How well do you manage your finances? Managing money wisely is not entirely difficult, but it can be tedious because it requires effort. Look at it this way; if you are prolonging a healthy lifestyle, you can keep track of your finances. Because of the pandemic, it has become strenuous for some. We have provided some tips with regard to assist you in proper money management.
1 Creating a budget and sticking to it
This tends to be the most helpful tool in managing money wisely. It allows you to create a spending plan so you can allocate your money in a way that will help you to reach your goals. A budget plan will allow you to identify what expenses to sacrifice to make way for a new one. There are many budgeting software that can be used to formulate your expenses and income.
2 Track your day to Day Spending
According to the financial author and expert Farnoosh Torabi, mentioned never forget to account for everything. Ms. Torabi, devoted primarily toward doling out advice for young people, reminds us to budget for the slightest things that add up and mystifyingly subtract from our budget, like thieving money ninjas.
“Little things that add up, like ATM fees, unused gift cards, unused Groupons. We spend a lot of money, but we forget and don’t make the most of it.”
3 Separate business funds from personal funds
You MUST divide business and personal finances. This is one of the most common errors business proprietors make by not keeping business and personal funds separate. It is more formal to set up separate checking accounts for business and personal use. Here are some tidbits:
- Write checks for business purchases from the business account and personal purchases from the personal account.
- Place business revenue in the business account and personal income in the personal account. This also applies to credit card accounts.
Keeping within these standards will allow you to have proper maneuvering abilities over your financials.
4 Have a consistent cash reserve
You MUST divide business and personal finances. This is one of the most common errors business proprietors make by not keeping business and “If you can’t see it and you can’t touch it, you won’t spend it.” This statement is entirely true.
The COVID19 pandemic has caused businesses to foreclose because they may not have had a consistent revenue flow to keep the business afloat for at least a 3-6 months. It is good to have an extra stash for the business “just in case” anything supposed to arise to at least cover your operating expenses. This is where the cash reserve comes in. It can be used for times like this to meet unplanned or short-term business needs.
5 Invest back into your business
For long-term success, a firm should redirect a portion of its profits back into the business for continuous growth. Be tactical and make sure that it falls within your specific development plan and your business desires. Please be mindful not to invest in a way that will eliminate other aspects of your company which may make you fall short. Make sure there’s enough to cover all of your other expenses.
What money management tool did we miss that works for you?