6 Money Habits Every Entrepreneur Should Build

For many small business owners, the work they do is a passion, a heart project. They recognize they need to make money but it is not their primary priority. And while that is noble and probably very energizing on a day to day basis, the truth is that running a business has inherent risks. And smart entrepreneurs develop strong habits for managing, keeping and growing their money.

You can quickly attain financial freedom by creating good habits around how you treat money. Here are 5 habits every entrepreneur should develop to ensure their long-term wealth and financial health.

1.  Have clear financial goals for your personal life – and review them regularly.

While most small business owners have very clear financial goals for their business, they frequently have their hopes for their personal financial future tied closely to the success of the business. Of course your business should factor into your financial plan, but it is important to have real clarity in your mind around your personal financial plan. Your goals can shape your attitudes, help you plan what you want to do, and ensure you can enjoy the fruits of your business in the long term. It will also help you focus – which is the outcome of setting goals.

2.  Put money aside regularly.

Cash is a hugely valuable asset. It can ensure your ability to weather lean times in your business when you cannot take a salary. It can facilitate the opportunity to invest in a new business. It can give you the liquidity you need to snap up a failing competitor and expand your business quickly. Or it can just give you peace of mind, allowing you to do what you need to do in your business, knowing your family is secure. Make saving a regular habit. The more you save, the better your financial well-being.

3.  Make clearing debts a priority.

One of the biggest hindrances to financial growth is personal debt. The problem is that debt keeps compounding, making it your most expensive liability. While many people say interest rates are so low it doesn’t matter if you carry debt, the truth is that the interest you earn on savings is also low. So it is an excellent time to pay down your mortgage faster or minimize your personal line of credit. And with the risks you carry in your business, it often makes sense to minimize liabilities in your personal life.

4.  Seek more income sources or wealth-building assets.

Take the money you make in your business and invest it in other income streams or long-term assets. The most successful entrepreneurs I know have multiple income-producing ventures on the go – or they have purchased real estate or other assets to grow their wealth. Consider investing in things that ensure you are financially free either now or in the long run.

5.  Live below your means.

While it may not be a popular concept, living a fairly frugal lifestyle is just good business. When you live below your means, you have the ability to funnel money into other wealth-producing assets or ensure a strong cash position so you can capture opportunities as they come along.

6.  Give generously.

Research shows that generosity makes us happier and more fulfilled. And while building a business can be very fulfilling, it can also make us very humble. We learn quickly in the entrepreneurial journey how the kindness of strangers helps us. And so the most successful entrepreneurs are often the most generous givers – either contributing financially or donating their time and energy to pet causes. Give more than you have to, more often than you have to.