Do you know exactly how much you spend for your internet provider this month? Or pay for your domain hosting? And how much you pay for your grocery? Have you paid your rent for the next 6 months? How about your car insurance, is it paid for this 3 months?
How much money do you exactly have in your account right now? Is it enough if you need some emergency funds in the next 3 days? And wait, do you still remember how much you paid for last week lunch with your client?
If you feel you can not answer to those question or questions like that, I think you need to manage your cash book once again. Can not answer such question meaning you might have a mess money management. Maybe you spend too much, maybe you mixed your personal expenses with your business account, which is not good.
Imagine if you mixed your personal account with your business account. You might be forget how much exactly each account has, and then when you feel you still have some extra money, you just don’t realize it is your business money and you should pay some business cost next week using that money….. You will get trouble next week I believe.
Actually it is so simple to manage your accounts if you have your own business. The very first step is having different account for each usage. Open different bank account for your business and your personal money, thus will be best if you have one more account which is your savings (don’t touch this money unless there is a certain emergency).
How much money do you exactly have in your account right now? Is it enough if you need some emergency funds in the next 3 days? And wait, do you still remember how much you paid for last week lunch with your client?
If you feel you can not answer to those question or questions like that, I think you need to manage your cash book once again. Can not answer such question meaning you might have a mess money management. Maybe you spend too much, maybe you mixed your personal expenses with your business account, which is not good.
Imagine if you mixed your personal account with your business account. You might be forget how much exactly each account has, and then when you feel you still have some extra money, you just don’t realize it is your business money and you should pay some business cost next week using that money….. You will get trouble next week I believe.
Actually it is so simple to manage your accounts if you have your own business. The very first step is having different account for each usage. Open different bank account for your business and your personal money, thus will be best if you have one more account which is your savings (don’t touch this money unless there is a certain emergency).
Have your own policy for each account, like:
- For your business account, you will never use the money for your personal use, it only use for the business inflow and outflow. You only pay your business cost, and every business income goes straight to this account. And if you need some money for business emergency, of course you could borrow from another account of yours, just don’t forget to pay it back ;)
- For your personal account, you will live only from this money; you cannot borrow money from another account of yours to buy grocery or other personal needs. You must discipline yourself to live with the amount (so calculate how much you need and live with it)
- Make an extra account for your savings, the money can come from your business profit (you could take certain percentage from your profit for your savings, beside some profit you might put back to develop your business) and also you might save the rest of your personal money if you could save some.
Having those personal account might be sounds some paperwork, but believe me, it worth. You only have to put the certain money on the right account. It’s like you have a different shoes for different occasion, it’s that simple.
The extra job you should do is periodically prints your book and monitors the amount and the book keeping, it’s that simple, once you get use to it, it will like riding a bicycle.
Having a business meaning you have a responsibility for reaching your goal, this only a small tip that might help you.
