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Entrepreneur? Saving Money with Your Irregular Income

By: Green Panda | Date posted: August 24, 2011 (5:00 am) | Write a Comment (0 Comments)

Running a business can be rewarding; not just financially, but personally. However it also involves work to make sure you not only survive, but thrive. For GPT readers who are thinking about starting a business, I wanted to share a few money saving tips and a money management system that can help.

Money Saving Tips

Looking to save some money with your business? Here are some money tips to help you get and keep your business in the black.

  • Bootstrap your operations. Some new enterpenuers go overboard and feel like he have to spend a ton of money just to get started. You don’t have to do that. Save a professional web design until you absolutely need to or until you have the money to pay for it. Keep your operations small to avoid getting into heavy debt. 
  • Go online for your banking. If your current bank isn’t serving your business needs, consider moving some of your accounts to an online bank. They tend to have low or no fees and higher interest rates on savings accounts. Some banks, like ING Direct, have a reputation for great customer service. If you need a brick and mortar option, look at local credit unions to see if they can offer you a better deal.
  • Look for free fax options. Sometimes I have to fax over paperwork for certain businesses. Fax costs are based on where it’s faxed and how many pages need to be sent over. If you’re a cash strapped entrepreneur, then you may want to consider some free and low cost options fax services. The catch is usually that you have an ad on your cover page, but if you don’t mind, that can save money on a business expense.

Don’t forget to keep the basic tenets of managing your money in your 20s. Following them can set you up for personal and business success.

How to Manage Your Money

As a self-employed person, I will let you know that even with regular clients and projects, there will be times that money does not come in as expected. Having a system to manage your money is vital as it can help you organize your finances and keep you afloat during lean times.

The key to being successful with irregular is to have a system in place that matches your financial goals. In the beginning it’ll take some time on your part as you find what works specifically for you, but it’s worth it.

  1. Create separate accounts for your money. For some people keeping their tax payments in with their business savings can be a recipe for disaster. If that’s the case for you, separate the money. ING Direct, for example, allows you to create sub-savings accounts that assist you in managing your money.
  2. Check with an accountant on how much you need to save to keep your business running. Money and taxes isn’t something you just want to guess on. Have a meeting with a professional to estimate your tax obligations and to come up with a realistic amount for your business expenses and savings. You’re paying upfront now for peace of mind later.
  3. Base savings on percentages, not a fixed amount. I get paid various of amounts through out the month with direct deposits and checks. As they come in, I set aside a certain percentage for my estimated tax payments, paychecks to myself, business savings, business expenses, and retirement. I can’t set a fixed amount to be set aside for taxes because some checks are smaller than others. Instead, taking a set percentage makes it easier on me to allocate accordingly.
  4. Automate your system. If your bank/credit union allows you to automate transfers and deposits, then take advantage of it. While you may not be able to automate everything, even easing your load  off a bit allows you to focus on growing your business.

As you get more comfortable with your system, you may decide to consolidate some of your accounts. That’s fine, but make sure you review your progress within 3 months to make sure you’re still on target.

Thoughts on Managing Your Career

Being happy with your career is a deeply personal series of choices. Don’t feel pressured to conform to anyone else’s definition. What works for me might not work for you and vice versa. I’d love to hear from you as entrepreneurs. Do you have a system to manage your irregular income?

Looking for more career related posts? Don’t forget  to check out the rest of the job series to help figure out your next move.

Photo Credit: jollyUK
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