By Jeanne Ching
Arthur used to be involved in their family business. As sales increased, business prospered. He decided it was time to invest in a good education for his children. He bought some educational funds, insurance and property via installment. These are good investments. But not long after, Arthur lost all of them. Why? He failed to segregate his business funds from his personal funds.
If Arthur had separated his business funds from his personal funds, he could have avoided this problem. When his business prospered, Arthur bought goods from his suppliers in credit. While a lot of cash seem to be pouring in, he forgot to consider that his payables also increased. So, when it was time to pay for the items he purchased on credit and the installment payments of his investments likewise became due, he could no longer catch up. That’s how he lost everything.
To prevent something like this, we should assess our financial capabilities before entering into a contract. Allocate a certain fixed amount as an investment to the business. Make sure the capital stays in the business. Only use the net earnings from business. Keep a separate account for business and personal use.
Do you know how some of our successful ancestors used to handle their finances? The men handled the family finances. They allocated a certain amount to their wife for household expenses. Men concentrated on investments and making their money grow, while the women concentrated on not over spending. Personal funds were distinct from business funds.
Today, most men and women share equal rights and are all entitled to their own money. However, it is still wise to set a limit to our disposable income, to allocate a certain portion of money to regular expenses, a portion for investment and a portion for emergencies. The future will always be uncertain, but, strictly segregating our funds will help keep us going.
