If you’re an entrepreneur who’s scared of numbers and financial language, this article by Susan Vanderburgh is a good start. I always tell my clients: You are the CEO of your business. And finances are the language of business. You don’t need to be a financial analyst to run your business but you need to understand enough to make informed decisions and hire great people who can help you manage money.
The calendar year is divided into standard fiscal quarters which businesses and financially savvy persons describe dated financial data.
Here is a summary:
January, February, and March (Q1)
April, May, and June (Q2)
July, August, and September (Q3)
October, November, and December (Q4)
Q1 Dates: January 1 – March 31
Q2 Dates: April 1 – June 30
Q3 Dates: July 1 – September 30
Q4 Dates: October 1 – December 31
Why is it important that you know this information?
Well, if you want to impress your friends and family members, you could start referring to a month in the context of a particular quarter. However, when you are speaking to business or financial professionals, it is appropriate, and sometimes expected, to refer to parts of the year in quarters.
For illustrative purposes, here is a scenario:
Prior to this knowledge, you might have wanted to say, “I will get this done by the end of August.”
Here are two examples of how you would say this differently when speaking with a business or financial professional:
Example 1: “I will get this done by the end of the third quarter of the year.”
Example 2: “I will get this done by the end of Q3.”
When you use either example (above), economic professionals will understand what you are saying. It also sounds cool, doesn’t it?
If a financial service provider does not understand what you are saying, hire a replacement. I mean this, seriously because this is a basic business and finance concept. Wouldn’t you want to work with the best?
Knowing about the quarters of the year is helpful when you are trying to gauge the business and financial knowledge of a potential business relationship or referral partner. Being able to refer to the calendar in quarters (Q1, Q2, Q3, Q4) also shows your sophistication when you are applying for a business loan. The potential lender is likely to look at you as a professional, especially when you are presenting your business ideas in hopes of getting financing.
For people who are self-employed or those who are required to pay quarterly estimated taxes, it is important to pay on time to avoid penalties. Although April 15 is a due date for filing tax returns with the Internal Revenue Service, you still need to file quarterly payments throughout the year as a self-employed individual.
Here is a Cheat Sheet of when quarterly self-employment taxes are due (US regulations):
|January 1 – March 31||April 15|
|April 1 – May 31||June 15|
|June 1 – August 31||September 15|
|September 1 – December 31||January 15th of the following year|
Please note that there are exceptions, especially during COVID-19. If the due date of the estimated tax falls on a weekend or a national holiday, the payment would be due the following working day.
So, what does this mean on a personal level? Why do you need to plan for the end of the year and think about the year in quarters?
The last quarter of the year could be quite expensive and can catch many people off guard. November and December (i.e., in the last quarter of the year) are quite important. Not only do we have Thanksgiving (for those who celebrate), birthdays, anniversaries, and winter holidays, for property owners, real estate taxes are also due.
Your knowledge about fiscal quarters also provides insight when researching stock and bond markets, and financial reporting of public companies. You might have recalled hearing about financial projections for publicly traded companies that schedule the releases of their financial reports and payment of stock dividends in quarters of the standard calendar year.
As you could surmise, the final quarter of the year is also when most public companies are pushing for the ability to report positive earnings. As a consumer, you would be inundated by offers from retailers and businesses offering incentives to spend. Also, do not forget, for homeowners, this pressure to buy during the last quarter could be torture, especially if your real estate taxes are not impounded with the mortgage payments and you must pay real estate taxes to avoid delinquency.
For employees, most companies offer year-end performance reviews and holiday or merit bonuses. Yes, these are more reasons and added temptation to spend those hard-earned dollars!
For people who are undergoing credit repair or budgeting for a better financial future, consumerism is a real struggle and often creates conflict on the person’s well-being and happiness when not able to spend.
As we head into the last quarter of this year, I urge you to make a list of your goals for the end of the year and for the upcoming new year.
Think specifically of these 6 questions:
1. How was this year for you financially?
2. Did have enough income to live comfortably or did you exhaust all your credit lines?
3. Do have an “emergency fund” that will cover you if something unexpected happened and would cost you some dollars?
4. How do you want to make your money work for you in the coming year?
5. What are your financial goals?
6. Do you have a plan to make the next year a better financial year than this one?
If you do not have answers to the above questions, you still have a few more months before the end of Q4 to figure out your plan for the next year.
For individuals who are hoping to buy a new home sometime next year, you should allow yourself 6 months (or 180 days) to make sure your credit profile is ready for a lender to review and have no objection. Please stay tuned for other articles regarding buying your home.
If you need assistance, it would be a good idea to seek professional guidance.
About the author
Susan Vanderburgh is a Business, Financial and Credit Strategist who helps clients get from frustrated to a more balanced financial lifestyle by implementing financial and credit strategies. http://www.getcreditcure.com