“What should I actually do with this money?”

Maybe you received an inheritance. Maybe you sold a house, got a bonus, exited a business, or simply saved aggressively for the first time in your life. Either way, letting $10,000 sit in a checking account earning almost nothing starts to feel wasteful pretty quickly.

This is usually when people begin looking into investing… and, almost immediately, things get overwhelming.

Should you use e*trade? What about Vanguard, Fidelity, Charles Schwab, or Robinhood? Should you buy individual stocks? ETFs? Index funds? Is it too late to start?

The good news is this: investing is usually much simpler than the internet makes it sound.

First: You Do NOT Need to Be Rich to Start Investing

One of the biggest misconceptions about the stock market is that it’s only for wealthy people or finance experts.

In reality, many investors start with a few thousand dollars and simply build over time. In fact, consistency matters far more than timing the market perfectly.

A lot of people obsess over turning $10,000 into $100,000 overnight. The more realistic — and healthier — goal is building long-term momentum.

That’s why many investors view hitting around $30,000 invested as a psychological milestone. Not because there’s anything magical about the number itself, but because that’s often the point where market growth starts becoming more noticeable.

At smaller balances, a 10% gain might only feel like a few hundred dollars. But once your portfolio grows, compound growth starts feeling much more real. That’s when people begin understanding why long-term investing works.

Choosing a Brokerage Platform

If you want to invest in stocks, ETFs, or index funds, you’ll need a brokerage account.

Platforms like e*trade, Fidelity, Charles Schwab, and Vanguard are all legitimate, established platforms. They each have slightly different interfaces, research tools, and investment offerings, but for beginner investors, the differences are often smaller than people think.

Some people prefer cleaner apps like Robinhood because they feel approachable. Others prefer more traditional brokerages with stronger retirement planning tools or customer service.

The important part is less about choosing the “perfect” platform and more about actually getting started.

Understanding Risk: High, Medium, and Low

One of the first things you’ll encounter while investing is risk tolerance.

Low Risk

Low-risk investments prioritize stability over massive growth. Examples include:

• High-yield savings accounts
• Treasury bonds
• Money market funds
• Certain dividend-focused funds

These typically won’t make you rich quickly, but they’re designed to preserve capital and generate slower, steadier returns.

Medium Risk

This is where many long-term investors land. Broad-market ETFs and index funds, especially those tracking the S&P 500, are generally considered moderate risk over long time horizons. The market goes up and down, but historically, diversified index investing has performed well over decades.

Funds like the Vanguard S&P 500 ETF or total market funds allow investors to buy tiny pieces of hundreds or thousands of companies all at once rather than betting everything on one stock. For many beginners, this is the simplest and most effective place to start.

High Risk

High-risk investing includes:

• Individual growth stocks
• Cryptocurrency
• Options trading
• Penny stocks
• Speculative sectors

This is the stuff that dominates YouTube thumbnails and Reddit screenshots. While massive gains are possible, large losses are equally possible.

A lot of new investors accidentally confuse gambling with investing. There’s nothing wrong with taking some calculated risks, but most financial stability is usually built through consistency—not viral trades.

Don’t Put the Entire $10,000 Into One Stock

This is probably the most common beginner mistake. People get excited about one company, one trend, or one “can’t miss” investment and dump everything into it. Diversification exists for a reason.

Spreading investments across different companies, sectors, or funds reduces the risk that one bad decision destroys your portfolio. Even investors who enjoy picking individual stocks often keep the majority of their money in diversified funds.

The Market Will Go Down Sometimes

At some point after investing, your account balance will probably drop. Maybe a little. Maybe a lot. New investors often panic during downturns because nobody emotionally prepares them for volatility.

But historically, long-term investors who stayed invested through market swings generally performed better than people constantly trying to jump in and out.

That doesn’t mean every investment recovers. It means long-term investing requires patience.

