It doesn’t matter if you’re a sole trader, a business leader, or an individual managing their personal finances: all too often, you’ll feel all at sea when you’re looking at financial data. You’ll have the experience of always being behind and not being to catch up with the incomings and outgoings that you’re seeing moving through your accounts. If you feel at a loss when it comes to your finances, as an individual or as a business, this is the guide for you. Read on to learn how to finally get on top of your finances.
Individuals and businesses usually have more than one channel through which their money is going. For example, a business will likely have a business bank account, a tax or accounting account, and other plug-ins and cards that help maintain cash flow. An individual may have investments and other assets held in digital wallets, as well as savings accounts, mortgages, and all of their other disconnected accounts that deal with different areas of their lives.
When you have financial data spread out in this way, it’s impossible to actually understand how much cash you have. You’ll always be chasing the numbers of a different app, account, or platform, and you’ll not be able. To build a coherent picture of how your finances look. The tip here is quite simple: it’s to gather up all of your financial data – whether in a spreadsheet of your own making or in an app designed for this purpose – so that you can start seeing your financial life in overview.
Now that you have all of your financial data at your fingertips, it’s time to start thinking about how to make sense of it all. That can take time if you’re going it alone, which is why you should look into MYOB’s bookkeeping basics to get an idea of how you can manage your finances once you’ve got everything in front of you. Getting on top of your finances means finally seeing what assets you have – how much you have in cash and assets. It also means understanding how much you are spending and if your financial behavior is sustainable or leading you off a cliff edge.
Many people find financial analysis tedious. Individuals, especially, aren’t keen to discover that they’re not living within their means. But it’s important that you do this work in order to plan for the future and think about what you could do with your cash. For businesses and sole traders, the need to get on top of your finances is imperative, as that’s how you’ll plan for a brighter future with higher profits and less money spent on overheads.
While bookkeeping can be done manually and on your own, with a spreadsheet that you build yourself, it’s worth considering the range of tech products out there that can give you a helping hand. Even banking apps are developing fast in order to centralize your financial life and help you make sense of your spending and your income. They help you to plan for things like tax and invoicing, and they’re responsive to live data coming from your cards and your accounts.
Other software is designed to number crunch on your behalf, presenting you with insights and forecasts that can be invaluable for planning your financial future. Businesses, in particular, can benefit from these apps, as they perform the work that you’d otherwise have to hire a financial expert or an account to do for you. Search online for the best accounting software to help you understand your finances without spending huge volumes of cash on that analysis.
Once you’ve used technology or traditional bookkeeping to achieve an aerial view of your overall finances, it’ll be time to spot the bad spending or investing habits that are losing you money. You might have an inkling of what these are, but it’s only by going through your finances with a comb that you’ll be able to see just where your money’s ending up – and what you should or could do to stop habits that are costing you dearly in the pocket.
Again, some apps will help you see this. You’ll see that you’re spending far too much on your morning coffee at the cafe, and you might consider making coffee at home instead. As a business, you might see that your profit margins are shrinking due to inflation and that you, therefore, have to raise your prices to keep turning a decent profit. You’ll also expose your good habits – like investing steadily in assets that are growing in value – which is another important step in understanding where your cash will be best spent.
Both businesses and individuals can find themselves in debt. When financial difficulties strike, we tend to get out loans in order to steady the ship and to ensure that we’re not going to find ourselves without the cash to live or to run a business. The problem is that loans come with interest payments, and that’s something that many people find difficult to pay back – especially if they got the loan out initially because of economic disruption from the pandemic or similar unprecedented events.
So how do you manage your debt in order to get on top of your finances? Well, you should think about liquidating assets that you’re holding in order to pay back the money you owe. You should also certainly consider cutting out all but essential spending for a month or so in order to accelerate the rate at which you’re paying back your loans. There are debt assistants out there, as well as apps that help you roughly plan how much cash you need to set aside per week in order to meet your loan repayment obligations. Engage with these professionals or this software to get back into the black and wave goodbye to burdensome debt.
Managing your finances can feel like a tough hill to climb. That’s why we’ve outlined here a few tips that’ll help you understand your entire financial ecosystem and what you can do to protect and nurture it in the future.