Most small businesses are run as Sole Traders, or Partnerships, and as such the finances, resources, and management can get intertwined with your personal finances and life.
Ensuring your personal finances are under control will filter into ensuring your businesses finances are under control.
Follow these 6 easy steps to get your personal finances under control, so you are not dipping into business money or worse contributing to your business unnecessarily.
Then ensure your small business finances are under control with 6 similar easy steps.
These steps are a framework to build a good system for keeping your personal finances under control. A full program, including worksheets and consultations, is available.
6 Steps to Financial Control – Personal
1a. Review your current financial situation / create the skeleton of your attack plan
- Review & list all accounts / Loans / Bills / Debts / Incomes
- How much money do you earn / owe / have saved?
1b. Budget Planner – complete the Budget Planner Spreadsheet or Document.
- List ALL actual incomes & expenses on a personal Budget Planner. Write down exactly what you need to pay out every week/month on all loans, credit cards, rent, mortgage, food, fuel, electricity, school fees, insurances….
2. Bank Account Separation
- This is the most important step.
- Your personal accounts MUST BE separate from your business accounts – bank accounts, credit cards – everything
- Separate your personal money into separate accounts for different goals (***most important***). Open separate bank accounts for:
a) Spending – Bills, every day, any large commitment
b) Saving – short term (eg: holiday), long term (eg: house), etc.
3. Automatic Payments
- Establish automatic payments to and from each account to ensure all bills and commitments are paid
- Establish automatic payments to each savings account. any amount, as long as it is regular
4. Reduce your Debts
- After identifying all your debts, and setting up payments, what debts can you eliminate, reduce or combine?
5. Increase Income
- If your commitments are more than your income, and you have reduced your debt, can you increase your income?
6. Celebrate & review
- It is important that you celebrate your control. In the above steps you will always have a ‘spending’ account where you can spend every last dollar, without guilt. If you have manged your commitments then there will be no more ‘chasing your tail’ to find money for bills or repayments.
- Review your income, expenses, bills, and savings every 6 months & adjust where needed.
Contact A Girl Friday for the full comprehensive 6 step plan and worksheets.