We talk a lot about managing cash flow if you start a new business, but less about managing your own finances while you do that! How do you keep your personal finances (and cash flow) organized?
1. Keep ‘Em Separate
It is essential that you keep your personal finances and business finances completely separate. Do not commingle! Make sure you are paying yourself a salary (rather than paying your personal bills) out of the business finances as soon as possible. Use software like Mint.com (www.mint.com) to keep track of your personal funds and net worth, the same way you use software like QuickBooks to manage company funds.
2. Manage Your Personal Cash Flow Like Your Business Cash Flow
The key to managing your personal finances is the same as for managing your business finances: Create a financial forecast. You need to understand your expenses, your cash burn, your potential cash inflows and potential unexpected expenditures. Figure out where you will get money for your personal account and how you can maximize your personal revenue stream. Then, do the same for your business!
4. Get Help
Managing finances can be complex and time consuming so it pays to get help with it. That help can come in the form of a partner, and employee or bookkeeping or accountancy firm. Having help can allow you to have an unbiased view of your finances and be smart about them. You can then ask questions and discuss issues as they come up, rather than being bogged down in an echo chamber of your own voice.
5. Track All Your Personal Expenses
A tip to track all your personal expenses is to use Google Doc and track all expenses — yes, even when you purchase an apple for 50 cents. This discipline can make you aware of what you are spending and helped to create a daily budget. This will help you know how much cash you have in the bank.
7. Keep It Simple
Mint.com (www.mint.com) is an excellent, free service to manage your personal finances. Simply sign up, link up your bank accounts, set monthly budgets for various spending categories and log in weekly or bi-weekly to ensure you are staying within your means. Mint.com syncs up with your linked accounts and can also be used to set savings goals, track your personal investments and find ways to save more money.
8. Make Regular Reviews
Every month isn’t enough! Nearly every week (or maybe more), Check in on both your personal and business finances—cash flow is king!
9. Manage Finances the Old-School Way
Many entrepreneurs find doing finances tedious and manually makes budgeting much more real and powerful. It can be helpful to copy and paste every expense from your bank account and categorize it into an Excel spreadsheet. Each time you copy and paste something, you have to mentally confront that expense. Doing this manually is a great mental exercise that gives you a stronger financial sense about yourself.
10. Calculate Cash Flow With Excel
Every month, go through and calculate your cash flow in Excel to see the sources of cash bleed, and then try to weed them out. It’s also helpful to try and project cash flows for the rest of the year to make sure any anticipated negative cash flow can be funded properly.
11. Buy Accounting Software
When starting your own business, the lines of separation between your business and personal finances can often get blurred. A great way to ensure this doesn’t happen is to keep your business finances clean and orderly by investing in accounting software. This will ultimately keep your personal finances just as organized.
If you need a Dublin based accountant to look after your accounting, bookkeeping, management accounts or other financial related business needs. Then click here now to call us here at Kilcoyne Accountants for a discussion regarding your requirements.