Financial Planning the Right Way: Mapping Your Future With a Professional Financial Advisor

Anyone can write a financial plan, or at least it seems that way. You can consult your banker, go to a brokerage firm, or hire someone who calls himself or herself a financial planner to prepare a plan for you. Financial planning simply isn’t that complicated, right? Let’s consider what’s included in a comprehensive financial … Continue reading “Financial Planning the Right Way: Mapping Your Future With a Professional Financial Advisor”

Anyone can write a financial plan, or at least it seems that way. You can consult your banker, go to a brokerage firm, or hire someone who calls himself or herself a financial planner to prepare a plan for you. Financial planning simply isn’t that complicated, right?

Let’s consider what’s included in a comprehensive financial plan. There’s a section on what happens if you died today. Will estate taxes be due? Does your estate have enough liquidity? Another section outlines what happens if you become disabled or need long-term care. Have you saved enough for retirement? And how will you pay for your kids’ or grandkids’ college education? What about charitable giving, income tax savings, and investment allocation?

The first place to start is selecting the right person to develop a financial plan. Find someone with a fiduciary responsibility such as a Certified Financial Planner™.

It is important to seek out someone who will listen to your objectives and design a plan to meet your goals. Be sure the person you choose to draft your initial financial plan is familiar with how the planning you do in one area affects outcome in another. For example, what you do in the area of investment planning can affect your tax planning. What you do to provide for asset protection can affect your estate planning, and so forth.

A sound financial plan should also address how you are expected to behave when placed in a variety of scenarios. The only certainty in life is that the unexpected will always happen. When placed in an unexpected situation, most people will tend to make major decisions based on emotion, and then try to rationalize them, undermining their long-term planning. Therefore, a solid financial plan should be flexible enough to accommodate the unexpected. This is especially true in the investment-planning arena. It is important to have a written investment policy statement to help protect your portfolio from unplanned and impulsive revisions of sound long-term policy. Especially in times of market turmoil, investors without an investment policy statement are inclined to make investment decisions that are inconsistent with prudent investment management principles–and their best interest. Your investment policy provides an agreed-upon and well-thought-out framework from which sound investment decisions will be made.

Many people believe the process ends once the plan is written. But good financial planning means regularly monitoring and adapting strategies to ensure you’re meeting your goals. Remember, you’re not just trying to create an end product that won’t ever need to change. You’re developing a map that will help guide you toward financial stability. And regular comparisons of where you planned to be in the future with where you actually end up can generate important discussions about why you ended up where you are. Are you ahead of plan because your investment portfolio did better than expected, were taxes lower than expected, or maybe you spent less than expected? The reason you end up at a particular place is important to understand because that determines what types of adjustments might be needed for your plan A financial plan that’s developed with the help of a professional financial planner could be the right map to help you reach your financial destination.

Many people can help you prepare a financial plan, but the most successful plans are crafted by professional planners whose allegiance is to you, the client. Professional planners have the credentials and understanding to know how the different areas of financial planning affect one another so they can help determine what is right for you. And professional financial planners will follow up with you after the plan is in place to assist in analyzing deviations from the plan in order to make competent adjustments to steer you away from failure.

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Investing Without Financial Plan and Goals

In times of plenty, we seek safe haven for surplus cash that will generate passive income for the future. In times of need, some of us take desperate steps to increase our money supply to meet the demands of the day. Both actions necessitate investment decisions, decisions that many of us are oftentimes not qualified nor experienced to make wisely without help. Thus, begs the need to know the answers to the four “wives” (why, when, where, who) and one “husband” (how) questions with respect to investing and financial planning. This article will discuss the two most important pre-requisites to making wise investments.

As a licenced financial planner and a business and financial advisor to small and medium companies, I am often asked to give investment tips or advice. Whether I am a fantastic investment guru or tipster or not is immaterial as I would always avoid answering such questions without knowing and understanding the financial background, status and financial goals of the questioner. This article is not intended to be a primer in investing or financial planning as one can select a book on the subject in any good high street or online bookstore. Rather, I would like to share what I consider to be the top two amongst the many pre-requisites an investor should consider before making an investment decision.

