You've filed your tax return, or your extension. Now you're done until next April (or this October), right?

No. You should take advantage of the snapshot you have of your tax, and financial life, to fine-tune your taxes.

Did You Get a Refund?

If you received a refund of just a few dollars, congrats for "getting it right." But if you got a refund of thousands of dollars, you need to fine tune your withholdings or quarterly deposits for 2007. Perhaps you had more deductions than expected, or took a loss on an investment … but commonly tax refunds are due to people using tax withholdings as a "forced" savings account.

Tax refunds are not good. That means you have been giving the federal government an interest free loan all year.

Instead of paying extra in taxes all year, and then getting the money back in April 2008, adjust your withholdings or deposits, so you come close to "breaking even." This may mean adjusting your W-4 with your employer to have a higher number of deductions, so less is taken out of each paycheck. 

Did You Owe Money?

You may have been surprised by a large tax bill this April. Perhaps you lost a deduction, made more money, or received unforeseen gains on stock sales. But right now is the time to adjust your withholdings and quarterly deposits to prevent this problem from happening again … especially if you owed penalties due to large underpayment of taxes during 2006.

Any tax program you use, or your tax preparer, should be able to help you estimate what your withholdings or quarterly tax deposits should be for 2007, and let you adjust for events that occur in 2007 (such as getting a raise). 

Take Action

If you got a refund or owed taxes, review your withholdings or quarterly tax deposits with your tax software or tax preparer, to determine if you need to make a change.

Most of you have little to worry about … but a few of you may need to take action to avoid potential fall out from fluctuations in interest rates, the availability of credit, and real estate prices, due to the collapse of the high-risk mortgage industry. 

Who Should Not Worry? 

Don't panic. The first step is to simply review the status and terms of your loans and investments to determine if you potentially have program. If you want to avoid major problems, the secret is to troubleshoot before payments go up. Don't wait until you can't make payments & you are forced to short-sell or be foreclosed upon.

Take Action

Review your mortgage policy to confirm terms. If you have a mortgage that will become adjustable, contact your lender and/or financial advisor to gather your options. 

Do you start out the year intending to get your finances in order, but you get off track? Or do you create a detailed budget, or get your financial plan from your advisor, but nothing ends up happening?

What you are missing are Money Meetings.

Whether you are trying to create wealth, get out of debt, or grow your small business, your finances are something that must be attended to regularly, or they will get off track — and require tons of time and energy to fix. The #1 secret is to troubleshoot problems before they start, when its easy to make small changes that will have drastic effects on reaching your goals. 

What's a Money Meeting? 

Its simply an appointment with yourself that you schedule on your calendar, just like a client or doctor's appointment. During this Money Meeting, you review your financial "state of the union" and decide how to make changes to prevent problems or help you reach your goals faster or easier. 

How often do you schedule Money Meetings?  

There are four different types of Money Meetings. Your weekly Money Meeting is just a 15 minute check on your trouble areas (personal overspending categories, like shoes or eating out, or income and sales figures for small business owners or salespeople). Your monthly Money Meeting is a short (30-90 minute) check of your income and expenses for the past month, and your progress towards short term goals, like getting out of debt or saving for a down payment on a house. These meetings you may just have with yourself.

On a quarterly and annual basis, your Money Meetings should be held with your spouse, partner, or business partners. These Money Meetings include creating a Net Worth Statement of your assets and debts, looking at your income and expenses, and planning for the next quarter or year. You may make adjustments to your future plans or create New Year's Resolution's to make major changes to your life. This is also a great time to discuss the goals for the family (purchasing a new home, starting a business, retirement, college) and to rebalance your investment portfolio.

What's the Secret of Money Meetings?

The Secret is that Money Meetings are not just about reviewing statements or creating reports. It's about deciding on an Action Plan or To Do List of changes you are going to make in your behavior so you can reach your goals faster, and troubleshoot problems before they start.

Take Action!

Schedule a 30 minute meeting at the end of this month with yourself to review your personal and/or business finances. 

1. Expenses are everything. Whether you are trading stocks, buying mutual fund shares, or investing in real estate, you will win or lose based upon the fees and expenses. You must evaluate not just the initial purchase commissions and charges, but also reoccurring maintenance fees, upkeep, insurance, and opportunity costs.