Retirement Accounts vs Regular Brokerage Accounts

Another thing to consider is whether you’re investing through:

• A regular brokerage account
• A Roth IRA
• A traditional IRA
• A 401(k)

Retirement accounts offer tax advantages, but they also come with contribution limits and withdrawal rules. A standard brokerage account offers flexibility — you can withdraw anytime — but without the same tax benefits. Many people eventually use both.

You Don’t Need to Become a Day Trader

One of the healthiest realizations new investors have is this: You do not need to watch the market every day.

Many successful investors simply automate contributions into diversified funds and leave them alone for years.

The internet tends to glorify constant trading, but for most people, wealth-building looks surprisingly boring.

A Simple Beginner Approach

For someone completely new with $10,000, a relatively common starting strategy might look something like:

• Keep an emergency fund first
• Invest gradually rather than all at once if nervous
• Focus mostly on diversified ETFs or index funds
• Avoid chasing hype stocks immediately
• Continue contributing consistently over time

The goal isn’t becoming a market genius overnight. It’s building a foundation.

The Bottom Line

Getting started with investing feels intimidating mostly because there’s too much information, not because it’s impossible.

Platforms like e*trade, Vanguard, Fidelity, and Schwab all give ordinary people access to investing tools that once required financial advisors or large amounts of money.

The hardest part for most people is simply starting and sticking with it long enough to let compounding work. Because eventually, if you stay consistent, your money starts doing some of the work for you.

The post Getting Started With Stocks: What to Know Before Investing Your First $10,000 appeared first on Huddleston Tax CPAs | Accounting Firm In Seattle.

In many cases, people downsizing after divorce is completely normal. Someone who previously lived in a high-cost area (like Seattle) may sell their home and move further north or east to more affordable areas such as Kenmore, Bothell, or even beyond. The goal is often simple: lower fixed expenses, stabilize cash flow, and create breathing room while rebuilding financially.

The important thing to understand is that divorce does not automatically destroy your financial future, but it does usually require a completely different strategy than the one you had while married.

Step One: Rebuild Your Budget From Scratch

One of the biggest mistakes recently divorced business owners make is trying to maintain their old lifestyle.

After divorce, your financial reality changes. You may now be responsible for:

• Child support
• Spousal support
• Higher insurance costs
• Separate housing expenses
• New legal or accounting fees
• Business restructuring costs

At the same time, your household may have gone from two incomes to one.

This is why creating a completely new personal budget is critical. Your goal should be understanding your true monthly baseline: housing, utilities, groceries, insurance, debt obligations, taxes, and business overhead.

Many business owners discover that their business was supporting more lifestyle inflation than they realized.

Separate Your Business and Personal Finances Immediately

After divorce, financial clarity becomes essential. If you previously mixed personal and business spending, now is the time to fully separate them. This means:

• Dedicated business bank accounts
• Separate credit cards
• Formal payroll or owner draws
• Clean bookkeeping records

Not only does this help with budgeting, but it also becomes important for taxes, legal protection, and future financial planning.

It is very common for divorced business owners to underestimate taxes because they are focused on cash flow rather than profitability.

Reevaluate Your Tax Strategy

Divorce changes taxes in several ways. Your filing status may change from Married Filing Jointly to Single or Head of Household. You may lose certain deductions or credits that existed previously. Depending on the divorce agreement, support payments may also have different tax treatment than many people expect.

Business owners especially need to reevaluate:

• Estimated quarterly tax payments
• Reasonable compensation (if operating an S Corp)
• Retirement contributions
• Health insurance deductions
• Entity structure

Many people discover after divorce that their prior tax setup no longer makes sense.

Create a “Single-Income Stress Test”

One of the healthiest financial exercises after divorce is stress-testing your life against inconsistent income.

Ask yourself:

• What happens if business revenue drops 20%?
• Could I survive 3–6 months of slow sales?
• Do I have enough liquidity for emergencies?
• Am I relying on credit cards to maintain my lifestyle?