1. Have a Financial Plan with SMART goals

Planning in general is an activity we engage in all the time – planning for a holiday, planning for a wedding, or planning for any other event or planning to achieve a particular objective. However, how many of us really get involved in developing a truly comprehensive personal financial plan and implement the same? If not, why not?

The Certified Financial Planner Board of Standards, Inc (CFPBSI) defines financial planning as “the process of meeting your life goals through the proper management of your finances”. Life goals are goals dear to us that we would like see come to pass, especially during our lifetime. Such goals can be as simple as saving to buy a car or for a cruise around the world, or a bit more challenging in investing to mitigate the effects of inflation in planning for retirement.

In goal setting, it is imperative that we be rational and do not set goals that will be too difficult to achieve in the timeframe required else we can be truly discouraged and discard the plan altogether. Thus, it is good to follow the SMART principle, taught in Management 101, which states that our goals should be Specific (say, save to buy our particular dream car), Measurable (say, save $50,000 to buy a car), Achievable (say, plan to buy a car costing a sum we can afford), Realistic (as in planning to buy a car and not a trip to the moon although it can come true for some), and Timely (say, achievable within a reasonable time period).

Knowing our SMART financial goals will enable us to plan how to achieve them. If we are not sure how to develop a financial plan that is workable for us, we can seek the services of a financial planner. A point to note is to ensure that we consult a financial planner that is adequately qualified (say, having the CFPBSI’s Certified Financial Planner certification that is recognized worldwide) and experienced (and perhaps licenced to practice as a financial planner by the appropriate authorities to ensure accountability and ethical behavior).

2. Understand your personal financial risk profile

Prior to making any investment decisions, it is necessary that we understand ourselves in relation to our individual financial risk profile. All of us take risks in our daily lives and these could include crossing a busy street, or taking a flight somewhere, or even getting married considering the increasing number of separations/divorces. It is important to note that different people have different thresholds in the level of risk they are willing to take for any number of reasons.

Assuming a risk that we are not prepared or capable to cope with may result in adverse consequences and detrimental to our health. Similarly, the level of financial risk we are willing to assume or can tolerate should be carefully evaluated and such an exercise will normally be based on a set of criteria relevant to each individual. In addition, the risk profile of an individual can change as his or her personal status changes and it is generally accepted that a younger person can assume a higher financial risk compared to a person nearing retirement as the former has time to accumulate or recoup losses due to investment decisions not realizing their desired potential.

Thus, it is wise to understand our financial risk appetite and risk profile so that the investment decisions we make will commensurate with our risk profile. Investment opportunities abound in the marketplace for all risk profile types, whether one is considered a conservative or can take high risk.

In summary, the above are what I consider the two essential pre-requisites to investing and the others mainly pertain to details in understanding investing, investment strategies, and investment opportunities that can be found in any good investment text books or articles, advice from investment professionals or financial planners, or perhaps can be the subject of a follow-up article by this writer. A last piece of advice is to re-emphasise the fact that we should not make any investment decisions that can adversely impact our financial well-being until we have a sound financial plan, and if professional advice is required, do always consult a qualified and licenced financial planner to help develop one’s personal financial plan. Always remember this well-known adage – FAILING TO PLAN IS PLANNING TO FAIL.

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Understanding Financial Planning

Financial planning is defined as a process whereby an individual or a couple settles objectives, assesses all resources and assets, estimates any future financial needs, and makes necessary plans to achieve any monetary goals they may have. It includes a variety of factors, such as cash flow management on a daily basis, selection and management of investments, as well as insurance needs. There are numerous elements that are involved with financial planning. This includes items such as risk management, allocation of assets, investing, estate planning, retirement planning, and tax planning. The strategy that is created offers a tailored approach that satisfies any present financial concerns as well as offer financial security for the future.

When a person wants the most out of the money they earn, this tool can play a starring role in achieving that outcome. Through careful financial planning individuals or married couples are able to set certain priorities and work toward achieving any long term goals they have set forward. It also provides a bit of a safeguard when it comes to the unexpected, such as income loss, unexpected illness, or work-related injuries.

