This isn't investment advice because I am not an investment advisor; it's to be used for educational purposes only.
Should I invest my emergency fund? This is one of the most common questions I hear. Folks who do all the hard work of saving six months (or more!) of their expenses into an emergency fund are often offended at how little interest they earn to amass a small fortune.
I understand the feeling and the urge to invest your emergency fund money. The long-held wisdom has been that one should never invest their emergency fund. The reasoning behind this is that you're opting for liquidity (having your cash available when you need it) over any returns you'd get investing.
Read MoreThe stock market can be intimidating for anyone just starting to invest. One of the most common fears new investors have is how to choose investments. Choosing a company to buy stock from opens the door to a myriad of frightening possibilities. What if that company isn’t disclosing their finances properly? What if I’m not doing enough due diligence before purchasing shares? Buying individual stocks also leaves you at risk of not diversifying your portfolio enough.
Read MoreDo you know how much it costs your business to earn each dollar it makes? Unlike traditional employees, when you're a self-employed service provider, every dollar you earn has a cost beyond your time and energy. How much do you need to pay for employee payroll, taxes, operating costs like marketing and insurance, profit, and personal pay?
Even if you’re a one-person freelance practice, understanding how much it costs you to earn each dollar in your company is a valuable shift in perspective that can help you build a sustainable, efficient business.
Read MoreThe sequence of events is consequential when we cook a meal, tell a story or travel to a destination. Instructions and directions are ordered, stories have sequential acts and arcs that depend on events. It’s the way things are, we accept this.
The same thing is true in the world of saving and investing. The chronology for both how you save (and invest) and where you save (and invest) matters.
Read MoreParadoxes are fancy literary devices that can teach us lessons through the use of logical contradictions. Examining them allows us to practice our ability to hold opposing ideas in our minds at the same time.
Read MoreWhat makes tax season so stressful for most small business owners and freelancers? I think it can be chalked up to a few things. First, if you haven’t kept up with your bookkeeping, then you’re facing a year’s worth of accounting homework with a fast-approaching due date. If you don’t know how much you’ve made, you can’t know how much you’ll owe in taxes - you’re flying blind and that’s scary.
Read MoreIt's easy to complicate things; it's hard to simplify them.
"Earn money. Spend less than you earn. Save and invest the difference. Rinse and repeat."
This is the advice an old boss would give when asked to distill financial planning into its simplest parts. It's excellent advice. When I first heard him deploy the words that would become a well-worn mantra in my mind, it was the moment I realized how easy it is to complicate things and how hard it is to simplify them.
Read MoreEven if you have all the right practical, rational information, when you're in a state of fear, anxiety, or stress, it is impossible to make sound, rational decisions. These states are innately emotional states where cognition is bypassed. When you're afraid, a part of your brain (amygdala) releases hormones that prepare your body for a "fight or flight" response. Humans struggle with having control when we're in these states because the amygdala has few connections to the rational parts of our brain, like our cortex.
Read MoreSo you’ve discovered that tax saving wonder known as the S Corp. You’re ready to start kicking the tires by learning what this “Reasonable Salary” thing is all about. Let’s discuss what it means, why it matters, and the best way to find yours.
A reasonable salary for an S Corporation's shareholder-employee is the part of their compensation that must be treated as employee wages. The IRS requires you to be paid an appropriate wage for the services you provide your corporation because provides needed funding for Social Security and Medicare. It’s best to work with an experienced tax professional to set your optimal reasonable salary, but this article will be a great primer to get acquainted with what a reasonable salary is.
Read MoreBy Pamela Rosario. Three ways legalizing your business will save you money in the long run.
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