Patience Is A Financial Virtue

December 6, 2016

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Modern society is characterised by fast-paced technology which allows us to enjoy updates and ready-to-eat meals. Today, it seems that patience has become passé; who wants to wait for anything in this age of instant gratification?

Patience, one of the seven heavenly virtues, is the ability to accept delays in the desired timing of an event, or the capacity to endure problems without anxiety. Patience really requires you to take a passive approach while you allow nature or destiny to take its course.

When it comes to money, it could be argued that patience indicates weakness, as we should be fiercely ambitious in going after our financial goals. However, patience is an important trait to have if you want to succeed with money; without it you may be actually be sabotaging your dreams.

Immediate not always ideal

Persuasive advertisers often encourage you to buy their products with a sense of urgency, as they insist that you can’t afford to miss out on the latest fashions or their amazing sales. When you’re spending your money, sometimes you may feel under pressure to act quickly to get the best deal.

Most times, applying a little patience when spending will not let you miss out on must-have items or a once-in-a-lifetime shopping event. In fact, taking your time and thinking twice before you hand over your money can help you to avoid making impulsive purchases that you may regret in the future.

Before you commit to any purchase, ask yourself if it is the best use for your hard-earned dollars. Are there more important purposes to which your funds could be allocated? If you postpone your purchase until the following day, you may actually be relieved that you didn’t give into the desire to spend.

Defer getting into debt

Lending companies also promote the idea that you don’t need to wait for what you want, as you can attain all the items on your financial wish-list if your credit rating permits you to borrow. The concept of saving to obtain the finer things of life is almost obsolete, as your dream is just one loan away.

Experience has taught me that consumer debt is easy to get into and extremely hard to come out of. If you used your credit card to buy the latest high-end smart phone and your bank account is empty, you should be questioning your priorities. Is it worth paying loan interest just to keep up with the Joneses?

Instead of borrowing to buy luxuries, save for them or try to increase your earnings to match your desired lifestyle. Once you have fallen into the debt trap, it will definitely require a lot of time and patience for you to extricate yourself and get back on the road to financial stability.

Slow but steady savings

Another area in which you have to exercise extreme patience is with your savings growth. With the low interest rates currently available on savings accounts, some people choose to forgo saving to spend, or look for more lucrative ways to turn over their money for profit.

Apart from the fact that saving teaches you about making sacrifices and builds discipline, the act of saving is essential to create a store of money for emergency purposes. You also need to save to amass lump sums that can be used for goals such as the down payment on a home.

To get the most from your savings, opt for term deposit accounts that may offer higher interest rates, and ensure that the interest you earn is added to your principal every month. With lots of time and a little patience, the magic of compound interest will allow your savings to grow exponentially.

Wait for wealth

As the saying goes, ‘poverty sucks.’ It can be hard to be patient when there’s never enough money to live in the way you truly desire. While you should aim to improve yourself financially, you must also be realistic about the time it takes for your wealth to grow.

One avenue in which many persons allow their impatience to get the better of them is with investing. People who respond to rumours about high-performing investments without doing the necessary checks to ensure that they are legitimate, often end up losing their funds.

To increase your wealth, you need to become knowledgeable about investing and business options which can help you to multiply your money. You also have to patient to wait for the opportune time to reap your rewards; remember you don’t plant an orchard today and start harvesting tomorrow.

Patience brings personal growth

Patience also refers to your ability to tolerate challenging times. If you are currently experiencing financial difficulties, take the time to understand why you are in this position, and learn what you need to do to overcome your issues. Patience will allow you to face your reality with an optimistic outlook.

Why Consumer Spending Matters to the Economy

December 6, 2016

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There are a variety of factors that determine the strength of the U.S. economy, including government spending levels, imports versus exports and currency values. Yet, the biggest factor in determining the health of the economy is based on consumer spending, which is the case in most developed countries.

According to statistics from the Federal Reserve (the Fed), expenditures from American consumers account for more than two-thirds of the nation’s Gross Domestic Product (GDP), the measure used to determine growth in the economy. While the role of the consumer has not always played such a dominant role in driving the economy, it has generally been responsible for 60 percent or more of economic activity dating back to the post-World War II era.

