Last updated on October 23rd, 2022 at 02:57 pm
Juggling a business and motherhood is no small feat, and if you want to be successful, one of your first priorities should be keeping your personal finances in order. There are a number of reasons this should be at the top of your to-do list.
First, it can make your life less complicated if you streamline your personal finances, and reducing your debt and building your emergency savings will mean that you are less stressed about how much money you’re bringing in, especially in the early days of your business. Keep reading for more important personal finance tips for mompreneurs.
Personal Finance Tips for Mompreneurs
When you had an employer, you may have participated in a retirement plan in a way that involved having money automatically deducted from your paycheck. If you left that job to run your own business, it’s important to set up some kind of system that will allow you to continue saving for retirement.
You can choose from among several different types of plans. A solo 401(k), a SEP IRA, a SIMPLE IRA, and a Keogh plan all have various advantages and disadvantages you should review depending on your situation. One of the easiest ways to fund your retirement is to continue having money deducted automatically from your main account. In other words, “pay yourself first.”
Funding For Your Business
If you are looking for money to get off the ground, you may find it helpful to apply for the type of small business loan that can help non-traditional owners like you. These types of loans often have a number of advantages, such as flexible payment plans, and the opportunity to receive coaching or tap into other support networks.
Other ways of funding your business may have disadvantages; using a credit card can mean high interest rates, and putting your own money into your business could jeopardize your financial security.
One of the most important personal finance tips for mompreneurs is to make sure you have some savings. Everyone should have emergency savings, but as an entrepreneur and a parent, it is especially important for you. Business owners do not have the secure income that traditional employees do, so while many people might have around three to six months’ worth of expenses in emergency savings, you may want to set aside enough money to cover a year or more of expenses. This cushion can give you the peace of mind to ride out the bad times, especially in the early days of your business.
This is also an example of good financial role modeling when it comes time to talk about finances with your children. You will have tangible examples of why certain practices pay off and can show your children how to have a healthy relationship with money.
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Pay Off Debts
While you should keep your business and personal expenses separate, there are really no downsides to working toward paying off your debts — with the exception of your mortgage, which may be more advantageously paid off over a longer period of time. As for the rest of your debts, you can arrange them either by the amount owed or by interest rate. Paying off your highest interest rate debts first will mean paying less in the long run, but some people find it more psychologically satisfying to start by paying off the smallest debt first.
Ultimately, what is most important is finding a plan that is easy and that will keep you motivated. Once you are debt-free in addition to having emergency savings, you will have more flexibility to take some strategic risks with your business.
Are you a mom and business owner? What personal finance tips for mompreneurs do you have to share? Leave us a comment.