Business ownership already comes with income variability. After divorce, there’s usually less margin for error because there is no second income helping stabilize the household.

This is why many advisors recommend aggressively rebuilding an emergency fund after divorce—even before prioritizing large investments.

Don’t Ignore Retirement Planning

Divorce often disrupts retirement savings dramatically. Retirement accounts may have been divided. Long-term plans may have been paused during legal proceedings. Some business owners stop contributing entirely while trying to stabilize cash flow, but your future still matters.

Even modest retirement contributions after divorce can create momentum again. Many self-employed individuals use:

• SEP IRAs
• Solo 401(k)s
• Roth IRAs
• Traditional IRAs

The important thing is restarting the habit rather than waiting for the “perfect” financial moment.

Reevaluate Insurance and Estate Planning

Divorce creates major gaps in planning documents that people often forget to update. Review:

• Life insurance beneficiaries
• Retirement account beneficiaries
• Wills and trusts
• Powers of attorney
• Business succession plans

If your former spouse was previously involved in the business operationally or financially, ownership structures and access permissions may also need updating.

Be Careful About Lifestyle Rebound Spending

Many recently divorced business owners go through a period of emotional spending.

Sometimes it’s a new luxury apartment. Sometimes it’s expensive travel, vehicles, or trying to “start over” too quickly. While understandable emotionally, large financial decisions immediately after divorce can create long-term pressure.

The first 12–24 months after divorce are usually better spent rebuilding stability rather than chasing rapid lifestyle upgrades.

Consider Whether Your Business Still Fits Your Life

Divorce can force a broader question: does your current business structure still make sense?

Some owners realize they built a business around supporting a much larger household. Others discover their stress levels are unsustainable while managing both business and personal recovery simultaneously. That may mean:

• Reducing overhead
• Outsourcing work
• Hiring operational help
• Raising prices
• Moving to a leaner business model
• Relocating to lower-cost areas

Financial planning after divorce is often less about maximizing growth immediately and more about building resilience.

The Emotional Side Matters Too

Financial planning after divorce is not just math. Business owners often tie personal identity to income, success, and providing for others. Divorce can shake all three simultaneously. Decisions made from panic, guilt, or fear can create additional financial damage.

That’s why slowing down, organizing your finances clearly, and building a sustainable plan matters more than trying to “win” financially right away.

The Bottom Line

Divorce changes nearly every aspect of financial life for a business owner. Housing, taxes, budgeting, retirement planning, and cash flow all need to be reevaluated through the lens of a single-income household.

The good news is that many business owners come out of this period financially stronger, not because divorce is easy, but because it forces clarity, discipline, and intentional planning.

The goal after divorce is not simply surviving financially. It’s rebuilding a life and business structure that is sustainable, flexible, and resilient long-term.

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Workaholism is a real condition. While it can contribute to successes and progress, it can also wreak havoc on your mental well being and your relationships with those closest to you. If you don’t know if you’re a workaholic, consider this: when you’ve finished a to-do list for the week and you have the opportunity to sit and relax… do you consider working some more? It sounds worse than it is, but there’s a compulsion to not stop. When you finally have time to yourself, you think, “Well, what else would I do with this time?”

Entrepreneurs are among the most susceptible to workaholism. They have a tendency to fall into a cycle of working. Part of this is due to the fact that building a business from scratch tends to mean it’s near and dear to your heart. Add to this the fact that you can make a living by keeping it alive and you think this is what you should be doing. While this work ethic can contribute to your business’s growth, there’s a chance it’s doing more harm than good. If working constantly becomes your norm, then when you need to take time off, you can feel worse. Imagine taking time off to watch your child’s graduation or you get sick and need to take a couple days. Suddenly, work continues to pull you back and you’re not able to be present.

Moreover, some of the best thinkers know that to effectively tackle a problem, you need to take breaks. If you’re constantly working at something, you’re not giving yourself perspective or room to breathe. It’s why so many mental health exercises include “deep breathing” where you focus on one thing happening in the present and slow down. With a business, it’s easy to get lost in the weeds, but taking breaks is good and when you return, you’re able to get that 30,000 foot level view.

