Many difficulties come with being a solopreneur. One of the most common problems is managing finances. Here are some easy ways to do so effectively and productively.
Keep a Checkbook
The number one rule of managing your finances involves keeping an actual, tangible checkbook. In today’s day and age where almost every financial transaction is performed electronically, it may seem like a hassle to open up such an archaic method as the physical checkbook. However, there are several benefits to using such a method:
- a) There is a direct connection to your bank account. This gives you the option of writing checks to pay bills, as well as draw cash directly from your bank (‘pay yourself’).
- b) It allows for easy tracking of bills due and money received (sales). If you use the check register like it was intended (instead of making up on-the-spot entries), it is easy to use the physical checkbook like a digital ledger and make notes on money received, bills paid, etc.
- c) It allows you to see how your business is growing or shrinking at a glance. This can help determine future goals or ways to pay down debt. It can also help you keep a watchful eye on how your business is doing over the years.
- d) It allows for easy reconciliation with your bank statements. Get in the habit of reconciling your checkbook and bank statement each month, keeping them both up-to-date and accurate.
- e) Keep your debit card remains active always and if in case, debit card declined but money in account, you can manage it by clearing with the help of an expert at the earliest nowadays.
Save Up and Spend Wisely
In light of the above, it is important to save money for upcoming expenses or things you may want (or need) later on. This could include anything from a new computer if your old one breaks down to taking time off work for vacation days. Managing finances requires discipline, so try not to splurge so much that you cannot pay your bills.
Set a Budget
Another important point involves setting up a budget and sticking to it. A good rule of thumb is to set aside part of each paycheck for taxes (which should be automatically withdrawn), savings, and retirement. This could include an IRA or 401(k) as well as a savings account for smaller upcoming expenses (like computer parts or vacation time). It is also important to set up an automatic payment with your bank and make sure to pay the company from which you borrowed money (if applicable) regularly.
If you have extra income, it may be tempting to take a portion of it and invest it in something, like a stock portfolio. While this is certainly an option, make sure to take the time to do your research first. There are many opportunities out there (like penny stocks or other so-called ‘high risk’ investments) that may not be worth your while.
Managing your finances by yourself can be a difficult task, but following some of these tips may make the process of managing money easier for you. In addition to these tips, it is also important that you set realistic goals and met them as they come. Develop a budget and stick to it, save up for upcoming bills or expenses, and don’t be afraid to ask for help if you need it. Remember, there is no shame in admitting that you do not know everything or how to do something. Asking questions and doing research (something we often neglected to do as kids) can go a long way. If you are looking for more great financial advice, consult with experts like at Woodward & Co. Business Accountants.