Learn best tips & tricks about effective money management from women

Money or finance management can be a tricky and challenging part of any small business. Everything at that point is new, and hence money management takes a backseat while you are busy with your main product or service delivery. Therefore, properly managing your finances can be beneficial to stabilise your company and make the business more resistant to failure.

Money management skills and money management tips can be specially learnt from women as they constitute half of the population with better saving abilities. Additionally, women are taking up more jobs and running small and large businesses, making a niche for themselves in every industry. Today, female-owned small businesses make up 36 per cent of all companies. In 2018, there were about 12.3 million women-owned businesses in the U.S., compared to just 402,000 in 1972. It is a sign of a giant leap that further showcases their money management abilities, which are worth discovering.

Why is Money Management Necessary?

In terms of small business money management, the most critical factors to ensure your business's financial health are two critical aspects of education and organisation. It means educating themselves and their team about the various facets of their finances and having a proper organisation for such actions. Financial specialists recommend these small and medium businesses save a bit of money every month. Also, your business grows primarily because of the effective implementation of strategies in the production process and service delivery. If you are inexperienced in handling business finances, this can be a difficult task and eventually you may end up losing your finances by getting into bad financial habits that may hamper your business too.

However, if you want to start a successful business, you will have to break away from this cycle and start budgeting and saving regularly and diligently. Only then can it lead you to grow into investing in your future as an entrepreneur. Millions of women have successfully developed their remarkable businesses, whether small or big, in industries including media, food, skincare, clothing, construction, and beyond. Along the way, they apply and learn numerous valuable financial and personal money management skills that are worth gaining knowledge from.

A business owner should educate himself well when it comes to managing a business and handling finances. Understanding the basic skills and techniques is crucial to run a business, be it small or big. Tasks like regular accounting, tallying, loan applications, or drafting the financial statements are some tasks that every business owner should have an idea about to create a steady financial future and avoid any breakdown in business. Additionally, being organised is also important for sensible money management.

Applying sound money management tips to work in your business is just as important as taking care of your finances. Here are 10 such money management lessons that every small business owner should learn from women:

1. Think ahead with your finances

One of the most important personal money management tips lessons one can learn is about planning every move and requirement. You will always need to plan and think ahead, not only for yourself but also for your company to always have enough cash on hand to pay for expenses like tax bills. There will always be various business issues that need to be addressed immediately, but you need to plan for the future when it comes to your finances. It is of utmost importance to look 5 to 10 years ahead, to not lag behind your competitors.

2. Prioritise organisation

Make sure that you record all of your financial data in one place so you can refer to it and keep track of your progress. This way of organising will also help you to track every facet of your finances. Establish an internal financial set of rules, even if it's as simple as dedicating time to review and update financial information. In the long run, this step will efficiently protect the financial health and strength of your business. Additionally, keeping up with your finances can help you diminish fraud or risks.

3. Saving is of utmost priority

Saving wherever you can is good, and one should try to find different easy ways to do so. You can start by looking at your daily habits and see if you have any spending trends. Cut back on those and change your approach to your finances by setting a budget and tracking its success. Stick to using your business emergency savings just for that and avoid the temptation to use it up for anything else. Gradually, you will get used to this new habit, and thus, your bank account will reap the rewards. It can further help you be accountable for all the financial decisions and set an example for your team.

4. Invest in future growth

It is crucial to store money aside and invest in growth opportunities to bring profits to your business. Since as a business owner, you should always keep an eye on the future; this will help your business to grow towards a healthy financial direction. Investing religiously in the future is a primary financial management tip and is required for the growth of your business and to earn the best employees in the market. Investing in various aspects of your business will surely increase the level of your service and the productivity of your employees.

5. Keep a check on your credit

As your business grows, you will further want to get additional insurance policies, procure more commercial real estate, and take out more loans to facilitate all these pursuits. However, with inadequate business credit, getting approval for all these transactions and acquisitions can be more difficult. Therefore, take time out to request a free credit report, and after knowing your numbers, use a few easy credit repair techniques to improve your score quickly. Improving your credit score to the best of your ability is highly essential for money management.

6. Examine regularly your financial books

Take some time aside every day or month and evaluate your financial books, even while working with a bookkeeper. It is a simple money management tip and will help you increase your familiarity with your business's finances and provide you with a chance into a probable financial felony. Check all your bank reconciliation, business expenses, your income, and net profits, business debts, sales trends, and review outstanding invoices to avoid wasteful spending or even misappropriation.

7. Strategise a good billing process

Running a small business and handling finances also means controlling the money flow and ensuring the business is growing steadily and healthily. If you struggle to get back the finances from your clientele, search for other creative ways of billing them. Most business owners might have a client that is constantly late on their invoices and payments. Here, try for a better approach with offers and discounts rather than nagging them with regular invoices and phone calls.

8. Prepare a proper business budget

As a business owner, you use a budget to manage your finances, but it's just as important to have one for your business. A business budget can help you to balance what might be coming in against what is going out. To make your proper budget, begin by adding up everything you spend on your business each month. Remember that no expense is too small to be added to the list. This way, if an expense isn't paying back in any substantial way, you can cut it from the budget and instead put that money to work somewhere else.

9. Prioritise expenditures and Return on Investments (ROI)

Small business owners should be cautious of where they spend their money regularly. Calculating expenditures and ROI will contribute towards a clearer picture of the investments and give unwanted spending. It will surely help in better financial decisions. Identify the places of investments and how they are paying off. It can also help you to avoid losing money on irrelevant or inadequate spending stakes.

10. Spread out your tax payments

Maintaining accurate financial records is one of the essential money management tips to know if you want to avoid tax trouble. And further, to maintain and manage money for timely tax payments, try spreading out your tax payments for smaller intervals. If you have trouble saving for your quarterly estimated tax payments, convert it into a monthly payment system instead. With this method, you can treat those tax payments like any other monthly operating expense and avoid any hassle altogether.

Although cluttered at first, managing your business and personal finances is a trying and yet rewarding experience. With proper planning, timely execution, and regular evaluation, your money management process will get super effortless and, eventually, less time-consuming. You will only improve your finances in this process and set yourself up for entrepreneurial money management victory.

Also read:

1) Best Small Business Ideas For Women
2) What are Some Beneficial Government Policies for Small Home-Based Businesses in India?
3) Top 10 Businesswomen in the Industry & What You Can Learn From Them
4) How to Start a Flower Shop Business in India?

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FAQs

Q. Why does a person need money management?

Ans. Money management is a crucial requirement for handling finances and keeping a hold on spendings. It helps a person to save and invest the right way.

Q. What is financial planning?

Ans. Financial planning refers to strategising the expenses and earnings according to the monthly flow. It is keeping track of both and also keeping money aside for saving effectively.

Q. How can one protect their finances?

Ans. A person can protect their finances through retirement planning and investments.