Are your personal finances in a bit of a, well, mess? Do you have a tough time getting through till the next paycheck? Do you constantly wonder where your money’s gone? Are your creditors calling you over past due bills? Are you wondering if you’ll ever get your finances under control?
Learn from successful businesses
When it gets right down to it managing personal finances is not that much different than managing a business. Successful businesses must monitor their cash flow and expenditures very carefully. If not, they’re bound to fail. The same is true if you mismanage your cash or overspend. Do this and two things are bound to happen, both of which are bad. First, it’s likely that you’ll be racking up debt just to make ends meet. And second, you could end up having to file for bankruptcy, which would damage your life for years to come.
If you would like to get out of your financial mess and get your personal finances under control here are six tips from the world of business that could get you on the road to an easier, less hectic life.
Reduce your overhead
When times get tough smart business people figure out ways to reduce their operating expenses or overhead. You could copy this by trading in your car for a less expensive, more affordable model or by moving to a smaller house. Other areas where you could reduce your overhead would be to cancel your subscription to that gym or quit eating out as much. While this might not feel very good at first, the long-term benefits will make these sacrifices worthwhile.
Create a business plan
Successful business owners understand that it’s important to have detailed business plans. These plans are helpful when trying to secure loans or investors. They also provide the company’s direction by defining its objectives and the steps that will be required to achieve them.
To be successful at managing your finances you will need to take a tip from successful business owners and create a plan to manage your personal finances. A spending plan or budget can be a great tool to help you understand how much money you have coming in vs. how much is going out every month. Creating a budget requires tracking your expenses for at least a month because it’s not possible to reduce your “overhead” or spending until you know where your money’s been going. At the end of that month, you will need to divide your spending into categories such as housing, transportation, entertainment, clothing and so forth. Then carefully review each of these categories to see where you could make cuts so that you will have money to pay off debt, invest or save for retirement.
Here, courtesy of National Debt Relief, are tips for a type of budgeting called zero based budgeting.
Pay your employees first
Smart business owners understand that they need to pay their employees first – even before they pay themselves. When managing your personal finances you need to think of yourself as an employee and pay yourself before you pay anything else. You do this by saving or investing a percentage of your income every payday. You can do this almost painlessly by having money automatically withdrawn from your checking account and then transferred to your savings or investment account.
When you invest your money you put it to work for you instead of you working for it. There are numerous ways available to invest money from buying property to stocks or mutual funds. If you don’t know what would be the best way for you to achieve your goals you should contact a financial advisor at your bank or ask your friends to recommend financial advisors they know and trust.
Insure against risks
It’s important for businesses to be insured against risks and the same goes for you. Business owners understand that a partner might die, an employee could be injured at a construction site or a customer might slip and fall. These incidences could spell the end of the business if the owner hadn’t taken steps to protect against them. You need to shield yourself against risks just as if you were a business. For example, if you are your family’s sole breadwinner you need both life and disability insurance. You should also have homeowner, health and auto insurance. While paying for these policies might be hard, things will be even harder if don’t have insurance and your home was to catch fire or if you were to have a serious auto accident.
Develop multiple income streams
Very few business owners put all their eggs in the same basket by having just one income stream. Bike stores sell accessories and offer services. Sporting good stores don’t just sell fishing tackle. They sell tackle, hunting equipment, kayaks, athletic clothing on and on. And convenient stores don’t just sell coffee. They sell literally dozens of different items.
What can you learn from this? You might want to think of other ways you could earn money besides your regular job. If you have a skill such as computer programming, accounting, marketing or graphic design you could put it to work and use the money you earn to pay down your debt or to save or invest. If you don’t have a marketable skill, don’t give up. You could get a part-time job working for a retailer like Staples or Home Depot. Thousands of Americans are earning extra money driving for Uber and Lyft. If you have a car and a smart phone this could be even better than working for a retailer because you can set your own hours. You could work whenever you wished and for as many hours as you choose. Many people are earning as much is $500 a week just for driving people around.
Patience and persistence
Smart business owners understand that success doesn’t happen overnight. They know it takes patience and persistence to be successful. These are also essential in managing your personal finances. If they are in a mess or if you’re deeply in debt, don’t expect overnight miracles. You will need to develop your business plan or budget and then be prepared to stick with it for however long it takes to get your finances in order or to get rid of your debts. As the old saying goes you need to plan your work – or your personal finances – and then work your plan. Don’t get discouraged if you don’t see immediate results. It can take years to build a successful business and the same can be true of your personal finances. Patience and persistence are the keys. Be patient with yourself as you may see only small degrees of change for the first few months that you’re on your “business plan”. And be persistent or determined about reaching your financial goals. Even Steve Jobs once failed but look where persistence got him. You may not become a millionaire but if you follow the tips you’ve read in this article you should be able to get your personal finances under control and your debts paid off. And wouldn’t that feel pretty darn good?