Business and personal finance skills are very important. Your business and personal money philosophies should compliment each other.
"There is only one success -
to be able to spend your life in your own way.”
- Christopher Morley |
If you’re honest with yourself - and if you’re like most people - the way you handle your personal finances tends to be much different that how you behave when it comes to making business decisions. So bad, in fact, that if you ran your busines affairs the same as your finances, your business would be heading toward bankruptcy.
A lot of successful business people couldn't show you a personal finance budget. Many of these same people who own businesses and run them with precision and frugality, also run their personal finances in a haphazard and wasteful manner! It just doesn't make sense.
You would think they might take the time to buy and read a good personal finance book, right?
So why the difference? One reason is that business owners have other people - employees, clients, stockholders, etc. - to think about, and answer to. It’s not just their own money they’re handling; it affects other groups and individuals. So they can’t be careless.
When it comes to our own personal money, subconsciously we figure it only affects us, so there’s less incentive to invest the time to handle it properly.
If you don’t have other people to answer to, and if you don’t mind being in debt and barely scraping by for the rest of your life, then by all means, carry on.
However, most of us don’t want that, which means we need to treat our business and personal finance situations with equal attention to detail.
What does that mean? It means being accountable for all the money you spend through personal budgeting. Stop spending frivolously or carelessly. Keep track of your money.
Balance your checkbook regularly. Monitor your online spending habits. There should NEVER be a time when you don’t know how much money you have, and what expenditures you have coming up.
Start developing your personal finance education today by downloading our free personal finance statement form.
When you manage your personal finances closely, you should never be caught off-guard or surprised to learn your funds are running short. If you’re going to be short on cash, you should know it well in advance, because you’ve been keeping track of where your money’s going, right?
Where business and personal finance habits may differ is in how the money is monitored. Most large businesses have accountants for the purpose of tracking and reporting. For your personal money you only have yourself to rely on. That’s why you must take the initiative to run a tight ship, the same way you would if you were running a multi-million dollar business.
When a business makes extra profit, it’s distributed to shareholders or folded back into the business to strengthen reserves or allow for expansion.
When you’re able to curtail spending or eliminate debts as a well-disciplined personal finance manager, you'll enjoy the benefits and opportunities that come with that extra “profit” you've earned at the end of each month. You can save it for the future or use it to pay off existing debts, all in the interest of becoming debt-free and running a profitable business/household.
By exercising self-discipline in your business and personal finance habits, you will always come out ahead!
"Some debts are fun when you are acquiring them,
but none are fun when you set about retiring them."
- Ogden Nash, American Writer |
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Debt is NOT your friend. It's not a wonderful "tool" for building wealth. That's a myth.
