As a business owner you are reliant on the performance of the business for your income. When the business struggles, unless you have significant reserves, the chances are you as a business owner will start to become concerned about how this will impact you personally.
Likewise if your personal finances become stretched, you may not take early enough action to manage your personal finances and end up putting strain on your business.
The rising cost of living, the energy cost crisis, interest rates soaring...
Taking action now and reviewing your personal finances will help alleviate some of the potential pressures that businesses, employees and business owners are already facing and are likely to continue through the winter and uncertain months ahead.
So what steps can you take to ensure you're on track with your personal finances?
1. Track your spending
Keep track of your spending as you go. There are several apps available to help with this or you can keep up to date via your online transaction history.
Being married to an accountant, this is (now) second nature to us. However, it hasn't always been that way. It took a while for me to buy into this process, (I was a little surprised that Starbucks didn't send out some sort of search party for me when I stopped making a regular appearance) it wasn't until I saw just how much wastage there was in our personal spending that I really saw the value.
2. Set aside time to review your finances
When it comes to insurance or booking holidays we invest time in making sure we are getting the best deal. Of course, there aren't enough hours in the day to spend this long analysing every penny spent, reviewing how much you are spending in certain areas will help you identify ways to protect hard earned cash.
Making this a regular habit will go a long way in you identifying opportunities to reduce your regular spending.
3. Review and update your budget
When setting your personal budget you need to ensure you are realistic . You will have both fixed and variable income so it is important to account for that. There will also be some small expenses that go unnoticed - small transactions like £6.99 for Netflix can find a way of hiding! So take some time to ensure you understand your committed spend.
If you are used to being socially active, or ordering regular takeaways or picking up a slice of cake when you go for a walk on the weekend, t is important, especially when you first start to budget that you don't remove all the joy from your life!
Set yourself a budget, and then review and update your budget to ensure it is realistic and balanced.
4. Involve your family
Our daughter, like most children, would often ask for a treat whilst we were out. We would quite often say yes, and this was one way that our personal budgeting was innocently sabotaged.
So, if you have children, personal budgeting is a great way for them to get involved in financial matters. Tailored to their age, you can talk through how they can help and ask for their ideas. After all, "the bank of mum and dad" needs to have some boundaries. This will go a long way in developing positive relationships with money.
We also set up a children's banking app for our daughter and some rules to go alongside it. Any necessary purchases, clubs and school items would be bought by us. Any other purchases need to be made via her own account. Her account tracks her spending with automated categorising, encourages saving and works like a traditional debit card, showing balance etc.
This shift in the management of money, quickly made our daughter think twice about buying a treat every time we went to the supermarket or asking for another t-shirt that wont fit in an already overflowing t-shirt drawer. It also helped her realise just how much she was spending on items that she would have nothing to show for once they were consumed.
5. Having an emergency fund
Perhaps easier said than done but when you start to make progress with personal budgeting there may be an opportunity to put some leftover money into savings. Not having an emergency fund can hamper your hard work with budgeting when you are faced with an unforeseen expense.
Likewise, if you have a healthy emergency fund it can be easy to not focus as much on you personal budgeting knowing you have that to fall back on it needed. if you are in this position, try to put your access to savings to the back of your mind.
There are so many different ways to manage your personal finances and these 5 tips are really just the beginning. Let us know your tips & tricks in the comments section below.
We have created a personal finances spreadsheet to help give you real time information on your current spend and income, create and manage your personal budget, and track your results.
To secure your free budget tool enter your details:
Once downloaded follow the step-by-step guide within the spreadsheet to get started. Feel free to share the spreadsheet with employees, friends or family to help them on their way personal budgeting. Finally, if you are the sole owner or director of a business, business planning is another way to help forecast your future income. Spending time with a business coach to prepare your financial business plan may help you make better personal financial plans.
Comments