No two people will look at financial planning the same, because everyone has different ideas regarding what their it will encompass. For some individuals, financial planning means finding investments that will offer security once a person or a couple retires. For other people, it is making investments and saving to have money ready for when children go off to get a university education.

When going about financial planning, it is best to obtain the services of a professional financial planner. Financial planners offer guidance and advice when it comes to any issues regarding financial planning. With life being complicated and sometimes hectic, it can be difficult to find the necessary time to manage future financial affairs. Not only that, but financial planning is often a multi-disciplinary task that “Average Joe’s” are just not capable of understanding. A financial planner will look at the current situation of a client and all future objectives. They will analyze the current financial status of the client and then recommend a financial plan that will suit both present and future needs.

Details of the financial plan may include retirement plan contributions, portfolio of investments, a budgeting plan for all current living expenses, and projected savings growth.

Unfortunately, many people delay in preparing for the future as they are too busy maintaining their current financial situation. No matter what a person’s income level is or their future plans, financial planning is essential to any future goals. With the assistance of a financial advisor, any individual can implement successful financial goals. They will also aid in maintaining the necessary discipline to stick with the plan. And do not worry if there are changes to a personal situation, such as a birth of a child, financial plans are not written in stone. The financial planner will aid in changing things around to ensure everything is properly maintained and a person’s financial future is properly taken care of.

KDK Accountancy Corporation with Katz, Daitzman & Kiesel CPAs, LLP (an Orlando CPA Firm) is an accounting firm offering comprehensive services to Central Florida businesses and individuals. We apply expertise for our clients ranging from setting up day to day accounting systems to preparing the most diverse and complicated tax return.

Our wide range of services include accounting, bookkeeping, tax preparation, tax planning, IRS problem resolution, and all areas of financial and estate planning. We are a certified QuickBooks Pro Advisor and can work with clients with all aspects of implementing and perfecting accounting software performance in the business environment. Our services are designed to assist companies with the obstacles they encounter in order to help their businesses run smoothly and efficiently.

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Financial Planning Helps You Make Your Money Count For The People You Love

One of the biggest mistakes I’ve seen people make when it comes to financial planning is to ignore it completely or put it off for so long that the big benefits of financial planning expire worthless. The earlier you start planning the more bang you’ll get for your buck, however, financial planning is valuable at any age.

Most people put off thinking about planning because of misconceptions about what the process involves or how it can benefit them. As part of its public education efforts, Certified Financial Planner Board of Standards Inc. (CFP Board) surveyed CFP® professionals about mistakes people make when approaching financial planning. The survey showed the public’s most frequent mistakes included:

· Failing to set measurable financial goals.

· Making a financial decision without understanding its effect on other financial issues.

· Confusing financial planning with investing.

· Neglecting to re-evaluate their plan periodically.

· Thinking that planning is only for the wealthy.

· Thinking that planning is for when they get older.

· Thinking that financial planning is the same as retirement planning.

· Waiting until a money crisis to begin planning.

· Expecting unrealistic returns on investments.

· Thinking that using a planner means losing control.

· Believing that financial planning is primarily tax planning.

Make Your Money Count with A Plan

To avoid making the mistakes listed above, realize that what matters most to you is the focus of your planning. The results you get from working with a planner are as much your responsibility as they are those of the planner. To achieve the best ROI from your financial planning engagement, consider the following advice.

Start planning as soon as you can: Don’t delay your financial planning. People who save or invest small amounts of money early, and often, tend to do better than those who wait until later in life. Similarly, by developing good financial planning habits, such as saving, budgeting, investing and regularly reviewing your finances early in life, you will be better prepared to meet life changes and handle emergencies.

Be realistic in your expectations:Financial planning is a common sense approach to managing your finances to reach your life goals. It cannot change your situation overnight; it is a lifelong process. Remember that events beyond your control, such as inflation or changes in the stock market or interest rates, will affect your financial planning results.

