Young entrepreneurs typically have a better understanding of money than most young people. The reason is that they are forced to manage cash flow at the risk of their entire dream and, very often, see money as a gateway to future benefits, rather than a means to acquiring superfluous items now. This personality trait is an important ingredient in any successful startup.
If you are a young entrepreneur, you are working when your friends are kicking back with NetFlix and this doesn’t give you as much time for your personal matters. It is therefore important that you automate as much of your life as you can, so you can find a healthy work/life balance.
There is one really critical thing that you must have and the future success of your business depends on it. The most successful entrepreneurs have it already and use it every day.
(Spoiler Alert – It’s not a Rolex, a gold iPhone, a sports car, Italian suits or a private jet)
What You Must Have Is…
…a budget! Having your personal finances in order, 6-12 months of cash savings and excellent personal credit is critical to your new business. Overspending is also very dangerous and a tungsten-solid budget will protect you from all of these things.
Fortunately, there is an easy way to be a rockstar budgeter that will provide you more time than if you didn’t have a budget, it’s free and it’s accessible even from your cell phone.
Too Fast, Too Flashy
I know a lot of business owners and it’s amazing how many of them are intimate with the financial activities of their companies while being totally impetuous when it comes to their own spending.
Don’t get caught in this trap by making your life flashier than it needs to be right now. You are a reflection of your business and appearance matters, but keep it real. Some entrepreneurs I know have learned to spend more of their money on experiences, like travel, instead of stuff, like houses, cars and new spouses. This is an excellent budgeting philosophy for anyone.
“When your material needs meet or exceed your income, you’re sabotaging your ability to really make it big.” – Jason Nazar, Co-Founder and CEO of DocStoc
Another important rule is to keep your personal and business money separate. Even if it’s just you in your bedroom office, separate the tax ID’s, separate the bank accounts and separate the tools you use to manage your financial transactions. For example, use QuickBooks for your business and use Mint.com for your personal finances.
How Can You Get It?
There is a lot of questionable advice out there from “experts” teaching miserable budgeting strategies that would make even me never want to budget again. Not here.
Click to read my post on how to budget and learn the right way for busy people like you to be in total control of your personal finances without reconciling statements, touching a spreadsheet or having one less second to focus on your business.
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Photo Credit: VisionCreation via Flickr