2. To know if you are getting a good return you must know if your investment is passive or if you are in business. If you are investing in mutual funds, your 401(k), or in a business you don't run or manage, you are making a passive investment and can be sufficiently rewarded by a moderate return.   If you are researching & trading stocks every day, managing rental real estate properties yourself, or overseeing a franchise, you are running a business and need to get a great return to make the additional risk & time worth your while.

3. Asset Allocation is 90% (or more) of return. Don't worry as much about picking the perfect stocks, bonds, mutual funds, or indexes. Almost everything comes from having a well-diversified, annually rebalanced portfolio that is allocated in the right percentages, in the right categories (i.e., large caps, bonds, international).

4. Simple is better. Yes, there are dozens of asset categories and tens of thousands of mutual funds. I commonly see brokers put clients into 20 or even 200 different mutual funds. More is not better. It just means that you are unable to manage your own money and your fees go up (reducing your real return). I usually use just 4 asset classes with one or two funds in each category, and get the same (if not more) return.

4. If it's too good to be true, it probably is. Many of the trendy investment seminars and schemes are not appropriate for you. A few of them are ponzi schemes, where the high returns (usually like 20% per month) are paid out from the principal of new investors not based upon any real profits — yes, I personally know people who have been bankrupted by these schemes.   Some are legitimate sophisticated techniques that will work for some people who are willing to take a lot of risk and spend time on the business (i.e, foreclosures, option trading), but most people will not be successful. If you are thinking about one of these programs, send us an email and we'll give you a reality check.   

• Family Net Worth Statement (Assets and Liabilities)
•  Family Cash Flow Statement (Income & Expenses)
•  Family Annual Budget or Cash Flow Projection
•  Family Investment Portfolio
•  Personal Visions & Goals
• Business Cash Flow Projections or Pro Forma's
• Business Marketing Reports (i.e., Campaign Performance)
• Business Balance Sheet
•  Business Profit & Loss Statement
•  Business Cash Flow Statement
• Business Marketing & Promotion Plan
• Business Plan
•  Business Vision & Goals & Mission

For a family, this quarterly review may be a one hour meeting between the spouses, where you go over the current version of your Net Worth Statement to make sure there are no surprises, and plan for the next quarter of Cash Flow — primarily expenses. You can also revisit if any policy or procedure adjustments needs to be made — for example, if one spouse is uninformed of what the other is doing, or if one spouse feels he/she is doing all the work. 

For a small business owner, you may have part of this meeting with yourself, to review your information and come to your own conclusions for what needs to be changed in business policies, procedures, products or services, and marketing, for the next quarter. You may want to set aside as little as a few hours, to as much as a day or two. Then, you may want to meet with your financial advisor, business coach, or mastermind group, to brainstorm and gather their opinions. 

Take Action

Take out your calendar right now and schedule time for your next quarterly review in September. Honor that appointment just as you would with a client or doctor's appointment.

How do you reduce your stress about your money?

How do you make sure you don't run out of money at the end of the month?

How do you get control of the variable cash flow in your business?

How do you save more money for your goals?

The secret is in the system. You must create a system for checking on your finances each week, month, and quarter, to make sure that you did what you thought you were going to do, and to make changes for the future. 

But for it to work, it must be easy and not take a lot of time. Otherwise, you are going to get overwhelmed and procrastinate — which defeats the entire purposes of monitoring your cash flow. 

I'm not talking about checking on your stock portfolio. I'm not talking about balancing your checkbook, or imputing stuff into Quickbooks. I'm also not asking you to look over all your receipts. 

The system is to create reports (or have your software program, bookkeeper, or assistant create reports) that you review each week, month, and quarter. These reports must make it easy for you to see if you are on track, and for you to decide if you need to make changes to your behavior, so you can meet your goals.

Personal Finances

In our personal finances, we typically have an issue with our expenses. Our personal expenses fluctuate month-to-month, and tend to creep up over time if we are not keeping on top of them. The secret in personal finances is to monitor your discretionary spending on a regular basis (weekly, monthly), and your fixed spending (bills) on a quarterly basis.

How do you do this?   It may be as simple as keeping a detailed log of your "problem" areas, so you can monitor them on a weekly basis - such as toys, clothing, shoes, dining out, or online shopping.   You may also use an "envelope" system, where you set aside $200 a month for shoes, for example, in cash in an envelope, and when that cash is done, you are done for shoes that month.

