Jan 26 2008

How to treat your finances like a small business

Written as a guest post by Kacie’s husband

After only seven months, here I was center stage – all alone – without guidance – but full of enthusiasm. I was presenting for recruitment on campus in a large classroom. Despite my new accounting job, I am as non-businesslike as the rest of us, so I spoke to students about the excitement of my early career.

A student greeted me afterwards with overwhelming enthusiasm. She had been struggling in school, and my discussion about “treating your career as a business” and “creating a ‘niche market’ for your skills” inspired her to realize that she has what it takes to be successful.

These analogies lead me to wonder – can they be applied to a frugal lifestyle? Sure! And as non-businesslike as possible, here are my thoughts:

  1. Find your “niche market”Similar to business, niches are just as much an important part in frugality – and life. My father, as an example, has never been savvy in the stock market or other financial investments. Instead, every weekend he invests his time and money at auctions and yard sales to buy antiques. His investment is unconventional, but he has found hundreds of antique “treasures” that will most likely pay big.You can follow his footsteps and find a niche to make the most profitable use of your money the way you know best. If you find a passion, it is easy to stay frugal.
  1. Start a frugal blogIs this a fitting topic? Definitely. Keep in mind that any surviving business has a website nowadays. In this case you will be the main person that benefits from blog as it will help you: 1) tighten your budget as you provide cost-cutting advice, and 2) receive support and frugal tips from your loyal readers along the way. Despite my “Accountant” job title, Kacie has become the financial expert in our relationship through her blogging expertise.
  1. Review and streamline costs Businesses at their peak must focus on cost-cutting when they can no longer grow their income. As individuals, cutting expenses becomes a more immediate focus since we have little control of income on a daily basis. You always hear that keeping track of what you eat can help you lose weight. Same situation here. Expense tracking is a single most important activity for controlling your finances.Have you been following your budget? My best advice is to make expense tracking easy. Do yourself a favor and track expenses through Mint, use a debit card, and use online bill payment to automate mundane tasks. Initial setup takes time, but you can categorize expenses every other week and review your expenses monthly.
  1. Keep it happy! keep it meaningfulEmployees are a business’s most important asset — You are your most important asset. If your overall mood and attitude is poor, sadness can lead to compulsive spending, and anxiety can stop you from reaching your goals. Along the lines of Maslow’s hierarchy, maintain your basic needs first and then tackle financial achievements.It is also important to remember what does frugality do for you? Any savings you make should be meaningful and have a purpose to help your family live happily.
  1. Think big and plan long-termThere is a lot of detailed analysis and planning for the future of a company. Retirement planning can be overwhelming just the same.A lot can be written on this subject, which would be appropriate for a series of blog posts. For now, I will mention that you can use software like Microsoft Money Deluxe to forecast your retirement money; it will do all the calculations of inflation, compound interest, etc. for you. As you review your budget each month, take time to make gradual adjustments to your plan in Microsoft Money.


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One Response to “How to treat your finances like a small business”

  1. Great post. For us just having me start a frugal blog was all the incentive we needed to rethink our finances. Because of the writing-the-blog efforts (and the behind-the-scenes frugal efforts), we are now running at a $1,500 surplus each month. If this were a real business, I would be using that money to reinvest in the business. Instead, I’m paying down debt and saving for something special in the future. It is amazing how accountable you become when you are writing a blog that everyone can read and comment on. Good job.

    Leah

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Hey! I'm Kacie, wife to Shane and mother to Jonathan (7), Vivienne (5) and Amelia (2) . I write about my family's finance: how we save money, improve our spending, and plan for the future.

I hope I can inspire and encourage you to improve your situation. See disclosure.

I'm adopting a much slower-paced posting schedule, and treating this as a hobby blog now.

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