Wednesday, March 8, 2017

3 Math Facts Every Business Owner Needs to Know

Kids who spend recess doing their math homework go to college and become accountants. Kids who spend recess selling baseball cards leave school and hire the kids who became accountants. But that means entrepreneurs often lack simple number skills that every business owner needs to know. Here are three math facts that can boost any business.

1. Giving More of a Product for Free Costs Less Than a Discount 

Imagine that a hardware store is offering two deals on a liter of paint. The first deal gives away 33 percent more paint for the same price. The second deal offers the liter of paint for 33 percent less money. Which is the better deal for the customer?

If you think they're the same, you're like most of the respondents in marketing studies. You're also wrong.

Let's say that liter of paint costs $20. The customer is paying 2 cents for every milliliter. If they're getting an extra 33 percent free, they're paying $20 for 1,333 milliliters, or 1.5 cents per milliliter. If the customer receives a 33 percent discount, they pay $13.20 for a liter of paint, or 1.3 cents per milliliter. 

That's a big difference for the customer, a big difference for the business...and the reason cereal manufacturers promise 25 percent more Cheerios instead of cutting the price.

2. Prices Work Best With Comparisons

In a classic test, psychologist Dan Ariely, showed how smart pricing can affect purchase decisions. He took a subscription offer for The Economist and showed it to 100 MIT students. The magazine was offering a digital-only subscription for $59; a print-only subscription for $125; and a print and digital subscription also for $125.

Sixteen students chose the digital subscription, and 84 chose the print and digital subscription. Not surprisingly, no one chose the print-only subscription that cost the same price as the third option. 

So Ariely took out the second option and offered the remaining two choices to another 100 MIT students. This time 68 chose the cheaper option and 32 made the more expensive choice.

That second choice wasn't filling space. It was making the most expensive option look cheap. Add a lower value option next to high margin offer, and even if everyone ignores it, you'll make more profits.

3. Extended Warranties Never Add Up...Except for the Seller

Imagine your business needs a new computer. You decide on the specifications, surf the Web for comparisons, then head to the store to make your purchase. When you reach the checkout desk, the clerk asks if you want to buy an extended warranty. The computer costs $1,000 and comes with a one-year guarantee. A three-year warranty is $180.

It's almost never a good deal. In effect, you're being asked to pay $180 for a repair that hasn't happened yet, and may never happen. And if something does happen to the computer, it's more likely to happen towards the end of its life when it's less valuable anyway.

Think of it this way: $180 represents 18 percent of the computer's value at the time of purchase. After nearly three years, the value of the computer may have fallen by 50 percent. For the warranty to be a good purchase, the cost of repair has to be a third of the cost of the computer. At that stage, replacement would be a better choice.

Extended warranties make sense for sellers, who often take half the premium for themselves, and for the clerks who sell them because they make a commission. But when you're buying for your business, choose good products and skip the warranty.

Image Credit: Getty Images

Theresa Todman, Managing Partner/CEO of B&M Financial Management Services, LLC . Theresa specializes in bookkeeping, accounting, QuickBooks solutions, small business tax issues and consulting.
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Monday, March 6, 2017

5 Tips For Managing Money While Self-Employed

When it comes to starting your own business, the future can seem very bright. As you keep an optimistic eye toward what lies ahead there is one component you don’t want to skim over: your budget. Managing money can be tricky, especially if you’re not financially conscious in your personal life, but it’s also vital to the future of your business.

Poor financial planning is one of the main reasons startup businesses fail. To avoid this fate, spend some time developing plans for both the business, and for yourself. To get your business started in the right direction, a few considerations:

1. Don’t Underestimate Your Expenses

If at all possible, do not “guesstimate” expenses. While this might take some extra time on your part, having an accurate estimate will help you in the long run. Once you’ve thought through all of the usual expenses, like product costs or payroll, walk through a typical day and see if there is anything missing. Some commonly missed expenses include gas, insurance, and postage.

It’s also important to remember that you will likely face unexpected costs during the course of your business’ lifecycle. When creating your plan, build in a buffer so that surprise costs won’t cause financial hardship.

