When it comes to financing a business, it’s important to note that different types of businesses have varying financial requirements. Whether it’s for purchasing inventory, equipment, or even hiring new employees, businesses must identify their specific financial needs in order to determine the best financing solution. The type of financing that works for one business may not be suitable for another, so it’s important to explore various financing options before making a decision.
If you want financing to buy equipment and expand inventory, the loan model is one. If you need working capital, the best option may be another.
In this guide, we detail the different types of financing for companies. The objective is to help you identify options and analyze which is best for your reality.
Personal finance
Personal finances comprise an individual’s various belongings, income, and financial obligations. Not only that, but your finance department will be able to better manage the expense-to-budget ratio over time.
As a result, it’s critical to approach personal money management with caution. We lose the monthly war against accounts (fixed and variable) if we lack discipline, which leads to an increase in debt and the degree of financial stress we face.
Behavioral finance
Behavioral finance is one of the categories of finance that specifies investors’ and economic actors’ strategic orientations and ambitions. Decisions that assist leverage some sorts of investments over others, for example.
Behavioral finance can aid in the evaluation of industry issues and solutions. Furthermore, it provides a more thorough examination of the whole financial market. When individuals continually calculate the figures, a financial crisis may be rapidly (and possibly averted) remedied.
Experimental finances
The experimental finance segment evaluates market conditions and the entire scenario, directly and indirectly, affecting finance. The academic community is one of the most interested in financial difficulties.
Researchers use this study to model events and make projections to see how these activities will play out. As a result, it is easier to forecast the effects of various economic conditions (micro and macro).
Public finances
Regarding state financial management, this is one of the most popular finance styles among the general public.
Through this effort, agencies create budgets, disburse money, and translate all forms of government action into national development indicators. This process involves applying, adjusting, and readjusting taxes, among other things.
Business (or corporate) finance
Business finances represent every economic activity that a company makes, starting with day-to-day operations.
It is possible to boost earnings, minimize (and eliminate) losses, create the institution’s financial planning, organize the budget, invest in other areas and goods, manage cash flow, pay taxes and fees, and use this information.
Angel investors
Angel investors are often savvy entrepreneurs who put their own money into early-stage companies, hoping for a future return.
In some cases, these investors have a minority share of the business they invested in, contribute to the financial investment, and act as mentors.
The objective is to support start-up companies that have high growth potential.
Companies’ financing type is also positive, as it does not overload the cash flow with monthly loan payments.
Crowdfunding
Crowdfunding has another name: Kitty Online.
By creating an “online kitty,” anyone can donate the value to their business, contributing to the company’s development, a specific product, or service.
It’s a type of financing for companies that can’t or don’t want to, deal with other, more “expensive” options like bank loans.
To create crowdfunding, you must:
choose a platform that offers this type of service
present your idea
create an account
indicate the amount and term you need to collect
When you reach the defined value, you will receive the money, paying a fee to the platform.
Once you receive the funds, you can put them to use!
Crowdfunding is generally a good option for companies with goals such as launching a new product or service that significantly impacts the “life” of their potential customers.
About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud platform where their QuickBooks™️ file, critical financial documents, and back-office tools are hosted in an efficient SSO environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity.
5 Ways To Boost Your Savings And Achieve Financial Freedom
Financial freedom means having enough savings, investments, and income to afford the lifestyle you want without depending on a traditional paycheck. Building this security requires systematic savings strategies, debt elimination, automated wealth-building systems, diversified income sources, and smart risk protection—all working together to create lasting financial independence.
Did you know the average American’s savings rate plummeted to just 4.9% in 2025, nearly half the historical average of 8.4%? After two decades leading Complete Controller and helping thousands of business owners master their finances, I’ve discovered that financial freedom isn’t about earning millions—it’s about implementing proven systems that compound over time. This article reveals the exact five strategies my most successful clients use to break free from paycheck-to-paycheck living, including automated savings techniques, debt elimination methods that save thousands in interest, and income diversification approaches that create true financial security.
What does financial freedom mean, and how do you achieve it?
Financial freedom is having sufficient savings, investments, and passive income to cover living expenses indefinitely without relying on active employment
Live below your means by following the 50/30/20 budgeting rule and cutting unnecessary expenses
Eliminate high-interest debt using the avalanche or snowball methods to free up cash flow
Automate savings and investments through direct deposits and tax-advantaged accounts
Build multiple income streams and protect wealth with emergency funds and insurance
Live Below Your Means to Maximize Savings
Living below your means forms the foundation of financial freedom by creating the surplus cash necessary for wealth building. This principle goes beyond simple frugality—it’s about aligning every dollar with your values and long-term goals while maintaining a fulfilling lifestyle.
The 50/30/20 budgeting rule provides a practical framework for expense management: allocate 50% of after-tax income to needs, 30% to wants, and 20% to savings and debt repayment. Smart savers often shift portions of their “wants” budget into savings, accelerating their path to financial independence. One Complete Controller client increased her savings rate from 5% to 35% by reassessing her “wants” category and discovering $1,200 monthly in forgotten subscriptions and impulse purchases.
Adopt strategic expense reduction
Major expense categories offer the greatest savings opportunities:
Housing costs: Negotiate rent reductions, refinance mortgages at lower rates, or consider house hacking by renting spare rooms
Transportation: Buy reliable used vehicles with cash, utilize public transit, or explore car-sharing options
Food expenses: Master meal planning, bulk buying, and strategic grocery shopping to cut costs by 40-60%
Entertainment: Replace costly activities with free alternatives like hiking, library programs, or community events
Leverage technology for budget tracking
Modern budgeting apps transform financial management from tedious spreadsheet work into automated insights. Tools like Mint, YNAB (You Need A Budget), and Personal Capital sync with bank accounts to categorize spending automatically, send overspending alerts, and visualize progress toward savings goals. These platforms reveal spending patterns most people never notice—like that daily $5 coffee habit costing $1,825 annually.
Eliminate High-Interest Debt to Reduce Financial Burden
High-interest debt acts as reverse compound interest, silently draining wealth-building potential year after year. With average credit card rates hitting 22.77% in 2023 and households owing $20,221 on average, debt elimination becomes a mathematical imperative for achieving financial freedom.
