After starting my own advisory, my finances did a complete RESET! I had to become focused and resort back to those money management skills that got me through 4 years of college and the first two years of the workforce.
Personal finances often reflect business finances. I’ve had clients ask why their bank accounts don’t reflect their revenue and profits. My response is always “What are your personal finances like?”.
Here are my sure-fire ways to manage your money like a professional:
1. Write your goals down! If you do not know where you are going, you won’t know if you are headed in the right direction. You should have financial goals such as saving 5K, paying down debt, maximizing IRA contributions, etc. Put these goals on real paper with a real writing utensil. Also, please make sure you TRACK your goal as well.
2. Budget! Track your money! Live within your means! There are several ways to say it. The best way to get a handle on your money is to tell it where to go. A budget is not just planning out your bills. Every single dollar should be accounted for, even the residual that is left over after all the bills have been paid. Use those extra funds to pay down debt or contribute to your HSA or IRA.
3. Have an emergency fund! The true purpose of an emergency fund is to prevent you from going into debt when an emergency arises. Some say $1,000, some say 3-6 months’ worth of expenses. I say start with a 1K and work your way up. Keep in mind, that you shouldn’t need this in the immediate future. This is not a transfer from savings to checking the type of fund. This is for EMERGENCIES ONLY!
4. INVEST EARLY! I know you’re thinking “if I had the money to invest, I wouldn’t be looking for money management tips”. Free yourself from the myth that you need a lot of money to invest. Also, free yourself from thinking stocks are the only investments. Side hustles, businesses, and real estate are also investments. Like I said before, start small and work your way up. Set a goal for your investments to cover your smallest bill for three months. Then aim for the next smallest. Build your investment portfolio up to the point where you can live completely on investment income.
These 4 things are easy to implement in your current financial situation. There’s no need to wonder how you will increase your income. FOCUS ON MANAGING WHAT YOU HAVE! Cash Flow management is telling your money what to do instead of the other way around.
Here’s the shameless plug. If budgeting is not your ministry I have simplified it for you. I have an easy-to-fill template that tracks your residual income, taxes, and debt to income.
The template also comes with a 45-minute budgeting consultation. You can request the template by completing a contact form with BUDGET as the subject. Read for Real Estate tax planning Dallas for more information.
Source: https://sydthecpa.com/2022/01/25/money-management-tips/