As a business owner, financial health will often be at the forefront of your thoughts. Both your personal and the company’s finances will, at times, keep you up at night as you attempt to balance income with expenses.
In order to reduce the amount of monetary stress in your life, consider these eight ways to improve your financial health.
Understand Where You Are Now
The first step you will need to take is to understand the precise state of your finances at the moment. What are your current incomes, and what are the expenses?
Go through your personal and business finances with a fine-tooth comb and arm yourself with the latest information. You may discover your finances are in a much better or much worse state than you were expecting.
You can also outsource this task to your accountant, who can give you a more insightful overview. They can also provide advice about the biggest expenses and how to reduce them.
Reevaluate Your Bank Accounts
If you have banked at the same place for a long time, it might be time to see what else is out there in terms of checking and savings accounts.
A lot of banks offer perks to new clients. You may be able to refinance some loans or mortgages or get a better deal on your personal credit card.
When talking to a new bank, make sure to carefully read the fine print. Don’t just listen to the best version the sales team will throw at you. Walk in armed with all relevant information about both your personal and your business finances to help them better understand your current financial position.
Invest in the Right Stocks
Investing in stocks can be an incredible way to improve your financial health. However, the trick is to choose the right kinds of stocks for your goals.
What this means for you will depend on a number of factors. You will need to determine how much of a risk you’re willing to take and how big a payout you’re looking for. Don’t put your proverbial eggs all in one basket, either. Diversify your stock portfolio so that even if one stock dips, you still remain afloat.
You can use a stock average calculator to help you understand the current state of your portfolio and which steps you will need to take in the future. Use it periodically to stay on top of the health of your stocks.
Make a List of Expenses
Without even realizing it, we often spend a lot of money on items we don’t actually need. For example, you may currently be subscribed to a service you hardly ever use. Or you may keep ordering printing paper when you still have plenty in stock.
Take some time to list all of your personal and business expenses, and then analyze each item. Do you really need this? Can you find it at a more affordable price? Is there a way to save?
Don’t be too brutal here, though. The goal is not to completely change the way you spend money (unless this is absolutely necessary). You’re trying to uncover opportunities for saving that won’t impact your day-to-day life too much.
Reconsider Your Budgets
You also want to take a look at your business and personal budget and see what needs to be tweaked. Most people will plan out their budget once and stick to it far longer than they need to. This may lead to inappropriate spending or an inadequate investment portfolio.
It will be particularly useful to compare your current incomes with the ones you’ve projected and uncover where the difference is. Are you earning more through one type of contract than you expected? Is there an expense that you didn’t foresee?
Use this information to redo your budget and start allocating the money where it will make the most impact.
Consider Your Needs and Wants
It would also be worth your while to give some thought to needs vs. wants. What are the expenses that are absolutely necessary, and what are you spending money on because you want to?
The simplest example is your daily cup of coffee. If you get one to go every day, is this something you absolutely need? Or is it maybe a want you can alter to save money?
The same principle applies to your business. Are you spending too much to embody a certain persona or a certain brand appearance, or are all your expenses warranted?
This may be a very difficult conversation to have with yourself. However, if you are honest and patient, you can improve the state of your finances now so that you can achieve your goals faster and live the life you want more sustainably in the future.
Create an Emergency Fund
If you don’t already have one, now is the right time to create an emergency fund. Think of it as a safety net that will protect you, your family, and your business should something unpredictable happen.
Ideally, you will want to cover all expenses for 9-12 months with this fund. That should give you enough time to bounce back in case of illness, an unforeseen market crash, or any other emergency.
Take out the Right Insurance
Speaking of emergencies, you should also consider investing in the appropriate insurance. This may mean insuring your business premises or your home, but it can also mean insuring your life against injury or death.
Again, it’s paramount to take a look at the fine print when choosing an insurance policy. You will want to know exactly what it covers and, more importantly, what it doesn’t cover. You don’t want to find yourself in need only to discover your policy does not cover that specific situation.
Consider these eight ways to improve your financial health and reach your business goals faster and more sustainably. Note that some of them may be better for your personal situation than others, so don’t rush in blindly. Take stock of your current affairs and go from there.