Earning your paycheck as an entrepreneur is just part of the battle. The bigger battle is between you and your financial management. How will you manage your money? There are some entrepreneurs who love to splurge on stuff they don’t need. To guide you in your adventure, here are five personal finance tips for entrepreneurs.
Separate Your Business Account
This is a must for every entrepreneur. Open your own business account. This allows you to clearly see your financial status from every point of view. You are able to separate your money for personal spending and the money you earn from your business.
Your personal account should contain all of your personal expenses such as food, clothing, leisure, and other needs. The business account on the other hand will be used in paying your employees or for maintaining your business. We cannot stress enough the importance of having separate accounts. We could tell you though that once you do it, you will feel greater power in managing your finances.
Set 20% Aside
Another great tip we could tell you is to set 20% of your earnings aside for priorities. These include debt, retirement savings, and emergency fund. No one knows what could happen to you on a daily basis. It is extremely important to set money aside for later use.
When we are young, we tend to not think of the future. Although, it is imperative that we think of it. We will grow old one day, it is nice to have something when time comes.
Set Your Own Financial Goals
Putting money aside without any clear goals is too complicated. Before you go any further, make sure that you set some goals. For example, by the age of 30 you should have saved a certain amount. Another great example is by the time you reach a certain age, you should already have several streams of income.
Setting goals is an extremely important part of being financially healthy. These goals serve as your measuring stick for tracking your progress as an individual and as an entrepreneur. If you have debt, make it one of your goals to pay it off in a certain timeframe. The feeling of accomplishing a goal makes us work even harder for our ventures.
Downsize
Spend some time listing all of your personal income outflows. Where do all your money go in a month? Think of the items you’ve listed down. Do you really need it? Maybe you could cut some corners and skip on some regular leisure activities. The point here is simple: review your spending and think of the areas where you could skimp on a little.
Maybe you really do not need to get your coffee fix from starbucks every single day. Better yet, do you really need to go shopping every single week? We have a lot of things that we love doing but we never realize how much money goes into our “Unhealthy hobbies”. Cut some corners on stuff you don’t really need and see where it puts you financially.
Educate Yourself
Of course, learning should never stop. As Warren Buffet says, we should be smarter than who we are when we woke up in the morning. Entrepreneurs should always keep this saying in mind all the time. You could read books, listen to podcasts, or participate in activities which add to your knowledge pool.
Sharpening your skills and gaining new knowledge allows us to make more sound business decisions. As the saying goes, good business decisions lead to good outcomes.
How about you? What personal finance tips do you live by? If you are aiming to make your first million in less than a decade, click here.
Opinions expressed by AsianBlurb contributors are their own.
Shanae Brooks is a reporter covering leadership in the business world. She began her journalism career as a ghostwriter behind various successful books in the business realm.
