Wednesday, May 1, 2013

Manage Your Finances Like a Small Business


You may not think personal finances have much in common with finances of a small business, but with a little creativity you can manage your money as if you were your own company. Here are some tips to keep in mind when working on your finances.

Hang On to Important Documents


As a homeowner, you probably won't have to deal with Cash Flow or Profit and Loss Statements like a business would. However, there are several forms and documents you definitely need to keep track of. This practice can help during tax season, when you might need to reference old statements for your files. Managing your finances will be a breeze if you store all your receipts, loan statements, and credit records in a safe, well-organized place.

Come Up With a System


Of course, knowing where your documents are is only half the battle. Once you've collected your files, you need to figure out a routine for keeping them organized and properly utilizing them in your financial management. It also helps to regularly balance your checkbook or keep track of your expenses in spreadsheets. Some business owners do a daily rundown of their gains and losses to maintain their financial flow. If you're struggling to figure things out, there's tons of free accounting advice online that can help you.

Focus On Profit


It might surprise you to think of a homeowner turning a profit, but this is basically what any individual with an income, expenses, and assets ends up doing. Consider the things you spend your money on every week--groceries, rent, energy bills, and probably some fun stuff, too. You can think of the dollars you don't spend on necessities as your profit and store them away in a savings account. Even non-monetary gains, like clothing or entertainment products, could be considered profits. One of your main goals should be to maximize these earnings so you can reap the most benefits from your hard work.

Plan Ahead


You won't get very far if you don't have a head for the future. Once you have all your files and systems ready, you need to consider what you want to do with your finances in the long run. If you want to make a large investment, like buying a house or a car, you will need to plan to save money and look for the best payment plan available. Financial programs can help keep track of your projects, or you can write a simple to-do list of tasks such as budgeting for food or allocating money for retirement. Just like a business, you should figure out your long-term goals and work on a good strategy to achieve them efficiently. 

Controlling your finances as if you were running a business is a great way to become more stable and more independent. Despite the differences between a small business and a homeowner, there are plenty of shared practices that can help any individual get a better grasp on their money.




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