When you’re a mom and an entrepreneur, every penny counts so it’s really important that you know how to manage your money effectively. That’s why I’ve put together some simple financial management tips to help you mompreneurs stay on top of the money side of life.
Have a budget
Okay, so this is basic advice, but it’s also very good advice. As a mompreneur, you should not only have a business budget, but also a personal one too. By knowing how much you have coming in and going out each month, and what your business costs are likely to be each month, you can better plan your finances and ensure that you stay in a good position financially. If you wing it, you may end up struggling, at least in the short-term. These days, there are so many great apps to help you track your money that having a budget really is a no-brainer.
Separate your finances
As a mompreneur, it really is important that you keep your business and personal finances separate. If you allow them to intermingle, things will get complicated, and filing your taxes will be way harder than necessary.
As well as having separate bank accounts for your business and personal finances, you should also think about setting your business up as a limited liability company if you haven’t already. What is an LLC? It’s basically a form of business structure that separates your business liabilities from your personal liabilities so that your business debts don’t become your personal debts. It will protect your personal assets to a huge degree, which means your family won’t suffer if your business doesn’t work out.
Build emergency funds
Having both personal and business emergency funds is a smart move for mompreneurs everywhere. Personal emergency funds are great for those unexpected bills like car repairs and veterinary costs, ensuring that you have a pot of cash ready and available to use so you can avoid getting into debt or having to make some difficult decisions.
Business emergency funds are similarly useful in that they can be dipped into whenever you’re having cash flow issues or when you’re hit by unexpected costs like rate increases or larger-than-expected tax bills. By having a business emergency fund, you won’t ever have to dip into your personal accounts to fund your business which will strengthen your financial position in both your personal and business lives.
Avoid credit
This isn’t always possible when you run a business and have a family to look after, but if you can avoid using credit, you really should. Credit is expensive and the more you use it the more you end up relying on it, Not only that, but it doesn’t feel great to owe money to a third-party. It’s far better to raise the money you need to run and grow your business from savings or by using crowdfunding sites where you sell your ideas to individuals who are willing to invest in your company because they believe in you and feel like they will benefit from the products and services you eventually produce.
If you do need to use credit, look for low-interest options such as 0% credit cards or credit union loans, which are less expensive overall.
Reinvest your profits
Reinvesting your profits in growing your business is often the smartest use of your money. Interest rates on savings are currently pretty low, but if you can use your money to grow your business, you could see significant returns, It often feels like a risk, but if you have confidence in what you’re doing and you have a healthy market of customers, it could be the smartest thing you ever do. Just make sure that you put the work into growing your business as well as the money.
Have an exit strategy
No entrepreneur wants to be thinking about the time when they need to leave their business behind, but from a financial standpoint, it makes sense to identify the circumstances under which you would be smart to cash in and get out. This could be when your business is too big for you to manage or when sales are starting to decline, or even when you have enough to retire in style – only you will know what is optimal for you – but it’s important you have a good idea now so you can leave with a decent reward for your efforts when the time does come.
Mompreneurs can be highly successful financially, but they also need to be careful with their cash, so be mindful, take into account the tips above and ensure you and your family thrive.
