If you have ever met a successful business owner, you know that they know where every dollar in their business is coming from and where it is going. They want to put every dollar to work and in turn, see a strong return on every dollar spent/invested. It’s time to start thinking of your personal finances like the business of you.
Where is money being spent?
Any good entrepreneur or small business owner who does well, knows where their money is being spent and why. As well they should. Flying blind can work out okay for a while but often it comes back to bite you in the behind. An entrepreneur may notice that there is a disproportionate amount of money being budgeted for one department with little justification. In your case, you may realize that you are spending a ton of money on shoes, eating out or something else.
Is your money being put to work?
All good entrepreneurs want to make sure that every dollar that they are spending is working hard for them. This means they continually evaluate their spending to ensure that those dollars are actually working for them. In the case of a small business owner, they likely do regular performance reviews with their employees to make sure that the person continues to be a good investment for the company. The same goes for suppliers, real estate, services, utilities, and etc. In your case, perhaps you do an audit of your subscription services.
Are you seeing a return on the spending?
Entrepreneurs are all about generating value, making money and delivering solid returns to their investors. To do this (and do it well), they need to make sure that they are indeed making money on the money that they are spending.
For an entrepreneur this could be in a few different ways. Are the dollars being spent leading to significant growth in users, sales, customers, markets, etc? Are the dollars being spent to increase margin, revenue and profitability for the company?
For you, you may consider how spending improves your (or your family’s) life or is this helping you in your career?
Ask yourself the questions!
While most of us are not entrepreneurs, we can certainly take the mindset of someone in a for profit business and apply it to our own finances. I challenge you to look at your finances and ask yourself the questions that most entrepreneurs ask themselves daily.
- Where is my money being spent?
- Is that money working for me?
- What is the return on the money I am spending? Does it improve my life? Does it make me happy?