The avalanche method maximizes interest savings by targeting highest-rate debts first while maintaining minimum payments on others. For example, if you owe $8,000 at 24% APR and $3,000 at 18% APR, directing extra payments toward the 24% debt saves significantly more in long-term interest charges. This approach requires discipline but delivers the fastest mathematical path to debt freedom.
Alternative debt strategies that work
The debt snowball method, popularized by Dave Ramsey, prioritizes psychological wins over mathematical optimization. By paying off smallest balances first regardless of interest rates, this strategy builds momentum through quick victories. One couple eliminated $125,000 of debt in just two years using this method, including a single $9,500 payment that gave them the confidence boost to accelerate their efforts.
Debt consolidation offers another powerful tool when executed properly:
Personal loans: Replace multiple high-interest debts with a single lower-rate loan
Balance transfer cards: Move credit card debt to 0% APR promotional periods
Home equity options: Use property equity for ultra-low rates (proceed with caution)
Debt management plans: Work with credit counseling agencies for negotiated rates
Calculate your true debt cost
Understanding the real cost of debt motivates faster payoff. A $5,000 credit card balance at 18% APR costs $2,423 in interest over five years making minimum payments. Adding just $50 monthly to payments saves $1,293 and eliminates the debt 2.5 years faster. Use online debt calculators to visualize your specific savings potential.
Automate Savings and Investments for Consistency
Automation transforms good intentions into inevitable wealth accumulation by removing willpower from the equation. When savings happen automatically before you see the money, lifestyle inflation becomes impossible and compound interest works its magic uninterrupted.
Setting up automatic transfers from checking to savings accounts on payday creates an artificial scarcity that forces living within reduced means. Start with 10% if 20% feels overwhelming—even small amounts compound significantly over decades. One client began with $200 monthly automated savings at age 25; by 50, that simple system had grown to $248,000 through consistent contributions and market returns.
Maximize tax-advantaged accounts
Strategic account selection multiplies savings power through tax benefits:
401(k) plans: Contribute enough to capture full employer matches (free money)
Roth IRAs: Pay taxes now for tax-free growth and withdrawals in retirement
HSAs: Triple tax advantage for medical expenses plus retirement savings at 65
529 plans: Tax-free education savings with state tax deduction benefits
Micro-investing for beginners
Modern investment apps democratize wealth building by eliminating traditional barriers. Platforms like Acorns round up purchases to invest spare change, while Robinhood and M1 Finance offer fractional share purchasing. These tools make investing accessible with as little as $5, perfect for building habits before scaling up contributions.
Build Multiple Income Streams for Passive Wealth
Relying solely on employment income creates vulnerability that true financial freedom eliminates. Diversified income streams provide security, accelerate wealth accumulation, and eventually replace active work requirements entirely.
Income Stream Comparison:
Income Type
Initial Investment
Time to Profit
Passive Potential
Risk Level
Dividend Stocks
$1,000+
Immediate
High
Medium
Rental Property
$20,000+
6-12 months
High
Medium-High
Online Business
$500+
3-12 months
Medium
High
Peer Lending
$1,000+
1-3 months
High
Medium
Royalties
Time/Skills
6-24 months
Very High
Low-Medium
Start small, Scale smart
Building multiple income streams doesn’t require massive capital or quitting your job. Begin with one manageable project that leverages existing skills or interests. A graphic designer might sell templates online, while a fitness enthusiast could create workout programs. These side hustles often evolve into significant income sources—one Complete Controller client turned weekend furniture flipping into a $60,000 annual business.
Popular entry-level income streams include:
Freelance services: Writing, design, consulting in your expertise area
Digital products: Courses, ebooks, printables, stock photos
Affiliate marketing: Recommending products for commission
Local services: Pet sitting, tutoring, home organizing
Investment income: Dividend stocks, REITs, bond funds
Scale through systems
Transform active income into passive revenue by creating systems and delegating tasks. Document processes, hire virtual assistants, or use automation tools to reduce time investment while maintaining income flow. This transition from trading time for money to building assets marks the shift toward true financial independence.
Protect Your Financial Future with Emergency Funds and Insurance
Financial protection prevents single setbacks from derailing decades of progress. Without proper safeguards, medical emergencies, job loss, or lawsuits can instantly erase accumulated wealth and force devastating lifestyle changes.
Emergency funds serve as the first line of defense against financial catastrophe. The traditional advice suggests 3-6 months of expenses, but consider your specific situation: stable W-2 employees might need less, while entrepreneurs or commission-based workers benefit from 9-12 months coverage. Keep these funds in high-yield savings accounts for liquidity—the 59% of Americans uncomfortable with their emergency savings face unnecessary stress during inevitable life disruptions.
Insurance as wealth protection
Strategic insurance coverage shields assets from catastrophic loss:
Health insurance: Prevents medical bankruptcy (leading cause of personal bankruptcy)
Disability insurance: Replaces income if injury/illness prevents working
Life insurance: Protects dependents from financial hardship
Umbrella policies: Extra liability coverage beyond home/auto limits
Long-term care: Preserves assets from nursing home costs
Estate planning essentials
Protecting wealth extends beyond your lifetime through proper estate planning:
Create a will specifying asset distribution
Establish healthcare directives and power of attorney
Consider trusts for tax efficiency and control
Review beneficiaries on all accounts annually
Document digital assets and passwords securely
Even young adults benefit from basic estate planning—unexpected events don’t discriminate by age. Complete Controller helps clients coordinate with estate attorneys to integrate financial systems with long-term protection strategies.
Conclusion
After 20 years helping entrepreneurs and individuals achieve financial freedom, I’ve learned that success comes from consistent implementation rather than perfection. The five strategies outlined—living below your means, eliminating debt, automating savings, diversifying income, and protecting assets—work synergistically to accelerate your journey from financial stress to lasting security.
Start with one strategy that resonates most strongly with your current situation. Maybe it’s setting up that first automatic $100 monthly transfer, or finally confronting credit card debt that’s been haunting you. Small actions compound into life-changing results when you maintain consistency and gradually expand your efforts across all five areas.
