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Four (4) Great Personal Finance Lessons For Business Owners

Personal Finance Lesson For Business Owners

According to the famous American author and entrepreneur Robert Kiyosaki: Financial freedom is a mental, emotional and educational process. In simplest words, personal finance lessons imply proper money management. Or, lessons in handling your hard-earned money in a manner that reduces waste while increasing its value.

In this article, I’ll be sharing with you four (4) great personal explain a little about some of the most important personal finance lessons you can use daily. These personal finance lessons are borrowed from some of the richest people on earth. And while the majority of them didn’t become millionaires and billionaires overnight. And even those who inherited fortunes continue working to make their money grow.

1. Savings Comes First

“Don’t save what is left after spending. Spend what is left after saving,” says Warren Buffett, an American business magnate and CEO of Berkshire-Hathaway. Surely you know that Warren Buffet ranks among the richest persons of the world. This is the first personal finance lesson everyone needs.

Most of us tend to spend our income first. Understandably, we’ve bills to pay and essentials to buy. Then we spend on entertainment and other stuff that helps enjoy life. Indeed, these are essentials rather than luxuries.

However, Warren Buffett’s adage implies, we can save a considerable part of our income and yet have a fantastic lifestyle. When we put money aside or save first, we’re directly securing our future. This act of saving for the future relieves a lot of stress and rids unknown fears about money.

When we save first, we know exactly how much money is left over for spending. Usually, this money is more than adequate to meet our life needs such as paying bills, expenses on basics such as food, clothing, shelter, and education. And of course, for occasional entertainment. By saving first and spending what’s left out, we greatly reduce opportunities for frivolous and unnecessary expenses.

Also Read: Top 5 Benefits of Using a Software for Your Small Business.

2. Never Depend on Single Income

“Your income right now is a result of your standards. It is not the industry, it is not the economy,” says famous American motivational speaker, Anthony Robbins. Rightly so. Because it’s our standards and what we settle for that decide our income. There’re plenty of lucrative jobs available in any industry, regardless of whether the economy is experiencing doldrums or steaming full speed ahead.

Therefore, another vital personal finance lesson never depends upon a single income. In fact, every financially successful person has more than one source of money. These would usually a mix of active and passive income.

You too can earn a passive income with a side job after work hours. I’m not implying you bid adieu to leisure or quality time that you spend with family or recreation. Instead, spend an hour or two at any point of the day to earn money from a secondary source. There’re plenty of ways you can easily make money online by working a couple of hours during your spare time. And returns are worth it.

Invest the money you’re earning from a secondary source on plans and schemes that fetch high returns. This ensures you’re making money even while you’re asleep. Investing in stocks, Exchange Traded Funds, Mutual Funds, and an excellent retirement plan helps you accumulate wealth passively.

3. Stay Away from Bad Debt

Hollywood star Will Smith says: “Too many people are buying things they can’t afford with money that they don’t have to impress people that they don’t like.” And that’s exactly how most people land in debt.

Actually, debt or credit isn’t bad as one may believe. In fact, having a credit card or other debt helps you build a credit score. Debt itself doesn’t damage your credit score. However, late payments, availing too much credit and default can damage your credit score severely.

Therefore, another key personal finance lesson is to stay away from debt. And to do so, understand clearly what actor Will Smith is saying. A lot of people use a credit card or loans to buy stuff they really don’t need. A credit card is an excellent financial resource to hold. But use it wrongly and a credit card can become your worst nightmare.

Credit cards come with an extremely high-interest rate that is sugar-coated as ‘Annual Purchase Rate’ or APR. Actually, APR is an interest that keeps on compounding and accumulating. It can go as high as 32 percent. Sometimes, the cost of whatever you’ve bought on credit card would be much lesser than the APR you’ll end up paying.

Understandably, debt is inevitable and also necessary. Nobody disputes its importance when buying a home on a mortgage for the family or other essentials. At the same time, it’s extremely essential to keep debt and credit minimal and ensure timely payments.

Also Read: Best B2B Marketing Strategies for Business Owners.

4. Get Control over Your Money

American radio show host and businessman, David (Dave) Ramsey says: “Unless you control money, making more won’t help. You’ll just have bigger payments.” And he’s 100 percent correct. Getting total control over your money is the next best personal finance lesson.

Unfortunately, we falsely believe we have full control over our money, regardless of whether we have a small or large income. Just take a look around your household and expenses and you’ll definitely find those invisible loopholes that cause your precious money to drain away without control. Baffled? Here’s one clue. Check how much does your cable TV, Netflix, Amazon Prime, DTH and other subscriptions cost every month.

Aria Systems that makes software and billing platforms finds, Americans spend whopping $857 per month or $10,284 every year on average on various kinds of subscriptions. Of course, the amount would be lesser for some households and individuals and higher for others. And strangely, 84 percent of Americans aren’t even aware they’re overspending on subscriptions.

The next time you get a subscription renewal bill, check how many TV channels your family actually views daily. Usually, a package comes with several less popular channels and those that people seldom watch. Yet, you’re charged for these. Also check which Value Added Services (VAS), by whatever name they go, are lying unused or underutilized on your mobile and Internet services.

Most likely, you’ll be shocked at the amount of money you’re wasting on subscriptions you rarely use. Therefore, it’s high time to cut these subscriptions and save money.

Examining your monthly expenses closely will reveal, there’re several such unwanted expenses you falsely believe as necessary. Eliminate those right away and get full control over your money.

Conclusion

Personal finance lessons are very easy to learn and implement. If you fail, the price can be very heavy. Literally. You’ll waste thousands of those precious and hard-earned Dollars every year and yet remain poor. Therefore, the right time to learn personal finance lessons and act on them is right now.

Author’s Bio:

Ashwin Honawar is a journalist, blogger & author with over 28 years of experience in India & various foreign countries. He writes about personal finances, human rights, education, women’s rights, anti-addiction, travel & lots of other topics. He is also a trainer in content writing.

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