Great Personal Finance Apps for Entrepreneurs

Great Personal Finance Apps for Entrepreneurs

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entrepreneurs in government

The feasibility of your business idea will be greatly increased when you have a solid plan for funding it. Funding can come in the form of real cash, credit, or sweat equity. We will talk more about funding your business (and doing so with cash, credit, loans, investments, or sweat equity) later in the text, but for now we will stay focused on your very first round of funding and the very first data set required for your brand new feasibility study: your own personal finances.

While not obvious at first, your own personal finances play a huge role in dictating the speed and ferocity with which you can pursue your new business. To survive, you must generate income from somewhere – whether it be from student loans, employment, inheritance, a spouse, savings, or other sources. Like it our not you need money to live. Likewise, your new business will generally require some money to survive. Evaluating and understanding your own personal finances will help you better identify where you have some excess money in your budget that can be dedicated to your business. By excess money I mean money in excess of what is required to feed you, house you, and pay your necessary bills. The more excess money you can tuck away, the faster you may be able to develop your business. You will also come to find out that the more money you can put in now, the less control in your company you may have to give up down the road – should you decide to take on additional financing (but again, more on that later).

Understanding your personal finances will also help you develop a feasible tapering plan. By tapering plan I mean a plan to taper down the number of hours you work on other people’s dreams (usually another job or two) in exchange for adding hours working on your own. During any one of my own ‘entrepreneurial resets’, my strategy was to work two part-time jobs, build my business up, generate some revenue, quit one of my part-time jobs, generate some additional revenue, and then at the point where I could support myself solely off of my new business venture, quit my remaining part-time job and jump into my business full-time. But to do that responsibility I had to be able to set income goals, reduce my expenses, and hit specific production bench marks. There is no way I could have done that effectively if I did not possess an intricate understanding of my personal expenses, the money I needed, and the money I spent.

Finding excess money to launch your business can really only be accomplished in one of two ways; cut expenses or increase income. Because you are probably busy (perhaps going to school while also working part-time or employed in a full-time day job and building your business at night), increasing your income through the addition of another job or an immediate pay raise may not be realistic (although if you are single, kid free, and answer to no one but yourself, I would certainly recommend adding another job or two!). So your best option for creating excess cash may be through cutting some of your expenses.

To cut some of your expenses, you need to understand what those expenses truly are. You also need to make some decisions about what expenses are a ‘want’ and what expenses are a ‘need’. An expense that is a ‘want’ is generally something that gives you pleasure, but is not necessary for survival. Great jeans, tickets to a concert, or a bigger apartment are good examples of ‘wants’. ‘Needs’ on the other hand are a necessary expense which is required for your survival. Food, water, and shelter are the most obvious examples of ‘needs’.

The best place to find excess money is in those areas where ‘want’ and ‘need’ seem to overlap. For example, groceries may seen like a ‘need’, but the sugar cereal, cupcakes, and beer in the grocery bill may be a ‘want’ you could cut in the short-term in exchange for some excess money to fund your new business. Now I am not suggesting that you live off of grains and old jeans. I am merely suggesting you ask yourself at the point of any purchase, “Is this something I would be willing to sacrifice now in exchange for a lot of it later?” See, if you can put the sugar and beer money to good use now – within your business, who knows how many times you might triple that investment down the road and be in a position to buy whatever sugar and beer you want whenever you want it!

Now to discern want from need you need some way of cataloging all of your expenses on an item by item basis – which is really easier said than done (and for those of us already under time constraints, damn near impossible). There are however, some outstanding new personal finance websites and mobile applications that I would like you to consider taking advantage of. My personal favorite is Mint.com – an application (phone or web-based) that can log into most of your online accounts and give you a pretty thorough reporting of what you are spending money on and how often. For example, when given permission, the Mint.com app can log into your student loan accounts, your credit accounts, and your bank accounts. Rather than just telling you that you put $500.00 on your Visa credit card for the month, the Mint.com app will tell you where that $500.00 went in a broken down reporting. Same thing with your checking account. The app will tell you how much you spent on movies, coffee, prescription drugs, your auto loan – and if you pay your bills online, how much you are paying towards utilities.

Armed with all of this new data, you can start to make some important analysis as to where your biggest opportunities are to start moving money toward your business and away from the ‘wants’. When I first completed this exercise, I discovered some pretty cool financial information about myself which I had never really recognized. For example, I was spending about $80.00/month on lattes (an expense I quickly adjusted). I was also spending about $125.00/month on books (an expense I just can’t live without). Because Mint.com can also access my retirement accounts I was able to recognize I was paying about $100.00/month in fees for my retirement program – fees I was able to eliminate by taking on about 10 minutes worth of work on my own every month. I could also see how much I was really eating out every month – which was about twice as much as I thought. All in all, even for a person like myself who feels like he’s got a pretty good handle on his personal expenses, I was able to identify about $400.00/month (almost $5000.00 a year!) in opportunities to direct money away from the things I wanted but didn’t really need to new business opportunities.

So my recommnedation to you is to create FREE accounts on both Mint.com and CreditKarma.com. This will give you an opportunity to do your own thorough examination of your spending. With this new understanding you can create your own tapering plan as well as uncover opportunities to direct more cash toward your current business venture.

Recommendations:

1.) Create a FREE account on http://www.mint.com. If you have a smart phone and are able to download and install mobile applications, I would also recommend installing the Mint.com mobile app and sinking it with your online account. This will allow you to check spending and account balances from anywhere.

2.) Create a FREE account at http://www.creditkarma.com. CreditKarma.com is a free service that allows you to easily monitor your credit score. For many loans and financing options, having a higher credit score can mean thousands of dollars in savings from lower finance rates and charges. The CreditKarma.com service also allows you to test different scenarios for improving your credit score (i.e. “What if I pay off this credit card?”) as well as showing you how additional credit lines may harm your score (i.e. “What happens to my credit score if I take out a loan for a $40,000.00 automobile?”). If you have a smart phone and are able to download and install mobile applications, I would also recommend installing the CreditKarma.com mobile app and sinking it with your online account. This will allow you to check your credit score at anytime. You will also receive alerts if something that needs your immediate attention pops up in your credit profile.