These days, there are countless flexible ways to earn a living beyond the standard 9-to-5 job. People can make money freelancing in the gig economy, or sell their services online. You could even use your ambition and skills to start a life as an entrepreneur and launch your own company.
However, while a life running your own business has many benefits, like the freedom to do something you’re passionate about and work flexible hours, it has its downsides too. You won’t always have the most predictable income as a business owner to begin with, which makes budgeting an extremely important part of protecting yourself and your family. Here are some quick ways to improve your budgeting strategy as an entrepreneur.
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Keep Your Bank Accounts Separate
The first step in successful budgeting and money management as an entrepreneur is keeping your personal and business accounts separately. Separate bank accounts are crucial for tax reasons, but they’ll also help you to simplify understanding things like business expenses, and personal costs, and how they affect your life overall. When keeping your accounts separate, make sure you take the right amount of time to assess the incoming and outgoing cash from both accounts on a regular basis.
You’ll need to pay close attention to your business cash flow over time so you can begin to predict when you’re more likely to have a higher amount or lower amount of income. Alternatively, paying attention to your incoming and outgoing expenses in your personal account will help you to detect where you might have more issues with your spending you need to address. Maybe you eat out more often than you should?
Look for Ways to Cut Costs
Constantly looking for ways to cut costs is something you’ll need to get used to as a business owner. You’ll need to reduce expenses in your business on a regular basis to increase your profits, but you’ll also have to think about how you can reduce monthly costs in your personal life too. One option could be to cut the amount of money you spend on repaying interest on a monthly basis. Student loans can really eat into your income, without having any positive impact on your life. A student loan refinance can help you to cut those expenses quickly. Other options include looking for ways to reduce expenses on your energy bills, by switching to a different provider, or regularly comparing the vendors you use for insurance.
Pay Yourself a Regular Salary and Save
Finally, as tempting as it might be as a business owner to give yourself a huge bonus whenever your company earns some extra money, it’s much better to give yourself a regular income, and place the rest of the cash you would otherwise earn into your savings. Both financial planning and budgeting are important and building up your nest egg makes the most sense. Every time you earn more than you expected, remember to put the right amount of cash into your tax savings, and the rest into an emergency fund. This will ensure you have something to tap into if you find yourself dealing with a dry period in the business.