Many people live paycheck to paycheck, paying their bills and expenses each month with not much left over for savings. It’s a vicious circle that is difficult to break and leaves business owners with nothing to fall back on when a crisis like COVID-19 hits.
Elena Meskhi is a certified accountant and tax adviser and founder of accountancy firm, Elena Meskhi & Co. She is also the author of a new book, Rewire Your Business For Success: the 6 step method to increase profit and reclaim your freedom. Here are some tips below from Elena to help break the cycle and lack of income and start building an emergency fund.
Know your personal budget
I know it sounds like a cliché, but how much money do you need on a monthly basis to have it all? To cover all expenses, set aside money for savings, investment, and allow yourself to do relaxed shopping without worrying about the end of the month? Take the last 3 months, add all expenses without exception and divide by 3. That’s the monthly average you should extract from your business.
Pay yourself first
As an entrepreneur, the outgoings and incomings are the important backbones of the business’ success, and if the business owner feels like they are last on the priority list, they will begin to feel stressed and lacklustre towards the business itself, losing the passion and drive they once had. Make yourself number one supplier and ensure you pay yourself before anyone else. People who have taken this approach reported that it was the last piece in the jigsaw puzzle and the business finally started to make sense.
Have a financial strategy for you personally
It’s vital to have a financial vision for your personal wealth and then achieve it step by step. Rome was not built in a day, and it is the same with personal wealth. Envisage how you see yourself financially in the future. Do you an investment portfolio or maybe a holiday let? Once you have created that vision, think again about your monthly income as it is no longer just about your monthly expenses. Decide now what your financial wealth strategy is and make a plan.
Research your investment strategy
Let’s face it the only way your business will make you rich is if you sell it. If that’s your one and only strategy to get rich, skip this step. For others, invest your time in learning about the financial strategy you decided upon in the tip above. By expanding your knowledge, you will remove the risk and create the opportunity for your investment. No need to enrol in expensive courses, talk to people who do it for a living, network and get to know the market.
Take time to pause and set the boundaries
It’s vital to step out of the operational side of the business occasionally and reconnect with yourself. It’s good for your health and it’s also good for your business. During these moments of distraction, the light bulb moment is the brightest. Good ideas will come to you when you stop and breathe and enjoy life.