Personal Finance is a touch job to tackle. You have too many credit cards, purchases made in places you didn’t know existed and somehow you need to figure out how to pay all the bills. It’s a hard task to budget your life, but it could be easier by managing your money like a business.
A business makes you think of structure and a profitable venture. It’s not the chaos that is your life. Hey, I love my chaos, but I wouldn’t complain if it were more streamlined like a business.
Create New Revenue Streams
All businesses have more than one revenue stream. They make money from several different sources to create a more stable financial platform. You don’t put all your eggs in one basket; otherwise you’re leaving yourself vulnerable.
For those that rely on their job as their only source of income, are in trouble if they ever get fired. You need to be able to get by if you were to lose a revenue stream. In fact, most Millionaires have at least 7 revenue streams.
A new revenue stream could be a side gig, selling some things on Ebay or even mowing your neighbor’s yard. Any side income can help keep you afloat and create a more balanced financial environment.
Establish Cash Reserves
Just like businesses don’t only rely on one source of income, they also don’t go month to month without having any money in the bank. They need to be prepared for upcoming payroll, bills and other expenses required for running a business.
A cash reserve can be 3 to 6 months work of monthly income, in a savings account. Any emergency or back up scenario would require dipping into your cash reserves.
Much like an emergency fund for our personal finances, cash reserves are there to protect us. Those unknown factors in life that creep up behind you can really mess up your finances. A cash reserve is there to keep you going no matter what life may throw at you.
Lower Operating Costs & Increase Revenue
Businesses don’t choose the most expensive options. They find ways to lower their expenses, which puts more money in the business’ pocket. Anything that is overpriced or redundant tends to be cut and replaced with a more efficient option.
We need to do the same and spend more wisely, looking carefully at what we spend our money on. Is that food bill able to be lowered? Try cooking at home a few times a week and see how much you save.
Increasing revenue works the same. Businesses find new ways to not only bring in more revenue through different sources, but also increase the current income stream. Finding more clients or raising their rates would be a good start.
Asking your boss for a raise or pursuing more revenue streams like I mentioned before can increase your revenue.
Pay Employees First
Employees expect to get paid on time and fairly to stay in a business. Well, surprise, you’re an employee of your household. You want to be compensated for your time and the hard work you put into your work. Paying yourself first is the best way to do this.
Paying yourself means savings of any kind. Whether it’s into your emergency fund or an investment, saving money now helps create stability and a solid foundation for when that money may be needed.
Saving something is definitely better than saving nothing, but I would recommend starting with what you can, whether that’s just 10% or more. Slowly work your way up to a higher savings rate until it’s on that uncomfortable edge. Don’t save so much you can’t do anything else, but enough where you see a difference.
Schedule A Board Meeting
Businesses hold meetings to discuss their finances, the company’s future and anything in between. We should do the same and set aside times every week or month to create a plan.
Setting a budget will create a structure for your money, much like a business does. In fact, you can say a budget is like a business plan for your money. You organize where it all goes and how much.
Holding these meetings will create more transparency around your personal finances and let you have a clear vision for where you’re headed.
Educate Yourself
Most businesses don’t hire people with out proper education or experience. So why shouldn’t you have the knowledge necessary to manage your finances?
It’s so important to educate yourself about personal finance and learn how to properly manage your money. It’s not taught in schools and many parents try to avoid this subject, so it’s up to you to research this yourself and read all my blog posts to create better financial intelligence.
Learn To Delegate
A CEO can’t do it all. Sure he/she may wear many hats, but a good boss knows when you need to delegate and bring on someone who is better equipped to do a job.
We should do the same. Hiring an Accountant to handle our money or an investment advisor to guide us through the stock market. There is a limit to what we can do ourselves and we should take that helping hand when it’s there.
A smart CEO surrounded his/her self with people smarter than them. We need to take this into consideration when handling money. Nobody knows our financial situation better an us, but having someone there to guide you and hold your hand can make it much easier.
Think Long Term
A business needs to plan for the future. Predicting the longevity of their company and creating realistic goals means a successful business. They need to plan ahead if they need to hire more people, do they have enough money to cover payroll in the future and so many more variables.
We need to do the same, planning for our future. So many people either don’t plan for their retirement or save enough. Having a clear goal in mind and understanding how much you will need to retire peacefully should be planned as early as possible.
Final Thoughts
Please remember any planning or saving will take time. Nothing will happen overnight. So be sure to stick to the budgets you created and not give up.