Financial freedom isn’t reserved for the wealthy or lucky—it’s available to anyone willing to challenge conventional spending patterns and implement proven systems. Your future self will thank you for taking action today. Ready to accelerate your path to financial independence? The experts at Complete Controller can help you implement these strategies with personalized bookkeeping, financial planning, and wealth management services tailored to your unique goals. Visit Complete Controller to discover how professional financial guidance transforms good intentions into lasting wealth.
FAQ
How much money do I need to achieve financial freedom?
Financial freedom typically requires 25-30 times your annual expenses saved and invested, based on the 4% withdrawal rule. If you spend $50,000 yearly, aim for $1.25-1.5 million in invested assets. However, reducing expenses or creating passive income streams can significantly lower this target.
What’s the difference between financial independence and financial freedom?
Financial independence means having enough assets to live without depending on employment income, while financial freedom adds the flexibility to pursue any lifestyle or passion without monetary constraints. Independence covers needs; freedom enables wants and dreams.
Should I pay off debt or invest first?
Prioritize high-interest debt (above 7-8%) before investing, as guaranteed interest savings often exceed expected investment returns. For low-interest debt like mortgages, consider splitting extra funds between accelerated payments and investments to balance risk and opportunity.
How can I save money when living paycheck to paycheck?
Start micro-small: save $1 daily or round up purchases to the nearest dollar. Audit all subscriptions and cancel unused services. Negotiate bills, use food banks if needed, and sell unused items. Even $25 monthly compounds over time while building crucial habits.
What percentage of income should go toward financial freedom goals?
Aim for minimum 20% of gross income toward combined savings, investments, and debt payoff beyond minimums. High achievers often save 40-70% through aggressive expense reduction and income maximization, reaching financial freedom in 10-15 years versus traditional 30-40 year timelines.
Brookings Institution. Summers and Carroll. (June 1987). “Why is U.S. National Saving so Low?” www.brookings.edu/wp-content/uploads/1987/06/1987bbpeasummerscarrollblinder.pdf
Bureau of Labor Statistics. “Multiple Jobholders Statistics.” www.bls.gov/cps/multiplejobholders.htm
Complete Controller. “5 Money Management Tips to Help Avoid a Deficit.” www.completecontroller.com/5-money-management-tips-to-help-avoid-a-deficit/
Complete Controller. “How to Manage Your Credit Responsibly.” www.completecontroller.com/how-to-manage-your-credit-responsibly/
Complete Controller. “How to Streamline Your Investment Portfolio.” www.completecontroller.com/how-to-streamline-your-investment-portfolio/
Go FSG. “5 Ways to Achieve Financial Freedom.” www.gofsg.com
Shopify Blog. (2025). “What Is Financial Freedom? Definition and Strategies.” www.shopify.com/blog
TFNB. “7 Steps to Take to Achieve Financial Freedom for 2025.” www.tfnb.com
Trading Economics. (May 2025). “United States Personal Savings Rate.” tradingeconomics.com/united-states/personal-savings
YouTube. (February 2020). “How Dave Ramsey’s Debt Snowball Method ACTUALLY WORKED for Us.” www.youtube.com/watch?v=xDKl6_w5RA4
About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud platform where their QuickBooks™️ file, critical financial documents, and back-office tools are hosted in an efficient SSO environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity.
Jennifer BrazerFounder/CEO
Jennifer is the author of From Cubicle to Cloud and Founder/CEO of Complete Controller, a pioneering financial services firm that helps entrepreneurs break free of traditional constraints and scale their businesses to new heights.
Brittany McMillen is a seasoned Marketing Manager with a sharp eye for strategy and storytelling. With a background in digital marketing, brand development, and customer engagement, she brings a results-driven mindset to every project. Brittany specializes in crafting compelling content and optimizing user experiences that convert. When she’s not reviewing content, she’s exploring the latest marketing trends or championing small business success.
Robert Kiyosaki, a famous financial educator and entrepreneur, describes a passive investment as everything you may obtain that generates revenues, maximizing his purchasing power.
For example, when you finance a rental house, it is a passive investment because, no matter how much it increases in value over time, it will continue to put money in your pocket to pay off the mortgage. Even if you pay cash for this home, you must pay maintenance and taxes.
Buying a car is not an example of passive investing. Much worse than property, which continues to appreciate over time, a vehicle depreciates when it leaves the showroom, not to mention the additional costs associated with IPVA, gasoline, maintenance, insurance, etc. And so on, your money disappears without your knowledge.
Even though you are thrilled to buy these items, feeling that you are making a wise investment, they are passive investments, which means that they drain your funds over time, keeping you in the “rat race.”
Why Passive Investing?
More than 90% of the portfolio’s long-term performance variance may be due to the distribution of assets across asset classes, as indicated in the asset allocation article. Diversification shows that the amount of money you set aside for each investment in your portfolio is nine times more essential than when and what you buy.
Furthermore, Ibovespa loses up to 66% of active equity funds in Brazil; this indicates that two-thirds of equity fund investors earn lesser returns than those who merely invest in ETF BOVA11 (an index fund?).
Why spend so much time examining the most diversified assets to invest if 2/3 of individuals lose to an index fund and asset allocation is nine times more essential than investment timing if you are not an experienced trader?
Index Limitation: Passive funds are limited to a specific index or even a set of investments with little or no variation. That way, investors are locked into these stocks, no matter what happens in the market.
Small returns: By definition, the passive fund cannot track market shares as they are blocked.
Asset Allocation: Recommended Portfolio
I will offer a portfolio that I feel is highly intriguing to conservative investors who wish to expose a portion of their money to variable income to pursue more significant returns.
The goal is to create a well-balanced portfolio with a few simple assets to invest in while being well-diversified across multiple asset classes.
Fixed Income: Treasury Direct
Government bonds are an excellent place to start if you want to invest in fixed income.
If you’re still unsure what it is, look at this article: Treasury Direct.
If you already know how to invest, learn how to invest more effectively in Treasury Direct with these step-by-step instructions.
Index Funds Provide a Source of Equity Income
I advocate index funds for equities.
If you already know how to invest, learn about Index Funds with these step-by-step instructions.