This time of year, it’s especially important to budget for a break. Turn off your computer, silence your notifications, and return to work in the New Year.

Holidays can put strain on the problem

Work’s only part of the problem. While marketing has increasingly contributed to this idea that this is the most joyous time of the year, myriad studies confirm people tend to suffer depressive feelings during the holidays due to:

• stress
• fatigue
• unrealistic expectations
• over-commercialization
• financial hardship

Throw in the pandemic and this is a tough time for anyone. With that in mind, there is something you should consider for yourself, that’s cost-effective and a good use of your time during the holidays: investing in some self-care.

So I should take time off work, but how can I take care of myself?

First, if you’re taking the last week off (which is becoming more commonplace), then reinforce healthy boundaries between work and life. In business, there’s a propensity (especially in unhealthy work environments) to treat “abbreviated weeks” as an opportunity to cram 40 hours into fewer days. If you’re taking additional time off, set the expectations with those in office. You should not aim to get everything done, so delegate appropriately.

Nationally recognized holidays should be treated as such: holiday. Whether you’re going on a vacation — or reserving time for a stay-cation, this should be expected time off. This is true if you’re an employee of one, working for a huge organization or running a startup with a small but healthy amount of employees.

Burnout is real and frankly, if you’re spending the run-up to the holidays stressed and cramming to deliverable end of year results, then the first thing you (and likely your employees) will do as you usher in the new year is reevaluate if this (your job) is somewhere you want to be. Don’t simply tell employees, “we’ll get through this year and then things will be better.” Instead, enforce that all employees turn off Slack, set their work email to “away” and only — under the strictest of definitions — answer a work call in the event of an emergency.

Enough about work, how else can I unplug?

Focus on Being Grateful

There is an entrepreneur mindset that can lead to impatience. You may be one signature away from securing a client or completing a work order, but like most other businesses, you’ll need to wait until after the holidays. Rather than worry about what’s to come or rushing through the holiday, be in the present, content with the state you’re in. Ambition doesn’t die overnight, there’ll be plenty of work to do when you and the rest of the country reopen.

Give Yourself Time to be Alone

Gift yourself some ‘me time’. Many people this holiday are seeking to regain some normalcy, traveling and hosting parties. However, given the pandemic and the stressful economic landscape, take this opportunity to decline invitations. As yet another silver lining of the pandemic, you don’t need an excuse to decline invitations. Steal yourself away from further commotion and chaos and come up with activities that make you invest in yourself; try something new.

Work Out instead of Working

Exercise whenever possible. Working nonstop is draining and especially in the startup world, it’s all too easy to put your “physical health” in the “important but not urgent” quadrant of your day-to-day. With the national holiday however, why not tend to that quadrant in particular. If everyone is shut down anyway, focus on exercise and eating healthier. Take care of yourself to ensure you’re at your peak when the New Year starts. You may enjoy the momentum and energy from “working,” but “working out” will provide the same (if not more) endorphins to feel energized, empowered and optimistic. Even if you do decide to travel, try running around the block or following some exercise videos.

Invest in Yourself

Take an online course to develop yourself. During the holiday, you may be tempted to only buy gifts for others, but consider an investment in yourself. Book yourself an online course to pick up some new skills. Many platforms offer affordable courses online courses (with discounts around the holidays). Learning something new will strengthen your memory, lead to innovation, and potentially increase your efficiency.

Despite the holiday cheer, it can be a rough time of year for many. And whether your business has suffered with COVID-19 or is on the cusp of launching, sometimes hitting “pause” is just what we need for clarity. For many, there’s a “ready, fire, aim” around this time of year, so take a breath, so you can emerge in the New Year rejuvenated.

