The following is a guest post from Noel Finley. That 4th point on making cuts when necessary could just as easily have been called Sunk Costs Are Irrelevant so you know I approve!
Whether or not you are an entrepreneur, there are many qualities of small business that you can apply to your personal finance to improve your life overall. Because so much of small business revolves around the management of money, small investments that potentially have the ability to greatly increase your income, and lots of planning ahead. A few ways that you can think more like an entrepreneur to improve your personal finances include;
Budget Every Dollar
Small businesses and entrepreneurs are forced to budget every dollar when working on a tight budget. They have to know how every dollar is spent, and each and every piece of income that is coming in. Applying this to your own personal finances will allow you to get a better idea of where you can save money, as well as where you are spending too much money. By budgeting ahead, and then strictly sticking to that budget, you can start to better your personal financial situation overnight.
Since expenses have to be claimed by small businesses on tax returns, they are forced to save each and every receipt for every purchase that a business makes. By keeping receipts, you will be able to monitor all of your spending, as well as look at which areas of your life are increasing in terms of cost over time. Keeping receipts is also beneficial for tax purposes as well, as they will allow you to write off various expenses. Keeping receipts also allows you to examine your expenses on an item level, looking at the amount that you spend on certain items throughout the month. While normally you might just look at your overall grocery bill and decide whether or not you have underspent or overspent, keeping receipts and tallying up the amount you spend on specific items will allow you to make small adjustments in your spending, based on particular items.
Write Off What You Can
Most small businesses take every opportunity to write off expenses on their taxes. Although there are not as many write-offs available to the average person, taking advantage of the write-offs that do exist for you, will allow you to save a lot of money on your taxes, and further reduce your overall tax rate. In reducing your tax rate, you keep more of the money that you bring home, and will become more aware of what types of purchases can be written off, allowing you to make more of them in future fiscal years. Small business owners and entrepreneurs know that write-offs are a huge tool to help with saving money on taxes, and can save you thousands of dollars.
Make Cuts When Necessary
One tip that individuals can take for their personal financial health, from entrepreneurs, is the ability to make cuts when necessary. If an aspect of their business is not paying off in terms of real money, entrepreneurs are not afraid to make the cut immediately. Figure out which parts of your life are not giving you a return on your investment, whether in terms of money, or entertainment, and cut your spending in those areas. Too often people are afraid to make large-scale changes in their spending, and as a result end up spending money on worthless and frivolous items, that do not add anything to their quality of life.
Create Additional Income Streams
Every entrepreneur and small business is always looking for additional ways to earn income. Although you yourself may not be an entrepreneur, investing, and creating additional streams of income should be a high priority for you. Making your money work for you allows you additional financial freedom and gives you unlimited earning potential.
Author Bio: Noel Finley works for RentersInsurance.net a company that is one of the leading resources about renters’ insurance information.