2. Manage Income

It’s more than likely that in the beginning, your new business will not be taking in a steady income. Your cash flow will probably be sporadic and vary from month–to-month. If this is the case, your best course of action is to average your monthly income. During months that you earn more than average, put the extra funds into a savings account. This will come in handy when you have a month that is not as fruitful and you need to supplement the income.

3. Try to Avoid Credit Cards

While credit cards can be a tempting crutch to fall back on, there are other ways to pay for business expenses. One downside to credit cards is that it’s easy to fall into a downward spiral; charging without thinking of the financial consequences. In the long-run, they also tend to be more expensive than the alternatives. If you still think you need a credit card for expenses, get one specifically for the business and only use it for business expenses – don’t intermix with personal use.

If you need money for your start-up, another option to consider is a small business loan. Many small business loans offer greater flexibility than that provided by credit cards.

4. Keep up With Your Taxes throughout the Year

Business taxes are much more complex than personal taxes. The deadlines, deductions and documentation are tricky, especially if you’re paying yourself through the business. The last thing you want come tax time is a big surprise.

To avoid under-withholding penalties, you may want to make it a regular habit to pay your quarterly tax payments. If you’re not confident with your ability to stay up-to-date on business tax developments or you simply don’t have the time, seek the assistance of an accountant so that you don’t have to undergo the costly process of remedying incorrect tax filings.

5. Make Sure You Keep Accurate Records

Keeping accurate records can be tricky, so you’ll want to create an organizational system that works for you. If you’re invoicing customers, keep track of what is paid and what is outstanding at all times. You can do this on your own, or you can invest in a software program that keeps records for you.

6. Ask for Help When You Need It

Being self-employed doesn’t mean you have to be a jack–of-all-trades. Facing legal matters? Speak to a lawyer. Need tax help? Consult with an accountant. Reaching out for help isn’t a sign of weakness when it means furthering your business. As I like to say, you are not expected to know everything, just how to handle everything. And sometimes that means passing it on to another professional.


Theresa Todman, Managing Partner/CEO of B&M Financial Management Services, LLC . Theresa specializes in bookkeeping, accounting, QuickBooks solutions, small business tax issues and consulting.
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Friday, March 3, 2017

9 Different Invoice Types for the Self-Employed

If you’re a new self-employed business owner unfamiliar with how to create an invoice, it can be tough to know where to start.

First, you can find an easy-to-use invoice template on the QuickBooks website. Next, enter your company information and the customer information for the party you are billing. Finally, provide a description of the product and/or service provided, and send the entire invoice to the customer via email, postal service or another preferred method of communication.

For a more detailed approach, there are nine types of invoices in accounts payable and accounts receivable procedures that you should be familiar with. The following is a quick-start guide to get you familiar with the basics of how to create an invoice.

1. Standard Invoice

Standard invoices are issued by a supplier of products or services to a buyer. They show the amount the buyer owes the supplier. For example, if you’re a bookkeeping consultant and you’re billing a client for 40 hours of bookkeeping, you would multiply your hourly rate by 40 and put this amount on the invoice. A standard invoice often shows a purchase number to identify what was bought, but it doesn’t have to. If you’re the one issuing the invoice, the dollar amount shown must be positive because you are owed money.

2. Credit Memo

A credit memo, also known as a credit invoice, is issued by a seller to a buyer and shows an amount the seller owes the buyer. This number should always be negative. For example, if you are issuing a client a refund for $100, you would issue a credit memo for $-100.

You could use a credit memo to issue a refund for returned goods, to give a discount, to write off a billing amount, to issue prepayment credit, to correcting a billing error or to resolve a pricing dispute.

3. Debit Memo

A debit memo, also known as a debit invoice, is issued by a seller to a buyer and shows an increase in the amount of debt the buyer owes the seller. For example, if one of your clients has an account balance of $-1,000 credit with you and you want to charge them for an additional $100 service, you would create a debit memo for $100 to reduce their credit to $-900. A debit amount is expressed as a positive number owed.