It is notable that consumers have played a more prominent role in recent decades. According to U.S. Bureau of Economic Analysis, a half century ago, in 1966, consumer spending accounted for 59 percent of total GDP. By 1991, the percentage had risen to 64 percent. Today, consumer spending represents 68.1 percent of GDP, and has been in a similar range since 2008.

What is the role of consumers?

Economists and market analysts often keep a close eye on trends related to consumer activity. If consumer spending is strong, it can be an indication that most Americans have a high level of confidence in the direction of the economy. The total amount of consumer spending isn’t the only measure people keep an eye on. The types of expenditures can help determine how high consumer confidence may be at any given time. For example, if sales of luxury goods (expensive cars, jewelry) are lagging and people are putting more money into necessities like food, shelter and clothing, it may not reflect a strong vote of confidence about consumer expectations.

The data on spending plays an important role in how businesses and government agencies plan for the future. If consumers show a high level of confidence, businesses are more likely to boost spending as well to try to capitalize on the opportunity for increased sales. By contrast, if consumers are cautious about spending, businesses may invest less and government policymakers have, at times, chosen to provide stimulus through tax cuts or increased spending to help give the economy a boost.

Consumer spending trends also have a big impact on monetary policy, which is directed by the Fed. If consumer spending is lagging, the Fed can decide to reduce interest rates and take other steps to help jump-start household and business spending. If consumers are spending too much too quickly, it might signal that inflation could become a threat. The Fed may take steps, such as raising interest rates, to try and control economic growth.

What can we expect?

It’s difficult to predict what the future will hold for the markets and economy. One thing is for sure – economists and financial analysts will likely continue watching trends in consumer spending to gauge where the economy is headed.

Five Tips for Buying Your First Home

December 6, 2016

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Are you dreaming about moving into your first home? While home hunting can be exciting, the process of buying a home can be somewhat challenging. Purchasing a home is a big financial commitment – potentially one of the biggest purchases you’ll make in your lifetime. With some planning, you can be ready to commit to a home with confidence. Here are some tips to help you get your finances ready for purchasing a home.

Determine your down payment and monthly housing cost. In most cases, you’ll need a minimum down payment of 10-15 percent. However, it can be advantageous to make a larger payment to reduce the interest you’ll pay and avoid fees attached to low-down-payment loans. As a benchmark, your down payment generally needs to be at least 20 percent to avoid Private Mortgage Insurance (PMI). Maybe you’re one of the lucky ones with a generous relative willing to help with your down payment. If that’s the case, ask your lender about rules pertaining to cash gifts. You can determine your monthly housing cost by adding the cost of your mortgage payment, taxes and homeowners insurance. Be sure to look at the total monthly housing cost before purchasing a home to make sure it fits into your overall budget.

Get preapproved for a home loan. With preapproval in hand from a reputable mortgage company, your offer has a better chance of being accepted. Plus, you may be able to shorten the closing period since the loan approval process has been completed. Keep in mind that getting prequalified for a loan is not the same as obtaining preapproval. Prequalification is merely an estimate of how much you may be eligible to borrow based on self-reported income information – it is not a guarantee you will receive a loan. You are still required to undergo an approval process.

Approach fixer-uppers with caution. Unless you are confident the house you’re buying has been deeply discounted based on the current housing prices in your area, you may place yourself at greater financial risk if your new home requires a lot of work. To avoid over extending yourself, look for a home that is in good shape and will stay that way for the foreseeable future. However, be realistic about what you can afford. If you have the time and know-how to retile the bathroom, paint the living room or enhance the landscaping, a moderate fixer-upper could be worth the financial investment.

Limit your demands. If you want to make a compelling offer, particularly in a strong real estate market, you may want to be selective about the conditions you’re adding to your offer. An inspection contingency is smart but asking for extensive repairs may tip the scales in favor of another buyer who is less demanding.

Do your research so you’re ready to act. Buying a home can be a very emotional decision and it’s important to go into the process well prepared. Take some time to lay out your priorities and research the market. What’s most important to you long-term – resale value, location, school district, number of bedrooms? Be practical about what you can truly afford and take the time to obtain preapproval from your bank or mortgage company. When you start seriously looking, you may have to act fast if you find the perfect house. If you’re prepared and thoughtful at the beginning of the process, you’ll be in a better position to make the right move.

