Ultimately it all boils down to one thing and that is money. Everyone who dreams of becoming the greatest businessman ever have this idea that they’ll pitch their idea, get great funding, and they will be spending money like a millionaire! But it isn’t that simple, it never is. Even if you manage to save about $1000, just like an average American, you may still be left with a debt of $20,000, just like an average American. If these numbers describe you, borrowing money, relying on credit cards, or even finding a suitable investor may not be your best move. This is when you need to bootstrap your business and spend judiciously.
So replacing the word “Spending” with “Saving,” let us start with some good financial habits for 2018 to become successful business owners:
- Don’t overspend, spend only within your means
How can you keep yourself financially disciplined and independent? By practicing delayed gratification. Short term sacrifices are the key to long term results. Shred your credit cards today! Because when you stick a credit card in the machine, you pay like $3 to get your own money. If you can’t pay in cash for an item, you can’t afford it.
- Save, save, save!
In your head, you should plan to save as much as you can, much more than you actually spend. You just need to tuck in your belt and control your spending. One of the main reasons why the American economy went into depression was that people had no savings at all. They were living off of credit only. So, once the economy collapsed, they had no savings. Hence, instead of spending money mindlessly, start saving up. Open up a savings account and earn interest on your savings. Saving as a business owner is even trickier because you’ll have other people to think about.
- Pay your debts and NEVER borrow
Borrowing huge sums of money on regular basis isn’t smart; smart is making money without borrowing much. Once you’ve paid your debts, close your credit cards. You might be under the impression that making late payments includes only fines that need to be paid over and above the actual expense. But in reality along with the huge extra fine that you pay, the late payments add up in your credit score in a negative way, one which you do not want to have in your financial report, especially for a growing startup.
- Don’t just leave your money in the bank
While it is very safe to have a savings account, but leaving the money stagnant in the bank won’t do much good to you, apart from the little extra money you may manage to earn from those ridiculously low interest rates. Invest in stocks, shares, bonds or funds or take Warren Buffet’s advice and invest in index funds, you can earn at least 5-10% per year.