Personal Finance Tips for Business Owners

Henil Shah
/ Categories: Mutual Fund, MF Unlocked
Personal Finance Tips for Business Owners

The very first rule of business is that you should always keep your business and personal finances separate. However, many a times, business owners go in the opposite direction and spend too much time on running and working on their business and investing the profits back into their business. In the process they end up ignoring their personal finances.

It is surprising to know that many business owners, despite being successful businessman, tend to get clumsy with their personal finances. There are business owners who spend too much than what they actually earn. They do not have enough savings for their retirement and they tend to make excessively risky investments or even some of them make the mistake of parking their money in their savings bank account or bank FDs (Fixed Deposits). Here are few tips for such business owners to get beck their personal finance on track.

 

Build emergency fund

Emergency fund is one of the crucial things that everyone should have whether they are salaried or business owners. In fact, business owners and professionals must have comparatively bigger emergency fund than salaried individuals. This is because, the certainty of income is on the lower end compared to the one who is salaried. Therefore, it is always better for a business owner to have at least 12 to 18 months of his fixed outflow (including regular investment for financial needs) as their emergency fund.

 

Save for retirement

As a business owner you don’t have any kind of social security available in the form of Employee Provident Fund (EPF) like salaried individual. Therefore, it is important for you to plan for your retirement to the soonest and have retirement on the top of your priority list. The first step towards this you can take by contributing towards Public Provident Fund (PPF). Further you need to determine the appropriate asset allocation that would suit your risk profile. Having said that, some of the business owners and professionals have a liberty to work beyond 60 years as well. Therefore, if in case savings are too short you can extend your retirement. However, that does not give you liberty from not saving at all.

 

Seek expert’s help

Like you are an expert in your business or profession, Certified Financial Planner CM (CFP CM) are expert in personal finances. They help you to deal with your behavioral bias and achieve your financial objectives. Do It Yourself (DIY) is only advisable if you have time and you are rational enough to keep your emotions out while dealing with money.

Rate this article:
5.0

Leave a comment

Add comment

DSIJ MINDSHARE

Mkt Commentary28-Mar, 2024

Mindshare29-Mar, 2024

Multibaggers28-Mar, 2024

Interviews28-Mar, 2024

Multibaggers28-Mar, 2024

Knowledge

General26-Mar, 2024

MF25-Mar, 2024

General18-Mar, 2024

DALAL STREET INVESTMENT JOURNAL - DEMOCRATIZING WEALTH CREATION

Principal Officer: Mr. Shashikant Singh,
Email: principalofficer@dsij.in
Tel: (+91)-20-66663800

Compliance Officer: Mr. Rajesh Padode
Email: complianceofficer@dsij.in
Tel: (+91)-20-66663800

Grievance Officer: Mr. Rajesh Padode
Email: service@dsij.in
Tel: (+91)-20-66663800

Corresponding SEBI regional/local office address- SEBI Bhavan BKC, Plot No.C4-A, 'G' Block, Bandra-Kurla Complex, Bandra (East), Mumbai - 400051, Maharashtra.
Tel: +91-22-26449000 / 40459000 | Fax : +91-22-26449019-22 / 40459019-22 | E-mail : sebi@sebi.gov.in | Toll Free Investor Helpline: 1800 22 7575 | SEBI SCORES | SMARTODR