Pondering how you to how to handle your personal finance like a business? This article would be your guide. So, let’s get started.
Regardless of the low rate of unemployment and the thriving economy, only about 29% of Americans consider themselves to be financially healthy. This means that numerous Americans are not prepared if another recession sets in. If you consider properly what financial health should entail, you will consider facts like having more income coming than expenses, being able to pay your bills as at when due, and having some saved in the bank.
The Financial Health Network in partnership with Flourish, MetLife Foundation, and AARP surveyed to get a sense of how Americans are feeling financially. In its second year, the U.S. Financial Health Pulse Report measured respondents against eight indicators to ascertain if they were financially healthy, financially coping, or financially vulnerable. They discovered that 17% of Americans were struggling with most if not all aspects of their finances.
Meanwhile, 54% were struggling with some aspect of their finances and 29% of Americans are repeating the cycle of spending, saving, borrowing, and planning. Statistically from the survey, it is discovered that more than 70% of Americans are having some type of financial challenge.
Through the survey, the groups found out that while the overall financial health of Americans was unchanged from last year, the lack of financial healthiness by the majority of Americans is something one should worry about. Nobody knows for sure if a slowdown will occur in America’s economy or when it will occur, but it’s certainly obvious from this survey that Americans are in no way ready for such. The survey reveals that most Americans are not saving much this year, with only 12% of the population saving lower than what they will spend in a week. That’s up 1.4% from the previous year.
More than half of respondents between the ages of 26 and 49 don’t have enough set aside to cover living expenses for three months. People are also spending more than they earn. Of those making between $30,000 and $59,9999, 20% said they fell into that category. A similar percentage making between $60,000 and $99,999 indicated the same. So many people find it difficult managing their finance. And this is large because while growing up, there was poor education or none at all on financial management.
According to a survey in 2015 in the U.S. by Standard & Poor’s Global Financial Literacy; although the U.S. has one of the world’s largest economies, it is ranked 14th when it comes to the percentage of adults who are considered ed financially literate (57%). Researchers also found out that only about 37% of Americans could answer simple financial-related questions.
Has it ever crossed your mind of how much advantage it would be if you managed your personal finance the same way you would manage a business? This idea might seem like out-of-the-box but just pause for a brief moment and think of the possibilities and opportunities a business could bring to the table and replace “business” with “personal finance”.
When you run a business, I am very certain you did not settle down with the idea of making losses all the time because the sole aim of starting a business if we will be truthful to ourselves is to make profits and earn lots of money. Imagine if we employ some business ideas, strategies, and principles into managing our finances.
Personal Finance Like A Business
So, if you want to be in a better financial position, consider treating your personal finance like a business, and below are some tips that will help you achieve that.
START WITH A PLAN
Every business begins with a plan, it might not be properly detailed but there must be a plan. Introducing this concept into treating personal finance like a business, one should have a lay down plan too for their finance. This brings us to the concept of budgeting.
One should not just learn to write down a budget but should be disciplined enough to completely follow through with it, proving oneself accountable to the plan. Budgeting doesn’t necessarily focus on just expenses, but it also focuses on both incomes and like a business striking a balance in other not to accrue a loss.
For some individuals they simply live on pay cheque after pay cheque, others live on debt because they spend more than they earn. Just like a business one should set goals and strategically work towards achieving them.
If you are in the category of living on pay cheque after pay cheque, design a goal aimed at making profits for other ventures like savings, investments, down payments fund, etc. if you are in the category that lives off on debts, aim at setting goals to pay off your debts without incurring more debt within a stipulated period.
STREAMS OF INCOME
Business owners understand that having multiple streams of income is one of the hallmarks to being successful because of the unpredictability of life, if one stream fails there will be others to fall back to. This means for us looking for other prospects that will help one generate more income aside from our normal job.
Start a side hustle, consider monetizing that skill of yours, try creating a platform for that talent to generate income for you. Think of ways to increase your value and thus increase your pay. Strive to earn more money.
TRAINING AND WORKSHOPS
Businesses increase their value by educating their workers through training and workshops. Likewise, you should educate yourself and gain skills related to your job thus increasing your value and in turn your income. You can learn a new skill to move to a better paying job or even start your own business.
Therefore, you also need to learn more about financial management and get related skills which will make you better at managing your personal finance. You can get so good at it that you become a financial consultant who would be hired for their services and by this more income.
When we consider our expenses, we can broadly divide them into two categories; the essential expenses and the non-essential expenses. The essential expenses are those recurring ones like rent, mortgage, tax, subscriptions, utilities, fees, and other bill forms.
The non-essentials are nice but not necessary, they are things you can survive without like eating out, throwing parties, taking friends out, etc. one should learn to control one expense and most time gets too extreme of cutting some off, this is a financial discipline for those who want to have financial freedom. You should aim at boosting your financial strength and a good way to start is to cut down on unwanted expenses and get multiple streams of income.
As the popular saying goes; nothing good comes easy, so it applies here. As you begin to treat your personal finance like a business, do not expect a sudden improvement. It will take a gradual process for it to grow and become great. You would have to patiently, consciously, and consistently follow through with all we have stated earlier on to achieve the maximum result.
It would not be easy, times might come when it looks like your efforts are not profitable, be patient with your self and you would see yourself walk into your financial freedom; after all, there is a saying: “Rome was not built in a day”. Follow these guides diligently and you will notice as your financial health would flourish amazingly.