You pay a lot of attention to your business' finances. But are your personal finances suffering in the bargain?

How I managed my personal finances while running a business

Before I give you some tips on managing personal finances, let me rewind to two years ago when I decided to start a fashion boutique with my friend. At the time I was working as an analyst, drawing a salary of Rs 40,000 per month. I liked my job, but there was always an entrepreneurial itch. That’s what made me come out of my comfort zone and decide to set up my own venture. 

We started off with our personal savings. Initially, there was a lot of muddling between business and personal finance. It soon became difficult to differentiate between the two. However, let me tell you something: an effort to separate one from the other helped both of us to maintain our overall financial health. 

So here are few personal finance tips for my fellow women entrepreneurs:

1. Diversity is the key

Running your own business is a big enough risk. You are already a part of the race in an unpredictable market place. So, while you invest with an aim to achieve your personal financial goals, consider diversifying your investments to reduce risk. For instance, distribute your investments among different assets, equities, debt funds, fixed deposits, etc. This especially important if you tend to use your returns from these investments for your business. 

Look at it this way: if you invest wisely and your business happens to shut down tomorrow due to any reason, your personal finances won’t be affected a lot. So, while you are busy dealing with all the business losses you incurred, you won’t have to worry about paying your bills.

2. Build a dependable emergency fund

Entrepreneurs like you and me need an emergency fund more than anyone else. We know that with factors such as recession, fluctuating markets, changing consumer trends etc. we need to prepare ourselves for every adversity.

While my friend and I made a sizeable profit in the first quarter of the financial year, we barely managed to pay ourselves our salaries in the last quarter. In such a situation, an emergency fund becomes your friend in need. It also ensures that you don’t default on your bills and EMIs, while you use a part of your personal savings to keep your business afloat. 

How I managed my personal finances while running a business

3. Plan for your retirement 

Remember you are not an employee and therefore you don’t have an Employee Provident Fund (EPF) to fall back on. With an inconsistent income, retirement planning becomes even more important. 

Make sure you set aside at least 10% of your income for your retirement. Don’t just save; invest it. Based on your risk appetite and retirement goals, you can choose from various investments such as National Pension Scheme (NPS), bonds, Systematic Investment Plan (SIP) etc.

4. Keep personal expenditure in check

In the initial phase of our business, I spent a lot of time focusing on how I can make the best of all the available monetary resources. However, I wish I had done the same on the personal front too. So, as you maintain a budget for your venture, ensure you keep one for personal finance too. Track your monthly expenses and refrain from overspending. If you have a surplus amount, over and above your monthly expenses, invest it for your future goals.

When you are investing all your time in running the show and working hard towards its success, you may inadvertently overlook your personal payments. This could result in unnecessary penalties. Make use of technology and opt for automated payment facilities to avoid late charges.

5. Seek help to manage taxes

Efficient and smart tax planning on both personal and business fronts can you save money. If you think you need help, seek the advice of an expert who can help you draw tax strategies for your business and personal finance. If you’re running a startup you can benefit from a number of tax-saving opportunities and policies introduced by the government under the Startup India scheme. 

A good financial adviser can help you assess your current financial situation. Keeping in mind the constant requirement of capital for your venture, you can obtain help in managing your personal finances more effectively. Tax experts/advisors can help you deal with temporary cash crunches without compromising on your personal finances.


This account sums up what I learnt from my experience of running an entrepreneurial business. Your venture would naturally hold a lot of importance for you, so you might want to put all your financial resources into it. But keeping in mind the fickle nature of business – and life in general – it’s an excellent idea to maintain your financial health on the personal front as well. I learnt this lesson the hard way. I hope you consider these tips and manage your money wisely.