Banks often use a debit memo to charge fees to customer accounts, and companies sometimes use a debit memo to clear a small amount of money owed to a customer as a credit balance. Most businesses rarely use debit memos, but they can be useful if you need an incremental billing adjustment. For instance, if you underestimated the amount of hours when billing a project, you might issue a debit memo to adjust the amount owed. Alternately, many businesses choose to reissue the original standard invoice with the adjusted amount.

4. Mixed Invoice

Mixed invoices can have either positive or negative amounts when they are matched to purchase orders or invoices. For example, if you have a mixed invoice for $-500, you could match this to an invoice for $-500 or a purchase order for $500.

5. Prepayment Invoice

A prepayment invoice is used to record a down payment paid by a buyer to a seller. For instance, if you require a client to pay a $1,000 down payment on a consulting project, you would use a prepayment invoice. When issued by a seller, a prepayment is expressed in a positive amount. A buyer also may submit a prepayment invoice as a negative amount.

6. Withholding Tax Invoice

A withholding tax invoice serves as a record for when you remit withholding tax to the tax authority. Use withholding tax invoices when you need to create records of payroll withholdings. You can create withholding tax invoices automatically or manually. When creating one automatically, decide in advance whether you want to create them during the invoice validation process or the payment process.

7. Expense Report

An expense report is an invoice to record an amount an employee is owed for business-related expenses they incurred while doing work for you. For instance, if a sales representatives has to travel to meet one of your company’s prospects, they would bill their travel hours to you as an expense. You then can report these expenses on your business tax returns. Use expense reports whenever you or your employees are paying for business-related expenses that you want to document for reimbursement or tax purposes.

8. PO Default Invoice

PO default invoices, also known as PO price adjustment invoices, record the difference in price between an original invoice and a new purchase order invoice. For instance, if you’ve already matched an invoice to a purchase order and the supplier changes the unit price, you would use a PO default invoice to adjust the unit price without having to change the quantity billed.

9. Quick Match Invoice

Quick match invoices are used to save time when you have a large volume of invoices that do not need to go through an extensive validation and default process. You can import them into your payables system after entry, after which validation and default procedures get applied.

After you familiarize yourself with the basic types of invoices, identify the types that are most applicable to your company’s business procedures. Then, find sample invoice templates online and customize them to meet your needs. Invoice template files are available for both word processing and spreadsheet programs.


Theresa Todman, Managing Partner/CEO of B&M Financial Management Services, LLC . Theresa specializes in bookkeeping, accounting, QuickBooks solutions, small business tax issues and consulting.
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Wednesday, March 1, 2017

Self-Employed Drivers: How to Make the Most of Your Mileage Deductions

Whether you’re a part-time Uber driver, a full-time truck driver or you occasionally do deliveries on weekends, you’ve got to keep track of your miles. Doing so allows you to deduct your business vehicle expenses, which can seriously lower your tax burden. Depending on what type of driver you are, there are various ways you can use your mileage log and the IRS’s self-employed mileage deduction to your advantage.

Choose a Method
First you need to decide which deduction method to use. The IRS gives you two options: the Standard Mileage Rate Method and the Actual Expenses Method. You won’t be able to take both deductions, so you need to evaluate which will bring you the biggest benefit.

The Standard Mileage Rate Method is the simplest method for calculating your vehicle-related deductions. For the 2016 tax year, the rate is 54 cents per business mile. (It changed to 53.5 cents for 2017). That means if you drove 10,000 business miles in 2016, you’re tax deduction would be $5,400. If you drove 30,000 business miles, you’re tax deduction would be $16,200.

To claim this deduction, you need to keep a detailed mileage log that includes dates, start times and end times, the activities involved, and the beginning and ending odometer readings. With the help of a mileage and expense-tracking app like the one offered within QuickBooks Self-Employed, you can do this automatically and integrate it with your other deduction tracking. The app also allows for easy categorization based on business or personal trips, and won’t drain your smartphone battery.