Set measurable financial goals: Set specific targets of the results you want to achieve and when you want to achieve them. For example, instead of saying you want to be “comfortable” when you retire or that you want your children or grandchildren to attend “good” schools, quantify what “comfortable” and “good” mean so that you’ll know when you’ve reached your goals.

Realize that you are in charge:When working with a financial planner, be sure you understand the financial planning process and what the planner should be doing to help you make your money count. The planner needs all relevant information on your financial situation and your purpose (what matters most to you). Always ask questions about the recommendations offered to you and play an active role in decision-making. Being in charge means your financial planner doesn’t take all the responsibility for every decision.

Understand the effect of each financial decision and the big picture: Each financial decision you make can affect several other areas of your life. For example, an investment decision may have tax consequences that are harmful to your estate plans. Or a decision about your child’s education may affect when and how you meet your retirement goals. Remember that all of your financial decisions are will impact the big picture of your overall plan. This is where the skills of a professional financial planner can make a big difference.

Re-evaluate your financial situation periodically: Financial planning is a dynamic process. Your financial goals may change over the years due to changes in your lifestyle or circumstances, such as an inheritance, marriage, birth, house purchase or change of job status. Revisit and revise your financial plan as time goes by to reflect these changes so that you can stay on track with your long-term goals.

Successful planning offers many rewards in addition to helping you Make Your Money Count and achieving what matters most to you. When CFP® professionals were surveyed about the most significant benefit of financial planning in their own lives, the top answer was “peace of mind.” Over my career, many clients have told me that their purpose for financial planning is the same – peace of mind. When you invest the time and money to work with a competent and trustworthy planner, you are far more likely to go to bed at night knowing you did everything possible to make your money count for the people you love.

For more information on financial planning, call CFP Board toll-free at 800-487-1497 or visit http://www.CFP.net to request a FREE Financial Planning Resource Kit.

Copyright © 2009, Certified Financial Planner Board of Standards Inc. All rights reserved.

Jim Munchbach became a Certified Financial Planner in Houston, Texas, where he offers financial workshops in his community. His extensive experience with clients following disasters like the Northridge Earthquake, Hurricanes Andrew, Katrina, Ike and dozens of other catastrophes has taught Jim the tremendous value of planning-before the unexpected happens. Jim wrote Make Your Money Count because he believes good money management is a discipline that builds financial, emotional, as well as spiritual muscle.

With gripping and heart-warming stories, Jim highlights powerful principles that provide clarity and a strong sense of direction in the journey to success, significance, and satisfaction.

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Financial Planning – A Road Map to a Secure Financial Future

Would you leave on a trip to a new destination without a map? What if your destination is a successful financial future? Without a map, would you know how to get there?

Financial planning provides a road map for your financial life. It can make the journey less stressful, more fun, and more successful. And, you can start right now – even if only a few steps at a time.

In today’s uncertain economy, financial planning has become increasingly important. With an overwhelming number of options for saving and investing, managing your finances can be difficult. Creating a financial plan helps you see the big picture and set long and short-term life goals, a crucial step in mapping out your financial future. When you have a strategy and a financial plan, it’s easier to make financial decisions and stay on track to meet your goals. Working with a CFP CM professional can secure your financial wellbeing and give you peace of mind and help you reach financial planning success.

Some people decide to do their own financial planning, but you may want to seek help from a Certified Financial Planner CM professional if you:

Want to better manage your finances, but aren’t sure where to start.
Don’t have time to do your own financial planning.
Want a professional opinion about the plan you’ve developed.
Don’t have sufficient expertise in certain areas such as investments, insurance, taxes or retirement planning.
Have an immediate need or unexpected life event.

Destination: Setting Goals
Financial planning starts with setting goals. After all, you need to know where you want to go before you can decide how to get there. Your goals can be short-term – for example, paying a credit card debt in six months; medium-term – such as saving for a down payment on a house in two years; or long-term – such as sending your kids to college in 15 years or your retirement. Write your goals on paper, including rupee terms and dates. Keep the list in sight so you can refer to it for motivation as you keep working toward your goals.

