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The fees you put on your company card can seem pretty harmless. New chair, Sunday lunch with colleagues, upgraded office space; it all falls within the scope of any business owner. If it doesn’t eat away at anyone’s income, what’s the problem with occasionally withdrawing a company’s credit card?
There is nothing fundamentally wrong with operating costs, and no one is suggesting that entrepreneurs stop spending money. Unfortunately, the need to spend often gives way to spending that is not so harmless or innocent. An opportunity to shop at work that you would not do on Sunday with your family is exactly the way in which so many business owners end up in deep torment of financial infidelity.
Unlike traditional infidelity, the financial species can be perverted and manipulated and ignored, even when it happens in broad daylight. However, the consequences of deceptive business spending can irreparably damage trust and relationships.
Be honest with your spouse
It’s not a scary idea to separate your work life from your home life. After all, no one wants to take their work troubles home to spread out on the kitchen table.
This way of thinking, although healthy in one respect, can turn small white lies into catastrophic financial problems. When a company encounters a difficult period, a proud entrepreneur decides to keep that information secret. In an attempt to solve the problem quickly and quietly, he or she decides to use the family home and get some money. The plan was to never steal from her spouse, but that’s exactly what happened. If the company goes up, the family is on a hook for consumption that they never knew about.
Year after year, finances are one of the leading causes of divorce. It is natural for couples to have disagreements over savings and spending, but it is a big problem when these disagreements are related to dishonesty. When undiscovered business debt plays a role in that conflict, things become really sticky.
If the company’s expenses are accumulating, and you are inclined to hide that information from your spouse, it would be good to be prepared. Even if you keep separate bank accounts, your financial lives are very intertwined.
Related: 5 rules for going into personal debt as an entrepreneur
Be honest with yourself
Financial infidelity thrives on people’s best intentions. More often than not, secrecy comes from a place of concern.
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A woman with a startup does not want to worry about her husband, so without his knowledge she got a small loan on the side.
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The husband tries to woo a new client with fancy dinners, but he feels guilty about spending and hides his credit card statement.
These events, especially when isolated, seem innocent enough. In some cases, they resolve and never really come to light. In most cases, however, one hidden expense turns into a dozen. Too long, spend to cover up spending. By the time you clean up, the debt is out of control and has fallen into your personal finances.
Most problematic behaviors, from compulsive spending to gambling to substance abuse, are exacerbated by the constant lying that comes as a byproduct. Lying, in most cases, is a means of self-preservation. You don’t want to talk about questionable spending in your company because it portrays you in less than flattering light. Instead, it is easy to hide the problem and continue with the habits in the hope that the situation will miraculously resolve itself.
As the person in charge of handbags, you need to see when business spending could soon bleed into your personal life. You need to be honest with yourself when considering how your company’s expenses can affect your spouse. If you choose the path of secrecy, it is a slippery slope that descends a long, long way.
Related: You lose money, so never mix business and personal expenses
Setting boundaries
The amount invested back into your company is not always something you can control. Inventory, staff, transport - some costs are simply inevitable.
In addition, you can still create a spending philosophy that allows you to set priorities. You can budget in a way that makes sense and, more importantly, allows you to be honest and transparent with your loved ones. For starters, you can make a list of your necessary and discretionary expenses. If you’re not sure which category a particular expense belongs to, assume it’s discretionary.
The budget will not only help you spend wisely, but will fight against the way of thinking “all business spending is good spending”. Too many CEOs tackle using a company card as a display of wealth and success, and that behavior is pretty much textbook financial infidelity. When it is easier to spend money on a new standing table at work than to take children to watch a movie, your priorities need to be re-aligned.
Set boundaries. Set protective measures. Don’t succumb to desires when it obviously doesn’t work, especially if you know you tend to spend more than you save.
It is very rare that you will hear someone in the twilight of their life wanting to spend less time with family and more ordering lunch at the office. The business might feel comprehensive at the moment, but you are committed to your family and your future. Be honest with yourself, be honest with your spouse and don’t lose sight of the things in your life that make you really rich.
Related: 9 business expenses you can reduce or eliminate to save thousands