Portfolio Balancing
After you’ve built your initial portfolio, all you have to do now is rebalance it every month, which you may do with your new contributions. Invest in keeping this equilibrium. Why?
This strategy works because you’ll constantly buy more depreciated assets (buying low) and sell the ones that have gained the greatest (selling high).
Conclusion
The passive investment allows you to put in significantly less work while putting together and managing your wallet while reaping substantial benefits. You may be confident that it is well worth it when you consider the savings in terms of money, concern, and, most significantly, more time “off the market.”
About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud platform where their QuickBooks™️ file, critical financial documents, and back-office tools are hosted in an efficient SSO environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity.
Being good at managing money is much more than just making ends meet. For this purpose, you don’t have to be a mathematician; you only need to know the basic rules for addition and subtraction. It refers to utilizing your budget correctly and balancing your checking and saving accounts to decide whether you can make additional purchases. Remember that it isn’t just about the initial expenses but also the utilities you must pay timely.
Tips for Managing Your Expenditures
If you’re struggling with managing your cash, here’s a list of valuable tips that might help you enhance your financial habits.
Organizing a budget
Many individuals don’t prefer organizing a budget as they rely more on assumptions. You don’t have to make excuses if you struggle with calculating the expenses. Preparing a monthly budget helps you differentiate between the most important and unimportant elements. So, instead of focusing on the tiring procedure of creating a budget, concentrate on the value that budgeting brings you.
Utilizing the budget
Your budget is futile if you create it but forget to use it best. A budget helps you proceed financially throughout the month and guide spending decisions. Update it occasionally after paying for the utilities and other additional expenditures. You might have to make an urgent purchase during the month, so you must always leave a little room for such expenses.
Track your spending
Small purchases are frequent; before acknowledging it, you’ve already crossed your budget limit. To avoid this, you must start tracking your expenses to discover areas where you might be spending unknowingly. You can also save the cash receipts and record your purchases by categorizing them in a journal to identify the areas where you’ve been overspending quickly.
Limit your credit card usage
Credit cards allow you to shop when you run out of money. You assume it to be a lifesaver during such a time without considering the financial consequences. Frequently, while opting for credit cards, we forget to realize whether we can afford to pay the balance. Review your expenditures for charges like these, and prefer canceling the insignificant subscriptions to stick around with more money each month. Resist the urge to utilize your credit cards for purchases you can’t make, especially if you don’t need them at the moment.
Bring in the saving habit
Undoubtedly, savings never go in vain as they aid us financially during the most crucial times. Depositing a tiny amount of monthly money into the savings account can help you maintain a constant saving habit. You can even organize it, so the money is reflexively transferred from your checking account to your savings. In this way, whether you remember to make the transfer or not, it will happen automatically. If you’re unaware of your monthly expenditures, there’s a good possibility that your spending habits have room for improvement.
Make investment strategies
Even if your sense of investment is minor, tiny contributions to investment accounts make significant differences by utilizing your earned money to generate more revenue. For this purpose, consider opening a retirement account or any other feasible one. The path to better financial conditions begins with modifying your spending habits. Some of these modifications will be easier than others. Meanwhile, you’ll be generating extra money. Still, if you stay dedicated to this transformation, you’ll learn excellent money management skills that will serve you throughout your life.
Set your desires within the budget
There’s no use of a strict budget based on drastic alterations such as never eating out with friends to save extra pennies. Remember that everyone deserves a little amusement occasionally to feel lively. If you’re working eight hours a day, you can easily create a budget that aligns with your lifestyle and spending habits. Also, you should utilize your set budget to adapt to better spending habits, including cooking at home more often. For me, that’s the only feasible way of doing money management work.
About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud platform where their QuickBooks™️ file, critical financial documents, and back-office tools are hosted in an efficient SSO environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity.
Considering your wedding budget is no easy feat. Your wedding will probably be the most significant event you’ve ever hosted and also the priciest. Many people dream of an elegant and unforgettable wedding but don’t wish for the financial aftermath. The best approach is to set a proper budget and work accordingly. Cut back on unnecessary expenses and make mandatory amendments beforehand. To work on a tight budget, you must review your savings, maintain an evaluated spreadsheet, etc.
One should set ratios based on the most significant arrangements. Maybe you’re willing to splurge on photography, not on the flowers. Determine the percentages if you’re concentrating more on one area than another.
Planning a Wedding on a Budget
For planning a perfect wedding on a budget, the following ways will undoubtedly help you proceed.
Consider Your Savings
You don’t have to scrimp for everything if you’re on a strict budget. Take your time to decide what’s more critical and aim to cut back costs on the less important ones. Based on your determinations, these elements can be practical or frivolous. An outdoor reception, loads of flowers, lunch with a buffet system, or a live wedding band adds whatever suits your needs the best. Also, you can separate your wish lists but let your budget make the decisions.
Track Your Wedding Expenses
Create an excel spreadsheet with required estimations costs. Adjust these estimates after including the supplier’s charges. Begin with deciding the venue, as it’s a massive piece of the wedding pie and the main factor in calculating the guest count. Experiment with some leftover birthday decorations for your big day. Not only it’ll reduce expenditures, but it’s also a great way to add your personal touch to your wedding. When suppliers provide you with the estimates, verify that they include tax. If not, determine yourself according to the state and local tax rates to adjust the proposal.
Limit Your Guestlist
Be wise and set a limit on your guest list. You might feel tempted to appear with a guest list similar to a royal wedding, but every guest is an expense. With every addition to your guest list, you would only increase the total cost of your wedding. You might want to host a minimal and more intimate affair to save some extra pennies. If the number of guests at your wedding is not of concern, invite all of your relatives and close pals and host a smaller reception.
Try Practicing DIY Ideas
Try not to get distracted by the latest trends. Instead, focus on the happiness your wedding day will bring the couple. It’ll prevent you from spending on unnecessary details to shape yourself skillfully. Save your pennies by making the wedding cards yourself and preparing the wedding dishes yourself rather than hiring a group of caterers. Also, you can try seasonal décor, and maybe you could clip the flowers from your backyard.
