- Personal Finance»
- Understanding Finance
Manage Your Finances Like a Business
Many people do not think about their finances very often. Oh, they might wish they had more money, or wonder where the money went, but they don't really think about it. To really think about you have to be involved in it. Finances are extremely important to a person's success in life. I am not suggesting you become obsessed with money or with making more money. I just want everyone to know about their money and be in control of what happens to it. Everyone should manage their finances as if it were their business.
First, you should keep records. Like a business, you will not get far with your money if you don't keep records of it. Balance your checkbook, keep track of where you spend your money, know what upcoming bills need to be paid and most importantly - know how much you have at all times. Too many people just spend until the money runs out, not planning for the future. Rent might be due in two weeks, but right now they have money in the bank so they keep spending. Rent comes due and they don't have the money. A business would fail within a month or two if that is how they handled things. If you handle your money like this you too will fail.
Second, make a plan for your money. Businesses have to have a plan for where they are going and you should too. What are your goals? They could be immediate like paying the car insurance bill or long term such as saving money for a house. Whatever your goals are, make plans to achieve them. I know you don't want to hear the "b" word, but a budget is a tool to help you, not hold you back. A budget is just a plan for your money. Instead of your money slipping away and you wondering what happened to it, you are planning how to spend your money ahead of time with a budget and then making it happen. It doesn't have to be restrictive other than your outgo can't be more than your income. If you want to budget $50 for coffee each month and you have the money for that then do it. If you want to budget a night out on the town then do it. Just make a plan ahead of time and stick with it.
Third, be very careful of going into debt. It is possible but very difficult to avoid debt entirely, but chose very carefully. A mortgage within your means is a wise investment. A new 48 inch flat screen TV is not. Keep your debts small and manageable and your entire life will be easier.
Lastly, make time for finances. Just like if you don't have time for your business it will falter, if you don't have time to take care of your finances they will falter too. It might seem boring or too complicated and you might not like it. But just like doing laundry you have to do it anyway whether you like it or not. If you manage your finances well then you will succeed at anything you want to.