Financial stability is a highly desired commodity for both individuals and businesses, and in both cases, money management is often a key to that stability. Multi-million dollar businesses don’t get to that level of success through improper spending and a blissful lack of awareness regarding their cash flow. It takes careful management, budgeting, and sacrifices to reach that level of financial stability.
If you want to become more financially secure, managing your finances like a business can help you to gain control of your financial situation. Here are a few tips on how to do just that.
Your Spending Accounts
All successful businesses start with a business plan. Typically, this includes things like the product or service their offering, their method for creating and delivering the product, and a company mission statement. For your personal finances, the main part of your “business plan” will be a budget.
Budgets are something most people are familiar with but few people employ properly. To manage your personal finances like a successful business, you should establish “spending accounts” relating to each category that is relevant to your monthly spending. This may include a spending account for rent, utilities, groceries, medical expenses, and personal spending. Everything you buy should be tracked and attributed to the proper spending account. If you fail to track your spending, you’re not managing your cash flow properly, and your financial plan will fail.
Your Mission Statement
The other part of your business plan should be a personal mission statement. Much like a business’s mission statement, this should outline what your end goal is. Why are you trying so hard to manage your finances? What result do you hope to see? Do you want to get out of debt? Do you want to put a down payment on a house? Maybe you just want to see a certain minimum amount in your savings.
Whatever it is, write it down, and put it somewhere that you can see it every day. Having a personal mission statement gives your financial efforts purpose and keeps you on track, just as it would for a business.
Your Operating Expenses
Businesses keep a close eye on their operating expenses, and are always looking for ways to minimize their overhead costs. You need to view your personal expenses in a similar manner. How much does it cost to “operate” your life on a day-to-day basis? Where can you reduce the spending to minimize those expenses?
Mastering your finances goes hand in hand with mastering yourself. It takes a great amount of self-control to say no to that invitation to go to the movies with your friends, or to pack a lunch for work instead of going out to eat every day. But these small sacrifices add up quickly. Just as a new business must do without the most high-end equipment and furnishings, you will sometimes have to pass on purchases that are extremely tempting.
Over time, these sacrifices will contribute to long-term financial stability as you form a habit of frugality that will guide you through your life. Similarly, businesses that are extremely careful about their spending habits are far more likely to become multi-million dollar success stories.
Your Revenue Streams
A good business owner knows that you must maintain multiple sources of cash flow in order to be successful. You can’t rely on a single client if you want your business to grow. This is a factor that many people don’t work into their personal finances. After all, if you have a job, what other source of income do you need?
It is always a good idea to have a secondary source of income, even if it is a small source. This may be something as simple as teaching piano lessons in the evenings or cleaning someone’s house on the weekends. A secondary income stream is essential to keeping you afloat if your primary income source is cut off.
Consider, as an example, multi-millionaire Sam Ovens. He began his business journey in his parents’ garage, building an app. Though the program was extremely successful, he didn’t stop there. Sam built on his own success and continued creating new revenue streams. He became a business consultant, then began teaching others how to become consultants. Though not everyone can have multiple, large revenue streams, having additional sources of income aside from your primary income is a vital part of managing your finances like a business would.
By constantly searching out new revenue streams, you can find ways to support yourself that you might not have imagined before. And if you follow the tips above, you can manage your personal finances like a successful, multi-million dollar business.