Starting your own business, becoming a travel / fashion blogger or a scuba diving instructor, all comes under our passion plan. Over the years most of us may have understood (in a hard or easy way) that passion is what drives us to success. Passion is something that sets people apart. And it’s the passion in you that’s probably driving you to leave your comfort job and live the life you always wanted to. But having said that one should give utmost importance to one’s personal finances even before pursuing the passion plan because the first steps of following your passion is usually a financial disaster. It usually means the cost of leaving a job or the cost of starting a business. These are critical costs that may stand as a roadblock between you and your plan. Secondly, passion is extremely hard to quantify and evaluate. You may have all the passion in the world, but it doesn’t guarantee you a dime. All this usually result in lack of a proper planning. Preparing to pursue your passion plan with a basic understanding of money management will give you a solid foundation to build from. Take note of these three essential finance management tips.
Save for your passion plan
Think about how you usually tick off a plan from your bucket list – be it buying a car, or going for that world tour. You set some serious saving goals before getting your hands on what you want. Starting a business or your passion plan is also one of those from your bucket list for which you need to set financial goals. Running a business or pursuing an expensive course may usually involve managing debt. So the more you save in advance, the less you will need to apply for as a loan. The more confident you get in setting and reaching your financial goals, the more responsible you will be when you actually go for your passion plan. Getting into the habit of saving forces you to become more aware of your actual financial position, rather than relying on credit, and will help you to live within your means.
Don’t cross the line
As we mentioned earlier how passion plan extremely hard to quantify and evaluate. So, whether you have started your own business or started freelancing as a blogger, it’s important to not go overboard with spending. It’s important to make sure that you aren’t stretching your budget too far and that you have a steady cash flow in your business or venture. Just don’t bleed it dry the moment you start to see the money coming in! It may seem like a fantastic idea to blow all of last month’s profit on a shiny new piece of equipment, but if next month isn’t as fruitful as you anticipated you may find yourself struggling to pay your bills. Because at initial stage, you just can’t predict. A great way to develop the habit (which most of you know out of your previous work experiences) of living within your means is to put aside money for all of your essentials first, then use the remainder as your disposable income. Saving and living within your means are great habits to adopt when thinking of going ahead with your passion plan, but to make them work together effectively you need to monitor your finances on a daily basis.
Monitor your finances
If you don’t closely keep track of your finances you may head into a dangerous territory. You can’t afford to exhaust all the income before the month ends. And if you are the one who is aiming to build a team of people then they will be depending on you financially. So, you cannot afford to go off-track. Hence monitoring your finances is so important. So make it a habit – set aside some time every week to review your financial position. A simple way to start off is by reviewing your previous bank statement. Group all of your expenses on the statement into relevant categories, such as rent, dining out, other expenses, etc. and add them to a spread sheet. Do this once a week and keep a tally of how much you’re spending in each category. Make sure you include any income you make to track that you’re living within your means and also include a category for savings, as this money won’t be available in your disposable income. This monitoring trick will not only help you to plan for the future, but will help you re-assess some of your ‘not required’ spending. Setting good financial habits before you execute your passion plan will make your journey smooth.
Learn to manage money first which will eventually be the wings to your dreams!
Are you also following your passion and need help in managing your finances then feel free to contact us.