Run your personal finances like a business

Many finance professionals and journalists agree that managing your finances as you would a business is the key to prosperity. Even the best business ideas can fail if the capital and revenue are not carefully monitored. Similarly, if you mismanage cash on a personal level you could find that you’re short of money by the end of the month.

Many similarities can be drawn between how a successful business owners operates their company and how a financially stable individual controls their personal finances.

Here are six tips adapted from the business environment:

  1. Create a ‘business plan’

    If you’ve ever watched an episode of Dragon’s Den you probably would have noticed that the investors always ask the entrepreneurs about their business plan, what they’ve earned and what they project to earn.

    Most business owners recognise the importance of detailed business plans, they provide direction by outlining company objectives and the steps needed to achieve them. A budget is a great tool to determine how much money you have coming in and going out every month.

    To create a budget, write down your expenses and ensure you have enough cash coming in to cover your monthly costs as well as to meet your financial goals, such as paying off debt or planning for retirement.

  1. Reduce overheads

    Entrepreneurs usually reduce operating expenses, or overheads, when times get tough. Using these sorts of tactics will keep your personal finances on track and build your financial security.

    If you find that your income has decreased, or that your expenses are increasing, it may be time to downsize; you may need to move to a smaller house, trade in your car for a more economical model, cancel magazine subscriptions, or cut out any other luxuries that drain your account on a monthly basis.

  1. Pay employees first

    It helps to think of yourself as an employee when managing your personal finances. Pay yourself before you pay anyone else to make sure that you meet all your monthly commitments, such as rent or school fees. You can also set some money aside for a savings account, retirement fund or other investments.

  1. Grow your money

    By investing, you can make your money work for you and build a better financial future for yourself. There are plenty of investment vehicles to choose, from unit trusts to property. If you’re unsure of the best options to achieve your goals, give me a call and I can help you out.

  1. Insure against potential risks

    It is essential that a business is insured against all types of risk to protect themselves, their employees and their customers.

    Just like a business, you need to shield yourself and your family against potential risks. If you’re the sole income earner, you should have life and disability insurance. Home, health and car insurance are also important safeguards for securing your personal finances.

  1. Create multiple income streams

    The most successful businesses have multiple streams of income. This way, if one fails, they have others on which to rely. Try and think of creative ways you can bring in more money. Make the most of a skill or talent, such as painting, baking, cooking or sewing.

    With some hard work, patience and extra time, there’s no reason why you shouldn’t be successful. Local markets are a re-emerging trend where stall owners apply their homegrown talents to turn a profit and online business is teeming with potential. You can do it too!

Just as you would run a business, take a professional approach to managing your personal finances. It’s important to realise that wealth does not occur overnight and these changes will take time to show positive results. Patience and persistence are crucial values for any financial venture.

Need help investing, insuring and implementing a business plan? I’m here to help, let’s get in touch!

Scroll to top

Allow us to help you and your family navigate your way through life