Support Local Businesses
From your photographer to your florist, try to support local wedding startups and emerging suppliers. While planning your wedding, not only would they be cheaper, but also reach take the extra step to bring perfection. Who says you must hire a professional wedding stylist or opt for expensive decorations to make your wedding memorable? You can undoubtedly get your Pinterest dream to life by explaining them to your potential wedding planner. From orating photo frames to striking candleholders, you’ll be amazed at what you can get when thinking outside the box.
Negotiation is the Key
Undoubtedly, negotiation looks scary at first. You might feel like offending the vendor, or he will refuse to work with you. However, the key to negotiating is to be passionate about it. Remember, you’re dealing with an expert who has set their rates based on the quality of services and experience. Treat them with respect, and they’ll ultimately reciprocate the behavior. The key to a successful negotiation is preparing a win-win situation. Evaluate your budget and convince them to make all the desired amendments within the given amount.
About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud platform where their QuickBooks™️ file, critical financial documents, and back-office tools are hosted in an efficient SSO environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity.
Bookkeeping is an essential and central part of every business, meaning effective and efficient bookkeeping practices are the key to a successful long-term business. So, business owners should not take it lightly. Bookkeeping must be accurate as it shapes the financial accounting records and makes the owners aware of the business account risks.
While in the initial stages of the business, you may not require complex bookkeeping and accounting processes, as business receipts and other functions at the initial stage are slow, and only a few transactions occur. But it doesn’t mean you don’t need to maintain your accounting record in the business book. Enforce bookkeeping practices from the start so your business is always ready for audit. At the end of the accounting year, bookkeepers will update the company’s financial statement.
An owner needs to raise capital and investors for the business. Updated and maintained financial records help get the investors’ attention and trust in your company to invest.
Aside from accurate accounting records and getting into investors’ good lists, bookkeeping also helps in budgeting, enabling you to assess financial assets and expenses in business. Filling taxes on the earnings and managing cash inflows and outflows becomes easy with efficient bookkeeping practices.
Learn the best bookkeeping practices to avoid risk and protect your business from financial accounting threats. Here, we have pro bookkeeping tips. Make sure you read it with your full attention.
Employee Professional Bookkeeper
Hire the right person for the right job. It means hiring an accountant who knows better about the bookkeeping of financial accounting and knows how to maintain day-to-day transaction records to avoid any risk.
You may also outsource a professional bookkeeper to check the accuracy of the account as they are experienced in the bookkeeping of business-related accounts and have excellent knowledge of how to protect the business from financial risk and bankruptcy.
A well-trained accountant should be a priority, as accounting software is hard to operate and maintain; only trained people with updated knowledge can handle and use this software. So, make sure you won’t take a risk by giving bookkeeping work to anyone who is not the right person for this job. It can be a riskier decision for your business, which you may not be able to afford.
Keep an Eye on Day-to-Day Transactions
Record daily (routine-based) transactions in your business and make it your habit. Record each transaction at the correct time, date, and valid entry. Scan the receipts in bookkeeping software to keep a record and make a file of the physical receipts to avoid uncertain conditions.
Recording timely entered transaction data will help you make an interim or annual financial statement on time for taxation and help in auditing business accounts.
Check that your accountant keeps every week and systematically records the transactions and matches these with invoices/receipts. Otherwise, it will be a blunder that is sometimes impossible to bear.
Separate Your Business Account from Personal
Don’t try to have the same bank account for business and personal purposes. It would only be difficult for the owner. It will be even more difficult for an accountant to manage business invoices of client payments and reporting of financial statements, especially during tax deductions. Putting your business finances at risk cannot be mitigated by the best accounting software.
For the protection of your business from risk. Have separate accounts, use business accounts only for business activities, go for individual debit/credit cards, and have different ATM cards. These will help you cope with your personal and business expenses, and you can quickly assess them.
Updated Accounting Software
One of the most critical elements is to protect your business from unwelcome risks. Don’t hesitate to invest in excellent and updated bookkeeping or accounting software. However, anyone can use accounting software with little knowledge; this software does not require an accountant. But to avoid even little mistakes, this software should be operated by a knowledgeable accountant who knows how to use it correctly and update it occasionally. Remember that a computer accounting software expert should do the initial installation and setup.
Hence, it integrates with automatic analytical calculation, checks the accuracy of transactions, matches the receipts/invoices with the correct marketing, and updates you on the business’s financial health.
About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud platform where their QuickBooks™️ file, critical financial documents, and back-office tools are hosted in an efficient SSO environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity.
All over the world, credit cards are one of the most used forms of payment. As a result, the question of how individuals can increase their credit card limit often arises. It’s common for people to desire higher limits on their credit cards, but how do you do this?
The popularity of credit cards is attributed, in part, to the easy and quick use of this financial instrument in our daily lives. On the other hand, this resource’s uncontrolled or undisciplined use might result in costly high-interest debt.
After all, the credit card limit functions as a high-interest loan, not as additional revenue.
As a result, it is essential to keep track of your credit card, but you must first understand how the limit given by credit card companies works.
In this post, we’ll show you how to increase your credit card limit, explain how lenders calculate your limit, and provide you with advice on avoiding falling into debt while seeking an increase on your card.
A better credit score might unlock the door to the cheapest accessible interest rates when you’re looking for credit cards. You may do a few basic things to boost your credit score. A slow approach to improving your credit score is available here.
Analysis of Your Credit History
Knowing what could be working in your favor might help you boost yours. Equifax, Experian, and TransUnion are the three major national credit agencies where you may get a duplicate of your credit data. You may do this once a year for free by visiting the official AnnualCreditReport.com website. Then, look through each report to determine what is helping or hindering your overall score.
Budgeting for 30% Savings
The percentage of your credit edge that you’re utilizing on the right is called credit usage—the second most significant component in credit score calculations, behind payment history.
Paying your credit bills in full every five weeks is the humblest approach to keep your card usage in check. Suppose you can’t always accomplish this. A decent rule is to keep your entire outstanding debt at 30% of your overall credit limit or less. After that, you may concentrate on reducing it to 10% or less, which is optimal for increasing your credit score.
Put a Limit on New Inquiries on Your Credit Report
You can separate inquiries in your credit history into two categories: “hard inquiries” and “soft inquiries.” You should check your credit, too. Your credit score will not be affected by soft queries while you are looking for it.