Starting Point: Where Are You Now?
Next, get a realistic picture of where you are financially. List everything you owe (liabilities) and the value of everything you own (assets). Also, track your monthly income and expenses in a notebook or on a budget form. Even if it’s not a pretty picture now, that’s OK. You’ve faced your financial situation, and financial planning will help you improve the picture.

Avoiding Potholes: Insurance, Debt, Job Loss, Taxes and Estate Planning
Financial potholes will inevitably come your way – stock market downturns, recessions, losing a job, wrecking the car, paying for an illness. You may not be able to avoid these potholes, but you can minimize their financial impact. Here are a few suggestions:

• Have adequate insurance. Insurance prevents financial catastrophes, so don’t put off getting it. Insure what you cannot comfortably afford to replace. For most people, that means having the following insurance: auto, renters or homeowners, liability, health, disability and life insurance (if someone depends on you financially). Take advantage of insurance offered to you at your job and supplements it with insurance you buy on your own. Shop for the best price, but make sure you buy from a reputable, financially sound insurance company.

• Control debt. Having a lot of debt puts you at financial risk. If you’re spending more than you earn, start using a budget to plug spending leaks, and make paying off your credit cards a top priority.

• Job loss. You can’t control the economy or a company layoff, but you can control how much time you invest in keeping your skills sharp and in meeting people who may help you find a job in the future.

• Taxes. Computer software can help you find deductions on your tax return. However, if your financial situation is complex, you may benefit from working with a tax or financial professional who can suggest tax strategies and make sure you are getting all of the credits and deductions due to you.

• Estate planning. Every adult should have these four basic documents: will, general durable power of attorney, medical power of attorney and a living will (also called a medical directive). A financial planner can guide you and refer you to an estate planning attorney to draft these documents.

There are many benefits of financial planning. If any of the above questions apply to you, it may be time to call a Certified Financial Planner CM professional to help you reach your financial goals and achieve financial success.

Article Source: http://EzineArticles.com/7250327

The Power of Financial Planning

“Someone’s sitting in the shade today because someone planted a tree a long time ago.” (Warren Buffet)

As a financial life planner, my underlying assumption is that planning is a “good” thing. Planning is widely acknowledged to be a pre-requisite for business success. However, Benjamin Franklin’s advice that “by failing to prepare, you are preparing to fail” frequently falls on deaf ears in the personal environment.

This is usually, in my experience, because people feel they have neither the time nor the skills for personal financial planning; nor do they want to spend money on hiring a professional financial planner. And a few people I have met have such confidence in their ability to make and retain significant fortunes that personal financial planning is deemed unnecessary, even spineless.

So this article is about why financial life planning is important. I will share with you some of the current approaches to planning, show you how to plan in practice and highlight the outcomes.

To plan, or not to plan?

I am passionate about planning because it leads to success. I recall my first sales job in financial services, cold calling to make appointments to sell insurance. I had an excellent manager who made me plan my target market, pitch, call strategy, everything. The first call I made was spot on, leading to an appointment in minutes. I knew it was going to work, my manager knew, my colleagues knew. And it did.

So why should we plan our lives and money? In my view, for four reasons:

1. To develop a practical framework for running household finances

2. To achieve profound goals as fast as possible

3. To ensure long term financial security

4. To deal with life’s setbacks

Lets look at each of these in turn.

1. Financial framework

Many people today lack a financial framework or system. When it comes to expenses, the core of financial planning, we often enter a fantasy world. Even if families can give a reasonably accurate set of current financial statements (assets, liabilities, income, expenditure and estate), they are rarely able to project what those statements will look like ten years, or even five years into the future.

Financial planners will usually tell you that clients come to them for these reasons:

‘We are not fully in control of our finances’
‘I don’t understand money; all I feel around money is fear and anxiety’
‘We don’t know where we are now or where we will be in the future’
‘We seem unable to live the lifestyle we aspire to’

When families do achieve clarity it usually provides great relief, even if the picture does not look good. They at least know where they stand and can take appropriate action.

2. Goals

Unfortunately, we live in an era where wealth is frequently generated for its own sake, rather than as the means to live a fulfilled life. Money is used to make more money – it becomes a proxy for the ego, and financial decisions are often made to protect or massage our egos, not to support the achievement of our deepest life goals.

