Having your money in order will help reduce daily stress, and also will serve as a basis for managing the capital of your company.
If you’re like most entrepreneurs, you will probably have to divide your time between managing your team, get sales, improve customer service, promote your business and create new products or services. The last thing you want to add to this mix is the care of your personal finances. However, if you do not have the finances of your household in order, you’re just adding more chaos and stress in your life … you realize it or not.
These 7 tips will allow you to make sure your personal finances are in order before proceeding expanding your business. Put them into practice and ensure your economic stability (and emotional).
1) Educate: Take the time to read about personal finances. Every week, calendar appointments “money” with yourself and spend a few hours to manage your personal finances and read books, magazines, or blogs finance sites. The more you know about your own finances, you will have greater confidence to manage your money in the long run.
If you need more help, consider hiring a financial coach to help you create a financial plan to achieve your goals.
2) Check your credit regularly: Your credit report is like a file you and your credit history. Basically it tells lenders how risky you are, and whether or not to lend you money. When it comes to buying a car or a house, it is desirable that your credit report is in excellent shape, so you can qualify for good rates. Make it a habit to check your history at least once a year to confirm that all is in order. Do it on a special date (like your birthday) so that you make it easy to remember and keep monitoring.
3.) Make a budget: Although this sounds very basic, many entrepreneurs do not have a budget way to monitor your monthly income and expenses. You can use digital tools like apps to monitor your personal finances or just a document in Excel. Regardless of which option you choose, make sure it fits your lifestyle. If you really want to fix your finances and stay ahead financially, you must devote time and energy to update your budget each week. This will help ensure that not spend more than you earn and that you are able to save for your financial goals.
4) Automates your finances: The technology greatly facilitates the task of managing finances every day. Search that most of the process is automatic. You can use transfers automatic online or pay your bills online each month. This will help you not stress about paying your bills on time and generate interest or extra fees. If you are concerned automate the payment of your bills, you can set alarms in your calendar (on your computer or Smartphone) that remind you of payments. The more you can automate your finances; you will have fewer worries daily.
You may also like to read another article on BSOInvest: Do you use your Financial Reporting for Business Millionaires?
5) Pay debts: Make a plan for pay all your debts as soon as possible. Start by making a list of all your debts (credit cards, auto loan, student loans, etc.). It includes the current balance, minimum payment per month and the interest rate. Then review your budget to determine how much money you can add to debt payments. From there you can do research on strategies to reduce debts so to confirm that you are paying the most efficient way possible. When you are working on reducing debt, it is important to have a “cushion” to pay any emergencies that arise along the way.
6) Build your own mattress: Having mattress money is an essential part of your finances. It allows you to use the money to pay for unplanned expenses or emergencies that may arise in your day to day, instead of increasing your debt or long-term investment. As an entrepreneur, it is convenient to have a cushion of six to 12 months of your expenses fixed. This will allow you to pay personal bills and not worry if you need to reduce your income due to the flow of business.
7) Reverses out of your business: Although it is very important to always invest in you and your business, you should not have “all eggs in one basket.” Diversification is extremely important as it will reduce your investment risk in the long term. Work with a financial planner to create a portfolio of long-term investments including stocks, bonds that align with your own financial goals and your risk tolerance.