5 Steps to Improve Your Personal Finances as a Small Business Owner

5 Steps to Improve Your Personal Finances as a Small Business Owner

Business owners have a ton of responsibilities. As well as being an entrepreneur, you’re also a manager, a marketer, a salesperson, and a CFO. It’s no wonder that many small business owners neglect their personal finances. That is never a good idea, though. The last thing you want is to be in the position where you have to let go of your business for financial reasons. This post will give you five crucial steps to improve your personal finances as a small-business owner.

Keep Personal and Business Finances Separate

First, you need to make sure you have a system for tracking your personal expenses, income, and bills. This can be difficult to do, but it’s crucial. Various tools on the market help you keep track of everything. Mint is an excellent option because it links directly to your bank account, and it will automatically categorize all of your transactions. It also makes creating budgets super easy with its handy pie charts that show where you’re spending the most money.

You’ll want to try your best to separate your personal finances from your business finances as much as possible. This means getting a separate checking account just for your business and another one just for personal use. If you don’t, then you’re bound to start borrowing from one account or the other, and that can lead to more significant financial problems down the line.

Don’t purchase things for yourself with company funds. Never take money out of your business account unless it’s for something related to the company itself–like paying suppliers or advertising costs. Keeping these two accounts separate will help prevent any confusion or trouble in the future.

Start An Emergency Fund

If you’re not already stashing away some money for yourself, start now. You need to create an emergency fund to improve your personal finances as a small-business owner. Whether you’re saving up for a vacation, paying for insurance deductibles, or simply budgeting for the future, you need to know that you can cover expenses if something unexpected happens. This will mean setting up a high-yield business savings account and contributing $50-$100 per month towards it for many entrepreneurs. Initially, this may seem like a lot, but it will only take four months to create a sizable emergency fund and protect your assets.

Pay Down Debt

One of the most important steps you can take to improve your personal finances is to pay down debt. While small business owners are often willing to invest in new equipment or inventory, they frequently neglect their personal financial obligations. This is an even worse idea if you’re living beyond your means. Debt-ridden business owners are likely to make mistakes and drive their companies into bankruptcy. Paying off debt levels will help get your personal finances under control, allowing you to focus on other areas that need improvement. You should also try to get rid of any vehicle with high mileage.

Consider Investments

One of the most critical steps to improving your personal finances is investing. And you should start by considering different investments, like stocks and bonds.

Investing in stocks and bonds or forex trading is an excellent way to get a steady stream of income from your money. This will help you avoid having large sums of cash tied up in liquid assets that don’t produce enough interest on their own. The downside to investing and trading is that it can be pretty risky. You have to consider the risk associated with these investments to know what’s right for you and your business.

Save For Retirement

As a small business owner, you need to be saving for retirement. We all know that the days of pensions are long gone, so we need to save for our own old age. But how can you do this when you have so many other responsibilities?

One of the best ways to save for retirement is by setting up an automatic investment plan with a company like Betterment. With an automatic investment plan, you don’t have to remember to put money away every month, and you’ll never miss it if it’s deducted from your account automatically. Betterment even offers socially responsible investing.

A final way you can save for retirement as a small-business owner is by opening an Individual Retirement Account (IRA) or Roth IRA. You can open an account with any traditional bank or savings institution, and they’re tax-free until you withdraw funds at retirement age.

It is never too late to start taking stock of your finances and improving your financial health as a small business owner.

About the author


Steven Ly

Steven Ly is the Startup Program and Events Manager at TheNextHint Inc. She recruits rockstar startups for all TC events including Disrupt, meetups, Sessions, and more both domestically and internationally. Previously, she helped produce Dreamforce with Salesforce and Next '17 with Google. Prior to that, she was on the advertising teams at both Facebook and AdRoll, helping support advertisers in North America and helped grow those brands globally. Outside of work, Priya enjoys Flywheel, tacos, the 49ers, and adventuring around the globe.

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