Photo by Kira auf der Heide on Unsplash

The post Stop Working & Budget for a Break: an Entrepreneur’s Guide to the Winter Holiday appeared first on Huddleston Tax CPAs | Accounting Firm In Seattle.

Yes, inflation is worsening; yes, the cost of goods has increased asymmetrically to the minimum wage increases; and yes, real estate costs more — in some cases, owning a home has become untenable. Even before all this, in 2017 it was reported that over 2/3rds of Americans could not afford a surprise bill of $500 or more.

The solution is not simply “make more money” or “move somewhere cheaper”. It’s prioritizing expenses. Children who learn to save when they’re young have an advantage growing up. Here are steps they can take to teach children how to save money.

Have conversations with children about money

The first step is to discuss money. This can start as early as 5 years old as kids begin to understand the exchange of goods/services. Teach them how it affects them before they ever make any money themselves. Some financial advisors have recommended asking kids hypotheticals. Start with “what do you want to buy when you’re older?” or “If you had a hundred dollars what would you spend it on?” These open-ended questions can form a foundation for kids to understand what the value of a dollar is.

For example, if their response is “I’d buy a puppy,” then it begs the question as to how they’ll afford food, toys, a leash, and vet appointments. This can help shape their understanding of a one-time purchase vs recurring charge.

Identify a good savings account

Although it depends on the child, typically paper money isn’t the best way to teach your kid about saving. Paper money can get lost and keeping it in a piggy bank or shoe box teaches more about safe keeping than it does about saving.

To capitalize on digital, give your kids access to view their money in a savings account. So long as they can earn revenue, they’ll be able to watch their money grow over time. Earning interest can help kids and young adults to understand the idea of compound interest. 

While picking a savings account for your child, search for one that has little (and preferably no) monthly charges. And find something with a high return.

Encourage them to set goals

Many parents are familiar with the marshmallow test, wherein you offer the child a marshmallow and set rules. If they eat it while you’re gone, that’s it, however, if they wait until you return, then they can get two. Many children pass the test as early as 2 years old. They understand the concept of setting goals so it’s important to compound that lesson.

Setting goals is essential as it helps children learn the significance of postponed gratification.

Match saving with spending

Part of educating children on how to save their money is educating them on how to spend it. Think about complementing a savings account with a spending account or an application that allows parents or guardians to restrict or observe spending. 

These features enable children to explore with money and enforce restrictions to assist them with dealing with their spending. Once children (and adults) have the discipline to control their spending, they find it easier to reach their goals in savings. 

Supporting children to learn how to save money is a significant part of cultivating personal finance. It can enable children to feel comfortable with money and assist them in figuring out how to adjust how they’re spending to achieve long-term goals.

Sure “more money” can help, but if spending habits aren’t formed early, it can turn into an ever-ratcheting problem. If your kids know how to save, it’ll reduce stress and prepare them for the future. For instance, they don’t need to be stuck in a job they hate if they have the savings to afford them time to quit and find a new job.

Photo by Braňo on Unsplash

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1. Plan Your Meals 

Plan your weekly meals and buy only the ingredients you need. Planning your meals makes you less likely to waste food. Moreover, you may enjoy stocking up on supplies to make multiple meals, but chances are high that you’ll get tired of the same meal day in, day out, resulting in ordering more takeout and more groceries going to waste.

By only buying what you plan on making for the week, you avoid wasting food and being tempted with takeout. Furthermore, by making a list of what you need to buy, you’ll be able to avoid impulse buys or overspending.

2. Cut Out Unnecessary Spending

The simplest way to do this is by taking stock of where you’re spending your money. Don’t overcomplicate it with too many categories, but break it down into recurring payments (rent, utilities, insurance, car payments, etc.), separate groceries from takeout, and take note of any subscription services you have.

Once you’ve separated your “recurring/must-pay” spending from “nice-to-have” spending, you’ll have a better idea of where to cut back.

