 |
Three Key Money Management Tips |
1) Get a handle on your money by reducing your expenses and increasing your income
- Strategies for reducing your expenses
- Make saving money your first priority each month. Track your family’s expenses for one month and identify a flexible expense that can be reduced to enable you to save more.
- Pay off credit card bills in full at the end of each month.
- Limit spending on business items such as toys and supplies by asking parents to bring items. Children need love and attention, not things.
- Strategies for increasing your income:
- The rates you charge parents should reflect the quality of your program. Regularly review your rates and adjust them accordingly.
- Charge for all the services you offer including: registration fees, late fees, vacations, holidays, holding fees, etc.
- Identify additional sources of potential income such as charging parents for lessons (swimming, ballet, gymnastics) or your curriculum. Consider involving parents in fundraisers to help sell frozen food, candles, etc.
2) Understand ahead of time the financial consequences of business decisions:
- Too often providers do not carefully consider the financial impact of their decisions before they make them. Whether it’s going into the family child care business to begin with or hiring an employee, buying a car or remodeling your home, providers can make smarter decisions if they examine the financial consequences before acting.
- For example, you will probably need to care for at least two additional children just to pay for the cost of hiring an employee. Buying rather than leasing a car is more economical and the less money you borrow to purchase the car the more money you will save. Remodeling your home may be necessary to provide a suitable play area for children but the tax benefits of doing so are very minor.
3) Establish a retirement plan:
- Most providers are not saving enough to meet their retirement needs. The four major sources of retirement income are Social Security, pensions, earned income, and private investments. No matter what their age is, providers should develop a retirement plan:
- Identify how much money you need to save for retirement
- Contribute to your retirement on a regularly basis throughout the year
- Take advantage of the many IRA plans available to maximize your savings over time
- Diversify your retirement investments in broad market index funds that represent U.S. and international stocks, fixed income assets such as bonds, and real estate
This handout was produced by Think Small (www.thinksmall.org).
For Tom’s entire publications visit: NAFCC Store (NAFCC members receive a discount)
Tom Copeland This email address is being protected from spambots. You need JavaScript enabled to view it. Phone: 801-886-2232 (ex 321)
Facebook - http://www.facebook.com/tomcopelandblog
Blog - http://www.tomcopelandblog.com
"Become a member of the National Associaton for Family Child Care, (http://www.nafcc.org/) and receive monthly business e-newsletters, discounts on books by Tom Copeland, IRS audit help, and much more."