Be Sure You do Not Have a Thin Credit Report
A thin credit file indicates that your credit history is insufficient to obtain a credit score. Having little or no credit history is a condition that affects around 62 million Americans. Fortunately, there are strategies to build credit and advance your credit points if your credit file is minimal.
Experian Boost is one such example. This comparatively new initiative gathers economic data that isn’t generally included in your credit bills, such as investment history and actual household payments, and incorporates it into yours. It’s a free service for those with bad or no credit who have a good track record of paying their other payments on time.
On the other hand, hard inquiries can harm your credit points for anything from a few months to two years. Applications for new credit cards, a bank loan, a car loan, or any recent claim can result in hard inquiries. The odd tricky question is whether or not this makes much of an impact.
About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud platform where their QuickBooks™️ file, critical financial documents, and back-office tools are hosted in an efficient SSO environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity.
Here are several suggestions to assist you in getting out of debt.
Survey All Your Debts
The first step is to determine to whom you owe the money. Create a survey that includes the forms of debt, the creditor (the person or firm you owe money to), the original and current amount of debt, the CET (Total Effective Cost) of the loan, including interest and fees, and the debt term.
Sort your debts by the interest rate in descending order (highest interest to lowest interest). It makes it easy to decide which debts to prioritize throughout the negotiation.
Analyze Your Financial Situation
Here, it would help if you thoroughly examine your whole financial situation. For 30 days, track everything (even small costs like coffee and tips) to determine where your money is going.
Answer the following questions:
How much do you earn in a month?
How much money do you spend each month?
How much of your money is in debt?
How much money do you spend on fixed and variable expenses?
How much money would you need each month if something unexpected happened (such as losing your job)?
Notify the Family
The entire family must be aware of the financial situation, as everyone must be involved in cutting expenses and searching for alternatives to find sources of extra income.
Cut all Unnecessary Expenses
When people are in debt, they must learn to tighten their belts and adjust their spending to their income rather than the other way around. Examine all costs to discover where you might achieve savings and reductions. Remove anything unnecessary: gym memberships, subscriptions to services and goods, and trips to the beauty salon. Make use of free leisure opportunities.
Know that Credit is Not Part of Your Income
Your income is what you receive at the end of the month. After deducting any discounts, that is what you should learn to utilize instead of adding to the limit on your overdraft or credit card. You probably already understand why you’re in debt if you labor to pay your revolving card and can’t cover your overdraft.
Reinaldo Domingos advises preventing overdrafts and keeping credit card limits lower than your salary if feasible. He recommends taking half of the profit.
You can use a credit card if the invoice amount is paid in full when due.
Build an Action Plan
Create a priority list to determine which debts will be paid or negotiated first.
You must prioritize payments for critical bills to prevent disrupting the delivery of vital services such as water, power, and health insurance.
Then, prioritize bills with the highest interest rates, such as overdrafts and revolving credit cards.
If you can pay a lower-interest debt, one option is to convert the very high-interest debt for a lower-rate obligation, such as a personal loan.
However, you must be conscious that you should only incur debt you can afford to repay. That is why doing math is so important.
Look for Extra Income
Sometimes, trimming is insufficient; even with all conceivable cuts, there is still a shortage of funds to pay off debt. If that’s the case, one option is to earn extra money. It might be with a job during off-hours, weekend breaks, or even sales.
You may get rid of goods you no longer need or make products such as cakes, sweets, and crafts to sell to friends, neighbors, or even on the internet. Find an activity that you enjoy and begin doing it.
Start Saving
Don’t save what’s left over at the end of the month because there’s never anything left when we’re out of control financially.
Save at least 10% of your paycheck as soon as it arrives in your account. Even if you cannot save this proportion first, start with any amount to establish the habit.
The emergency reserve should cover six months of total costs and be the first savings established. In this way, you might use the reserve money instead of getting into debt in the case of an unforeseen incident. Once you’ve used it, save again until you’ve saved enough to meet these months’ costs. You only begin to save for other goals, such as vacationing, replacing your car, or even preparing for retirement.
About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a clo
ud platform where their QuickBooks™️ file, critical financial documents, and back-office tools are hosted in an efficient SSO environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity.
Essential Types of Finance and Real-World Examples
Types of finance examples fall into three fundamental categories: personal finance (individual money management), public finance (government financial operations), and business finance (corporate funding strategies), each playing critical roles in economic growth and financial stability. These finance types interconnect through practical applications like emergency fund building, government infrastructure investment, and business expansion funding.
Over my 20 years as CEO of Complete Controller, I’ve witnessed firsthand how mastering different finance types transforms both personal wealth and business success. From guiding startups through their first venture capital rounds to helping families build generational wealth through strategic planning, I’ve learned that financial prosperity comes from understanding how personal, public, and business finance work together to create opportunities and mitigate risks.
What are essential types of finance and real-world examples?
The three essential types are personal finance, public finance, and business finance
Personal finance manages individual income, savings, investments, and retirement planning
Public finance encompasses government revenue collection, spending allocation, and debt management
Business finance includes debt financing, equity funding, and working capital management
Real-world examples demonstrate practical applications across all three finance categories
Personal Finance Management Strategies and Applications
Personal finance forms the foundation of individual financial security through systematic income management, expense control, and strategic wealth building. According to the Federal Reserve’s 2024 survey, only 63% of Americans can cover a $400 emergency expense using cash or its equivalent, highlighting the critical need for robust personal finance strategies.
The gender gap in emergency savings reveals systemic challenges requiring targeted solutions. Empower research shows men hold a median of $1,000 in emergency funds compared to just $500 for women, with overall median emergency savings at only $600. These disparities underscore why personalized financial planning must account for demographic differences and income variations.
Emergency fund building tactics
Establish automatic transfers to high-yield savings accounts
Target three to six months of living expenses in liquid funds
Separate emergency funds from investment accounts
Review and adjust savings goals quarterly based on life changes
Utilize money market accounts for better returns while maintaining accessibility
Investment portfolio development
Building diversified investment portfolios requires balancing risk tolerance with growth objectives across multiple asset classes. Successful strategies combine traditional stocks and bonds with alternative investments like real estate investment trusts (REITs) and exchange-traded funds (ETFs). Regional variations significantly impact investment approaches—Bankrate’s 2025 research shows 54% of Northeasterners have three months of expenses saved compared to only 42% of Southerners.
