As an entrepreneur, there’s nothing more satisfying than the feeling of jubilation you get, when the money first starts rolling in. After all, the culmination of all your hard work is finally coming to fruition. But in these ecstatic moments, it’s all too easy to get carried away.
Many entrepreneurs squander their wealth once they’ve “made it”, effectively undoing years of hard work through sloppy financial management. Let’s take a look at 5 tips for protecting your wealth to ensure this doesn’t happen to you.
There’s no better way to control your expenditure than constant monitoring. Start by organising your personal finances. These days, most mobile banking apps have an in-built feature that tracks and categorises your purchases, allowing you to discern how much you spend on every aspect of your life each month. You can use this information to determine where your money is going and foster better spending habits.
The same concept applies to your business. Most budding entrepreneurs don’t have the budget for an accountant yet, so they’ll need to be organized by documenting their income and expenses in one place.
Identify, Understand, and Improve Your Credit Score
The ability to borrow money is crucial for almost any business. Yet many entrepreneurs don’t quite understand the impact of their credit score. First off, determine your credit score through a free online assessment. Your rating will then determine how much you can borrow and at what rates.
If you’ve got room for improvement, then there are ways to increase your score over time. Consider the following:
- Always pay your utilities, rent, mortgage, and any other bills on time.
- Pay off your debts as soon as possible
- Consolidate your debts
- Lower your credit card limits
Start a Savings Plan
While it’s tempting to spend your newfound hard earned cash, remember the old saying “you’ve got to have money to make money”. If you can adhere to a strict savings regime, then you’ll rapidly build enough wealth to further invest in your business.
Use a banking app or bookkeeping software to analyse both your personal and business expenses to determine where you can save. Cutting out coffee is almost a cliché, but these expenses do add up. Consider eating and drinking at home to minimise your spending as well.
Set Short and Long-term Goals
Setting short and long-term goals is the best way to keep you motivated and your business on track. Just remember to be S.M.A.R.T about them.
Arrange them so that success in your short-term goals will inspire you to stay focused on your long-term goals.
Ask For Help
Even the best and brightest entrepreneurs have enlisted help along the way. And the same applies to protecting your wealth. Network with other entrepreneurs and quiz the more organised and successful ones on how they manage their finances. Some may even agree to take you under their wings as a mentor.
Invest in accountants and professional financial advisors as your business grows. These experts will significantly help to free up time for you to focus on the money-making side of your business.
Everyone knows earning money as an entrepreneur is tough, but most don’t realise that keeping it can be equally challenging. The above money management tips will help keep your finances in check.