3 Ways Business Owners Struggle With Personal Finance

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If you’re a business owner, then you won’t need us to tell you that it can be challenging.

After all, even during good periods, running a business can take up considerable time and energy.

Most financial advice given to business owners relates to the finances of the business itself. It’s assumed that if the business is doing well fiscally, then the owner is too. But that’s not always the case. 

In some cases, business management can come at the cost of healthy personal finances, with nearly a third of business owners using their own personal funds to keep their business afloat.

In others, the sheer amount of time that running a business takes means that there’s little energy left over to get personal finances in check.

As with most things, the first step towards fixing these issues is to be aware of what causes them in the first place.

With that in mind, we’ve put together a list of some of the key reasons why business owners often struggle with personal finance matters, as well as outlining some handy strategies for getting things back on track. 

Blurring Business and Personal Finances

Many business owners blur the lines between business and personal finances, using an account that should be used for just one of them to pay for things relating to the other.

This not only makes running the business more difficult — it’s a lot harder to figure out tax when business and personal finances are muddled up — but, more often than not, means that personal finances get left behind.

Opening separate bank accounts for each can help to prevent overlap. 

They Focus Too Much On Business Finances, Not Personal Finances

Business owners are passionate about their business because they have to be — after all, without dedication, finding success becomes a lot more challenging.

In that context, it’s natural that the owner is primarily focused on making sure that their business finances are in healthy shape. As a result, personal finances often become an afterthought, if they’re considered at all. 

But it’s ultimately your personal finances that will determine your future. Working with an independent financial planner can help to create a roadmap to a healthy, long-term financial landscape that exists separately from your business’s financial health.

Personal finances don’t require significant amounts of time/energy/effort, and even less so with the input of an expert. 

If you choose not to work with a financial planner, then remember that even small improvements can lead to big outcomes.

Setting aside an hour a month for personal finance and automating savings can help prevent many potential problems from developing.

They Assume Selling Their Business Is Their Retirement Plan

Many business owners assume that, when it comes to retirement, they can simply sell their business and secure their financial future.

That might happen, but there are no guarantees that it’ll sell within the timeframe you need it to sell, or at all.

Working on your exit strategy proactively and building retirement savings independently will increase your chances of success.