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Finance for dummies

Finance is just a fancy term for how people manage their money and other assets. Here are a few steps to make managing your finances easy.

Step one:
Setting priorities. This is the most basic step to manage you finances, whether it is for your business or for your personal life, but it is also one the hardest steps to managing your finances. What you need to do is set goals that you want to achieve and then figure out which ones are the most important for you to achieve. Keep in mind that you might not be able to achieve all of your goals so buy choosing the most important ones you can focus more clearly on those goals.

Step two:
Creating a budget. Part of reaching your goals is to create a budget and then stick to it. To help you create a budget you are going to have to identify how you are currently spending money, figure out what you are wasting money on that can be put aside to help reach your goals and then keep track that you are spending the money how you want to spend it. For example if you are eating out three times a week you can cut it back to one night a week and that should help you save money. If you are trying to create a budget for your business you should look at the things you have to pay such as utilities, rent, maintenance, etc. But you can also look at some of the extras you are spending money on that can be reduced, these are called unnecessary expenses.

Step three:
Look at bank accounts for checking and saving. While bank accounts are a great way to spend money you might want to consider shopping around for saving money. Savings accounts do not pay as much interest as mutual funds or CD's. If you own a business you already know that maintaining a checking account is going to cost you money every year, but you can look into the different types of accounts to see how you can get the most benefits for your business for the least price. Look into using a credit union or a money market account for your business, they offer the same things that bank accounts do, but usually at a better price.

Step four:
Controlling your debt. Many people and businesses alike get in to debt, while some debt is normal, for example financing a business or buying a home, other debt is completely unnecessary. A lot of people and businesses get into debt because of credit cards. Credit cards provide an easy way to spend more money than you are making. A good rule of thumb to follow is to only have one credit card and to pay it off each month. Rather than place big purchases on your credit card you should save up the money each week so that you can pay for it at once, also that will give you time to decide if you really need that item or if it is just something you want.

Step five:
Set up a retirement account. Just because you are in business for yourself or you work for somebody else it is never to early to set aside money for your retirement. If you own your own business there are retirement plans available designed for small business owners and they also provide tax breaks. Just because your company is making a profit every year does not mean you should spend the money as fast as you are making it. Setting aside money for retirement or rainy days is always a good idea.

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