This is the second post in our series “Strengthen Your Finances”. In Part One, we discussed setting your financial goals so that you know where you’re going on your financial fitness journey. In this post, we remind you how important it is to retire your debt in a timely manner. Remember: “Profit = Income – Expenses” and your payments on your debt are included in your Expenses.
Before you start paying down your debt, there are two important actions you should take on a regular basis.
- “Pay yourself first.” You have probably heard this recommendation before; this is a separate action from paying yourself a salary or other compensation. In this case, we are talking about regularly adding to your savings, your retirement account, and/or your investment account. Especially when you own your own business, it is important to develop the discipline to “pay yourself first”—BEFORE any other transaction. You can set up a line item for your savings strategy in your small business online accounting application.
- Ensure that you have an emergency fund equal to three months of expenses. When you have all of your regular expenses listed in your small business online accounting application, you can then check to make sure that you have a separate account for your emergency funds.
You can take advantage of the data entry features in Kashoo by adding important details to each of your expenses that are regularly due debt payments, the due dates, and the payment amounts. You also generate those detailed reports for your monthly meeting with your bookkeeper and accountant.
Stay tuned for our next post to help you set up your recordkeeping systems.
Kashoo Inc. (https://kashoo.com) develops easy-to-use accounting and bookkeeping software for small business owners around the world. Check out the company’s iPad app, ideal for entrepreneurs on the move. Founded in 2008, Kashoo is located in Vancouver, Canada. For more information about Kashoo, visit https://kashoo.com.