers. Using existing cash flow and resources in a way that prevents waste and generates more income is vital. All of these actions require planning before doing. That is operating in the future. Thinking is definitely required.

Where did all the money go? Your accounting software system tells you that.

How much money will be coming in? How can your cash flow best be used to increase the long term survival potential of a company and the individuals in the group? The answers to these questions require frequent, consistent, and careful financial planning and money management – no accounting software required for those steps.

Don’t get me wrong, I’ve been using QuickBooks since the early 90′s and I recommend it to my clients: we need it simply to keep records for preparing our tax returns. But I also use the Money Management software on a weekly basis to stay in control of my financial future.

What are you doing to take charge of your financial future?

p.s. – Attend our ongoing FREE business building webinar series – sign up to get on the advance notice list at www.BizWebTV.com/AdvanceNotice