The Actual Expenses Method allows you to deduct your vehicle’s actual expenses. Eligible expenses include:

  • Depreciation
  • Lease payments
  • Registration fees
  • Licenses
  • Gas
  • Insurance
  • Repairs
  • Oil
  • Garage rent
  • Tires
  • Tolls
  • Parking fees

This method also requires a detailed log. Using this method, you can only deduct the portion of the costs that are associated with your self-employed work. For example, if your total actual vehicle expenses for 2016 are $3,000 and you used the vehicle 75 percent of the time for business (3,000 x .75), the allowable deduction would be $2,250.

Calculate the Costs
Unfortunately there is no easy way to select the best method for you without calculating both. But there are a few general guidelines that can help you understand where you may match up.

Short-Distance Drivers
If you drive fewer than 10,000 miles a year, the Actual Expenses Method may be right for you. In general, some vehicle expenses, like depreciation, insurance and interest, are pretty much fixed costs. For example’s sake, say your fixed costs for the year amount to $4,800 and you drove 2,000 miles (all for business).

Standard Deduction: 2,000 x .54 = $1,080

Actual Expenses Deduction: $4,800

If you drove a bit more — say 8,000 miles (all for business) — your numbers would look a little different, though the actual expense method would still be in your favor.

Standard Deduction: 8,000 x .54 = $4,320

Actual Expenses Deduction: $4,800

In both situations, you’re better off using the actual expenses deduction. Part-time rideshare or delivery drivers, this may be the right method for you.

Long-Distance Drivers
If you have an inexpensive car that gets great gas mileage, you may be better off with the Standard Mileage Method. For example, if you drove 30,000 business miles in 2016, your standard mileage deduction would be $16,200 — which is likely far greater than what it would cost you in actual expenses to keep the car running.

The standard deduction may be the most favorable deduction method for full-time rideshare or truck drivers.

Again, it’s best to calculate using both methods before deciding which one will yield the larger benefits. Using accounting software like QuickBooks Self-Employed can help you automatically track your mileage, automate your deductions and calculate both methods For more tax tips and self-employment solutions, visit QuickBooks Self-Employed Center.


Theresa Todman, Managing Partner/CEO of B&M Financial Management Services, LLC . Theresa specializes in bookkeeping, accounting, QuickBooks solutions, small business tax issues and consulting.
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Tuesday, February 28, 2017

7 Budgeting Tools to Get Your Finances in Order

We admit it: Budgeting is drudgery, a pain, the pits among personal finance tasks. But at the start of a new year, when people are brimming with resolutions to get organized, accelerate saving and all that, it’s a good time to talk about the B word. Maybe you already track income and expenses. More likely, you have followed a budget in the past and then let things ride (and maybe slide).

But it’s a good idea to put yourself through the budgeting paces periodically. Developing a blueprint for how you intend to spend and save money is an important step to reach your goals, both in the short term and in the distant future. It’ll also help keep you out of debt and give you a sense of control over your money.

Plus, budgeting doesn’t have to be painful if you take advantage of websites and mobile apps that help you get organized. No matter how you prefer to budget, you can probably find one to match your style and perhaps automate the task. Some sites cater to detail-oriented types who want to know “how much they spent on Coke versus Pepsi over the past six months,” says Steve Shaw, vice president of strategic marketing for the digital banking group at Fiserv, a financial-technology company. Others take a broader approach, providing simple expense and income tracking.

We offer options that fit a variety of users. Some require you to share user names and passwords for your bank, credit card and other online accounts for quick, automatic updates of where your finances stand. A few let you enter transaction data manually—a plus if you’d rather not share your log-in credentials with a third party. But all of them use security measures, such as encryption and password protection, to safeguard your information. They are free except where otherwise noted.



Best if: You want to budget the easy way

Introduced a decade ago, Mint con­tinues to be a go-to application because it offers attractive, easy-to-use tools for tracking financial accounts and creating budgets. Mint can link to your checking, savings, credit card, loan and investment accounts to let you see how your finances stack up, including a snapshot of your net worth. You can see estimates of your home’s value from Zillow and your car’s value from Kelley Blue Book. You can also set spending limits in various categories (such as shopping and entertainment), view how much you’ve spent in each area throughout the month, and receive alerts if you go over budget. Plus, you can monitor your progress toward savings goals, such as building a fund for emergencies or a vacation.

