So, you’ve realized that you can’t depend on your standard 9-5 to pay your bills anymore? Your side hustle has turned into your full-time gig. But now, you’ve come to realize that your expenses are quickly climbing right along with your income. So now what? You need to quickly improve your finances in order to be the successful entrepreneur you’ve imagined.
Proven strategies for improving your finances
Lucky for you, I’m going to lay out some simple but action based strategies for you to be able to actually improve your financial situation. Let’s get started.
1. Make More Money!
Okay, okay. It sounds easier than it actually is, right? Here is the deal – if you’re going to live outside of your means, then it’s as simple as that. You will need to find a way to make more money. Maybe you need to pick up more clients. Maybe you need to develop an affiliate program. Maybe you need to have a secondary offering. Or, maybe you need a big slice of humble pie and realize that you’re not quite ready to leave the corporate world just yet.
Let’s say making more money at this point is just not an option. But, you can’t possibly go back to where you used to work, and you are strapped for time as it is. It’s totally fine. Don’t worry, because this leads us to the #2 way to fix your finances.
Yeah, yeah, yeah. That big nasty word known as BUDGET … but really, it’s not as nasty of a word as you think it is. What budgeting really means is that you’re not willing to allow your money to have control over you. Instead, YOU have complete control and say over where your money is going. Honestly, I’m not a huge fan of having to allocate where every single dollar is going. Budgeting means that you are saving for what your money is going to be used for. For example, your mortgage, rent, payroll, taxes, etc. Basically, you’re filling all of the “buckets” you are responsible for. In return, you have a plan to ensure you’re not over-extending yourself each month. Figure out what you value most, and that is where your money needs to go. If you’re just spending on things to look good, and it doesn’t necessarily make you who you want to be, then you really need to do some heaving thinking on whether or not you’re living in line with what you value most.
3. Know Your Net Worth
This is one of the most valuable numbers you will carry around with you. This is a true measure of your success. If you have sufficient net worth, you will be able to have other investment opportunities. You will be able to retire comfortably and pass assets down to next generations. Your net worth displays how financially set you are vs. how much of a car or mortgage payment you can afford. See what I mean?!
So, how do you figure your net worth? Just grab a simple spreadsheet and add up all of your assets – things you own free and clear. Then, on the other side of the spreadsheet, add up all of your liabilities. This includes whatever debt you owe from credit cards, loans, or mortgages. Then, your total assets minus your liabilities is your total net worth. When you have a large positive number, you have a large number of success.
4. Set Your Financial Goals
I could write an entire blog on this subject alone, but I’ll simplify this one. This goes back to your core values. Is it you and your family’s needs, or is it everyone else you’re trying to impress? This is a serious question you need to ask yourself when laying out your budget. So, how do you go about this? Set out your big goals. For example, do you want to be debt free in 2 years? Do you want to pay off student loans by xxx date? Do you want a different home? Whatever your big audacious goals are, set them and then work backwards to figure out how you’re going to get there. Are you going to cut out a certain amount of activities, groceries, or restaurants each month in order to inch your way toward them? Are you going to take on more clients in order to make more money? Find a way to actually be able to work toward these goals.
5. Make Financial Rules
You’ve heard of boundaries, right? Think of your finances as having them. Just like your clients go crazy with food quantities, people go crazy with purchases. The biggest issue today is that you can go get another line of credit, another credit card, or another loan in order to purchase whatever you want. If you have decent credit, you can most likely go and purchase it, whether you can actually afford something or not. But, it doesn’t mean that you should. Set financial rules that you will live by, no matter what. Some examples of these rules could be not spending over $100 without speaking to your spouse, not purchasing a vehicle until all other credit is paid off, not putting certain items on credit but only paying cash for them, etc. Make these rules maintainable but strict so you can get closer to your goals.
Your finances will improve over time
Bottom line – just like you do with your clients, you have to set financial goals with your money. You’ve got to start making small strides of progress towards your goals. In order to do that, you’ve got to really figure out what is important to you – looking good OR being secure. If you buckle down now, and follow the strategies laid out above, then down the road you can have both. Figure out what you really value, make a plan to reach your goals, and set rules in place in order to keep your spending under control.