Many entrepreneurs take the time to learn how to manage their business funds, but few ensure that they hack their personal finance. “Simplified by Cowrywise: Personal Finance for Entrepreneurs” was a virtual event held to will help business owners learn how to manage and multiply their personal funds, while still ensuring their business is growing. We were joined by Omobolaji Balogun, Finance Manager at Cowrywise and Jennifer (@financialjennifer), Certified Financial Education Instructor and Coach. They shared practical tips on how to effectively manage your money as an entrepreneur. Read the summary of the session below and remember to share your lessons in the comments as well.
Omobolaji Balogun on how to fix this major challenge that entrepreneurs have 👩🏽🔧
Many entrepreneurs struggle to separate their personal finance from their business finance. Instead of ignoring the elephant in the room or acting like this challenge doesn’t exist, Omobolaji suggests that you instead acknowledge and appreciate the importance of the interplay between both worlds – your business money and personal money.
When you understand this interplay, you’ll be in a condition to effectively manage your finances so you don’t risk your business’s chance for survival.
Here are some tips to help you effectively overcome this challenge:
Get out of
your business way 😑
It’s important to learn how to wear different caps at different times. When you’re dealing with your business, you wear your business cap and vice versa. The goal here is to treat your business like an external auditor so you can stay accountable. It ought not to be a “passion project” that funds can be removed from at any time. 🌚
Do not merge your business and personal finance together because if that’s the case, how will you be able to tell that your company is making a profit or breaking even?
To build a business that lasts the test of time, you’ll need to put strict rules in place. At first, it might seem hard to follow, but the result will eventually speak for itself. 👌🏽
Embrace the cashless policy 💳
You must have heard this many times before but it is important to state it again! Separate your business and personal bank accounts.
You need this if you’re going to truly embrace the cashless policy in your business. Omobolaji advocates for going cashless because it helps you better account for every kobo in your business. Things get mixed up when cash-at-hand is involved.
Also, create invoices and receipts that help you keep track of every transaction.
The nitty gritty of personal finance for entrepreneurs? Plan. Save. Invest. Insure. 🚀
Approach your personal funds as you would your business funds.
Remember the point made earlier about approaching your business funds as an external auditor, well this is useful for your personal finance as well! 😒
“It’s my money, I can do whatever I want with it” has put many people in serious trouble. Pay yourself a salary from your business. Ensure the salary is an amount the business can afford to pay, then create a plan for that salary.
Pay yourself first by saving a percentage of your salary, build an investment portfolio that you can easily manage and then insure as many things as you can in your business. Insurance helps you to cover certain bills ahead. For example, health insurance can cover all or a part of your bills if a health emergency comes up. However, if you didn’t have insurance before that, you’ll be required to pay out-of-pocket for all the drugs and treatment you may need.
Though Cowrywise does not insure businesses, I love that Omobolaji added it to strategies to adopt as an entrepreneur.
Your business is not an emergency plan 😩
Even if your business is a “side gig”, it’s best to pay yourself for your time and expertise. When you do this, it’s easy for you not to turn your business into an emergency plan such that every time an expense comes up unexpectedly, you quickly jump into your businesses for “support”.
Financial Jennifer’s money tips for entrepreneurs
Are you doing well if your business is doing well?
Jennifer’s answer is not really. The fact that your business is doing well does not mean that you’re doing well financially. She mentioned how she knows people who have thriving businesses but who can’t account for any personal finance achievements.
If something happens to that business, are you secure? Have you built a portfolio that can help you rebuild?
Personal finance is for everybody. It’s not only for 9 to 5ers.@FinancialJennifer
What does ‘pay yourself first’ actually mean?
“Pay yourself first” is not a license to flenjor. It is a call to financial responsibility and a path to financial stability.
When you “pay yourself”, all that money is not meant to be spent. You should regularly save and invest part of that money. This is how to ensure your money is working as hard as you because you earn interests and returns by doing this.
You’re paying everybody else but what are you paying yourself for long term gain? 😉
Invest in assets that don’t require too much of your time
No matter how busy you are, there are investments for you! Not having enough time is no longer an excuse. 😑
There are investments that require you to actively monitor them, say on a daily basis, if not, yawa can gas. However, mutual funds are great investment options for busy people because they don’t require your active participation.
This doesn’t mean that passive investments don’t require you to monitor them; it just means that they don’t require you to be 100% hands-on. For example, forex trading requires full participation as things can drastically change overnight.
There are over 20 mutual funds that you can choose from on Cowrywise right now. Go ahead and see for yourself.
I know that running a business can be draining as it may require you to literally work round the clock, but you need to constantly think of your personal finance just as you think of your business finance.
One should not suffer for the other. 🤲🏼
Remember to start things in this order – Plan. Save. Invest. Insure.
I’m always here rooting for you! Actually, all of us at Cowrywise are, not just me. 😁
Ready to put your money to work through investing? Awesome! Then, start here.