Mint will slice and dice your finances into graphs over periods you select, displaying how your net worth has changed over the past year, for example, or in which categories you’ve spent the most during the past month. You can also sign up to get a free credit score from Equifax and alerts of significant changes to your credit report. Mint recommends credit cards, brokerage accounts and other financial products, but keep in mind that many of the suggestions are from partner companies, so you may be able to get a better deal elsewhere.

You Need a Budget


Best if: You're up for a deep dive

With a philosophy of “give every dollar a job,” You Need a Budget is best suited for those who don’t mind wading into the weeds. YNAB charges $5 a month (or $50 a year) after a 34-day free trial. But you get a thorough plan and a lot of hand-holding as you prepare your budget, including a guide to setting it up and explanations of why you’re taking each step. Plus, YNAB offers live online workshops on financial management, such as reaching savings goals and paying down debt.

You can connect to your income and spending accounts, such as credit cards and checking and savings accounts, and customize categories. (You can also link to loan and investment accounts to track balances and see your overall net worth.) If you’d rather not provide direct access to your accounts, then you can enter balances and transactions manually or download statements from your bank and credit card websites and import them into YNAB.

At the top of your budgeting page, you’ll see how much cash you have to divvy up among the categories; you are directed to run that number down to zero by allocating all of it, both in the current month and in the future. In its “Age of Money” tally, YNAB calculates the number of days that passed between when money arrived in your budget and when you spent it. The goal is to spend money that is at least a month old, breaking the paycheck-to-paycheck cycle.



Best if: You're the hands-on type

Fair warning: Spendee does not sync with your online financial accounts yet, so keeping it up-to-date can be labor-intensive, and it currently operates only as a mobile app. But if you want to be mindful of every purchase and you prefer not to share your log-in credentials—plus you’re smartphone-savvy—Spendee is a handy tool.

Each time you spend or earn money, you choose or create a category for it (such as “Restaurants” for expenses or “Paycheck” for income) and enter the amount. You can upload photos of receipts to attach to each transaction, and you can set up recurring transactions so that, say, a $2,000 paycheck is recorded every two weeks. Spendee subtracts total expenses from available cash to display how much you have left to spend, and it generates graphs that break down your income and spending categories. For a single category, you can set a limit and track how much you’ve spent in it. But if you want to create budgets in multiple categories, you have to upgrade to the Premium level ($1.99 a month or $14.99 a year).



Best if: You budget the old-fashioned way

With the classic budget-by-envelope method, you label envelopes by expense category and stash cash in each. Once an envelope is empty, you’re done spending in that category until the next refill. Mvelopes updates that system for the digital era, allowing you to link your bank and credit card accounts. As income and expenses flow through your Mvelopes in-box, you assign transactions to customizable on-screen envelopes and set up rules to have recurring transactions directed automatically. If you like, you can attach photos of receipts to your transactions, as well as create a savings envelope.

You can earmark cash to an envelope up to a year in advance, applying the same monthly limit to the ones that hold regular expenses and individually marking the rest. If you find that one envelope is too low on funds to cover expenses or if you have extra money left at the end of the month in another, you can transfer money among envelopes. Mvelopes’ graphs are not as well executed as those in some other applications, but they clearly show your account balances, net worth and other measures.

You’ll have to stick with somewhat broad budgeting categories if you use the free version of Mvelopes, which comes with 25 envelopes and lets you link four accounts. For $95 a year, you get unlimited envelopes and can connect as many accounts as you wish, plus you get access to debt-management tools and other features.

Personal Capital


Best if: You're an investor who wants the big picture

Personal Capital’s strong suit is monitoring your whole financial picture. Link bank, credit card, loan and investment accounts to Personal Capital (or enter data manually) to see a dashboard with charts and graphs that show your net worth, cash flow, portfolio balance and allocation, and best- and worst-performing stocks. You can drill down into each section for more analysis.

