Entrepreneurs are expected to spend cash when developing their startup, certainly. Money has to go toward product development, services, payroll, website creation, media, headquarters and/or expansion. However, this doesn’t quite mean that entrepreneurs can afford to be frivolous. In fact, a wise entrepreneur will spend wisely and effectively, and they’ll save despite incurring irregular income during financially turbulent times.
For many entrepreneurs, putting money away simply isn’t a priority, not when a bulk of their time is being spent launching, feeding, maintaining, and reinvesting in a business. However, startup entrepreneurs don’t have it easy, particular at the beginning when resources may be scarce. Those initial years promise to be filled with lean times, particularly when trying to gather funds and grow revenue. While some resign themselves to lives absent of functional personal other savings, others enlist the advice of finance professional who can offer an intelligent perspective on saving while growing, as well as tips for saving as an entrepreneur without buckling under the pressure of financial restraint.
According to financial expert and founder of FNPhenomenal, Aisha Taylor, there are five tips that can ease an individual’s journey into accumulating wealth while living one’s life as an entrepreneur. For one, it’s important to pay quarterly taxes. The best way to save money is to plan for expenditure, and knowing how much money you have to pay the government should be at the top of your list. You could risk owing that government interest or you risk penalty if you underpay your taxes. This is an added stress that you don’t need, so be sure to calculate your quarterly taxes and put funds aside to meet financial obligations.
Another tip is to reevaluate your monthly bills. Divide the essentials from the non-essentials. Essentials include groceries, insurance, transportation, utilities, and maintenance costs. Unfortunately, for most people medical costs, an essential, happens to be the biggest reason why people become bankrupt. This means you have to truly consider your medical insurance options, equipping yourself with insurance that will protect you in the case of catastrophe, saving yourself a great deal in the long run. Also, be sure look at the cost of your deductible and other important details related to that insurance.
Yet another tip is to save in small increments. Rather than mistakenly believing small contributions don’t matter, understand that saving even $25 dollars a month can be so important. Checking accounts can be set up to make automatic transfers to savings accounts. Also, consider using the online tool Mint.com, which allows you to gauge how much you’re spending, which helps you to save. Similar apps take “spare change” from your accounts and adds it to personal savings.
In the same vein, be sure to have two separate bank accounts: one for personal and business. The mixing of private and business assets can be a huge mistake and bad for budgeting purposes. Create two separate saving accounts, one designated for emergencies, and another for annual and semi-annual payments, such as insurance costs and taxes. And while speaking on the subject of taxes, you should use a third of your tax refund to pay off debt, while using the other portions for emergency savings and self-nourishment (i.e., treat yourself!). Also, consider whether you should or shouldn’t reinvest during after a particularly lucrative period. While staying committed to savings, never deprive yourself of well-deserved rewards, which is an incentive to stick with your financial plan.