6 Money Management Tips for First-Time Entrepreneurs
That $5 coffee every morning isn't taking you to the next level any faster than brewing a pot at the office.
By Will Caldwell •
Opinions expressed by Entrepreneur contributors are their own.
How many times have you been told that saving money is a good thing? Financial specialists recommend that you save a bit of money every month, but that's easier said than done. After all, it's not uncommon for people to live paycheck to paycheck.
However, if you want to start a company, you'll need to break away from this cycle and start budgeting and saving. At times, this will be a trying task, but it must be done if you want to invest in your future as an entrepreneur.
If you want to start managing your money more effectively and set yourself up to become an entrepreneur, follow the six tips below. With these techniques in your arsenal, you'll start so see immediate changes, and you'll set good behaviors in motion that'll serve you throughout your career as an entrepreneur.
Related: 25 Proven Ways to Save Money Before Next Year
1. Prioritize organization.
When you are organized, you can track every facet of your finances. Record all of your financial information in one place so you can refer to it and keep track of your progress.
When you chronicle all of your financial information, you may want to try and organize it by category. For example, when you are recording your current costs, you can categorize them as "urgent" and "future." Not only will this system help you stay on top of your personal finances, but it'll prepare you for entrepreneurial success because it's a directly transferable skill.
2. Check your credit.
According to a recent MoneyTips survey, nearly 30 percent of people don't know their credit score. If you are among this group, it's time to request a free credit report. Once you know your number, assuming money's tight, feel free to use a few do-it-yourself credit repair techniques to quickly improve your score.
Understanding your credit score and improving it to the best of your ability is paramount when it comes to money management. A little-known fact among aspiring entrepreneurs is that the funding a new business receives is often dependent on the founder's credit score.
Related: 10 Dumb Money Mistakes People Make it Their 30s
3. Save where you can.
People often cringe when they think about cutting back. Fortunately, there are several painless ways to save. Look at your daily habits and see if you have any spending trends. For example, if you spend $5 every day on lattes, you might consider cutting back and only having the expensive latte every other day. Slowly, you'll get used to this new habit, and your bank account will reap the rewards.
4. Search for additional information.
Have you heard of The Penny Hoarder or Dough Roller? These are just two personal finance blogs that can help you better manage your money, but there's a whole lot more out there.
Subscribe to websites and follow podcasts that offer advice on money management. Also, keep your eyes peeled for informative outlets that speak directly about entrepreneurial finances and follow them, too.
5. Set long- and short-term goals.
Have you ever noticed that people want to reach their goals in as little time as possible? If you pick up almost any given health magazine, it'll claim that it can help you achieve extreme results in little to no time. Unfortunately, crash diets are often ineffective, and "get rich quick" money management techniques often lack substance.
It's hard to accept that your goals will take time to accomplish, which is why you create short- and long-term goals. In either case, aim to make goals that are specific, measurable, attainable, relevant and time-based. Ideally, accomplishing your short-term goals will give you the positive feedback that you need to continue striving for your long-term goals.
6. Find a mentor.
If you manage your personal finances and entrepreneurial finances, one thing is certain -- at times, it will feel like you can't keep up with everything. Financial planning can be difficult, and it's not uncommon for it to feel overwhelming.
Related: To Spend or Not to Spend: The Importance of Opportunity Cost Among Small Businesses
As an individual, you can seek out mentors that can help you with personal finances. As an entrepreneur, you can continue to work with these people or seek out more established financial consultants that provide you with guidance you need to run your business.
Managing your finances is a trying and rewarding experience. It will feel messy at times, but the more you practice, the more you'll improve your personal finances and set yourself up for entrepreneurial money management success.