Frequently, one of the first things people discover is how much they’re actually spending on subscriptions. Most people don’t need all major streaming services all at once. Moreover, some subscription services still give the illusion you’re saving money. As an example, while a subscription to monthly razors may seem like a reasonable subscription, in two years time, such a subscription winds up costing the same as a high-quality reusable razor.

3. Look for Ways to Save

For example, instead of driving to work or school every day for an hour each way, try cycling or walking. In the COVID era, advocate for yourself and request work from home days to combat rising prices in gas. If your company wants to retain talent, they’ll oblige.

If you have a job that requires you to be in the office (such as those in construction or medical field), then consider carpooling with people near your area.

Meanwhile, in your personal life, consider all purchases by their price per use. If you’re wearing shoes every day, it makes sense to consider and invest in a high-quality pair. Meanwhile, if you’re looking at a seasonal jacket, consider how often it’ll be worn and if it’s worth it.

4. Capitalize on Cost Saving Apps

There are numerous, accredited apps specifically designed to improve efficiency and productivity. For instance, GasBuddy will show you where your nearest gas stations are and who offers the best price. Driving an extra 2 minutes may save you an extra $20.

Similarly, most people don’t notice how much time they spend on their phone or “window shopping”. And it’s easy to get sucked into an app like DoorDash or UberEats. For apps that compell you to spend money, set a time limit on them so your phone will shut you out before you sink more money into them.

Image by chris s from Pixabay

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401k Options

One thing you can do now, to help save for retirement is to use your 401k plan. Specifically, you can use something called a “partial in-service rollover.” So essentially, what it means is that you take some of the money you’ve saved from your 401k, and then put it into an IRA before you plan on returning and while you are currently working. This will allow you to diversify your investments and find options that are more tax efficient.

Life Insurance

Another approach is to take out a life insurance policy. You don’t have to do this for your descendants, you can actually just do it for you instead. This is because it will make it so that you can borrow against or just withdraw the value of the policy you get. So you can then get cash that’s tax-free income by pulling it out against the policy. This will give you a lot of flexibility when it comes to taxes later in life and you will have to worry less about taxes as a result.

Note: Pulling out too much money can cancel your life insurance policy and some specify that you can only pull out what you’ve put into it in premiums, however it can ensure your family is safe and you can usually get your premiums back if you outlive your policy.

Roth IRA Conversions

A Roth IRA is a special kind of savings account that gets funded from after-tax dollars while you’re actually working. They have exemptions, like from RMDs, and you don’t have to pay taxes on them at all once you retire. If you convert the Roth IRA, you’ll be paying taxes early so that you’ll have more around when you are actually retired and are looking to take out money later on. It may not be for everyone though, depending on your situation, so it’s important to talk to professionals about it before you commit.

Annuities

If you go for a fixed index annuity, then you can make sure that the amount you put in will grow quickly. It also gives you some protection against having losses in the market indexes. You get inflation-adjusted amounts based on the annuity. These options also make it so that you get amounts to guarantee that you can have the five daily activities of living,” which include walking and getting to the bathroom, eating and others. This way, you’ll be able to pay for your long-term care no matter what happens to you in the long run. This will also have benefits that let you stay clear of taxes.

The post How To Reduce Taxes For Retirement appeared first on Huddleston Tax CPAs | Accounting Firm In Seattle.

One of the most common deductions that you can use whenever you plan on renovating your home is mortgage interest. This is a percentage of the mortgage payment you make during the year. The interest is an additional percentage that you pay on top of the principal balance of the loan. With mortgage interest, you can deduct several thousand dollars per year which can help you make up for renovation expenses as well as lower your overall tax burden.

Another deduction that you can take advantage of with renovating your home is energy efficiency upgrades. These are expenses that are associated with making your home reduce energy consumption. For example, installing solar panels to lower your heating and air conditioning bills is one way to lower your tax burden. You can use a credit where you can deduct 30% of the cost of your energy efficiency upgrade.

