Money management is often a challenge for entrepreneurs, especially those starting out for the first time. Because they tend to wear many hats, the financial hat is one of many competing for limited attention and energy.
When this happens, cash falls through the cracks, payment deadlines are missed, and an overall sense of confusion reigns. To bring some sanity back into your finances, here are some tips you can follow for better money management.
Information is power. When it comes to money management, understanding how money works will help you see the big picture. At this point, do not focus on finding tactics and strategies. Instead, focus on understanding the basics.
Learn all the terms that are related to money management. Learn how taxes work, and how they affect you and your venture. Getting a strong grasp of money management basics will help you take decisive steps in managing your money.
While you may want to jump right into business finance, start by figuring out your personal finances. Think of it this way. If you have a financial crisis at home, you will likely divert funds from your business, something that could jeopardize its future.
If on the other hand your personal finances are well organized, you will be able to focus on your business better. Using a financial independence tool can help in achieving this.
Entrepreneurs are notorious for flooring the pedal and only noticing they missed some milestones when they were forced to slow down. Monitor your financial health by setting financial goals. How much do you want to make by the end of the year?
How much of that do you want to spend and how much do you want to keep? Just remember to set specific, measurable, attainable, realistic and time-based (SMART) goals. You can also divide them into short-term and long-term goals for easier attainment.
When cost-cutting, try not to chase after huge savings at first. Do not close your office because it will save you thousands a month yet will end up hampering your growth. Instead, look for smaller ways you can shave off a few dollars here and there.
Skip expensive lattes and make them at home instead. Eat out less frequently. Use free and open source tools instead of expensive paid ones. These and other small savings add up over time.
Life happens, and when it does, it comes with a check that must be settled immediately. A lawsuit, damaged equipment, an emergency trip, a failed venture are all unanticipated expenses.
If you do not have an emergency fund, they could cripple you financially. To avoid this, set up a fund with at least 6 months of your monthly expenses. If you can manage a year, even better. The bottom line is, you want to be ready when something unexpected happens.
Also Read: Money Saving Tips for Bloggers
While being an entrepreneur is fun and exciting, it does not take away from the need to be financially competent and astute. Follow these tips to unleash your inner financial guru and unlock the next level of potential in your entrepreneurial journey.
1. Get Educated
Learn all the terms that are related to money management. Learn how taxes work, and how they affect you and your venture. Getting a strong grasp of money management basics will help you take decisive steps in managing your money.
2. Start with Personal Finance
If on the other hand your personal finances are well organized, you will be able to focus on your business better. Using a financial independence tool can help in achieving this.
3. Set Financial Goals
How much of that do you want to spend and how much do you want to keep? Just remember to set specific, measurable, attainable, realistic and time-based (SMART) goals. You can also divide them into short-term and long-term goals for easier attainment.
4. Look for Small Cuts
Skip expensive lattes and make them at home instead. Eat out less frequently. Use free and open source tools instead of expensive paid ones. These and other small savings add up over time.
5. Establish an Emergency Fund
If you do not have an emergency fund, they could cripple you financially. To avoid this, set up a fund with at least 6 months of your monthly expenses. If you can manage a year, even better. The bottom line is, you want to be ready when something unexpected happens.
Also Read: Money Saving Tips for Bloggers
While being an entrepreneur is fun and exciting, it does not take away from the need to be financially competent and astute. Follow these tips to unleash your inner financial guru and unlock the next level of potential in your entrepreneurial journey.
Ashutosh Jha
Ashutosh Jha is a professional blogger, Blog and IT Consultant. He writes about Blogging, SEO, Making Money, Internet Marketing and Web Design.
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