Why Personal Expenses Matter to Your Business
Ever find yourself juggling money between your business and personal accounts, like using your business credit card for personal groceries, or transferring money from your business account to cover your mortgage? If this sounds familiar, you're not alone. Many business owners get caught in this trap, leading to long hours and even longer days. Here's the deal: if you don't have a clear picture of your expenses, you will likely work harder without seeing the fruits of your labour.
When personal and business finances aren't separated, it's easy to fall into the trap of working more to cover the gaps. You might be dipping into the business funds for personal needs, creating a vicious cycle of stress and financial strain. This can lead to cash flow issues in your business, tax implications, and even personal liability for business debts. By understanding and managing your personal expenses, you can stop this cycle and make your business work for you rather than the other way around.
The Power of a Personal Budget
1. Get Clear on Your Personal Expenses
Start by taking a hard look at your budget. It might seem daunting if this is your first time doing this, but it's a crucial step. Check your bank statements, track your spending, and determine your household expenses. If you need a tool, we've got a personal budget template in the Ladies With Tradies group, which is a great place to start.
2. Allocate Drawings or Wages for Yourself
Decide on a regular amount to draw from your business, whether weekly, fortnightly, or monthly. This isn't just about paying yourself—it's about ensuring you're compensated for your hard work and keeping your finances in check—set goals for what you want to achieve with this money and make it a priority.
3. Set Clear Financial Goals
What are your personal financial goals? Whether saving for a holiday, investing in a new hobby, or just making sure you're not constantly stressed about money, having clear goals will keep you motivated and focused. As things change—like rising interest rates or economic shifts—review your budget regularly to stay on top of your game. These clear goals can provide a sense of direction and purpose, keeping you motivated and focused on your financial journey.
Why It's Worth the Effort
Let's face it: managing finances isn't everyone's idea of a good time. It can be uncomfortable, especially if you've been avoiding it. But ignoring your finances can lead to a lot of stress and even strain your relationships. The sooner you get a handle on your personal expenses, the sooner you can stop feeling like you're on a never-ending hamster wheel.
If you're feeling overwhelmed or frustrated, remember: understanding your finances is empowering. It's about taking control and making your business work for you, not the other way around. This sense of empowerment can boost your confidence and positively impact your business's success and overall well-being.
So, take a deep breath, dive into those numbers, and prioritise managing your personal expenses. Your future self—and your business—will thank you.
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