You see ‘Mind Your Own Business’, more commonly known as ‘MYOB’, is an accounting software package that helps business owners track and manage every aspect their business’ finances.
Why am I mentioning a piece of accounting software? Well it’s because whether you realise it or not you run a business! Yes, even if you’re an employee you run a business – I’m referring to your own ‘personal business’.
Think about it, you make income, you have personal expenses, and you have assets and liabilities – and depending on how you are doing with it all you’re either turning a profit or making loss each financial year.
Not convinced? You have a Tax File Number [TFN] and submit a personal tax return every year don’t you?
In fact, not only do you run a personal business, if you’re married or in a de facto relationship [especially if you share income, expenses, assets or liabilities] you also run a joint business – that’s right your spouse is your business partner! Remember that little joint venture contract you signed at the altar 🙂 ?…
It makes sense right? But the truth is most people never think of it that way and so they never end up running a profitable and thriving personal business.
You see, despite record low interest rates, times are tough at the moment and the reality is only those with a well-managed ‘personal business’ will survive and thrive.
Just as it is with traditional business it’s not about how much income/revenue you make, it’s how much you get to keep – your profit! There’s plenty of people on 5 figure incomes living month to month or worse falling into further debt each year.
The first step is to realise and acknowledge that you do in fact run a ‘personal business’. The next step is to MYOB! …that is treat your personal business a bit more like a traditional business and start managing it to the best of your ability.
You need to understand what comes in, what goes out and how much you have left over each month. Then set a goal for where you want to be in 12 month’s time and put in place a plan, better still a set of strategies, to help you get there. After all you can’t improve what you don’t track and measure!
I’m not saying you need to run out and buy MYOB, QuickBooks or the like [although it’s not a bad idea] but if you want to improve your personal finances there’s a range of steps you might want to consider.
Introducing the powerful yet simple…
There are many methods by which you can go about achieving a better financial future but the philosophy is essentially the same; spend less than you earn, save the difference, and use your savings to pay down your bad debt and to invest. Here’s how to do it;
The first thing to do is to track your cash flow; how much money do you personally generate each month, where do you spend it, and how much is left over. Once you know these numbers then you can start working on ways to improve your cash flow and profit.
You should always try and increase you income, however the most immediate and effective thing you can do it focus on reducing your expenses – it’s usually the area where you have the most control and leverage.
We recently wrote detailed piece on why and how you should set up a personal budget and automatic savings plan. In it we provide a link to our free budget planner. Feel free to use it to help get things going, otherwise you can easily set up an Excel spreadsheet to track and update your expenses each month.
Once you’ve focused on reducing your everyday expenses you should look at ways to reduce your current debts.
But remember not all debt is created equal. Generally speaking there is two different classes of debt; ‘good debt’ and ‘bad debt’.
There are a range of strategies you can explore in order to reduce your ongoing interest repayments and overall debt levels, saving you thousands. These include;
…Stay tuned for our next post where we’ll discuss each of these strategies in detail.
Good luck and have fun!
Sam & Matt
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