As an entrepreneur, you grind for your money. You toil away for 60, 70, or 80 hours a week to perfect your craft, find new clients, and grow your business. It's not all about building a wildly successful brand, though. The end goal is to provide your family with the income needed to live a comfortable life.
With that being said, growing revenue and increasing profit margins are only part of the battle. You also need to focus on how you can maximize and grow the income that enters your personal savings account.
Try These Five Money Management Tips
It's amazing how many entrepreneurs are successful at managing business finances but struggle with personal finances. The reason entrepreneurs frequently have issues here is because they don't commit enough time and effort. They're so focused on the business that they forget about themselves, compromising their future.
Are you one of the many entrepreneurs who can't seem to get this right? You may not be struggling to make ends meet, but you certainly aren't paving the way for a stable financial future.
If this sounds familiar, then you could benefit from the following tips.
1. Establish Financial Goals
In order to build a successful portfolio that benefits you now and later, you need to establish some financial goals. While someone retiring now only needs roughly $1 million at age 65 to be fairly comfortable, someone who is currently 20 years old will need more than $7 million to have the same lifestyle (accounting for inflation and other factors). You'll likely fall somewhere in the middle of the spectrum, but the exact dollar amount isn't important. What matters is that you're setting goals and implementing steps to reach them.
2. Get Educated
You can (and should) hire a financial advisor to help you establish goals and find financial products that help you maximize and grow your assets, but you also need to be involved. Financial education is key and you must be willing to learn.
Thankfully, the flexibility of the internet means it's never been easier to get an education in finance. There are free web-based courses that teach you how to trade investments. There are online communities that let you ask questions and solicit advice. There are even YouTube channels that specialize in personal finance advice. Commit to a life of learning - you'll like the results.
3. Create a Budget
If you don't have a budget, then you're probably bleeding money. Think about it - how would your business do without a concrete budget? Chances are, you would make a lot of costly mistakes, hurting your bottom line. Well, the same is true in your personal life.
A budget is only good if it's strict. This means tracking every single dollar that comes in and having a place for it to go. Every dollar should be accounted for in terms of spending, saving, or investing. There are a bunch of good tools that can help you get started, so find one that you're comfortable with and use it to bring some organization to your finances.
4. Set Up a Retirement Account
If you start saving for retirement at age 25 or 30, as opposed to 35 or 40, your money can earn hundreds of thousands of dollars more in interest. That's why it's imperative that you set up an interest-bearing retirement account - such as an IRA - as soon as possible. Even if you can only afford to put away a couple hundred dollars per month, you'll give your financial future a huge boost.
5. Create an Emergency Fund
While your finances may be fine right now, the life of an entrepreneur fluctuates. All it takes is a couple of clients dropping their accounts and your monthly income can go from comfortable to tight in a matter of weeks. That's why it's smart to keep an emergency fund on hand.
"An emergency fund is designed to cover a financial shortfall when an unexpected expense crops up," personal finance blogger Miranda Marquit writes. "Your emergency fund can serve as a place to get the money you need when you find yourself short. Because it must be reliable, it needs to hold guaranteed investments. In other words, savings accounts are good for emergency funds, while stocks are bad."
Take Personal Finance Seriously
It's easy to get caught up in the finances of your business and focus on increasing profit margins and driving revenue, but you aren't doing your family any favors if you don't spend much time reviewing your own financial situation.
Building a portfolio that allows for a comfortable lifestyle takes strategic planning and foresight. Review some of the techniques discussed in this article and identify items that can be applied to your situation