Updated: Nov 19, 2019
Does managing your finances seem like stress-inducing burden, or like a vehicle for success? The space between financial slavery and financial freedom has less to do with your revenue than with your attitude. The difference comes down to control and clarity.
Mastering your money requires less effort but more consistency than many business owners expect. The key to keeping on top of your business finances (and feeling on top of the world) is developing simple habits that become part of your rhythm of life. Here are three daily routines that take minutes per day but can save you hours of stress per month.
Every morning, LearnVest CEO Alexa von Tobel sits down with her finances for what she calls a Money Minute. In this super-short but super-focused time, she reviews her account balances, recent transactions, and current goals.
Checking on your financial state randomly (or, worse, only when forced to) leaves you vulnerable to problems that might become emergencies before you’re ever aware of them. Checking in every week or randomly throughout the day can prevent some last-minute issues and unwise decisions. But getting a quick pulse on your financial health every morning can alert you to potential issues, help you make wise decisions throughout the day, and boost your confidence and purpose as you dive into daily operations.
During your Money Minute, check your bank statement for recent transactions including automatic payments, review your bills, and check your calendar for any upcoming tax deadlines, or payroll needs. Finally, review your budget and financial statements to remember your goals and renew your motivation to achieve them.
It’s impossible to adhere perfectly to a weekly schedule or foresee the demands of tomorrow—“each day has enough trouble of its own.” This is especially true in small business, where job roles and the separation of personal/professional can get fuzzy.
For small business owners especially, planning and tracking your daily time expenditure is really a financial practice. What is an hour of your time worth? Get in the habit of calculating the cost of each activity based on this number, so that you can become more efficient, focused, and profitable over time. You might find that you’re spending 3 hours every day on administrative tasks that you could outsource for ½ the cost in your man-hours.
Or you might find that you spend 30 hours every month doing specialized work (like accounting or marketing) that would take an expert 10 hours to do. Even if the expert charges twice what your time is worth, it would save you money to outsource those tasks and focus what you’re best at.
The sheer amount of documentation involved in running a business can get overwhelming very quickly. Like dirty dishes lying around the house, random records often lie around a business owner’s life. Receipts hide in pant pockets, invoices sit in a sea of emails, old tax returns are locked up in an old laptop.
Whatever grand accounting system you use or don’t use, keep all your records in one place. It doesn’t matter if it’s a folder in your home office, a folder in your company Dropbox account, or a database in your cloud-based accounting system. Just put it there. As soon as the mailman passes you a tax document or the Staples cashier hands you a receipt, put it in that place.
You can (and should!) organize, make copies, and back up these documents regularly. But if you don’t know exactly where to find that random $5 receipt when it’s time for your weekly bookkeeping, you’re likely to spend more than the equivalent of $5 in valuable time looking for it.
By understanding the value of your time and budgeting it wisely, you can run a more efficient, stress-free, and profitable operation.