How good do you consider yourself when managing your finances?
I’m not just talking about your day-to-day expenses, but overall. Are you investing in the right products and services your business? Able to save some money for a rainy day? Utilizing your credit card benefits to their fullest? To answer these questions the best way possible, you’ll probably need to look at your end of year finances. Since tax season just closed up about a month ago, it’s a good time to revisit how you’ve been doing things.
I mentioned in a previous post how my first year in business pretty much ended in a loss for me. I use the word ‘loss’ rather loosely however, since I fully expected my first year to leave me in the red. The reason for that is it was my first year selling online and I knew I’d need time to get some traction. Also, I had to make some upfront investments that I knew I probably wouldn’t get a return on right off the bat. So I expected the loss…I also planned for it. That’s part of how we manage our money.
Almost halfway through my second year of Sofydoll Designs, I am doing things a bit more deliberately. Being that I am more or less a freelancer (or sole proprietor) my business/personal finances are mixed together. And while I’m not making tons of money just yet, I am sure to do everything on the up and up, logging all of my income and expenses down to the penny. One app that has allowed me to do that is WaveApps. It’s a great way to keep track of all your income and expenses which is helpful not only for your end of year needs but also for your own personal knowledge. You can easily import everything into the system and it gives you a running tally in a report for your quick visual reference. You can see where your money was spent and where it was made. Knowing this allows you to think smarter. Currently, the basic version of Wave is free and you get a lot of special features with it.
I also now have a designated credit card that I use for most of my purchases…not just for business but for personal use. The benefits of this card allows me to earn points (that I can use for other purchases) as well as offer me special promotions I wouldn’t get otherwise. I’m also sure not to spend money foolishly and make smarter choices going forward.
These reports are also a great way to see where my products are doing their best, sales wise. So I know am sure to focus on those areas more. Gone are the days of me putting all my energy to marketplaces that don’t support me. From now on, the ones who support me get my full support back. Another way these end of year reports help is to show me what I’m spending my money on and I can review if that money was well spent or not. If it was, I continue with it…if it wasn’t I know where I can cut corners. Has my advertising money been well spent? Have I been buying too many design assets, etc. that I don’t really need? Are there other things I should be investing in for my business? All this helps me as I continue on in my second year. Taking a good, hard look at my business finances really allows me to think smarter about my personal finances as well. Are there ways I can save money at home?
As I write this, inflation is high, gas prices are through the roof and overall a lot of folks are struggling to make ends meet. First and foremost, we (and our families) need to eat and have a roof over our head. Those expenses come first. So saving money (or at least not spending it foolishly) is a great place to start. If you do have to invest money in your business (because let’s face it, you do have to invest some to make some) make wiser choices…really think hard about what you need and what you can live without…at least for the time being. And if you make a little money from your business – try not to be tempted to buy yourself that new pair of shoes. Instead save it and put it towards a business expense. Or at the very least, you can put it towards rent or groceries.
All this seems pretty easy advice to follow but the truth is, if you’re not paying attention…you’re probably not making the smartest choices.
That’s OK though, you absolutely CAN get there. All you have to do is the following:
1. Make a list of priorities; food, rent, car payment, etc.
2. Keep a running track of all your income & expenses (use an app for this)
3. Pay attention to where your money is being spent and think about how you can cut corners
4. Keep an eye on where you’re making the most money (a certain marketplace, etc) and focus your energy there
5. Put aside some money (even a little) every week (if able) – that little pot of cash will give you some security
6. For the business side of things, any money you make in the beginning try and put back into the business if able
Finally, and most importantly, try not to get stressed out about money. I know that’s hard to do but keep in mind any new business takes time to get successful. So don’t get discouraged. Instead, put your energy to working hard, staying smart and being patient with yourself while you do it all.
Feel free to say hi in the comments, I’d love to hear from you!
Until then…
