Taking Care Of Your Personal And Professional Finances
Your finances are an area in life that needs time and attention. As entrepreneurs, the focus is often on making money. We see the inflow of profits, and it makes us happy, rarely thinking about how to handle the money. Catch our episode on Making Bank S7 E38 to hear from Brandon Dawson about his journey.
Know Your Taxes
Yes, we dived straight into this one! As an entrepreneur, your tax liabilities are different. Learn about how it works — income brackets, tax rebates, filing of returns, and so on. If this is not your cup of tea, make sure you hire someone you can trust and rely on. A lot of companies lose money due to incorrect or delayed filing. It’s best to have this area of your finances in shape to avoid nasty surprises at the end of the financial year.
Budgeting As A Tool
Live by a budget. Sit down and work it out. Have a clear understanding of your income, your fixed expenses, and the variable ones. This will help you spend within a limit, while also ensuring you have money left over at the end of the month. A budget lets you allocate finances for various areas in your life. Travel, entertainment, eating out, insurance payments – everything gets clearer. Everyone must have a budget for their personal and professional lives. If used well it can serve as a tool to forecast the growth of your business. Having a clear idea of what expenses are coming up will let you plan for them in advance. Better planning=lesser debt.
Don’t Just Save, Invest!
We grow up hearing about the importance of saving money. Start investing early on to make sure your money grows with time. Through investing, you make your money work for you. Irrespective of how the business is doing, have a fixed amount that gets invested every month. Having a systematic plan in place will help you keep money aside. It will also teach you to live with the money that is left over for use. Keep an eye out for these investments so that you can make moves according to the market scenario. Seek professional help to handle your portfolio if this is not something you think you have the time for.
It’s often tempting to take on debts, feeling confident about being able to clear them off soon. As far as possible, avoid all forms of debt — borrowing from colleagues, family, well-wishers, loans, and even credit card debts. If you already have some of these to take care of, make a plan to clear them out consistently. Set financial goals that help you pay off at least part of the amount. In doing so, you will avoid an accumulation of interest and penalties.
Prepare For The Worst
It’s a volatile and uncertain economy out there. When you invest in your business, chances are you will put in what you have. It is also a possibility that your business may not work. Understand this harsh reality and accept it. By doing so, you mentally prepare yourself for the worst possible outcome. This way you are better equipped to deal with failure, if any. Make sure you are financially set up as well. Have some money kept aside as an emergency fund to fall back on. Getting the right insurance plans as protection is one way to help you stay afloat in case of eventualities.