As an accountant for over twenty years, I have manged the finances of companies large and small. I have had the privilege of working for multi-million dollar companies and entrepreneurs making a few thousand dollars a month. I have paid their bills, collected their income, reconciled their bank accounts, and created their financial statements. I have had the opportunity to manage several business owners’ personal finances and affairs and I’ve learned quite a bit about how the “rich” handle their money. Above all else, becoming financially stable requires education, planning, and discipline. If you are uncomfortable tackling your financial situation alone, meet with an accountant or a personal financial specialist for in depth advice and assistance in getting your personal finances in order.
In the last installment of the B.O.S.S.Y. blog series we examine the key steps in getting your personal finances in order. If you want to be a Boss business owner, you have to be able to manage your loot.
1. Create a Budget
You need to know exactly what you are working with. Add up all of the money coming in (income) and subtract the total of what’s going out (expenses). Include everything from the rent to the money you give your kids for lunch. What’s left over is your disposable income. If this number is negative or damn near zero, your primary financial goal right now needs to be increasing your income and decreasing your expenses. When I was in the hole, this meant braiding hair on the side and turning off my cable for a few months.
2. Treat Your Savings Like A Bill
Pay yourself like clockwork. It doesn’t matter how much you can afford to save, make sure to put a set amount away every month. Yes, you should be paying down credit cards. Yes, you should be investing for your retirement. You should also make sure you can pay for a flat tire without having to borrow the money from a friend or pull out a charge card.
3. Manage Your Debt
I know all abut the life of a person in debt up to her eyelashes. Several credit cards maxed out, more than a few over the credit limit, and at least one in collections. I know all about making a purchase by paying $50 with one credit card, $35, on another and…wait…put $12.75 on this one. And I really know about sending Sallie Mae straight to voicemail. This is no way to live. We all do what we gotta do, but we have to do better. Make debt repayment a priority. This will free up funds and loads of stress in the long run.
4. Work Towards Long-Term Goals
Retirement, buying a home, paying for your child’s college education are all major financial goals that take years of planning and discipline. You cannot wait until the last minute and cross your fingers hoping you win the lottery. Determine what it is you want, how much it’s going to cost, and make a realistic plan to make sure that you have the credit and dollars to make the moves you want to make in the future. Investing in usually required to reach these type of goals. Consult with a reputable financial planner or investment specialist to discuss your specific situation.
5. Include Fun in your Finances
Family outings, vacations, bottles of wine, and impromptu dinners out are just as important as the light bill and the rent. We all need to relax and have a good time. It’s part of being human! Fun does not have to be expensive but it is necessary for our well being and that of our children. Leave a few dollars out in your monthly budget to just have fun with. If you can’t afford Netflix every month, an occasional “Redbox and Chill” is just as good.
You are a Boss, so handle your money as such. If you can’t manage the amount you have now, you will not be able to manage more. It just doesn’t work that way. You will simply have a more expensive mess on your hands. Master the basics on your level so that you will be able to receive and manage more!
Until next time,
Rachel Henderson is a single mompreneur who helps other single mothers turn their pass ion into profit, while maintaining their home. She has over 20 years experience in accounting and business, and is now focused on spreading entrepreneurship among young single mothers. Her hobbies include cooking, shopping, and making gift baskets. She lives and plays with her three boys in sunny Los Angeles, CA. Her faith and the love of her family keeps her motivated every day. For more information visit www.mzrachelzplace.com.