Within cash flow, for example, you can view how much of your income came from cash deposits, interest, investment income and other sources over a period of 30 days to a year, as well as a breakdown of expenses by category. The displays in each section are colorful, detailed and easy to navigate. And it’s broadening its budgeting capabilities; it will soon allow users of its web application (not just Apple users of the mobile app) to set a spending limit and track how they’re faring against it.

Its tools for tracking investments are especially robust. Along with digging into your portfolio to view it from different angles, you can use the Investment Checkup tool to get a suggested target portfolio allocation based on your goals and the Retirement Fee Analyzer to see an estimate of how much of your earnings in retirement accounts may be lost to fees over time.

Prosper Daily


Best if: You have a fear of fraud

Detailed budgeting is best left to other apps, although Prosper Daily’s money-tracking component is useful for keeping an eye on overall spending. This tool’s strong suit is its ability to identify fraud.

Regularly checking your bank and credit card accounts for unauthorized charges is a task that can easily fall through the cracks. After you link it to your accounts, Prosper Daily (accessible only through a mobile app) pulls in your transactions and prompts you to verify whether you made them. The app highlights duplicate charges as well as those that occur in unusual locations. You’ll also get an alert when a merchant with which you’ve done business suffers a data breach, and you can choose whether to be notified when your credit or debit card is used out of proximity of your cell phone (under the assumption that you carry your phone with you most of the time). Free monthly credit score updates are available from TransUnion.

On the budgeting front, Prosper automatically splits transactions into such categories as travel and groceries and compiles the information into graphs, and you can see how your bank and credit card balances compare with a spending limit that you set. The app also provides alerts of upcoming payment due dates and new monthly recurring charges.



Best if: You like bells and whistles

With so many free and low-cost online options for budgeting and monitoring accounts, spending $75 on software that you have to download to your PC may not be on your radar. But if your finances are complex or you’d like extra help with taxes, investments and other knotty topics, you may benefit from the bells and whistles that come with Quicken.

Quicken offers several versions of its software for Windows, ranging from $30 to $155. If you want to manage investments along with your finances, spring for Quicken Premier 2017 (you can download it or buy a CD for $75 at It connects to bank, credit card and loan accounts so you can download your transactions (you can attach photos of receipts to transactions, too). Then it uses the data to provide analysis and forecasting, in colorful graphs. For example, it displays how your bank account balance is likely to change in the next week, month, year or longer based on what it knows about your income, bills and other transactions. The Lifetime Planner draws on information about your age, income, family, tax rate, savings and other variables to determine whether your finances look secure in years ahead. With the Tax Planner, you can stay on top of capital gains and losses, deductions and other items to make tax season less of a headache.

As for investment tools, it evaluates asset allocation, performance and other key factors affecting your portfolio, and you can use the LifeYield Tax Optimizer to drum up investment strategies that minimize the tax bite. When it’s time to rebalance, for example, Premier suggests selling holdings that will minimize the tax impact. It also recommends how to distribute asset classes among brokerage and IRA accounts for tax efficiency.

If you don’t need all the investment tools, consider Quicken Deluxe ($55 on, which otherwise covers much of the same ground. Mac users have access to just one version ($55 on, which is comparable to Deluxe for Windows but with a different mix of features. The Lifetime Planner and Tax Planner, for example, aren’t yet included, but it has additional investing features. All versions come with a mobile app.

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Theresa Todman, Managing Partner/CEO of B&M Financial Management Services, LLC . Theresa specializes in bookkeeping, accounting, QuickBooks solutions, small business tax issues and consulting.
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Monday, February 27, 2017

Can Money Buy You Happiness?

Over the years, I've had countless people ask me: "Neil, what's it like to make millions of dollars? You must be so happy!"

And the truth is they're right, I am happy. But not because of the millions I've made.

Through all of the good times and bad I can't say I've ever felt true happiness from the dollars in my bank account.