Five Reasons to Pay Your Bills on Time

December 6, 2016

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Not paying your bills on time might mean termination of services such as electricity or your phone, or your account could end up in collections. You could even be sued, which is costly and nerve-wracking. Even before you reach this level of stress, though, there are beneficial financial reasons to pay your bills on time.

Late fees are a no-value purchase

Late fees are free money to the company you are paying. You pay them a late fee, but you receive no value in return. What can a late fee cost you? Fees can range from a few dollars to $50 or more. Some creditors charge a late fee and add on additional finance charges, which might be calculated as a percentage of the balance owed on the account. Being late on your bill payments means you may pay enough in late fees and finances charges to cover another bill entirely.

Interest rates may go up

Some lenders include language in the contract that allows them raise your interest rates if a late payment is made. Some lenders may forgive one – or even a few – late payments, but frequent late payments can result in an increased interest. Higher interest means you pay more over the life of the account or loan. Some credit card companies will raise your interest or alter finance terms even if you miss a single payment.

Credit scores drop

Some lenders offer a short grace period of seven to 15 days. After that, they may report your account to credit bureaus as late. Usually lenders report late payments and those that are 30, 60, and 90 days past due. Late payments hurt your credit score and can impact your chances to obtain financing in the future. Late payments on your credit report may also reduce your chance for getting a good interest rate on future loans or accounts.

Internal collectors can be aggressive

Even if you pay your bills before accounts go to collections, if you make a late payment, you might have to deal with an internal collector. They can be as aggressive as collection agencies, calling you several times a day and pressuring you for payment. Sometimes, individuals make payments just to appease such collectors, but that can lead to running behind with other bills and starting the cycle over. Budgeting to pay all your bills on time prevents this from happening.

Loss of account benefits

Some accounts come with benefits, such as interest-free initial periods, cash-back bonuses, or rebates. Some creditors remove benefits from accounts when payments are late, which means you might lose access to valuable services or rewards.

8 Tips to Improve Your Financial Communication

December 6, 2016

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What makes a couple successful in their financial relationship? Ameriprise Financial surveyed over 1,500 couples (those married or living together for at least six months) to learn about their money conversations and how they make decisions. The results revealed eight ways you can improve the financial health of your relationship:

1. Understand your partner’s money mindset. It’s normal to have differing views and habits about money, but that doesn’t mean you can’t agree on your financial goals. Couples who report being on the same page financially work to understand their partner’s approach to money and keep the lines of communication open.

2. Make finances a priority and don’t give up. Couples who are willing to have the hard conversations and who work together to find financial harmony will reap the benefits over time. As you might expect, the study found that couples who had been together longer tend to have better communication and are on the same page when it comes to financial matters.

3. Agree on financial goals. It’s tough to pool your money with someone who overspends or who isn’t willing to save for the vacation you’ve always dreamed about. Sharing financial goals does bring you closer together-or at least it’s one less thing to argue about. To make it easier to save, challenge yourselves to add a timeframe to each goal so you know what you’re working toward first.

4. Assign and accept financial roles and responsibilities. Most couples split up tasks such as paying bills or monitoring investments. Clear responsibilities allow you to hold one another accountable without worrying if the cable bill was paid. However, be sure to work together on tasks such as retirement planning that requires close collaboration.

5. Invest in your future together. Make it a priority to set aside a portion of your earnings for short- and long-term goals, including retirement. Know how much you collectively have in retirement savings-a surprising 23 percent of couples are unsure of this number. If you have kids, talk about how much you’d like to contribute to their college expenses so you can save accordingly.

6. Set a spending limit. Spending habits were the leading cause of contention for couples. Consider setting a spending limit to ensure you’re on the same page as your partner regarding large expenditures. On average, couples said a purchase over $400 should trigger a discussion.

7. Understand that disagreeing is okay. According to the Ameriprise study, even couples who say they’re in financial harmony disagree on financial matters. What’s important isn’t that the partners don’t always agree, but that 82 percent resolve their issues and move on.

