The Green Sheet Online Edition

November 23, 2015 • Issue 15:11:02

Boost Your Biz: Avoid financial mistakes and gain

Americans have been following sage financial advice since the 18th century, when Benjamin Franklin dispensed pithy words of wisdom. "A penny saved is a penny earned" and "Rather go to bed without dinner than to rise in debt" are just two quotes from him that ring true today. And they illustrate that it isn't only the wise actions people take that lead to prosperity; it's also misguided actions they avoid that can make the difference between financial freedom and a life of just getting by.

Misguided actions

So, aside from falling deeply into debt, what other financial missteps should an enterprising business owner avoid? Here are several mistakes identified by Stephen F. Lovell, President of Lovell Wealth Legacy, www.lovellweathlegacy.com.

1. Becoming infatuated with the hot investment of the hour: "Hot investments are like ice cubes," Lovell said. "They're solid when you get them, but they soon liquefy and when you liquidate, your gains trickle away."
2. Neglecting to consider all options: Savvy investors use a variety of investments to satisfy various financial needs, Lovell noted. "Relying only on stocks, bonds and cash puts you at a disadvantage," he said.
3. Failing to account for investment costs and tax ramifications: "Don't diminish the importance of investment costs because they diminish your wealth," Lovell said "You need to take time to learn about the costs that are applied to each type of investment."
4. Spending all that comes in: Too many people let their income level set the ceiling on how much they spend each month, Lovell said. Thus, they live paycheck to paycheck, and when the unexpected, but inevitable, medical or car repair bill comes due, they have to take on debt to make it to the next day.

   Your budget, not your income, should dictate spending limits, Lovell said. If you don't have a monthly budget, now is the time to create one, he advised, adding that it's imperative to spend less than your net income, and then stick to your budget.

5. Trying to go it alone: Without reliable guidance, most people can end up lost when it comes to financial planning. "You need someone who understands all the upsides and all the pitfalls," Lovell said. "The person you choose should be both skilled and trustworthy, and should always put your interests first."

Resources at hand

Lovell isn't the only financial professional offering sound advice. Following are five books containing recommendations for those who want to improve the way they manage their personal and business finances:

1. Everything You Need to Know About Financial Fitness in 1000 Words, by C. J. Carlsen
2. Personal Finance for Dummies, by Eric Tyson
3. Preparing for Retirement: A Comprehensive Guide to Financial Planning, by Ryan Glover CFP and Dr. Alan Brown
4. The Total Money Makeover, Classic Edition: A Proven Plan for Financial Fitness, by Dave Ramsey
5. 925 Ideas to Help You Save Money, Get Out of Debt and Retire a Millionaire So You Can Leave Your Mark on the World, by Devin D. Thorpe.

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