Great success starts with great financial decisions. Whether you’re a new business leader or a seasoned expert, you can always improve your personal budget and find new ways to manage your finances more effectively.
From simple but sound practices such as reviewing expenses regularly to managing your long-term investments properly, the right approach to your finances can set you up for a life of prosperity, and it’s never too late to start.
Here are six ways leaders can manage their finances:
1. Review Expenses Regularly
Starting with your personal budget, take the time every year to go over your expenses in detail and cut through the chaff where necessary.
While that $20 per month savings on Xfinity may not seem like a huge deal on a month-to-month basis, getting the best deal on every bill adds up significantly over time.
After all, you don’t get and stay wealthy by spending money unnecessarily.
2. Sleep on Big Purchases
Whether it’s a home, a business investment, or the latest 4K smart TV, it’s a sound idea to wait 24 hours before making any big purchase.
Use those hours to make a pros and cons list, shop around for better deals, or just wait and make sure that you actually want that smart TV.
No big purchase is so important that it can’t wait a day, and this smart practice eliminates the possibility of impulse buys.
3. Check Around for Money Market Rates
Just because you have a money market account already doesn’t mean that you can sit back and let it grow. Check around regularly for money market rates at local banks to see where you could be getting a better deal.
Often, if you find a higher interest rate elsewhere and you’re a valued customer of your current bank, you can convince them to raise your interest rate in exchange for keeping your business.
4. Auto-Split Deposits
Make allocating funds effortless by auto-splitting your direct deposits. The general rule is to save 10 to 15 percent of your income for retirement through an IRA or 401k and 20 percent of your income as basic savings, money market, or other investments or savings.
Of course, make sure that all of your accounts are high-interest and low-fee where possible.
5. Maximize Flexible Spending Accounts
Many insurance plans offer a flexible spending account that lets you save money tax-free toward out-of-pocket medical expense costs. Make sure you’re putting in the maximum FSA contribution every year to avoid federal, state, local, and FICA taxes on that amount.
However, make sure that you’ll actually use those funds before you allocate them. At the end of the year, any money that isn’t spent from an FSA is forfeited.
6. Make Long-Term Investments
Patience is a virtue. Holding onto a high-quality investment as a buy-and-hold investor pays off in the long run. Learn to let go of hopeless stock early on while recognizing and “riding winners” until they peak.
Combine the price-earnings ratio and value-oriented strategy to recognize when a stock is worth holding onto.
After all, it only takes one top-tier investment to make years of waiting worthwhile.
Personal and business finance are skills that you’ll use for a lifetime once they’re developed into habits.
Make these smart finance tips second nature by practicing them now. A frugal mindset is what you need to manage your money responsibly, ensuring that you hit your financial goals year in and year out.
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