We can all agree that it's nice to have financial security. No one wants to worry about paying bills. But even with this security, happiness eluded me.

It was a puzzle I was determined to solve and through all the ups and down I've learned some essential lessons I'll share with you today.

Becoming Rich

In the beginning of my journey, my goal was to be rich, plain and simple. And to be honest I don't even feel rich... heck I even feel broke compared to some of my friends.

I worked hard for every dollar earned and because of that hard work, I got to live that is much more privileged than my parents have..

Here are just a few of the things I spent (more so wasted) money on:

  • Helicopter
  • Luxury condos
  • Fancy restaurants
  • Expensive watches
  • Designer clothes

On paper it looks like I had won the game of life. But there was something missing from this lifestyle.

I couldn't quite pinpoint it, but I knew something was wrong. I had to take a step back and figure out what needed to be done.

Defining Happiness

Happiness is a word that gets tossed around a lot in our culture, but what does it actually mean?

At its root, happiness is a warm and fuzzy feeling. It's an emotion that feels good, so naturally we want more of it.

Not only do we want more of it, we want it to last forever. We want to perpetually live our lives in a bubble of warm and fuzzy feelings, but very few people even get close to this.

Why is that? It's because throughout our lives we've been told that happiness comes from acquiring more money. Just like a video game, if you can reach the high score you'll get the grand prize.

So I followed what society told me and I fought for those dollars. I hustled night and day in my business to achieve a high level of success and I eventually made it to the "Promised Land". But when I finally got there, the grand prize was not waiting for me. In fact, nothing was waiting for me. I had been sold a lie and I paid for it dearly.

Achieving Long-Lasting Happiness

So how does one acquire such an elusive feeling? Well, you can go the route I went and buy a bunch of stuff. You'll definitely feel happiness, but it will be fleeting.

  • After the joy of owning a helicopter wore off, I just had an expensive flying object that I never used.
  • After the joy of buying $100,000 watches wore off, I just had a piece of metal that I didn't even care got dinged.
  • And after the joy of wearing designer clothes wore off, I went back to wearing white polos and jeans.

Those purchases wore off and I was left with the bill.

But through this realization, I learned something very important that would change the rest of my life.

Long-lasting happiness doesn't come from more money; it comes from the simple things in life.

  • Time spent with family.
  • Laughs shared with friends.
  • Memories from the good ol' days.

I know it sounds cliché, but these are the things that last.

When I lost all of my money at the age of 21, I wasn't consoled by an expensive watch, I was consoled by my parents. They were there for me and that made me truly happy.

I wish I could give you a magical formula that will make you happy forever, but I cannot. Instead, I have good news: you already possess the ability to be happy.

The Honest Truth About My Lifestyle

While you may think that I'm a big shot with a fancy car and nice homes, you would be surprised to know that I don't own a car. In fact, the only homes I own are purely for investment purposes. I gave up the home I lived in to become a nomad.

I keep my life simple. This definitely helps me focus on business, but more importantly it helps my happiness.

I don't have to worry about big bills and fleeting emotions. I'm a genuinely happy person. No, I am not riding on sunshine and rainbows; no one is perfect all the time. I have bad days just like everyone else.

But I am far happier at this point in my life than I've ever been and it didn't come from acquiring more money, it came from simplifying and prioritizing the right things.

  • The more time I spend with my family and friends, the more memories I create.
  • The more memories I create, the happier I become.
  • The happier I become, the more time I want to spend with family and friends.

It's a positive feedback loop and it just keeps compounding.


So to answer the question once and for all, does money buy happiness?


If you're seeking the almighty dollar, I definitely don't want to stop you. Money is nice, but don't expect all of your problems to go away.

Financial security is important and you should definitely try to achieve a baseline of financial independence, but don't get lost along the way.

Just enjoy the ride and take in the moment. Because money comes and goes, but the simple things in life will always be there.

Image Credit: Getty Images

Theresa Todman, Managing Partner/CEO of B&M Financial Management Services, LLC . Theresa specializes in bookkeeping, accounting, QuickBooks solutions, small business tax issues and consulting.
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