Money mindfulness is an essential part of financial success. It can be difficult to manage, especially when you’re juggling various accounts and income avenues. But with careful planning and discipline, you can learn to maximize the value of every dollar you make and become organized when it is time to allocate those funds.
Here are 4 ways to become more mindful of your finances:
1. Track and Evaluate Your Expenditures.
Make sure you’re being intentional with your spending! As a business owner, it is easy to find yourself spending money on unnecessary items or services that are not beneficial to the overall success of the company. Consider what your business really needs, versus what you want. Evaluating expenditures often involves comparing costs against expected returns to assess performance against what was projected. By looking at what could have been saved or where more could have been invested, businesses can make better decisions about future investments and make sure resources are used most effectively.
For businesses, tracking expenditures can be as simple as writing down purchases in a spreadsheet or journal. Reviewing regularly also helps you to be more objective and consider if what you’re paying for is offering more value or a return on investment! Additionally, digital platforms such as QuickBooks or similar software programs can help track expenses with greater detail and accuracy. For larger businesses, you will probably want to think about hiring an accountant who can take charge of tracking every transaction daily to ensure accuracy within the financials.
If you need some assistance with tracking expenditures, there are plenty of Money apps that help you organize your personal finances that are free to use. If you need an app suggestion, or want to learn more about what these apps can offer, check out our blog post 4 Money Apps to Help You Track Your Spending.
2. Evaluate your income sources.
Evaluating your income sources can help you understand where your money is coming from and how much you are making with each source – KNOW your money to GROW your money! With this knowledge, you can determine which sources are most beneficial to you and prioritize them accordingly. Start by listing all your active income streams. This includes any salary or wages earned through employment, freelance work, rental income, interest on savings, dividends from investments, and other passive income streams. Once you have a comprehensive list of your active income sources, tally up the total amount earned in each category over a designated period. This will provide a better understanding of the overall contributions to your total earnings.
It is also important to consider the tax implications and risks associated with each source when evaluating their effectiveness. Depending on the type of income received, different tax rates may apply which can significantly reduce the net amount that you receive after taxes. If you have invested in stocks, there can be some accompanying risks such as fluctuating prices that could result in losses if not monitored closely. While rental properties offer potential long-term benefits, they require consistent upkeep and maintenance costs throughout its lifespan.
Once you understand how much you are making on average per month, It becomes much easier to allocate those funds and prioritize where your money should be going.
3. Invest in your future.
Whether it’s time to start thinking about boosting your retirement fund, or you’re looking to buy real estate, it is important to continue thinking ahead with your money. Investing in real estate can be a great way to build wealth, but it’s important to understand all the costs associated with owning property before making any decisions. If you are planning to rent out the property, you will be responsible for maintenance for your tenants. If you can keep up with regular maintenance costs, real estate has potential to appreciate over time while also providing rental income if applicable.
Are you nearing the end of your working days? It’s probably time to boost your retirement fund! Start contributing to a retirement fund as soon as possible so you can take advantage of compound interest over time and build wealth for when you retire. If you’ve already begun contributing to a retirement fund, now is the time to evaluate the progress of that account. Can you afford to allocate more funds to this account to better prepare yourself for the future?
4. Set SMART goals.
Both your personal and business-related financial goals should be specific, measurable, achievable, relevant, and time-bound (SMART) goals. These goals provide structure and enable you as a business owner to track your progress more easily. Goal setting also serves as a motivator and can be used to fuel your ambition. It’s said that most successful business owners have an intense drive to achieve their goals, which is what makes them successful in the first place! it’s important to make sure they are aligned with your overall business objectives. This means that all your tasks should be geared towards working towards those larger business goals. Don’t set your standards too high at first! Little steps are steps in the right direction.
Being aware of your business money flow, as well as your own personal money flow is essential for success. When you have an understanding of how cash flows through your company, you will be able to make more informed decisions about investments and growth opportunities. Additionally, staying mindful of where money goes can reduce wasteful spending leading to increased profitability over time. With the right financial planning strategies in place, your business will have the ability to grow into something amazing!
Are you ready to improve your financial literacy? Check out our Money Coaching Online Courses to get you started!