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Personal Finance From a Biblical Perspective

Handle Yourself as a Business for True Personal Finance Success

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This is a guest post by Eric Rosenberg, a full-time freelancer and blogger at Personal Profitability. Eric writes about personal finance and entrepreneurship at InvestmentZen, his own blog, and other sites around the web.

If you have trouble managing your money, you are not alone. Millions of people struggle every single day with paying the bills, keeping their accounts straight, and having enough leftover to save for an emergency, let alone retirement.

handle yourself as business

If this sounds like you, why not take a step back and look at your finances through a different lens. If you treat your finances like a business, and yourself like a financial analyst, you may be able to better identify your financial strengths, weaknesses, and put together a plan to enjoy financial success for years to come.

Create Personal Financial Statements

Every business tracks its financial health using financial statements. If you search for your favorite large company’s annual report on Google, you can find its financial statements posted online. To get an idea of what these look like, stop in and check out Google’s latest annual 10-K report here.

Of course, we don’t need to put together a 100+ page detailed report, just a simple one will do. The three primary financial statements you’ll want to look at are the Balance Sheet, Income Statement, and Statement of Cash Flow.

  • Balance Sheet – The balance sheet is a snapshot of everything you have and everything you owe in one place. Subtracting your debts from your assets, you can find your net worth.
  • Income Statement – The income statement shows how much you earned and spent over a specific period of time.
  • Statement of Cash Flow – The statement of cash flow shows how much money came in and where your money went in terms of spending and investing.

If you want to learn more about personal financial statements, check out my guides here.

Diversify Your Revenue

If a company earns a significant portion of its revenue from a single customer, that is called “revenue concentration risk.” It is a risk because a problem with that one customer can completely bankrupt a company or destroy a product line.

For example, GT Advanced Technologies went bankrupt after losing its biggest customer in 2014. GT Advanced Technologies was a primary supplier to Apple for iPhone glass screens. When Apple changed suppliers, it destroyed the entire company’s business.

What would happen if you lost your primary income source tomorrow? For most people, that is a full-time job and losing it would mean a serious hardship. By diversifying your income and investing your time in side hustles, you are in much better shape to withstand a sudden change in income.

Maximize Profits

The root of business is earning a profit. Earning a profit requires earning more than you spend. Businesses and individuals can both utilize a budget to help plan for this goal. A budget isn’t something to restrict your spending, it is about planning and understanding your spending.

It is important to focus on both revenue and expense when budgeting. Don’t look at your income as a fixed number, look at it as something you can grow through hard work and focus. If you do well at your job, you can get a raise. If you do well with a side hustle, you can earn more. That is key to growing your wealth.

On the other side, do focus on big wins for your budget. Saving a few cents here and there is great, but finding recurring costs to cut and major expenses to avoid will have the most meaningful impact on your finances.

Be Your Own CFO

If you can stay focused and treat your finances like a business, you are essentially acting as your own Chief Financial Officer. Mastering your bank accounts, credit and loan accounts, and taking an active role in growing your income while cutting expenses will be hugely helpful in the long-term.

Even if things seem too tough to handle today, creating your personal financial statements will show you where you need to focus to live the life you want. Whether you want to travel more, save for retirement, or just want to feel more confident when dealing with your money, treating your finances like a business is the way to go.

6 Steps to Creating a Successful Home-Based Business

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There are all sorts of people ready to tell you how to be successful at creating a home based business. In some cases, many of the same suggestions are shared.

The following are some standard, but extremely useful steps to creating a successful home-based business.

1. Create a Work Environment that you can Work in

4 Screen Work Station

Imag via Flickr by Martin Terber

It might require purchasing some professional office equipment and furniture, but put together a work space where you feel comfortable and able to function. Be sure the equipment is both what you need and as ergonomic as possible.

You’re going to be spending a good deal of time in this room and you don’t want to suffer because you provided yourself with substandard work essentials.

2. Keep Overhead Costs Low

Depending upon the business you create for yourself, there could be a fair amount of overhead. Keeping the amount of overhead at the right balance is critical. Remember, it’s not how much money you make, it’s how much you keep.

Working from home has its advantages, but preventing bankruptcy isn’t necessarily one of them. You can over extend yourself if you’re not careful, particularly in overspending in technology.