Business Finance Fundamentals and Corporate Applications
Business finance encompasses complex funding mechanisms that enable companies to launch, operate, and scale effectively through strategic capital deployment. Small and medium enterprises particularly benefit from understanding multiple financing options, as each serves specific growth stages and operational needs.
Debt financing allows businesses to access capital while maintaining ownership control, though it requires consistent cash flow for servicing obligations. Bank loans, lines of credit, and corporate bonds represent common debt instruments, each with distinct advantages for different business scenarios. Equipment financing specifically targets asset acquisition, while working capital loans address short-term operational needs.
Equity financing structures
Angel investment for early-stage startups requiring mentorship alongside capital
Venture capital rounds for high-growth companies with scalable business models
Private equity for established businesses seeking operational improvements
Initial public offerings (IPOs) for mature companies accessing public markets
Crowdfunding platforms are democratizing investment access for smaller ventures
Working capital management tools
Modern businesses leverage sophisticated financial management systems integrating real-time cash flow monitoring, automated accounts receivable tracking, and predictive analytics for inventory optimization. Cloud-based platforms connect banking APIs with accounting software, providing comprehensive financial visibility that traditional bookkeeping methods cannot match.
Public Finance Operations and Economic Impact
Public finance governs how federal, state, and local governments collect revenue and allocate resources to provide essential services while maintaining economic stability. These operations directly influence both personal and business finance through taxation policies, infrastructure investments, and regulatory frameworks that shape financial opportunities.
Government revenue streams include income taxes, sales taxes, property taxes, and various fees, funding public services and infrastructure development. The interconnected nature of public finance means that government fiscal policies significantly impact wealth management strategies through tax incentives for retirement savings and capital gains treatment for investments.
Infrastructure investment mechanisms
Municipal bond issuance finances long-term infrastructure projects, including transportation systems, educational facilities, and utility networks. These investments create immediate employment opportunities while enhancing long-term economic productivity for businesses and communities. Public-private partnerships increasingly bridge funding gaps, combining government resources with private sector efficiency.
Tax policy implications
Progressive income tax structures affecting personal financial planning decisions
Corporate tax rates influence business location and investment strategies
Property tax assessments impacting real estate investment returns
Capital gains tax treatment shaping long-term investment behavior
Integrated Financial Strategies Across All Finance Types
The most effective financial strategies recognize that personal, business, and public finance interconnect in ways that create compound advantages when properly coordinated. JPMorgan Chase Institute research reveals that 92% of households can actually cover unexpected $400 expenses when considering all available resources, demonstrating how comprehensive financial planning spans multiple finance types.
Entrepreneurs face unique challenges navigating all three finance types simultaneously while building wealth. Successful integration requires maintaining clear separation between personal and business finances while strategically coordinating both for optimal tax efficiency. This includes establishing business credit independent of personal credit scores and structuring compensation packages balancing immediate needs with long-term wealth accumulation.
Cross-category financial metrics
Financial ratios provide quantitative tools for evaluating performance across different finance types:
Personal debt-to-income ratios guiding borrowing capacity
Business liquidity ratios measuring operational health
Government debt-to-GDP ratios indicating fiscal sustainability
Return on investment calculations comparing opportunities across categories
Risk-adjusted returns accounting for volatility differences
Modern Technology Transforming Finance Management
Digital transformation reshapes how individuals, businesses, and governments approach financial management through artificial intelligence, blockchain technology, and mobile applications. Automated budgeting applications track expenses in real-time, while robo-advisors democratize sophisticated investment management previously available only to wealthy individuals.
Fintech innovations create new financing channels including peer-to-peer lending platforms, invoice factoring marketplaces, and revenue-based financing models. These alternatives complement traditional financing sources while often providing faster approval processes and more flexible terms for businesses with non-traditional profiles.
Digital tool categories
Personal finance apps automating savings and investment decisions
Business intelligence platforms providing predictive cash flow analysis
Government portals streamlining tax collection and benefit distribution
Blockchain systems enabling transparent public finance tracking
API integrations connecting disparate financial data sources
Conclusion
Understanding types of finance examples provides essential knowledge for navigating today’s complex financial landscape. The interconnected nature of personal, business, and public finance means that mastery across all three categories creates synergistic advantages compounding over time.
My two decades helping businesses navigate financial complexities has shown me that success comes not from perfecting any single finance type but from recognizing their interdependencies. Whether building emergency funds, securing business expansion capital, or evaluating municipal bond investments, the principles remain consistent: understand available options, evaluate risks against returns, and maintain sufficient liquidity for unexpected opportunities.
I encourage you to take action on these insights today. Start by assessing your current position across all three finance types and identifying gaps in your financial strategy. For personalized guidance tailored to your specific situation, contact the experts at Complete Controller to learn how our team can help integrate these finance concepts into a cohesive strategy supporting both personal and business objectives.
Frequently Asked Questions About Types of Finance Examples
What are the three main types of finance, with practical examples?
The three main types are personal finance (emergency funds, retirement accounts, investment portfolios), business finance (bank loans, venture capital, working capital lines), and public finance (tax systems, government bonds, infrastructure spending).
How do small businesses typically access different financing options?
Small businesses commonly utilize SBA loans for debt financing, angel investors or venture capital for equity funding, equipment loans for specific asset purchases, and revolving credit lines for working capital management needs.
What’s the difference between debt and equity financing for businesses?
Debt financing involves borrowing money, requiring repayment with interest while maintaining full ownership, whereas equity financing exchanges ownership stakes for capital investment without repayment obligations but sharing future profits.
How does public finance impact personal financial planning decisions?
Public finance affects personal planning through tax policies influencing retirement savings incentives, interest rates set by central banks affecting borrowing costs, and government programs providing safety nets that reduce emergency fund requirements.
What financial management tools help integrate all three finance types?
Modern tools include comprehensive accounting software tracking personal and business finances, tax planning platforms optimizing across categories, and financial dashboards providing holistic views of assets, liabilities, and cash flows across all finance types.