8. Enlist a professional to solidify your financial plan. When you need an objective opinion – or a deciding vote – meet with a financial advisor. Together the three of you can create a financial plan that meets your specific needs as a couple.

Ultimately, it feels good when you are in sync with your partner regarding financial decisions and can work together toward managing your finances. Couples who actively work on improving their financial relationship will likely be less frustrated over money matters and may even feel better about their relationship overall.

A Few Ways to Pay the Rent

December 6, 2016

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As a landlord, your return of investment comes in the form of rent. If your property is not leased, it does not earn the income that you need to pay the mortgage.

However, many landlords have difficulty in collecting the rent. Even if there is a solid lease agreement, which indicates late rent fees, some tenants have the problem of paying on time.

How could both parties meet halfway to make sure that the landlord receives the payment, and that the tenant will find it easy to pay the rent before or on the first day of every month?

Let’s take a look at how tenants pay their rent and the pros and cons of each payment method:

In the Form of Check

Paying a check is a secure method, which informs the bank to withdraw from the checking account to pay money to anther party. Most landlords still accept checks.

Pros: Tenants can mail checks in advance and also postdate them to cash on the specified date.

Cons: In case the check bounces, the bank charges the tenant, who has to pay a fee. Additionally, getting a check does not necessarily mean that there is money in the account of the tenant.

Take note that checks are not commonly used by millennial, which you need to remember when renting to students.

By Means of Cash

It is not practical to accept cash as payment because it can get lost, it’s difficult to trace, and could have discrepancies on the amount the tenant paid against the cash you received. One more disadvantage of cash payment is that you need to collect from the tenant every month.

If ever you accept cash payments for rent, which is common among landlords who have their basements leased or live close by, make sure to give your tenant an acknowledge receipt as proof of payment and a record of their payment.

There are tenants that still choose to pay rent with cash since many of them use it to monitor their spending. Yet, this appears on their bank statement simply as a withdrawal – that is why it can be difficult to use is as rent payment.

With a Cashier’s Check or Bank Draft

Another secure form of payment is through a cashier’s check or bank draft, wherein the bank withdraws on its funds after withdrawing the amount from the account of the tenant.

Though these may be a secure payment, this is not practical for a lot of tenants, since a fee is required to draw one up. Besides, the tenant has to go all the way to their bank to issue it.

The Importance of Gifting

December 6, 2016

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With the holiday season in full swing, most people begin to think about what’s on their loved one’s annual wish list. While the latest high tech gadget might be a great idea, have you ever thought about how far a monetary gift can go? A gift to the youngest generation in your family can help teach the importance of saving and self-discipline, ultimately leading to a lifetime of good habits and fiscal responsibility. For 20 & 30-somethings, a monetary gift can not only reinforce good habits, but can immediately ease the debt of those coming out of college, or help boost a loved one’s retirement account. And although we always assume that a gift exclusively helps the receiver, the tax benefits associated with these types of gifts can also be good for your wallet. As the “gifter” you can reduce your estate by giving to whomever you choose and if it’s to a registered non-profit charity, you could even be eligible for a tax deduction.

An individual can give up to $14,000, and a married couple as much as $28,000, to as many recipients as they’d like without any tax ramifications each year. These gifts can be made directly to the individual or put into an account in their name that they’ll benefit from in the future. Savings bonds, or deposits into custodial accounts or educational savings plans are very popular gifts for young children, ensuring that the gift is saved for a future purpose. For those 20 or 30-somethings, consider a gift into a traditional or Roth IRA. If you’re worried that your children will grow to expect these gifts instead of saving themselves, consider offering some type of match. One common strategy is to offer a retirement match, putting one dollar in an IRA for every dollar that the child puts toward their IRA or company 401k plan. For those paying student loans, another common strategy is to match dollar-for-dollar into a retirement account every dollar the child pays over the minimum monthly payment on their loans.