Life and money are deeply intertwined. Identification of clear life goals is essential to provide direction, and enables sound financial decisions to be made. So when asked to comment on an investment someone is considering, I always pose another question: “Will investing in this product enable you to achieve your goals more quickly and efficiently?” Very often the answer is that it won’t.

3. Long-term security

The impact of increasing longevity on family finances is profoundly important. The keys to addressing this are the Three Drivers of Financial Freedom: savings, compound interest and asset allocation. While saving implies a reduction in spending, and potentially the hijacking of those important and immediate life goals, financial life planning can help to resolve these difficult conflicts between the short and long term.

4. Dealing with the unexpected

Life will have kicked you in the teeth in the past and it will do so again in the future. Accept it, and plan for it. Life can throw a huge range of fastballs at us, from the irritating yet not too serious car breakdown to the death of a close family member. Put in place contingency plans centred around a Security Fund and insurance. No one likes insurance (though I have yet to meet a widow who complained her husband was over insured).

Freedom

What you are really going to achieve from well-formulated goals and a structured, considered life and financial plan to achieve those goals can be clearly expressed in one word – freedom.

Freedom is a central theme of my work, so what exactly is it? True freedom comes from defining and setting boundaries and living a life dedicated to achieving your goals within those boundaries. Greater freedom comes from personal growth, the means by which we can expand our boundaries.

Lianne’s story illustrates this perfectly. A mother of two on a modest salary, Lianne had gone through a difficult divorce and when she first came to me for help, she was consoling herself with a compulsive spending habit.

However, her goals were to love, support and educate her children and to be a really good mother to them to compensate for the breakdown of the marriage. I worked with her to plan her boundaries. We established her life goals, tackled her spending and developed an annual spending plan.

One Monday morning she called me to talk about her weekend. She had taken the girls to London to see a concert and had done so without any feelings of guilt or anxiety over money. It had been in her plan. She had achieved her goal of bringing happiness and fun to her children. Within her boundaries she had achieved real freedom, to be there in the moment with her children, simply to be.

It’s the process that matters

Plans rarely survive contact with reality, to misquote Moltke. Reality for many of us can cause a change of direction. However, the process of planning is as much a benefit as the plan itself, often more so.

There are a number of planning processes around, often developed by professional bodies such as the Financial Planning Association or the Kinder Institute in the US or the Institute of Financial Planning in the UK. My own process is a six-stage process for called FUTURE:

Foundation: a full inventory and analysis of your life, including assumptions and an analysis of your risk profile
Utopia: establishing what you want to have, to do, to be
Transformation: identifying and dealing with the obstructions on the road to utopia
Utilisation of resources: establishing the best option for your existing resources
Roadmap: creating the plan to get you from where you are now to where you want to be
Execution: implementing and living the plan

Having developed a plan it is important that you continue to monitor and renew the plan each year. Planning is dynamic, a habit, not just a couple of sheets of paper to be drawn up then relegated to the bottom draw and forgotten.

The fruits of the process

We all in the financial community trust our processes, because we know they bring results, results that are more than just a written plan.

Initially you will develop a personal inventory of your life. This will include a detailed set of accurate financial statements comprising a schedule of assets, liabilities, income and expenditure, as well as data about yourself and the environments you inhabit.

Self-understanding builds on this base and by the time you are well into the process you should be able to articulate your deepest and most profound goals. In doing so, you will find yourself energised, focused and far sighted.

Finally, you will learn about money. If you are working with a coach or adviser you will have a raft of financial principles and products explained to you. If you are alone on this journey you will need to educate yourself, and there are plenty of resources out there to help.

What is the alternative to planning? Well, you can wing it; with a good deal of chutzpah, a hefty dose of confidence, a wing and a prayer and a bit of carpe diem you might well achieve great things, and get a real thrill and sense of achievement when you do. However, I do believe in the importance of living in the moment. The present is where we can really ‘be’. Crucially, financial life planning will actually help you to achieve this state by removing regrets for the past and fears of the future.

