Managing your Money
Today's article came to us in the form of a question from one of our subscribers. Managing money is a huge responsibility and the answer to this question depends on how much money you are talking about. If we are talking about reinvesting your money into your business that is one way to manage your money, but we can also be talking about using that money to make even more money with things that have nothing to do with your current business.
Get an app, use an excel spreadsheet, and get an accountant. I recommend that you download an app like Mint which will keep track of all your accounts and the money going in and out. I would also recommend starting an excel spreadsheet, and this is important whether you're going to be saving to invest in your business or something else. The excel spreadsheet should include a few columns that say the day, the amount of money made, the amount of money kept after taxes, and where that money is. In other words is it in your pocket, in the bank, invested in a second location or second website. Also on top of one of those things you need to get an accountant. He will tell you where to put your money
Keep track of your money like you would a child. Your money is basically like a child if you send it out and don’t go to check on it, you're going to lose it. This is the managing part of your money, and even if you invest your money always know which investment it is in, who invested it (like Chase, Charles Schwab, or you), and how much money it is making daily. Whether it makes a penny a month or $1,000.00a day you need to understand how much more you have since you invested it.
It is important to keep track of all these numbers weekly (daily would be better, but who has the time) and record them in that spreadsheet. Read this article on Five Things Millennials SHOULD do with Money even if you’re not a millennial it will help.Don’t just spend it on things. Don’t just waste your money or friends or food, keep it in the bank and if that is too tempting keep it in an account that doesn’t offer immediate withdrawals or a debit card. Not spending your money doesn’t mean you have to live in the gutter, but be frugal with things you know will be gone in a few minutes or things that you know are just not worth it. Like a pancake breakfast with fruit and tea for $19.00, that is when you are frugal with your money, but $10.00 breakfast with coffee and fruit when you're out with friends, once in a while, won’t break the bank. Understanding the difference between a necessity and a want is the key to spending your money properly. So ask your self-do I need new shoes because mine is four/five months old and have a hole in them, or do I want new shoes because this model is a few weeks old. Learn 5 Ways Millennials can CUT Spending with this great article.
These three steps are how you should manage money if you are talking about managing money that comes in from your business. If you are talking about managing your money in the terms of making more money from it follow these tips.
Don’t invest because everyone is investing there. Investing should not happen because everyone is buying a new home in San Francisco for example, you should invest in a market that you know has the potential to be worth more later and is already not too expensive. The same goes for stocks, don’t invest in Tesla because everyone says they’re going to invest, invest because you know or have read that they came out with a new car that will make them tons of money which will make their stock worth more than the already blank it’s worth today.
Don’t invest in a sure thing. Ok, the truth is nothing is a sure thing, but there are many things that are calculated risks. For example, if you currently work in the coffee business and know that you understand your margins and are making money investing in another Cafe is nearly a sure thing. You already know you’re going to be successful because you understand the business and know all the ins and outs.
Build your wealth. If you are lucky enough to have money to save and invest than you need to start building your wealth. If you already own a business take that business and learn how to start Building a Brand with it so that you can start to introduce more products and capitalize on your trusted name.
All in all, these are two ways that your question could be addressed. You can either manage your money to save it and keep track of it, or you can manage your money in a way that can build you wealth in the long run. Overall, these tips should help you to better manage your money. For more info on money management and tricks check out The Daily Nickel - Money, Entrepreneurship, Productivity, & Education for daily articles on saving, investing, and spending your money the right way.