7 Tips for Entrepreneurs to Manage Personal Finance Better

7 Personal Finance Management Tips for Entrepreneurs

As an entrepreneur, you have to don many hats and balance too many things simultaneously. From manufacturing the product to marketing it, from chalking out the delivery process to offering after-sales services – you have got many eggs in your basket. However, the most important thing you have to take care of is funding and running your business. Now, as a start-up owner, you are the one shouldering every financial need of your business.

That means you have got to start sacrificing on the personal finance front. You have to remember that every dollar overspent for private purposes is a dollar less for your business. This is precisely why you must be very careful of what you spend for personal reasons. However, you do not have to necessarily sacrifice a lot as an entrepreneur if you know how to manage personal finance strategically.

On that note, here are seven things that you can do to stop yourself from splurging and maintain a healthy financial equation for your new-born business.

1.      Keep personal and business finance separate

Although both your personal and business money comes from your pocket, you must set a boundary between the two. This will not only help you track your business expenses better but also let you control what you spend on the personal front. Therefore, the first step would be to open up a separate business account that you use to pay business bills and taxes.

That way, your grocery bill, and Netflix subscription won't come in between your business’ financial needs. Moreover, as your business grows and you start earning more revenue, a separate business account will help you track how well your business is performing.

2.      Set definite and achievable financial goals

You know you should save more. But how do you do that? How much do you try to save? Managing personal finance can be a little confusing in the first few months. So, you need to have definite goals – something to strive toward. Here are some things to remember:

·         When you set personal finance goals, make sure they are practical and attainable.

·         Plus, give your goals a timeframe.

·         Start with small but sure steps. For example, set a goal to pay your business bills a few days before the due date using an automatic bill payment to avoid the late fee deduction.

·         You can also try sacrificing one personal need every month and putting the money into your start-up's savings account.

 

3.      Track your cash flow regularly

Whether it is personal or business finance, it is crucial to know what you are spending on and where your money is going. We all are guilty of impulsive buying – a dress that you will not wear beyond the trial room, a gadget that you won’t use much, a book adding on the pile of the unread ones.

As an entrepreneur, you may have to meet a business need at the end of the month. But, how do you bear that expense when you have zilch lying in your account at the end of the month? Therefore, make it a habit to check your account and credit card statements to understand your spending habits. 

4.      Reduce your personal expenses

Once you have created a spreadsheet to track how and where you spend money for personal reasons, the next step is money management. First, divide your expenses into various categories. The first category should be necessities, like groceries, power and gas bills, taxes, entertainment, etc. The second category should be other expenses like shopping, entertainment and subscriptions, and other non-essentials.

Now, start coming up with strategies to cut back expenses under each head. You can try out the following to have better control over your finances:

·         Use a streaming service every month.

·         Eat at home more to cut down on the food bill.

·         Make your cup of joe instead of buying takeaway Starbucks coffee.

·         Make a grocery list to avoid unnecessary purchases.

 

5.      Start small at first

Most entrepreneurs tend to go overboard right after starting a business. As a result, they end up taking hefty loans to meet those business requirements. If you max out your business budget right initially, you will find it challenging to keep your head above water later on.

So, you must learn to take things slow to avoid those huge overhead costs. Assessing your business assignment help you jot down the essentials for your business. Do you need a social media manager right now? Do you need a new separate laptop for your business? Understand which expenditures can wait and which cannot. You can consult with a financial planner to set a limit to invest in your start-up. You can increase that limit as your sales grow, and your business expands.

6.      Use your credit cards to your advantage

A credit card can make or break your business, depending on how you use it. Several people fall into the rabbit hole of overusing or misusing a credit card and then struggle to get out of it. Maxing out your credit card and not paying the loan can wreck your credit score, which can reflect on your business later on.

So, get a credit card that lets you win reward points for every dollar you spend. That way, you will earn even while paying for groceries or bills. At the end of every statement cycle, transfer money from your savings account to pay the dues to avoid interest charges. Here is everything you need to know to get your first credit card.

7.      Generate more streams of income

If you are an entrepreneur, you cannot just sit idle and depend on one source for the funds. Instead, you need to develop multiple revenue streams to ensure that you always have access to a steady flow of money even when one stream closes down.

Think it this way: the more streams of money, the more safety nets you have to fall on during a setback. So, look for part-time hustles where you can work remotely. For example, you can become an assignment writer for the subject you have specialised in. you can also find side gigs that demand less commitment, like Uber driving, babysitting, delivering goods, and food doorstep.

Parting thoughts:

When you start a business, it is solely your responsibility to keep your business thriving. And for that, you must do everything to stop your personal financial decisions from affecting your business funds. So, what can you do to prevent your personal finances from bleeding into your business's budget?

Remember that your business is a result of your blood, sweat, and tears. So, you better not let your spendthrift choices let your years of effort boil down to NOTHING! Implement the personal finance tips discussed above to pay extra attention to how you spend your money to keep things lean and manageable. All the best!

Author Bio: Jacob Ryan is a chartered account and a cost management specialist. He is also associated with MyAssignmenthelp.com, where he offers finance assignment help. Dean also loves to read and travel in his free time.