03/20/15

Saving Your Spring Tax Return Now to Fund Your Dreams Later

Spring has just arrived and for many of us, so has our tax return.

With this new chunk of change, the temptations are high to use the extra money to purchase a well-deserved trip out of town or maybe the latest electronic product that you have had your eye on for a while. Whatever it is that has captivated your eye, might I suggest taking a second to resist and save most if not all of this month’s extra income?

The instant gratification of making a big purchase may seem well deserved and worth it but so will saving it and investing it in your future.

In past years I have taken my tax return and cashed out for a girl’s trip or a well needed shopping spree, justified in my purchases as I continued on life with no immediate consequences. It was not until college that I soon realized that my dreams of owning a fashion empire did not match up with my savings account. I thought I wouldn’t need capital to start my business because I can always get a small loan.

A specific lecture series in my third semester taught by Wyn Dunford, blew my mind with the brutal reality of business loans and the importance of building capital now.  My wise teacher instructed daily to “Start saving your money now!!” He made it clear that without savings and good personal credit, the probability of anyone granting me a business loan was slim.

Since researching small business loans and now working for the nation’s best small business lending company, Lendio, I have learned this to be true and invaluable information. Your personal saving and spending trends are equally as important as your credit score when looking for a small business loan.

My FICO states the following lending fact, “Lenders use a number of facts to make credit decisions, including your FICO® Scores. Lenders look at information such as the amount of debt you can reasonably handle given your income, your employment history, and your credit history.”

It has been a long time coming but I have since learned to ingrain in myself the vital importance of saving every penny and staying ahead of my debt. This means living frugally, paying my bills on time and keeping my credit score high. Along with the basics I have established two financial golden rules for myself.

First, always give some money away. I know you might think “Give my money away?! This is crazy, this article is supposed to be about SAVING!!” Yes, this is true but I have always been taught that there is a natural law that, “what you give, you shall receive”. Think of it as when you give honest work daily, you want to receive pay. If I have the health and ability to work for what I receive, others may not.

Give a little to help someone in need say anywhere from 5-10% and you will be given more in return. Studies show that people who give to charity are more happy and have less stress. By doing that it will keep you humble and hungry to continue to work harder.

Step two, pay yourself. This is simple, each time you receive extra cash such as your tax return or a bonus from work, pay yourself.  Take 20% of that and pay it in a saving account. Set up a completely different saving account that you can’t touch. I have one setup that I like to call my dream account.

As I continue to work hard towards my dreams there will be a time I will need to cash out and invest in them and I know that by saving now I will have a saving account ready to back me up, and the history I need to get a small business loan.

Source: http://www.myfico.com/CreditEducation/FactsFallacies.aspx

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