Home > Articles, Motivational, Self-empowerment > Managing Your Personal Finances as Key to Starting a Successful Business or Career and Having Financial Freedom by Senator Ihenyen

Managing Your Personal Finances as Key to Starting a Successful Business or Career and Having Financial Freedom by Senator Ihenyen

 

Financial freedom

Financial freedom

You want to start a successful business or career and have financial freedom. You want to generate capital and create wealth. You just want to be successful, but you are not sure of the first steps you need to take to start making money and become successful. To get you started, this article shows how to use personal finance skills as key to starting a successful business and having financial freedom. You have to think like an entrepreneur ahead of being your own boss!

It’s not news that getting a job these days is increasingly becoming mission impossible! And if you are lucky to get one, most millionaires have shown that owning your own business can make more money for you. Thomas Stanley and William Danko’s “The Millionaire Next Door”, self-employed people have been shown to be likely to be millionaires four times as people who have jobs! To start your own business is not an easy way out though. It is for the tough-skinned! Even if starting a successful business of your own is not your forte, personal financing skills such as planning, budgeting and controlling are great skills you will also need to be successful in your professional career. After all, it all boils down to becoming successful and having financial freedom! Below are the six important steps you need to take if you really want to start a successful business and have financial freedom:

  1. Know your Current Assets and Liabilities – What are you really worth?

Probably, you don’t know how much you are really worth. Often times, there are people out there who think they have no asset at all; so why should they border about knowing their worth! It’s logical thinking, but very dangerous for your personal finance. You don’t have to be Bill Gate to know what you’re really worth! Every individual should – including you! The first step is to simply list your current assets. This includes cash, fixed assets (such as vehicles), furniture and fixtures, equipment (laptop, T.V etc.), buildings and landed properties. Assets other than fixed assets could also be goodwill. Your assets are evaluated based on their current value.

In the same way, you have a balance sheet, your current liabilities should also be listed. Your liabilities, if any, include all moneys payable such as mortgage loans, bank loans, credits, taxes, rents etc. the difference between your assets and your liabilities is what is called the owner’s equity. This enables you to determine your net worth. With this, if you are a would-be entrepreneur, consider how much you will need to start and run your business venture.

  1. Keep Record of Your Expenses – How Much Penny Do You Spend Daily?

Financial discipline involves developing and maintaining the habit of keeping detailed record of your expenses on a daily basis. Always keep track of every penny spent. This will greatly help you avoid the situation of running out of money. With financial control, you are able to keep records of your expenses in a record book known as a journal or ledger. To help yourself, simply record different items such as for instance, “Electronics”, “Books”, “Internet Services” etc. in separate accounts with dates. Such financial discipline helps you develop the resource skills you will need as a successful entrepreneur to efficiently allocate men, materials, money and time to achieve business goals. For the career person, your achieving your financial goals becomes assured with such healthy personal finance habits – wealthy future in your own hands.

  1. Make a Personal Budget – Have You Been Spending More and Saving Less?

The next step is to prepare your own budget. It is important that your budget plan should be determined by your financial goals. Ultimately, as a would-be entrepreneur, I should think your financial goal is to have enough money to start your own venture. If we are on the same page with that, you shouldn’t be having any difficulties. And if you’re the employee kind of person, your financial goal is probably to enjoy some financial stability and financial freedom in the best possible time. You will also find a budget very useful.

A successful personal finance requires a lot of financial discipline. Cutting back on your expenses will be difficult, but try as much as you can to spend less than you earn or get. Always spend on what is necessary and important, not just on any item. Your real needs should be separated from your mere wants. Again, Thomas Stanley in his book identified that most of the millionaires next door try to spend on things that have lasting value.  Even as a high-wage earner, it is financially unhealthy to spend the good part of your money on expensive homes and cars. As an entrepreneur in the making, budgeting finance can help you a great deal to be more productive, resourceful and successful.

  1. Get Rid of Your Creditors! – Have Paid Off Your Big Debts?

Of course not; you need your creditors alive! What I mean is get rid of your debts – pay them off! It is better you get rid of debts with the highest interest rates first. This gives you the financial freedom you need to become a bit more adventurous in your financial investments in the future. Starting a business venture is one of such major financial investments.  Believe me, you don’t want to start and run your new business with debts! And as an employee, you don’t want to ruin your career with personal financial liabilities hanging on your neck. It is just too risky to do that at this stage of your career. If anything goes wrong, it might cause you your job, your house etc.

I have seen many small businesses crash within the first two years because they were set up with borrowed money from financial establishments. It is tantamount to buying yourself more liabilities upfront. Should you be wondering why many successful small businesses out there try to start small with their own saving s and financial support from family members, relations and friends? Try to start small but think big if your business plan targets some future expansion. Of course, there are many small businesses that chose to remain small concentrating on a business niche in a particular locality. It does not mean they are not successful businesses. What makes a business successful is not necessarily its size. What is crucial is running your business professionally and creatively in a consistent way. In so doing, there is no way your business won’t become really successful while keeping smiles on the face of your customers or clients!

  1. Stay Away from Loans that Do Not Increase the Value of Your Net Worth – Are You Strangling Yourself With More Liabilities?

Robert Kiyosaki in his book, “Retire Young, Retire Rich” emphasised how you can use other people’s money to get rich…very rich! And if you look around you, the millionaires and billionaires of today use bank money to get ahead in their businesses. But they are not unprepared for the underlying risks involved? Are you prepared to bear such risks as a would-be business person or career person? Do you have sufficient assets to cover for any liabilities that may arise from such loans? It is a very bad idea to use your limited asset as collateral for such loans. The boomerang effect on your financial future is only better imagined!

The idea of borrowing for certain expenses is not a good financial decision. Your financial security should always be your watchword in making financial decisions. When you borrow money for expenses, you are most likely to end up more indebted. For instance, borrowing to acquire cars, expensive clothing etc. will end up increasing your liabilities. This is why you need a good budget to help you keep your expenses considerably lesser than your income.

However, if used to acquire assets that have the potential of increasing in value, borrowing money is not a bad decision. This is because when the value of your assets increases, your net worth also increases.

Of course, at first, you may experience some difficulties adapting to these six sure steps to managing your personal finance to start a successful business or great career! But really the pain is worth the gain! By following these steps, you will not only save yourself from running out of money when you need it, but also have the great opportunity of enjoying financial freedom from your career. And for the would-be entrepreneur, you would have also saved up enough money to start a successful business – your sure path to becoming the next millionaire next door! Meet me at the top!

 

Senator Ihenyen is a poet, writer, Lawyer, avid blogger and web designer. His interest cuts across Law, Literature, writing, business & social entrepreneurship, and the Internet. A two-time Campus President of Golden Minds Nigeria in the University of Benin, Benin City, he is the author of the book “Colourless Rainbow” and several articles on self-development, blogging and intellectual property law. His email address and blog: senatorihenyen@gm ail.com  www.senatorihenyen.wordpress.com

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  1. IJEOMA MALASOWE
    28/12/2012 at 22:37

    this is indeed a nice one

  2. Esther Osakwe
    29/12/2012 at 11:53

    Realy Educating!

  3. 30/12/2012 at 14:49

    I simply could not depart your site prior to suggesting that I really loved
    the standard information an individual provide
    on your visitors? Is gonna be again regularly in order to inspect new posts

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