Complete Controller. (2023). “Various Types of Finances.” Complete Controller. www.completecontroller.com/examples-of-various-types-of-finances/
Corporate Finance Institute. (2025). “Public Finance.” CFI Resources. corporatefinanceinstitute.com/resources/economics/public-finance/
Empower. (2024). “37% of Americans can’t afford an emergency expense over $400, according to Empower research.” PR Newswire. https://www.prnewswire.com/news-releases/37-of-americans-cant-afford-an-emergency-expense-over-400-according-to-empower-research-302187157.html
Federal Reserve Board. (2025). “Report on the Economic Well-Being of U.S. Households in 2024.” Federal Reserve. https://www.federalreserve.gov/consumerscommunities/sheddataviz/unexpectedexpenses-table.html
Fincart. (2024). “Types of Finance and Financial Services Explained.” Fincart Blog. www.fincart.com/blog/types-of-finance-and-financial-services/
Financial Tortoise. (2022). “10 Greatest Personal Finance Lessons That Changed My Life.” Financial Tortoise. www.financialtortoise.com/blog/10-greatest-personal-finance-lessons
FreshBooks. (2024). “What is Finance? Definition & Types of Finance.” FreshBooks Hub. www.freshbooks.com/hub/accounting/what-is-finance
JPMorganChase Institute. (2024). “How vulnerable are Americans to unexpected expenses?” JPMorganChase. https://www.jpmorganchase.com/institute/all-topics/financial-health-wealth-creation/how-vulnerable-are-americans-to-unexpected-expenses
Statrys. (2024). “What is Business Finance? 4 Main Types To Consider in 2025.” Statrys Blog. statrys.com/blog/business-finance
About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud platform where their QuickBooks™️ file, critical financial documents, and back-office tools are hosted in an efficient SSO environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity.
Jennifer BrazerFounder/CEO
Jennifer is the author of From Cubicle to Cloud and Founder/CEO of Complete Controller, a pioneering financial services firm that helps entrepreneurs break free of traditional constraints and scale their businesses to new heights.
Brittany McMillen is a seasoned Marketing Manager with a sharp eye for strategy and storytelling. With a background in digital marketing, brand development, and customer engagement, she brings a results-driven mindset to every project. Brittany specializes in crafting compelling content and optimizing user experiences that convert. When she’s not reviewing content, she’s exploring the latest marketing trends or championing small business success.
Starting your own business may be a challenging yet rewarding experience. While a strong business plan is essential for entrepreneurs, funding is one of the most significant aspects of a company’s success.
On the other hand, financing a startup or small business may be challenging and time-consuming, especially for people with bad credit. While no minimum credit scores are required to obtain a business loan, traditional lenders often accept a range of scores.
Consider an alternate loan if you have a poor credit score and no collateral to provide. We investigate the benefits of alternative loans and offer recommendations on financing your business in this article, which breaks down a few slight business funding possibilities.
There are always options that are the best, and it is possible to find the best corporate loan on the market. Regarding which factors determine which loan is best, it differs depending on a company’s needs, but some elements are more common.
Family and Friends Become Increasingly Important when Small Businesses Seek Funding
More and smaller business owners are borrowing from themselves, family, or friends to finance investments in their businesses. In an interview chief economist says that this is a worrying development because it increases personal financial risk.
The Entrepreneurs’ Financing Survey 2018 showed that over fifty percent of all small businesses experienced difficulty obtaining external financing.
Among how small businesses solve financing are, among other things, loans from owners, family, or friends. The financing method has become increasingly common, and since 2016, the number of companies that have taken out loans from related parties has doubled.
It is worrying because it also increases the risks of the entrepreneurs who borrow or are forced to borrow from family and friends to finance the company’s operations, says Daniel Wiberg in an interview.
Private Invests Part of the Solution
Entrepreneurs’ chief economist Daniel Wiberg believes that the results confirm the personal financial risk that entrepreneurship entails and call for a policy that better considers the risk-taking that entrepreneurship and entrepreneurship entail. For example, by encouraging new forms of financing and alternatives to traditional bank financing:
Financing difficulties are an obstacle to growth, and more favorable conditions for private individuals who want to invest in their own or others’ businesses can be part of the solution. Risk-taking is part of entrepreneurship, and if investors and lenders understand what it means, it is positive if more people want to contribute to growing companies. You should consider the proposal to extend the investor deduction to include investments in unlisted companies, says Daniel Wiberg.
Bank Loans are the Most Common
Despite some media attention, grassroots financing does not appear to be gaining momentum among companies, as only 1% state they used the financing method last year. Although related parties have become more critical, bank loans remain small businesses’ most common external financing method. In the previous twelve months, every fifth company financed one or more investments through bank loans, increasing five percentage points compared to 2016.
There is reason to be optimistic when it comes to companies’ opportunities for financing. Among other things, the number of players in the so-called fintech sector is growing, a new type of financial player that uses digital technology to offer payment, financing, and crowdfunding services. Even if new financing solutions emerge, it will take time before the vast majority know and start using them. However, the development will pressure the big banks, says Daniel Wiberg.
Difficult with External Financing
As many as 52% believe that it is pretty or tough to finance the company’s investments with external financing. When it comes to bank financing is a recurring explanation for why entrepreneurs perceive it as challenging high demands on security and personal guarantee. Here, too, the family plays an important role. Fifty-nine percent of companies with loans from a lender have personally guaranteed credit to the company through themselves or a relative.
Many entrepreneurs experience a lack of understanding from the bank regarding the company’s operations and difficulties with requirements for security for loans. Despite this, the entrepreneurs ‘experiences of the banks’ treatment of them as corporate customers show that the treatment is still experienced quite positively. Daniel Wiberg says that only 6 percent of the companies have changed banks during the past twelve months. It can contribute to corporate customers remaining a very loyal customer group.
About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud platform where their QuickBooks™️ file, critical financial documents, and back-office tools are hosted in an efficient SSO environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity.
About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud platform where their QuickBooks™️ file, critical financial documents, and back-office tools are hosted in an efficient SSO environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity.