The holidays are also a time of year when people contribute more to charitable organizations close to their heart. If you own highly appreciated stock, this year consider gifting those shares instead of a cash gift. Let’s assume you bought a share of Apple for $20 that’s worth $100 today and that you’d like to use it to give to charity. If you were to sell this share yourself and then gift the proceeds, you’d pay capital gains taxes on the $80 of growth. If the charity is a tax-exempt non-profit, they don’t pay capital gains taxes. By gifting the share of Apple directly to the charity, you’re able to avoid the $80 taxable gain and also tax a deduction for the full $100 market value of the stock. If you’re growing your investment savings, write yourself a check for that tax-deduction and re-deposit the value back into your investment account. If you have required minimum distributions (RMDs) from your IRA, you can donate up to $100,000 of these assets each year to satisfy your required withdrawal and avoid paying ordinary income tax.

Many people only make plans in their will for gifts to their loved ones. As advisors, we see cases where a person with a large estate leaves gifts in their will that are below the annual gift exemption. When this happens, in addition to possible estate and generation-skipping taxes paid by the estate, certain states require the recipient to pay inheritance tax on the gift as well. By giving to your loved ones while you are alive you can reduce your estate and help avoid taxes, but more importantly, you get to see the recipient benefit from the gift. You also have the opportunity to warp your gift in a story, sharing your hopes and desires in giving the gift. Share with the next generation the importance of financial independence, why you enjoy giving to your favorite charity, or the biggest money mistake you made over the years.

Holiday gifts of cash can do a lot to help your loved ones, teach strong financial lessons and potentially lower future taxes. But, monetary gifting is most successful when it is about sharing your success and your values at the same time.

10 Financial Opportunities to Consider in 2017


The start of a new year is a great time to take stock of your financial life. Have you done all that you can to put yourself in the best possible position? Or, have you missed out on some important financial opportunities? Take a look at where you stand and consider these key opportunities that could make a big difference in your financial life in 2017 and beyond:

1. Revisit your financial goals

You may have established financial goals a year ago or maybe it has been several years. Either way, it makes sense to revisit your goals and make sure they are still consistent with the direction of your life and dreams for the future. Make adjustments if anything has changed.

2. Build a sufficient emergency fund

One of the most fundamental forms of financial security is having money set aside in a “rainy day” fund to meet any emergency needs. You don’t want an unexpected expense to result in a major financial setback. It’s best to have a minimum of three-to-six months of expenses set aside, and up to a year if you can.

3. Save on interest payments

First and foremost, if you have outstanding credit card debt, make it a priority to pay down this costly form of borrowing as fast as you can. Also, take a closer look at the interest rate on your home mortgage. If it’s notably higher than today’s market rates, look into refinancing to reduce your monthly payment and put the money you save to better use.

4. Take advantage of your workplace retirement savings plan

If you participate in a 401(k) or 403(b) plan at work, make sure you are, at the very least, contributing enough into the plan to take full advantage of any employer match. It’s a “free money” opportunity and should not be overlooked. To the extent you can afford to do so, consider contributing more than the match amount to your plan.

5. Capitalize on “catch-up” contribution rules

If you are age 50 or older, you can boost contributions to your workplace savings plan and individual retirement account (IRA) by taking advantage of so-called “catch-up” rules. This can mean investing tens of thousands of additional dollars over time to help secure your financial future.

6. Establish Roth savings if you qualify

Roth IRAs and Roth 401(k)s allow you to build retirement savings with after-tax dollars where all distributions may qualify for tax-free treatment in the future. The potential for tax-free income in retirement can be an important benefit.

7. Make sure you are comfortable with your portfolio

Are you constantly worried what could happen to your portfolio in a market downturn because you’re taking on too much risk? On the flip side, do you think your portfolio needs to be more aggressive to keep up with your financial goals (knowing that there’s always risk with reward)? If you come up short in either area, it may be time to revisit your investments and make appropriate changes.

8. Review your protection strategy across all aspects of your life

Do you have sufficient life insurance in place to protect your loved ones? Is disability income coverage part of your mix? Are you protected against the risk of specialized care costs later in life? Are your home and personal possessions properly covered? Make sure you have a comprehensive protection strategy in place to prepare for unexpected events.

9. Get a handle on your taxes

Review past tax returns and your current financial situation with a tax professional who can help you find potential ways to reduce your tax liability. If charitable giving or volunteering is important to you, consider the tax implications of your donations.

