You have just started your business and look forward to a healthy growth trajectory. One of the critical factors that startup owners and entrepreneurs must keep in mind is managing their personal finances well. It’s really important to develop a ratio of how much money you intend to spend, save, and invest.

Frugal living as a lifestyle goes a long way in inculcating healthy personal finance habits, which help you make the most of your income by reinvesting it in your business and using the bare minimum for personal expenses.

Here are a few steps that you can take to inculcate a frugal lifestyle:

Observe your Monthly Spends

For one month, deeply observe your monthly spending. Track every expense and categorize it into different heads like food and groceries, entertainment, utility bills, etc. after a month, analyze your spending and put them under two heads – controllable and necessities.

Control avoidable lifestyle expenses

It is human nature to spend more when you have more. This phenomenon is termed lifestyle inflation. And as a startup owner, you mustn’t give in to this tendency because sometimes, in keeping up with societal expectations or the latest trends, we tend to lose sight of the difference between what is necessary and what is not. So, make sure to maintain control over avoidable lifestyle expenses.

Create a crisis fund

Savings is the most important part of personal finance management. No matter what, make it a habit to save a certain portion of your monthly income and add it to your emergency fund for unforeseen circumstances. While it may seem tempting, instill discipline that you shall not touch this fund unless there’s an actual emergency. In case you need money for a regular expense, you consider borrowing money through an app that offers flexible repayment options without any collateral instead of breaking your crisis fund.

Safeguard yourself against online fraud

Cybersecurity is becoming more important than ever before with the increasing number of online scams and fraudulent transactions. And it is imperative to be vigilant of your online accounts, app permissions, and security settings. Here are a few steps that you can take to safeguard your personal accounts:

• Be conscious of any suspicious activities and set alerts on all your bank accounts.
• Monitor your bank statements, account history, and credit reports routinely
• Ensure that your passwords are strong and not easy to guess/hack
• You may have several close aides, friends, and relatives who are supportive of your venture. But beware of placing absolute blind trust in any person.

Improve credit score 

A good credit score will help you secure personal loans, auto loans, and any other credit at cheaper rates. To improve your score, first, see your score by approaching a credit bureau and generating your credit report. Then identify any gaps that may have lowered your score like outstanding payments, overdue, etc. and clear all of them. This will typically improve your creditworthiness.

Start investing 

To manage your personal finances well, invest a certain portion of your income in mutual funds, stock market, long term bonds, etc. wherever you find comfortable. You can even consult an experienced person in your family, approach a consultant or you can take help from stock market websites, stock market analysis tools, etc. They can guide you on this subject to make sure that you are investing money in the right place.

Get Insurance

Insurance rates are much cheaper when you are young, healthy, and fit. You can get theright insurance package for yourself at a fantastic rate when you plan it much earlier in life, and this builds a security system for yourself and your family when you reach a later age.

Alternate source of money never hurts

You can use your assets, your skills, and your time to generate alternate income sources. For example, if you have great knowledge in your field, you could try out blogging, setting up a YouTube channel, or tutoring kids over the weekends. You could also think of subletting or renting out your assets to generate income.

Be up to date on maintenance

Ensure you regularly maintain your assets – be it household appliances, your car, your home, etc. Annual maintenance contracts make look like an overhead today. Still, they prove to be useful in maintaining the health of your asset and do not dent your budget in the long run with significant breakdown expenses.

Author Bio

Lily Tran is a content writer, working for MoneyTap, who writes about all things Finance. Her passion for credit, debt, loan & investment drives her to help readers get an insight about everyday finance.