A well-structured plan will give you a thorough understanding of your situation and ensure you always have the right money in the right place at the right time to achieve your deepest life goals.

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Sustainable Growth with Triple Bottom Line

Globally, for decades, it has become almost a ritual for corporations to produce their financial performance reporting to their stakeholder annually, though in a view of sustainable growth of the organizations, financial reporting alone would not suffice the overall social and environmental performance. It is therefore; ‘Triple Bottom Line’ reporting becoming increasingly accepted way for businesses to demonstrate their strategies for sustainable growth.

What is Triple Bottom Line?

“Reflection of company’s overall economic, social and environmental performances”

Triple Bottom Line emphasis financial profitability, environmental integrity and social equity. It is a form of reporting that takes into account the impact a business has in terms of social and environmental values along with financial returns. Whereas traditional models were all about profit, profit and more profits.

± The social bottom line refers to how an organization approach issues such as ethnic and gender diversity, working hours, wages, staff security and its contribution to the community services.

± The environmental bottom line refers to the impact of the company’s products or operations on the environment, along with their approaches to deal with the nature of emission and waste generated.

± The economic bottom line emphasis not only to the financial performances but also to the philosophies behind company’s business strategies.

The below Figure-1, demonstrates the relationship between superior social, environmental and economic performances. The balancing the Triple Bottom Line is very important as without all three aspects of Triple Bottom Line- it would only be bearable, equitable or viable and when all three spheres intersects, the sustainable growth is achieved.

Benefits of Triple Bottom Line

Triple Bottom Line serves as a conceptual framework to help organizations shape their own socially responsible approaches and it bring numerous opportunities and benefits on its full implementation. From the organization’s perspective, there are three major benefits of Triple Bottom Line:

± Increased Revenue and Market Share

± Increased Employee Retention Rate

± Increased Community and Environmental Support

“Triple Bottom Line emphasis financial profitability, environmental integrity and social equity.

Another holistic benefit of triple bottom line is to share the importance of the good social conditions and preservation of the environment, as a society becomes richer its people develop an increasing desire for a clean environment and protected wildlife, and both the willingness and financial ability to contribute to this and to a compassionate society.

Triple Bottom Line is the most structured framework for the organization to fullfill their social responsibilities.

Roth Ira Contributions – An Interesting “work-Around” To The Income Limits

[If you are an investor who makes more than the income limit for contributions to a Roth IRA – this MAY be for you!]

Many people have Roth IRA’s that they opened in the late 1990’s. For some, they have been unable to contribute to their Roth IRA since then, due to income limits. In 2009 and 2010, the income limit for someone to contribute to a Roth IRA (married, filing jointly) is $176,000 and $177,000, respectively. [This limit is based on Adjusted Gross Income (AGI) and the amount that someone can contribute starts to phase out at $166,000 (2009) and $167,000 (2010)]

In 2009 and 2010, the maximum contribution is $5000 for each year (this amount is higher if you are over 50).

There has always been both an income limit for contributions and a maximum amount that could be contributed. It has been indexed for inflation each year.

Conversions from a Traditional IRA to a Roth IRA are a different story. The income limit has been $100,000 since the inception of the Roth IRA. In 2010, this limit was removed (much more on this in other postings). In other words, in 2010 anyone, regardless of income, can convert funds in a Traditional IRA to a Roth IRA.

This has introduced an interesting “work around” to the AGI limit for contributions mentioned at the top of this article.

While I have seen it mentioned in some blogs and other articles, I am surprised that I haven’t seen it more often in the mainstream media.

If you make more than the income limit to contribute to a Roth IRA, this may be for you…………….
Here is how it works:

1. Open a Traditional IRA

2. Make the maximum contribution for 2009 (by April 15th) and 2010 – $5000 for each year, unless you are over 50

3. Don’t deduct the contribution (I will explain in a second)

4. Immediately convert the Traditional IRA to a Roth IRA

5. Voila! You have just gotten $10,000 into a Roth IRA when you otherwise would have been forbidden to do so (based on your income)

Since you didn’t deduct the contribution, there are no taxes due on the conversion (unless there was some interest or gain between the time you opened the Traditional IRA and the conversion – that is why I stressed converting immediately after the account is opened).
Yes. I know. Seems too good to be true! Well, there is at least one “catch”….

