You may or may not know, but January is Financial Wellness Month. It’s a time for both individuals and businesses to review their financial health after excessive spending throughout the holiday. For small business owners, in particular, financial wellness plays a vital role in overall business health

In this handy guide, we’ll pose four simple questions you can ask yourself to assess your financial wellness:

  • Are you prepared for financial emergencies?
  • Does your spending support your long-term business goals?
  • Do you feel in control of your spending?
  • Do your finances cause your stress?

Answering these questions will help you better understand your financial health and give you direction on where to make improvements. 

Are you prepared for financial emergencies?

As a small business owner, there are all kinds of financial emergencies that, if left unchecked, could interrupt your business operations

For example, you might suddenly:

  • Need to repair or replace essential equipment. 
  • Lose an important client. 
  • Have an unexpectedly large tax bill. 
  • Face legal action. 
  • Be required to recall and refund a faulty product. 
  • Need to hire outside help. 

Assessing your preparedness comes down to your emergency funds. Ask yourself, do you have enough reserve funds to deal with any of the examples listed above? If so, how many? 

If you don’t have a rainy day fund, it’s best to start saving now and err on the side of caution. Even if you do have a significant amount saved up already, keep adding to the fund. It’s better to have it and not need it than need it and not have it. 

Does your spending support your long-term business goals?

Wise spending is one of the best financial habits you can get into. 

Everything you spend money on should help you get closer to achieving your long-term business goals, so the first step is defining those goals and figuring out how much money you need to achieve them. 

For example, how much would you need in order to:

  • Expand your production?
  • Hire new staff?
  • Build a new website?
  • Create a new product?

To help you budget toward meaningful goals, it’s best to review your statements every month to see exactly where your money is going. Then,  evaluate how much benefit you’re getting from each transaction. 

For example, you might have signed up for a marketing service that you thought would have a huge positive impact on your business. But, if you don’t see any tangible results, it’s probably a good idea to cut your losses and cancel the contract. It can be difficult, but a cut-throat attitude is often the best approach. 

Even if you are happy with your current spending, don’t be afraid to try and negotiate better terms with shippers and suppliers to help save some money.

It’s an ongoing task, but regular spending assessments and adjustments will help ensure that every penny is going toward something worthwhile. 

Do you feel in control of your spending?

Following the last point, it’s essential to understand exactly how confident you are with making the right financial decisions. 

Some people are naturally better with money than others, but it’s not determined by some genetic trait. It’s a skill just like any other, so you can get better with money with enough time and practice. 

Of course, everybody is different when it comes to this sort of thing, and it’s not always easy to know if you’re good with money or not.  If you’re not sure, here are a few signs that you’re not in control of your spending:

  • There are purchases on your bank statement that you don’t remember making.
  • You consistently exceed your monthly budget.
  • You have high revenue but low overall profits. 
  • You find yourself justifying impulse purchases. 

If you do realise you need more control when it comes to spending, don’t be afraid to reach out to others for help and advice. There are also loads of courses tailored toward this very subject.

Do your finances cause your stress?

Money is one of the biggest causes of stress regarding business and personal finances. As such, your own stress levels are often a good indicator of financial health. If you find yourself stressing about money a lot of the time, then you’re probably not in a state of financial wellness. 

Stress about finances also has a unique place in this list because it directly feeds into two other areas of wellness – mental and physical wellness. 

Constant stress about money will have a negative impact on your mental health, which will then harm your physical health. With that in mind, trying to alleviate financial stress should be a top priority when it comes to financial health. 

It’s a little too easy to say that more money will reduce your stress. While it may be true, it won’t necessarily address the route cause of the stress – a lack of control. 

The best way to prevent financial stress is to use all the tools at your disposal to gain control of your finances and feel confident about the financial decisions you’re making. For example, you could use budgeting and accounting software to help guide your decisions or consult an accountant to help you create a budget.

Achieve financial wellness with Countingup 

Financial management can be stressful and time-consuming when you’re self-employed. That’s why thousands of business owners use the Countingup app to make their financial admin easier. 

Countingup is the business current account with built-in accounting software that can improve your financial wellness with features like:

  • Profit and loss statements – Receive live cash flow insights and see exactly how your spending affects your long term profits.
  • Tax estimates – Easily budget for tax season by seeing exactly how much tax you’ll have to pay based on your income and expenses. 

You can also share your bookkeeping with your accountant instantly without worrying about duplication errors, data lags or inaccuracies. Seamless, simple, and straightforward! 

Start your three-month free trial today. 
Find out more here.