Separating Business from Pleasure: Managing Personal Finances
One of the first rules of business ownership is you never mix your business and personal finances. But sometimes, business owners go too far in the opposite direction and spend so much time running their business and investing profits back into their business that they end up not paying enough attention to their personal financial situation.
Many business owners find themselves in unique financial situations at some point by spending too much, not saving enough for retirement, or making risky investments. If you’re a small business owner, it’s important to have a solid understanding of personal finances.
Here are some suggestions and strategies on how to make better financial decisions in your personal life.
Build an Emergency Fund
It’s always good to have a reliable financial backup just if something happens with your business or finances. What if you lost a big client or had to take a major pay cut?
It’s well-known that having a three- to six-month emergency fund helps to provide the security needed to survive in a pinch. Having an emergency fund gives you more peace of mind to make more confident business decisions. If you know that your family is protected in the event of a financial loss, you are more able to focus on running your company.
Save for Retirement
Small business owners usually invest a lot of their profits back into their business, but there are also some options for small business owners to save for retirement. Retirement plans should be considered, such as an IRA or tax-advantaged retirement savings plans for businesses.
Depending on your income and qualifying factors, you may find you can save more money for retirement planning as a self-employed person than you could as a full-time employee. Instead of investing all of your business profits back into your business, saving for retirement helps you diversify your savings into a broad range of investment options, including stocks, bonds, ETFs, and money market mutual funds.
Manage Personal Credit
Credit moves businesses forward, and you need to make sure your credit is also on firm ground. Even if money is tight, always make sure to make at least the minimum payment on a credit card as this is better than missing a payment or paying late. Having a better credit score also helps your businesses, especially if your business is still establishing credit under the business’s name.
Get Insurance
As a business owner, insurance is crucial on several fronts. In addition to having the right life insurance policies, it’s also essential to have the right business insurance plan, such as a CT BOP plan.
A CT BOP plan from Byrnes helps business owners like you with the right coverage to take care of any gaps and assess any risks. Not being covered with this kind of insurance leaves any business owner out in the open and at risk for costly legal and reputational losses.
Diversify Incomes
When you’re a business owner, it’s always helpful to have different income streams so that you don’t become too dependent on one source of income. Keep an eye on different ways to diversify income streams by looking at various sources outside of your sole business. This may look like starting another business, buying an annuity product, or investing in income-producing assets.
Considering these tips can help maintain your business’ financial health without compromising your personal finances.
About Byrnes Agency
At Byrnes Agency, we offer insurance solutions that can be tailored to meet your specific needs. Whether you’re looking for personal policies or commercial coverage, we have the right coverage for you. To learn more about our products, contact us today at one of our two locations.
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Phone: (860) 774-8549
394 Lake Rd
Dayville, CT 06241
United States
info@byrnesagency.com
Hours of Operation: Monday- Friday 9:00am-5:00pm
Phone: (860) 886-5498
6 Consumers Avenue
Norwich, CT 06360
United States
info@byrnesagency.com
Hours of Operation: Monday- Friday 9:00am-5:00pm