Finances are important to entrepreneurs. In fact, they are one of the determining factors in why we do what we do. We all have needs and wants that we try to meet with our incomes, no matter how large or small. This is even more important for finances outside of business. How can you run a company’s finances if your personal budget is embarrassingly non-existent?
As a young entrepreneur, finances become a critical part of our lives, our businesses, and our relationships. Balance in all of these areas is nearly impossible.
However, there are a few steps that we can take to set ourselves up for financial success with what we have and what we will make in the future.
The three common sense principles to follow that will lead to a life of stable finances are Give, Spend, Save. Earth shattering, I know, but very few people think through each step and how imbalance in any area can lead to disaster down the road.
That’s right, give. Giving does three things for us as young entrepreneurs. First, it keeps us from thinking EVERYTHING we make is ours. It keeps us from becoming greedy. Second, it helps others, and hopefully, those in need. Lastly, it feels good! Giving reminds you that there are very wonderful things money can do besides improve your bottom line, pay your bills, or even buy that new tech gadget (which will probably be obsolete in 6 months anyways). You can give to your religious institution, charity, friends, family, or strangers. It doesn’t matter- just give!
Go and buy things! Spending should fall into two categories: needs and wants. Buy a few things you need to make sure that you are comfortable and taken care of for the foreseeable future. You can’t always be practical, though. Buying things you want is also important, and even better if treated as a reward for reaching a goal in business. Go and buy a new television or that jacket you’ve always wanted! This reinforces that money can take care of you if you take care of it.
Saving is arguably the most forgotten of the three; it is the principle that can change your life if done right for a few short years! Treat saving like it’s a bill or something that needs to be paid every pay period. Your savings will determine how long you work in life and it can determine the level of comfort you retire at.
You may notice that in explaining these three principles I never use numbers or percentages. This is your money! You need to figure out what works for you. The important thing to instill is that you do not cheat on any of these areas. You should work on all of them. If you do that faithfully for years, your finances will begin to take care of themselves. Personal finance isn’t a formula, it’s a set of principles on how you deal with money. Remember, you reap what you sow.
Category: Money Basics