Tips On Managing Your Personal Finances
If you’re like most entrepreneurs, it is likely that you’re balancing your time between managing your team, generating sales, improving client service, promoting your business and creating new products and/or services. The last thing you want to do is add the care of your personal finances to this mix. But if you don’t have your home finances in order, you are only adding more chaos and stress to your life – whether you know it or not. Here are 7 tips on managing finances. Note: if you believe spending the time getting your finances in order is impractical for you, hiring a bookkeeper to track all of your finances and create a plan for you is a great option.
1. Educate Yourself:
Take the time to educate yourself about various personal finance topics. Calendar appointments titled ‘money’ each week for yourself and spend some hours managing your personal finances and reading books, magazines, websites or blogs about finance. Know more about your own finances, greater confidence will help immensely when managing your money in the long run.
2. Check your credit regularly:
Your credit report is like a file about you and your credit history. Basically tells lenders how as risky you are – and whether or not to lend you money. When it comes to buying a car or a house, you want that your credit report is in its best form, so that you can qualify for better rates.
3. Make a budget:
Although this sounds very basic, many entrepreneurs do not have a budget to monitor your income and monthly expenses. You can use systems such as mint.com to monitor your personal finances or simply a document in Excel. No matter what you choose, make sure that it works for you and your lifestyle.
4. Automate your finances:
This technology makes it easy to manage finances every day. Set your finances so that most of the process is automatic. You can use automatic transfers online or pay online bills every month automatically. This strategy can help relieve the stress of paying your bills on time.
5. Pay debts:
Make a plan to pay off all your debts as soon as possible. Start by making a list of all your debts (credit cards, car credits, education credits, etc.). It includes the current balance, the minimum payment per month and the interest rate. Then check your budget to determine how much money you can add to debt payments. Star with the smallest first! Each time you knock out a debt you can put those payments towards the next smallest. Then the next smallest, and the next… Until you’re debt free!
6. Build your own cushion:
Having a cushion of money is an essential part of your finances. It allows you to use the money to pay for unplanned expenses or emergencies that may appear in your day to day, rather than increasing your debt or long-term investments.
7. You spend out of your business:
Although it is very important to always invest in yourself and in your business, you should not have “all the eggs in one basket”. Diversification is extremely important because it will decrease your risk of investment in the long term. Working with a financial planner to create a portfolio of investments in the long term that includes stocks, bonds and Cetes that align with your own financial goals and your risk tolerance.