Though paying yourself first is one of the common things financial planners recommend, my experience is that very few at-home-entrepreneurs do this with their business. But it's a powerful tactic to strengthen your financial position for three reasons:
- You'll build a fund that you can use when it is time to upgrade or buy new equipment, and you won't have to borrow to do it.
- You'll have a cushion so that you won't feel pinched when estimated taxes are due or other payments are required.
- You'll be able to weather the dry spells that come (and they always do!) between income checks.
When I first started my at-home work, I put everything I earned into a checking account. My goal was not to touch the money for six months. And, if I remember correctly, I almost made it. Doing this enabled me to build a financial reserve which I maintain to this day. I've never regretted it.
Too many entrepreneurs are living paycheck to paycheck. And that's stressful. If this has been your pattern in the past, I want you to get servious about building a reserve by paying yourself first. I don't care if you deposit 5%, 10% 20% or 50% in a savings account for your business. I just care that you do it. Paying yourself first works because you don't miss money you don't have. In other words, if you get a check for $500 and put $50 of it in savings, you won't be tempted to spend the $50 because you no longer have easy access to it. This makes it easier to build savings quickly.
In my next post, we'll look at how saving now puts money in your pocket later. In the meantime, I'd like to know: Are you saving? And if so, do you put away a flat fee or a percentage each time you get paid? Hit the comment button and let us know!
Financially Yours,
0 comments:
Post a Comment