Whenever you are looking to renovate your home and lower your tax burden at the same time, general improvements are also something that you can deduct. Updating things such as cabinets, countertops and appliances will cost money but make it more valuable. So when you sell the home, you will increase your overall equity and profit. Making general improvements will allow you to lower the tax burden as you will likely pay less in taxes.

Another one of the most valuable deductions that you can use is depreciation. This is a deduction in which you claim the reduction in value of a certain asset. In some cases, parts of your home will go down in value which can help lower your tax burden. You claim the reduction in value on things like appliances and fixtures. Some of these depreciation deductions can lower your tax liability by a few thousand dollars.

When it comes to claiming tax deductions when renovating your home, office improvement is another valuable deduction that you can make. If you make improvements to the area of the house where you conduct business or work, the expenses associated with that can be deducted. With these expenses, you will be able to help lower your tax burden by up to a few thousand dollars during a given year. These expenses can include repairs as well as improvements to structures such as the walls and other areas such as the closet.

Owning a home provides you with many benefits as you may already know. When it comes to making renovations, you will be able to take advantage of even more benefits that will help you lower your tax liability during the year. Therefore, it is important to keep these deductions in mind whenever you plan on making renovations on your home.

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How are people saving more?

Americans are saving more money now than before the pandemic for two main reasons:

1. An increase in income from government aid and
2. a decrease in spending from business closures and safety concerns.

Government aid through programs such as unemployment benefits and stimulus checks paid directly into citizens’ bank accounts mean that many people now have more money in their accounts than they did before the COVID-19 outbreak.

The second main reason accounting for increased savings is that their spending has decreased – more than half of Americans have reported such a decrease. For health and safety reasons, some are choosing to abstain from travel and restaurant dining, which frees up a substantial portion of disposable income for those individuals.

People are keeping more money than ever in their bank accounts to help themselves feel more financially secure during this time. Unfortunately, that reluctance to spend could have adverse effects on the recovery of the economy since a consumerist economy necessitates spending from the public.

Why are people saving more?

That’s how people are able to save more money than usual during the pandemic, but why are they doing so?

Some experts attribute the desire to save more during these times to the uncertainty of the strength of the economy in the future. While Americans may have more money in their pockets now because of decreased spending and increased aid from the government, people are not confident that additional income will persist in the future. Something that people have learned during the pandemic is just how quickly circumstances can change; now more than ever, you can have your job one day and be laid off the next.

Around 25% of Americans have struggled to make at least one payment because of coronavirus, whether that is a credit card payment or payment for rent or a mortgage. That struggle can largely be attributed to losses in household income. Some examples of a loss in household income include being laid off, being scheduled for fewer hours than usual, or even being forced to take unpaid time off.

With their increased savings, people have either been keeping that money in their bank accounts, or taking the opportunity to pay down any debts that they were previously holding on to. About one-third of people who have decreased their spending have been able to pay down their debts faster than they would have otherwise been able to, and over half of people who are now spending less because of coronavirus are able to keep more money in their savings accounts.

While the coronavirus pandemic has indubitably had many negative impacts for many industries and individual families, the increase in savings for many Americans is an unexpected, but welcome, silver lining.

The post The Paradox of the Pandemic: Savings Increase During Economic Downturn appeared first on Huddleston Tax CPAs | Accounting Firm In Seattle.

Smart spending means getting the best deal, buying what you must have and staying conscious of where every penny goes. As the old saying goes, the smarter you spend, the further your money will go. So how do you break bad spending habits and spend better?

Set and stick to your goals – As the old adage says, if you do not know where you are going, any road will get you there. The same can be said with spending habits; if you do not have any goals set in terms of your financial standing, you will always fall for anything that comes your way. It is therefore, advisable that you set both short term and long term goals that will see you through a certain period. Ensure that you always limit yourself to prioritized and realistic goals that will set the pace for the future.

