Financial Literacy 101: What Every Nail Tech Should Know

If you’re a working nail tech or salon owner, you’re a bona fide businesswoman. You may not carry a briefcase to work every day, but that doesn’t mean you’re not investing time and money into your future. “The challenge often comes from the intermingling of both business and personal finances,” says Keythe Ward-Aguilar, certified financial planner and founder of Ward Aguilar Financial (www.wafinancialinc.com). The biggest money mistake Aguilar has noticed is not planning for personal retirement. “Most women tend to find it challenging to embrace and grow their wealth. Factors ranging from a lack of confidence to lower paychecks to family responsibilities can all get in the way,” she says. It’s important to note that women generally live longer than men, making retirement savings all the more vital. If you want to build the foundation for a successful financial future, Aguilar recommends knowing these terms now:

Balance Sheet: A financial statement that summarizes a company’s assets and liabilities at a specific point in time.
Business Risk: The possibility that a company will have lower than anticipated profits, or that it will experience a loss rather than a profit.
Cash Flow Planning: A forecast of short-and long-term business expenses against the projected incoming cash. This planning allows you to anticipate trouble by creating a cash flow cushion for unexpected expenses.
Credit Score: A number assigned to a person that indicates to lenders their capacity to repay a loan.
Depreciation: 1. A method of allocating the cost of a tangible asset over its useful life. Businesses depreciate long-term assets for both tax and accounting purposes 2. A decrease in an asset’s value caused by unfavorable market condition.
Peer-to-Peer Lending (P2P): A method of debt financing that enables individuals to borrow and lend money without the use of an official financial institution as an intermediary.
Profit and Loss Statement: A financial statement that summarizes the revenues, costs, and expenses incurred during a specific period of time, usually a fiscal quarter or year.
Risk Tolerance: The degree of variability in investment returns that an individual is willing to withstand.
 
If these terms offer more confusion than clarity, it could be time to get help. CPAs or accountants can help with recordkeeping. Financial or investment advisors can aid with investing or setting goals. “Getting started with the correct advice is very important to establishing good habits and may save someone from making disastrous financial mistakes,” says Aguilar. If budgeting for professional help is a concern, technology can always provide support. Aguilar recommends the following apps and sites to assist with financial planning:

> Mint.com (free app)
> LevelMoney.com App (free app)
> PersonalCapital.com (free app)
> LearnVest.com
> QBIntuit.com
> Expensify.com (free or subscription)
> iPhone wallet (free app)

Remember, a sound financial future begins with a proactive present. The more you learn now about investing and finance, the more money you will have later on.