10. Solidify your legacy plan

Make sure your will, health care directives and trust documents reflect your current priorities. Review and if necessary, update beneficiary designations on retirement accounts, bank accounts and insurance policies.

Why Is Money the Most Important Topic for Most People?

December 6, 2016

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Recently I tried putting ‘money’ in my article topics to see how they would fare above the others that include health, child abuse, spirituality, and last days’ prophecies, among other things. Of the top twenty performers 12 deal with money or the financial system. This speaks volumes of the way many think when it comes to what’s important in the minds of many, and who can blame them? In today’s world the economy is tethering on the brink of disaster and people are struggling.

In Australia where an election will be held on July 2nd, it is the economy that is the main issue on the government’s agenda. The Prime Minister promises better management of it and more incentive and growth leading to more jobs. While that is the promise it is not the reality.

Over the three years of the present administration the economy has gone backwards. Jobs have been lost left, right, and center. Payments to parents have been cut, government sponsored services have disappeared, and generally the mood is one of gloom. Businesses are closing and retail shops are finding it so hard to trade that many are folding.

The world economy is also on a knife-edge while economists are struggling to prop up stock markets and keep something like stability going ahead. But how long can this continue before the big break comes?

Many of my articles deal with this crisis and it is no surprise that people want to know. It seems that there is a general nervousness that is driving people to look for alternate leaders who promise things that are impossible to deliver. Some don’t have to promise anything and they are leading in the poles because voters don’t want to have a return of the same.

Is there anything that can be done to prevent Australia going into a recession? That is the big question and it is one for the world as well as other countries fight back bankruptcy and declining incomes. Venezuela is one nation that stands as an example of what is likely for many other nations and right now there appears to be none that are immune.

It is my opinion that we are in the last days and the prophecies state that at this time there will be a collapse of the systems as the Spirit takes back control of the World Order that has been built on a false premise. That is the money that invented to give men power and while it has been pushed to the limit to do that it is based on nothing bur dreams.

The Financial Business Model: 5 Keys to Long-Term Success

December 6, 2016

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Why do so many businesses fail to make profits and achieve their financial goals? The answer is simple because many business owners simply ignore one or more of the 5 keys to financial success. Many businesses are making sales but are not profitable. Learn how to fortify your business model and set your company up for success. Developing a financial business model provides a clear picture of your company’s financial history as well as your company’s financial future. Working from a financial business model will help to prepare your company to make better decisions for the company in the future. And analyzing your finances on a regular basis will provide you with the financial success you are seeking to achieve. Get ready to gain more flexibility and financial freedom in your company with the keys to success.

Key #1) Don’t Go It Alone
Mismanagement of finances is not reserved for start-up companies but for all businesses. Many business owners are able to produce and sell their products and services but are not able to manage their finances. If you are not able to determine where you have been you will not know where you are going. Accountants and bookkeepers are able to assist your company with establishing a financial foundation and making predictions surrounding your financial future.

Key #2) Review Historical Data
By developing a financial history of your company’s finances provides you with valuable lessons for the present that will guide you into a more profitable future. Reviewing financial history helps you to know what to do and what not to do in your business. Compiling historical financial data can help your bookkeeper or accountant to assess the reasons for your success or failure.

Key #3) Project Sales and Costs
Once you have completed the second key it will set you on the trajectory to be able to project the sales and costs. Projecting sales and costs without historical data can be challenging but not impossible. Projections for your company are not a process that begins at the start-up phase, it is an on-going process to help determine areas of growth and change. Costs are always easier to project than sales. However, sales should not be your main focus but rather on the company being profitable!

Key #4) Develop Financial Statements
Financial statements are the framework for the accounting cycle. In other words, the income statement, the balance sheet, and the statement of cash flows provide a picture of how well your company is doing financially. Financial statements structure all financial data in a manner that is easy to understand and should be prepared with accuracy. These statements assist you with assessing financial performance and determining key business decisions.

Key #5) Assess and Implementation of Changes
This is the final piece in the financial business model. Once all of the first four keys have been established you will be able to assess your company’s financial position and implement changes where it is necessary to ensure financial growth and success. Tying it all together the financial statements will reflect your company’s historic information and decisions can be made about the future from that data.