3. Remember to Spend some Time On your Business

Most people work in their business, forgetting to work on their business as well. A home based business usually consists of one person – you. As such, it’s easy to get caught up in the operation – the product or service delivery. But you must also remember to allocate time to working on your business also.

That includes finances, vision, strategy, marketing plans: the infrastructure. It’s the difference between being successful and just making it through each day.

4. Increase Your Skills and Education

If you were in a business working for someone else, you would probably attend training and education seminars. It’s important to keep the axe sharp, and the same goes for home based businesses. Gain as much education as you can; attend groups that focus on the same business as the one you’ve started; even go back to school.

Entrepreneurs are well served by getting an online MBA AACSB. Consider this seriously as its worth more to you to invest in yourself, since in many ways, you are your business.

5. Work on Your Branding

Many home-based entrepreneurs don’t understand the importance of creating a positive, powerful identity for their business. A good brand will include confirming your credibility, delivering your message clearly, motivating buyers, connecting with prospects on an emotional level, and finally, securing user loyalty.

6. You Work From Home – Not At Home

This is hard thing for many at-home workers to put into practice. You may work from your home, but you also live there. Be able to separate the two. Set time limits so that you “come home” and everyone understands that your “at home” time has begun. Keep at home time sacrosanct.

Starting a home-based business can be tricky and requires all the expertise of any entrepreneurial enterprise. Learn from other’s mistakes. Get more education. And have the confidence to push through until you’re successful.

5 Quick Tips to Purchasing the Best Small Business Insurance

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Small business owners have plenty to worry about, and unfortunately, catastrophic events are one of those things.

That’s why all small businesses need insurance. Insurance feels like an unnecessary expense, but it can be the survival lifeline when things get bad. It helps business owners cover accidents at the workplace. It protects a business’ assets if it ever finds itself on the wrong side of a lawsuit and covers any risk associated with the business.

That monthly small fee could cover a significantly higher payout one day. If that day comes, a small business owner will be happy he or she had insurance.

Small Business Insurance

Small Business Insurance: 5 Tips For Choosing The Best

Of course, picking out the best insurance is no easy task. With a myriad of choices and programs out there today, finding the perfect insurance can be like finding a needle in a haystack.

There are countless stories out there of businesses purchasing insurance they think covers them in all situations, then to find out that it doesn’t cover business-interruption, or some other kind of damage.

“Generally speaking, small business owners are not completely aware of the coverage they have or the coverage they need,” Steven Spiro, an independent insurance agent told the New York Times.

So, what needs to be known when purchasing business insurance? Here are two quick items:

  1. What are the legal requirements? Some states require a business carry insurance, just as drivers are required to have auto insurance. Check with a local Small Business Association to see what’s required in a specific state or county.
  2. What type of business do you run? The type of business that an owner runs can determine what type of insurance is required. Also answer how many employees you have and what type of work each of them does. It sounds specific, but knowing this information can help business owners determine which type of insurance is best for that business.

Of course, a main concern about small business insurance is the cost. What is a small business owner to do?

According to a Xero small business guide on business insurance, it pays to shop around.

“Talk to a few brokers to get a feel for the type of coverage available to you and how much it’s likely to cost. If you don’t know which brokers to choose, ask for recommendations from friends and business associates.”

To find good insurance, you’ll have to find a good insurance broker, or salesman.

Independent agents are a good place to start because they tend to work with several insurance companies. And because they are paid on a commission, they’re determined to earn a small business owners’ business. Of course, this can be a little dangerous, because some brokers might play favorites with certain carriers and push a business owner toward a higher priced insurance company.

Once this process wraps up, it’s time to determine the level of coverage and shop around. Here are some tips to remember during that buying process:

  1. Several carriers might offer packages and discounts when buying multiple forms of coverage. Be aware.
  2. Customer service is important. If a business owner ever has a claim, they’ll want to deal with positive customer service.
  3. What kind of reputation does the carrier have? Insurance companies can fold overnight, so go with a company that has a strong reputation.

Picking out insurance can be difficult and cumbersome, but that patience comes in handy in the long run. Doing the proper homework can be a huge benefit down the road.

How to Invest Money and Combat Debt

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[The following is a featured post discussing the idea of investing a small amount of money in order to pay off debt. This is something that I have done with mixed results so far.]

