Good mental health is important to any business owner.
It keeps you grounded, stops you from being overwhelmed and keeps the stress levels at a minimum.
We all know the basic principles of maintaining good mental health. It’s all about eating well, getting enough sleep, taking regular breaks, not pushing yourself too hard and moving your body.
But, did you know that having your finances in order is also good for your mental health?
In fact, if you don’t have your finances sorted, it can easily spiral you into a negative space.
Not convinced? Let’s explore this idea a little further.
How Do Finances Impact Your Mental Health?
You're a business owner, so you know that finances can be stressful.
If you are constantly worrying that there isn’t enough money or that you don’t have money in your account at the right time of the month, your mental health can easily be impacted.
You can find yourself losing sleep, becoming anxious, and your mood sinking lower and lower.
Worrying about money can make your mental health worse. Then, when you have poor mental health, it makes it harder to manage your money. You can easily find yourself in a cycle that is hard to break.
So, what can you do?
New Financial Year, New Financial Plan
The beginning of the year (both physically new year and financial new year) can be a fantastic time to examine your finances, both personal and business.
New years and goal setting often go hand in hand. So, you are already in the mindset for change.
Capitalise on that to get your finances organised and working for you. The simple act of being organised and knowing what to expect from those numbers can be a huge weight off your mind.
Correspondingly, being organised with a plan can help to improve your mental health as it is often the anxiety about the unknown that causes negative thoughts.
How To Do It
Alright, so we know that having a plan can help you maintain good mental health. So, how do you create that plan?
Here’s how to set your finances on the right path:
1. Understand Where You Are At
The first step to organising your finances is to understand your current position. Even though it can feel scary to peer into your numbers, you will need a starting point to work from.
Rather than creating a formal budget, build an expectation report. This documents all the revenue you know will be coming in and your expected expenses. It helps you to see any gaps or potential cashflow snags before they become a major issue.
2. Tick Off The Basics
Once you know what is coming in and out of your business, go through the basic financial health checks. That means looking for ways you can boost your income and reduce your expenses. That means cancelling unused subscriptions, auditing your costs to see if you can find more affordable options, being mindful of all your spending so you don’t splurge etc.
You also want to look at any debts you might have. Consider what you can do to reduce them and which ones you should be prioritising. We really like the advice that The Barefoot Investor provides for personal debt.
3. Adopt A ‘Profit First’ Approach
A Profit First approach flips traditional accounting methods on their head. Rather than thinking about profit as what’s left after your expenses are paid, Profit First encourages you to deduct profit from your revenue first and use the remaining amount for expenses.
Often, as business owners, we pay ourselves last after everything else has been paid. Unfortunately, that means we are usually working for less than minimum wage. This can significantly impact your mental health, triggering thoughts of failure, anxiety and imposter syndrome.
Profit First teaches you to account for your profit, taxes and pay first, before you consider your other bills. This helps you to correctly value your own contributions to the business and become conscious of your spending habits. The shift in mindset is a game-changer for your mental health!
4. Get Support From A Buddy
Just like a fitness buddy can help motivate you to get off the couch, a finance buddy can help you to stay on top of your finances. And who better to have for a finance buddy than someone who knows the story your numbers are telling - ie. your accountant!
Here at Trio, we don’t just want to do your taxes at the end of the year and send you a bill. We genuinely want to help you organise, maintain and boost your finances. Which is why we make the perfect finance buddy.
With a wealth of financial knowledge, and an intimate understanding of your business, we can help you maintain great mental financial health with practical steps and zero judgement.
We are also accredited Mental Health First Aiders so if your finances are already impacting on your mental health, we can help you work out where to go for additional support beyond the numbers if thats what you need.
Get in touch today to discuss how we can help you get organised and in good health.