Finally, you’ve just opened your first store branch. All those years working as an employee finally paid off as you venture off doing everything you love. But you might forget that doing something you love will still take its toll on your expenses and your own health. Be informed. Develop the proper financial habits with these three.
Reduce Your Debt Today
A mountain of debt will have banks shut their doors when you need them the most. But to start a business, you might need to take on mountains of debt.
Before you say this particular situation is quite ironic when starting a business, you have a choice of making debt reduction your top priority.
Manage the possible damages to your credit rating by handling the highest interest rates first, including your personal expenses in your credit card. Then, eliminate your student loans.
Also, never shut off your access to debt consolidation services. These are essential if you have multiple loans.
Good Spending Habits Habit
Avoid being too gallant for yourself during the first three months. If you’ve been wanting that new car or financing that new branch already, stop yourself.
Practice a bit of accountancy by plotting down all the expenses you’ve made and about to make in the next few days. Monitor your repayments for your business loan, student loan and equipment financing for your business, if any.
Get your bad spending habits under control. If you’re an impulse shopper, prioritise your business and avoid adding to your debt.
If you can get your financial demons in control, you develop better entrepreneurial habits, making you ready for corporate decisions in finance.
Emergency Fund and Insurance
Never forget to have at least 3-6 months of personal living expenses once you begin your business. This will help you avoid troubles that might lead you owing wages to your employees. Have a money-market account or at least a savings account.
You could create your own emergency fund by depositing money in a Roth IRA, or better yet an insurance policy with a growth fund component.