If your personal finances are not under control, you must get a handle on them before you start a business. If you’re bad at managing your personal finances and goals, you will be horrible at managing your business financials as well.
You can’t afford for this to be a weakness and move forward.
You Need a System
Create a system where you check and update your financials weekly. Once you have gotten into the routine of doing this consistently for a few months (six), you can switch over to a monthly updating system. This is a must.
Once you get your personal finances under control, you will know how much cash you have available to start implementing your business idea. And once you know that, it is time to start setting your goals—financials for your personal needs and business needs.
You need to ensure you have enough cash reserve to draw from to cover your essential living expenses––for example, your mortgage or rent, transportation, food, utilities, and any other obligations you already have.
It helps to have three different sets of economic goals. When creating your personal and business goals, follow a progressive economic change. Click To Tweet
Ask yourself what is needed to provide yourself with economic stability. Stability is the amount needed to pay all your economic obligations on time each month.
What is needed to create prosperity for yourself? Prosperity is what you have after you’ve paid all your bills. You may now want to buy a new house and/or save for retirement and other expansions.
Finally, ask yourself what is needed for you to create an economic legacy. Your legacy means having funds and assets to pass on to your children.