You may not be aware of this, but your business and your personal finances are inextricably linked, especially when you are a small business owner who might even be working from home. If you happened to be in a considerable amount of credit card debt or weren’t able to pay your mortgage, the debt companies can seize your assets to pay off the money that you owe, and your business is an asset. In some cases, it could be your most valuable asset. Therefore you should do everything in your power to protect it by getting your personal finances in order. Below are a few simple tips on how to do just that.
This may seem absurdly obvious, but it is actually a very easy trap to fall into, especially in today’s culture of easy credit. It is important to keep track of the purchases you are making, even the small ones. In fact, it is usually the small purchases that impact your income the most. Picking up a coffee and a sandwich every day, instead of making your own, can add up to a surprisingly large amount over the course of a matter of weeks. Start thinking about purchases in terms of time worked to earn the money that they cost. If you would happily work that time all over again just to pay for it, then you might be able to justify it; if not, then don’t bother.
Most people have a certain amount of debt, and some is perfectly acceptable. Student loans and a mortgage are perfectly acceptable, as is perhaps a small amount of finance on a car. However, if you have debt spread out on multiple credit cards, it may be time to get rid of it. Focus your energy on paying it all off as quickly as possible, as the quicker it is paid off, the less time there is for interest to accumulate. Companies like debtconsolidation.loans can help to make multiple debts easier to manage by organising a single payment instead of several. You may have to tighten your belt with regards to your spending for a while, but the feeling of finally being debt-free will be well worth the hardship.
Create A Buffer
Once you have reigned in your spending and settled all your debt or at least the debt that is of more pressing importance, then you need to start thinking about the ‘what ifs.’ Any number of things might occur which would ordinarily have you reaching for your credit card or a payday loan. Instead, you must create a buffer of savings that can help you to cover any unforeseen costs. As a small business owner, you need to make sure that you have the ability to work or get to work. If your car breaks or your electricity fails, causing you to be unable to work, your business will suffer as a result. A small pot of money to deal with these financial emergencies will mean that you are able to carry on as normal without adding to your debt.
There you have it, three simple steps to ensure that your personal finances never have a negative impact on your business. In the early stages, you will need to devote a lot of time and energy to turn your small business into something bigger, and you don’t want financial worries to hinder that.