Don’t let business get personal

5 tips to separate your financial ambitions

Stock picture of man working at a laptop source: canva

Although the entrepreneurial spirit is strong in South African small businesses, the economic landscape has made it difficult to balance personal and professional financial success. Sometimes, the needs of the business outstrip those of the home. How can an entrepreneur separate their personal lives (and finances) from their business and still strike a financial balance on both ends?

Bertie Nel, Momentum Head of Financial Planning and Advice, says,

“It takes every ounce of effort to grow a successful business, but if it is eating into your personal life, it’s time to slow down and draw a line in the sand.”

He provides some much-needed guidelines  for entrepreneurs to follow for long-term financial success:

Separate business and personal finances

Maintaining distinct financial boundaries between your business and personal life is crucial. “Setting up separate bank accounts and bank cards for your business and personal expenses simplifies bookkeeping and tax filing,” says Nel. “It also helps protect your personal assets from business liabilities.”

Nel reiterates this as the most important line in the sand, which he says lays the foundation for a harmonious financial future on both ends of the spectrum. Once it is laid, the next piece of the puzzle can be slotted in: the budget.

Creating and keeping to a budget

A well-structured budget is essential for financial stability. Nel advises, “Developing a comprehensive budget that covers personal and business expenses is key. Regularly reviewing and adjusting your budget ensures you stay on track with your financial goals.” 
He says your budget will only be as effective when kept to and managed. Once the budget is set in place, you can finally understand how much you can earn.

Pay yourself a salary

To avoid financial instability, paying yourself a consistent salary is vital. “Many entrepreneurs overlook the importance of paying themselves a reasonable salary,” Nel explains. “This ensures a steady income stream for personal expenses and avoids the temptation to dip into business funds. Structuring your salary in a tax-efficient manner is also crucial.” 
He says this practice not only prevents the temptation to dip into business funds for personal use, but also enforces financial discipline in your business operations.

Prioritise retirement

Saving for retirement should not take a backseat to business growth. “Choosing the right retirement plan can significantly impact your long-term financial health,” Nel notes. “Consistent contributions, even during fluctuating business periods, and taking advantage of tax benefits are essential steps to secure your future.”

Seek professional guidance

Engaging a financial adviser provides ongoing support and expertise. Nel emphasises, “A comprehensive financial plan tailored to your business goals and personal objectives can make a big difference. Advisers help entrepreneurs manage both personal and business debt, prioritise high-interest debt, and explore refinancing options to improve cash flow.”

A partnership with an accredited financial adviser can help an entrepreneur to stay on top of aspects such as tax obligations, taking advantage of available deductions and credits are also critical components.

“Every aspect of our financial lives is intertwined in one way or another. It is a complex web of interaction that we can’t all understand on our own. Get the help you need to put it all in the right perspective.”

Managing personal finances while running a business requires a strategic approach. By consulting a financial adviser, Nel says entrepreneurs can establish clear financial boundaries, create a realistic budget, ensure a steady income, prioritise retirement savings, and receive professional guidance tailored to their unique needs.

“These steps not only secure personal financial futures but also contribute to the long-term success of your businesses,” concludes Nel.   

Bertie Nel, Momentum Head of Financial Planning and Advice
Bertie Nel, Momentum Head of Financial Planning and Advice

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