How to Keep Track of Your Personal Finances When Busy With Your Business?
by Mashum Mollah Finance Published on: 29 March 2017 Last Updated on: 21 October 2024
Just because you own a successful business doesn’t mean your personal finances are in order. It has become something of a cliche for entrepreneurs to be overextended in their private lives, often with loads of debt and terrible credit. Sometimes this is the result of keeping an early business afloat with the help of personal finances. Other times, the new business simply takes up so much time and energy that there isn’t enough left over to carefully manage the money in your bank account. Whatever your reason for burning the financial candle at both ends, there are ways to improve your situation with a few simple steps.
Keep Track of Your Credit Score and History:
Your credit history can tell you a lot about your own financial health. But unless you read it, you’ll miss a lot. Credit histories are kept by three different credit reporting agencies. Your credit history will be blessedly uneventful if all is going well, but it will have various reports on record if you have messed up financially within the past few years. If you have so much as a lost library book that has been sent to collections, this negative credit history mark could be bringing down your credit score. Go here to learn more about credit scores both good and bad, then make sure that you are in good order.
Get Out of Debt:
Even if you have substantial cash flow through your business, you must get rid of debt as soon as possible. The more debt you have, the worse your credit will be (As in the point above). Debt also tends to accrue quickly, often faster than any investment you could ever put yourself at the receiving end of. If you have the income to spare (and most of us do), start putting it toward your outstanding debt, to get rid of it as soon as possible. Once it is gone, you can enter into the next step in earnest.
Save and Invest:
Saving and investment is the best way to build a secure future for yourself. Do it as soon as possible, even if the business is roaring. There is no way to know that your business will be around to support you 30 years from now. The only way to do that is to take some of the earnings (as high a percentage as you want or are able), and put it into investments which will earn you more money faster than inflation takes away the value of liquid assets. You should also save enough money in an emergency fund to support you and your dependents for six months, just in case something was to go terribly wrong. Even if you don’t use it, it’ll be nice to have that money lying in reserve.
There are loads of ways that personal finances can go wrong while you are busy managing your business. Follow these methods and you should be setting yourself up for a better future, no matter how your business happens to go.
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