Today we observe that many a business person mixes business finance with personal finance. This trend is too acute in the case of small business where the line dividing business and the owner is much blurred. This has caused so much of troubles lately that every business person must be coerced to put his personal finance in order before doing anything else.
Streamlining your personal finance dictates that you tick off each and every instruction below as right and doable:
1. Legislate in your business model that you will never ever draw more than one-third of the profit or forecast-profit of the business. Now is the bitter part: learn to live within this ceiling
2. Once in a way you would have over-stretched your personal finance; that is excusable but do not make this as a habit
3. When there is indeed some over-stretching and your manoeuvrability is limited you must work consistently to improve the situation. Hoping for an Aladdin’s Lamp to solve your financial worries is meaningless. Of course, you are justified in having the thought that the situation might improve over a period of time; but if you are not going to act promptly the situation might even get worsen. A classic example is what is happening in Greece. The Greeks have jacked up public expenditure; borrowed more money to finance it; they do not want to tighten their belts; now they want the rest of the world to give them some more money
4. Never get into arrears in utility payments such as electricity, gas, water, telephone and mobile s as these bills add to your finance woes
5. Learn one wisdom: Credit card due is a treble-edged sword; if you do not make the minimum payment there is a plenty; even if you make a minimum amount due still the banks charge you interest on the whole amount including the amount you have paid in; if you make further purchases that amount is also added to your burden and payable in the next cycle. Therefore, either you pay the entire amount due well before the due date or never use the credit card at all
6. Contrary to many financial gurus, I hold the opinion that you must pay your bills manually rather than electronically. It is because you never know the amount you are paying till you get the bank statement. On the other hand you might be charged interest if by paying these bills your account gets overdrawn. A systematic way of paying bills as these fall due must be initiated by you rather than you allowing some machines to handle this on auto mode
7. Never lend your money to your friends or members in your family circles as the chances of getting it back is slim during recession
8. You must streamline your purchases for home and personal needs. Shopping must be done either weekly or fortnightly basis in a planned manner. This rule may not apply to urgent or daily purchases. Drive away the feeling of swiping your credit or debit card at supermarkets at your whim and fancy
9. Your business makes profits; such profit must be allocated in three ways; one part be invested within business; one part be invested outside business and the remaining part goes as your drawings. In this scheme the second one is very important. You must invest about one-third of your business profit elsewhere so that you will be able to get some return when you really need it.
10. Always save for the rainy day; keep some spare cash stuck away somewhere in a bank, bank locker or in some corner in the house
11. Examine your cosmics for guidance and inspirations. Cosmics are aspects that are beyond facts & figures but still influence the conduct of your business and your personal finance; cosmics reside in every individual and by extension in every business. A business person who understands his cosmics can plan out his personal finance by culling the fringes of his spending patterns. Moreover, he can focus on keeping a tight and right balance over income, savings and expenses.
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