In days gone by, it was commonly believed that the specter of debt could only be overcome by reducing expenditure and committing to a frugal lifestyle. While this remains solid advice, however, it is not necessarily the most productive method in an age of technological advancement and advanced money making opportunities.

Although it may sound a little unorthodox, the prevailing contemporary theory requires individuals to invest capital in pursuit of greater returns. This money can then be used to repay debts more effectively, without forcing households to struggle against a back-drop of austerity and long-term uncertainty.

Debt Investing

How to Speculate and Accumulate: 3 Ways to Spend More and Generate Additional Income

With this in mind, how exactly can modern-day speculation inspire you to boost your income and stave off debt? Consider the following:

Embrace the Financial Markets

While access to the open financial markets was once exclusive to professional traders and large commercial institutions, the development of sophisticated online trading platforms and educational resources have removed many of the pre-existing barriers to entry. As a result of this, numerous markets are now within reach of independent traders with minimal dollars.

This has exposed everyday citizens to a diverse range of financial products and derivatives, from trading forex and currencies to exchanging carbon credits. While you will needs patience and knowledge to succeed, there is ample opportunity to build wealth through this method.

Understand how to Create a Stream of Passive Income

Passive income is a term used to describe capital can be generated without the completion of a direct action or the sale of a commodity. It allows you to speculate and accrue wealth that is entirely separate to what you earn through traditional working methods, which in turn can be used to clear a significant amount of your total debt.

There are several options of this type to suit alternative risk appetites, with the latest high yield checking accounts providing a low-risk avenue for growth and real estate investments available to those with more income and a desire to achieve greater returns.

Do not Underestimate the Rewards of Hard-work

While it may sound old-fashioned and overly simplistic, hard work remains one of the most effective methods of boosting your income and combating personal debt. This does not necessarily mean that you have to work for 12 hours a day in a number of physically demanding jobs, however, as those of you with a viable industry skill can use it to work from home and freelance in your spare time.

Website developers, content writers and software developers remain in constant demand in the current economy, and this has created opportunity for proactive individuals to market themselves as an independent contractor.

As a general rule, speculating to accumulate does require a certain degree of disposable income in order to generate any sort of return. This can be minimal, however, so as long as you are willing to commit this sum in the pursuit of reducing your debt then you can achieve outstanding results over time.

How Ethical Trading May Be Encouraged

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Ever since the financial crash in 2008, this hasn’t necessarily been the case and now, in 2014, scapegoating for problems seems to be worse than it ever has been before. Banks and large trading institutions may have caused some of the problems that ultimately led to the crash, but small scale investors were also causing issues.

Here we will look at ethical trading and how the concept of social trading allows us to trade in a manner that allows us to keep a clear conscience.

What Do We Mean By Ethical Trading?

Ethical Trading

When the financial crash happened, many banks and institutions were punished for unethical trading. This means that they invested money in areas where they shouldn’t have, gambling money that wasn’t theirs to lose.

Ethical trading on such a large scale would mean that a bank will only spend money that is theirs, or will only use your money if you’ve given them explicit permission to do so (as you can with some types of account). Even then, when a bank invests this money, they should look to invest in products and projects that are perceived to be ethical.

As well as this, as was the issue in 2008, banks must also be seen to be staying within the banking code of conduct, observing rates rather than trying to manipulate them.

How Can Ethical Trading Be Practiced On A Small Scale?

Although many banks have had issues with the law and unethical trading in the past, single, small-scale investors have fared much better and, the majority of the time, they are trading well within the code of conduct.

If you trade at home on a trading platform, it is highly likely that you’re already what is considered to be an ethical trader; staying within the rules and only trying to make an honest living.

Issues with individual traders generally only arise when people are given access to insider information; something that is both illegal and immoral.

Passing On The Word: The Benefits Of Social Trading

Social trading acts as an online forum for investors, where people can meet, chat and discuss trades. Because of the fact that brand new investors can speak to those with far more experience, this is the perfect place to spread the message of ethical trading to those who are inexperienced and likely to succumb to pressure.

[How much can you rely on social media in your investing?]

Social trading looks as though it could very well be the future of forex trading, and it’s available through almost any ECN broker. With this in mind, now is the perfect time to learn from the lessons of 2008. So, consider the way you trade, ensure it is ethical and spread the word. Together, we can make the world a better, fairer place.

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