Non-deductible IRA’s are aggregated with all other IRA’s to determine what proportion of the conversion would be taxable. If you have an IRA rollover from a previous employer (or any IRA that has pre-tax money in it), then at least a portion of the conversion would be taxable.

For that reason, this strategy works best when an investor has NO OTHER TRADITIONAL IRA MONEY.

401(k)’s that are at previous employers don’t count against you…..as long as they are still in the 401(k) – and not in a Rollover IRA.

Comparisions and Compliance Monitoring

No person or department should be able to completely process a transaction from beginning to end without being cross-checked by another person or department. For example, some division of the treasurers department should be responsible for depositing daily cash receipts in the bank. The controllers department should be responsible for recording customer collections to individual customer accounts receivable. A third employee should compare the treasurer departments daily records of cash deposited with totals of collections posted to individual customer accounts by the accounting department.

One of the most effective tools for monitoring compliance with management’s policies is the use of operating budgets and cash budgets. A budget is a quantitative financial plan that helps control day-to-day management activities. Management may prepare these budgets on a yearly, quarterly, monthly, or more frequent basis. Operating budgets are budgets of future period’s net income. They are prepared by line item of the income statement. Cash budgets, discussed in depth later in this chapter, are budgets of future periods cash receipts and cash disbursements. Often these budgets are rolling, being constantly updated by adding a time period a year away while dropping the time period that has just passed. Computer systems are programmed to prepare exception reports for data that are out of line with expectations. This data can include variances for each account from budgeted amounts. Department managers are required to explain the variances, and to take corrective actions in their operating plans to keep the budgets in line with expectations. This is an example of the use of exception reporting.

To validate the accounting records and monitor compliance with company policies, most companies have an audit. An audit is an examination of the company’s financial statements and its accounting system, including its controls. Audits can be internal or external. Internal auditors are employees of the business. They ensure that employees are following company policies and operations are running efficiently. Internal auditors also determine whether the company is following legal requirements. External auditors are completely independent of the business. They are hired to determine whether or not the company’s financial statements agree with generally accepted accounting principles.

Auditors examine the client’s financial statements and the underlying transactions in order to form a professional opinion on the accuracy and reliability of the company’s financial statements. Accounting records provide the details of business transactions. The general rule is that all major groups of transactions should be supported by either hard copy documents or electronic records. Examples of documents include sales invoices, shipping records, customer remittance advices, and purchase orders, vendor invoices, receiving reports, and canceled (paid) checks. Documents should be pre-numbered to assure completeness of processing and proper transaction cutoff, and to prevent theft and inefficiency. A gap in the numbered document sequence draws attention to the possibility that transactions might have been omitted from processing.

Six Factors to Consider When Preparing a Business Plan

Many businesses only create a business plan simply to gain financing. After they have been granted the loan, they then file their business plan away in a file cabinet and forget all about it. In actuality, a business plan is a document which all companies should keep updated as they grow. These types of documents can serve a number of functions besides persuading creditors.

Before crafting a business plan, all companies should consider the following factors suggested by Black Enterprise: Guide to Starting Your Own Business.

Six Factors to Consider When Preparing a Business Plan

Target audience – Who do you intend to have read your business plan? Defining your audience will give you a better idea of how your plan should be structured.
Company type – Business plans will differentiate from company to company. Take into account if you are providing consumers with a service, good, or both.
Customers – Define how you will reach your customers. Will your business have a storefront or will you offer products through mail order, distributors, or wholesalers? A business plan should indicate how you will attract potential customers along with reasons why they should buy products from you instead of from your competitors.
Resources – Gather a lot of information about your business and industry. Everything from personal resumes to financial statements will need to be included.
Your timetable – Create a five year plan and schedule frequent updates and revisions.
Professional consultation – Do not surrender all of the responsibility of preparing your business plan to someone else, but it is suggested to seek some expert advice (especially when it comes to preparing the financial section of the document).

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