Change the notorious financial habit – If you are a ‘big’ spender, then you will notice that there is always that one financial habit that keeps you spending without planning. You will need to assess your spending habits to pick out and reduce this habit or stop it altogether. Once you master the art of changing this major habit, then you can replicate it to the other areas of your expenditure.

One of the best ways to change your spending habits is by keeping a log of what you’re spending. It’s not simply impulse buys, but some are ingrained. If you have a rough meeting at work, maybe the coffee shop just down the street is your go-to stop. Notate your expenses so you can track what triggers you to spend more.

Do enough research before shopping – If you love shopping, then it may be time to take note of how you do your shopping. Do you simply go to the market and pick whatever pleases your eye? This may be one of the ways you are losing your money. Before shopping for anything, take your time to research their prices while at the same time comparing quality. This is even easier in the digital age where all you have to do is go online and compare the prices from different stores.

Stay away from your spending triggers – There is always that place you will go and end up spending way more than you had planned. On the surface, this may sound like we’re talking about casinos, but it’s much more than that. If you go out to the movies and always buy candy (or even buying candy in advance) or always buy a snack as you grocery shop, these are all areas where you may be adding to the initial cost of a trip when smaller purchases are adding up. Buying that new album may not seem like a big deal, but if you don’t jot down that you did it, then you may forget that it was only 2 weeks ago that you made that purchase and then purchase another new album thinking it’s a new day, a new budget.

Triggers aren’t limited to places either, as this can also apply to some people. Everyone has a friend who intentionally or unintentionally, entices you to spend more than you had budgeted. For better spending habits, it is advisable that you stay away from these triggers or mitigate as best you can.

Everyone will always have that spending habit they hate to love. By first determining the leading habit that needs to go, you are already on the right track. However, this is not to say treating yourself once in a while is a crime. It only becomes a problem when it turns into a habit that slowly drains your finances unnecessarily.

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One of the key challenges with crafting your startup budget is, you don’t have past data. A budget can help ensure you’re profitable, taking into account forecasted income and expenses — frequently called profit and loss statement. Before you start, think about why you need to spare some time to create a small business budget. You can use a budget for other reasons other than for bank financing. 

So, for starters, what is a business budget? 

A budget is a plan that stipulates how you will spend your finances every month or year. 

Managing a budget will benefit you in the following ways:

• Project the revenue you expect.
• Plan how and where to spend that income. 
• Deduce the difference between reality and plan.

What makes an incredible budget?

A good budget needs to be flexible and simple. If situations change, you can adjust your budget to give you a clear, panoramic picture of your financial standings. 

The best way to budget is to examine all your income sources to know what money your business makes on a monthly basis. When you make money, ensure that you calculate the revenue. Revenue is calculated as all the income that your company collects before you deduct expenses. What remains after subtracting expenses is profit. 

Once you know all your income channels, determine your monthly income. You should do this for several months and also for the last 12 months, but as long as you have sufficient data.With sufficient data, you can calculate the performance of your monthly income and look for seasonal patterns. 

Looking at the Research Costs

Researching on costs will help you prepare for unexpected events. Unexpected expenses for instance, sets you off track and make it harder for you to achieve your goals. If you set your budget for a given cost and you discover that you need more money later, then the profit being realized from the sales will be reduced. This places your business in a bad financial state because you will have to figure out how you will increase profit and revenue to offset the high expenses. 

Have a Contingency Fund for Unexpected Expenses

Whether you have business experience or not, you definitely know once in a while costs do not come around when it is convenient. These costs normally come up when you do not expect them, more so when you have a tight budget. You should stop unexpected costs when you are creating budget for your business by ensuring you have additional money on hand and plan for such contingencies within the budget.

While it is easy to spend your additional income on variable costs, place some cash aside as emergency fund. This way, you will be prepared if equipment breaks down and requires repair or if you want to replace inventory damaging by flooding. Alternatively, you can consider a small business loan. However, many options are better than fewer.

Prepare a Profit & Loss Statement

Once you have all the information above, you can now prepare a profit & loss statement. 

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