Then, you can just worry about the big stuff that tends to stay the same from month or month (grocery shopping, gas, bills) at your quarterly review. (we will discuss quarterly reviews next week)

Small Business Finances

For small businesses, the issue is usually not expenses — it's fluctuating income. There, the secret is to monitor your income and marketing campaigns on a weekly and monthly basis — so you can make changes immediately if things start to slow down.

Small business owners should have a weekly report of all marketing campaign statistics, such as visitors to your website, new subscribers to your eZine or blog, introductory appointments made, purchases, new clients signed, subscriber drop-outs, and conversion rates. If things are down one week, you can immediately ramp up your marketing to make up for the lull. That way, you won't be surprised in 6 weeks when you income goes down because you had let your marketing slide one month earlier.

You should also be reviewing cash flow projections on a weekly basis, which take those marketing campaign data and use it to project how much income you will have in upcoming months and quarters. In your cash flow projections you will be able to see which expenses will be coming out in upcoming months — so you don't accidentally think you have extra month this month (and spend that money), because you forgot that your big insurance payment is due in 2 weeks.

On a monthly basis you will also monitor your Profit & Loss statement and your Balance Sheet, which will give you a snapshot of how your business is doing for the month, quarter, and year. 

You can have your assistant, bookkeeper, marketing consultant, or accountant create reports for you, but you MUST be reviewing them yourself. Only you can make the necessary changes and interpretations that will fully utilize the reports and keep your business in the black. 

Take Action

Are you looking at your money on a regular basis? Set aside 15 minutes per week to look at your money. Schedule this appointment just as if you would an appointment with your doctor or a client. If you own a business, set aside 15 minutes for personal and 15 minutes for your business.

Did you miss out on any tax deductions for 2005?

How much income will your small business take in next week?

Would you be nervous about defending yourself in an audit? 

When you are creating a system to manage your personal or business cash flow, keep in mind that it has three purposes:

Send the Paperwork to Your Worker Bees

What's the #1 concern of small business owners? 

How to manage up's and down's in business income each month. 

What's the #1 concern of individuals?

How to save more money & have more money available to spend on improving their lifestyle.

Either way, it's all about managing cash flow. 

Whether you put it under the category of budgeting, cash flow management, pro forma's, financial planning, or balancing your checkbook, it all comes down to creating a system to achieve your goals by managing and strategizing the cash coming in and going out each month. In Prosper! this month, I will be disclosing my 4 Step System to Manage Cash Flow. You can use this system for your household finances, your home business, or a multi-million dollar corporation — the same universal principals apply. 

Step #1 - Send Paperwork to Your Worker Bees

The first step in managing your cash flow is to get the details out of your way. One of the details is all the paperwork and records we are required to maintain for tax purposes. I'm talking about all the documentation to support tax income and tax deductions. On the personal side, it's salary information, investment records (both purchases and sales), and deduction records (i.e., property tax, mortgage interest, charitable deductions). On the business side, it's income records (invoices and deposit slips) and expense receipts and cancelled checks. 

Whether or not you use this original data to prepare your tax returns (we'll discuss that next week), you do need to keep all of it in case you get audited. But you must not get bogged down in these details, because it dose not help you manage you cash flow.

How to Keep Records: Personal records may be kept in files by year, along with the tax return for that year. Business records may be kept in 4 monthly expanding files — one for income, one for deposit slips, one for cancelled checks, and one for receipts. You may combine travel, automobile expenses, entertainment, and dining records with the receipts (just write notes directly on the back of the receipt), or keep logs in a separate file or journal - whatever is easier for you.

You can keep these documents as electronic files. But, I find that scanning the documents takes more time then throwing them into files. And who cares about having a pdf of a Starbucks' receipt from 1998 on your computer? 

How to Maintain Records:  If at all possible, delegate to your Worker Bees! Have your Virtual Assistant, Personal Assistant, Professional Organizer, spouse, responsible teenager, stay-at-home-mom neighbor, or babysitter take over this job. (And yes, not only rich people have VA's and PA's - you can get someone for just 2 hours a week.) All they need to do is sort the paper by year or month, label the files, and stick the documents into the files. There is no reason for you to do it, except to manage that it gets done regularly (at least monthly). 

Action Step

Do you have a pile of receipts? Cancelled checks? Notes and logs? Stop dealing with this paper and get it off your desk into a simple expandable file. Even better - delegate this task to your Virtual Assistant or Personal Assistant.