One of the biggest struggles I hear from business owners is the struggle to save money for themselves, especially in the first couple of years of business.
I get it. It feels nearly impossible to save when most of what you’re earning is going back into the business.
But, the reality is you can’t neglect your savings. That’s just asking for trouble when you have variable income.
Here are some ways business owners can improve their personal savings as they build their businesses,
Put more consideration into business investments.
One of the obstacles standing in the way of business owners being able to improve personal savings is the need to invest in their businesses.
Do you need to invest in your business to keep making money? Absolutely. But there’s a big difference between investing money and spending it.
For example, most beginning business owners probably shouldn’t spend thousands of dollars on web design or some fancy email marketing system, yet business owners do that all the time. This leads to a lot of wasted money that could have gone toward your goal to improve personal savings.
This isn’t to say that should avoid investing altogether or that you don’t need to take risks in business, I simply mean you should carefully consider the investments you’re making. If you do that, you avoid making huge money mistakes.
Here are some things to ask yourself when considering a new investment for your business:
- What’s the ROI? Can you actually quantify it? How long will it take?
- Do you really need this investment or do you just think you need it?
- How soon will you see ROI?
- Are you actually going to use what you’re paying for?
The problem is many business owners don’t think this far ahead when it comes to investments. This is especially true in the online world where it seems like everyone is showing off their latest investment or project. As with most things, you need to keep your eyes on your own business in order to make the best financial decisions.
Pay yourself first.
There’s a reason why financial experts say to “pay yourself first” in the form of personal savings – it’s because it works.
I’ve met several business owners who neglect to give themselves any money from the business. In fact, the idea terrifies them because they feel they won’t earn enough.
I get this too. I spent a long time being extremely conservative with what I would save because I wasn’t ever sure that I would be able to make enough money to improve personal savings, pay my bills and manage business expenses.
The funny part is I was underestimating myself. The only thing that helped me overcome this fear was to start taking my personal savings off the top. This means I prioritize my own savings before I even think about paying bills or spending money. I come first, my business comes second.
No one can afford to neglect their personal savings, even if their money is being reinvested in the hopes of making more money. By using these two tips you can ensure you aren’t wasting money in your business while also prioritizing your personal savings.