I know I know, you’re all thinking, “My money is spent before I even have it!” That’s fair, mine usually is too. But if you are a small business owner it’s likely you’ll have good months and bad. Some months you’ll break records and maybe make more than you did in your first year. If you don’t own a business and you think this is bananas, first years are often not profitable at all. I was lucky, my first 12 months was pretty good overall and I have yet to net more in one month than I did in those 12 months but it would not be unusual. A good month doesn’t necessarily mean a good year though. How do you budget for good months and bad? How do you stay on top of things and not spend the money before you make it? The next couple of posts are going to be some advice that works for me. I am by no means a financial expert or advisor but I’ve learned a lot from my own mistakes and maybe something will resonate with you.
First, figure out a method that works for you for bill tracking. I know lots of people who have lots of different methods but almost all of them include a calendar. For me, it’s a google calendar with each bill written down on it’s due date. When I get paid, I sit down with my calendar and pay the bills I can and mark them all off. If I have a little left, I either pay another bill, pay some of my debt, or use it to buy something I’ve been saving for. We’ll talk about how to decide where it goes next week. The calendar method essentially eliminated late payments and drastically reduced my anxiety. I used to worry that I had forgotten one or I’d get a past due email and then have to pay a late fee. It was truly life changing.
Start paying attention to things that surprise you regularly. You can put your yearly bills in your calendar but you still might not notice them until the month before and if it’s a big bill, what do you do now? We talked about some options for taxes here: https://www.laurenpiner.com/stf/thats-a-big-number. It could be yearly insurance, car registration, all kinds of things. The first and easiest solution is to put some money into savings every month. Especially if you know you have bills like these, focus on boosting that savings account so that when these bills come you don’t have to find the full amount. I personally love the bank accounts that put money into a savings account when you use it. The one I have lets you designate exactly how much so every time I use my debit card or pay a bill from that bank account a dollar goes into the savings account. While it’s not enough to pay for these big expenses, it’s often enough to cover something if I’m just a little short before a pay period. For the big expenses though, the payment should be one of your calendar bills.
If you do have a particularly good month, immediately put at least half of the extra into a savings account. Your money may already be spent, you may be paying off some debt, but do everything you can to put at least something into a savings account.
We’ll leave it there for now. If you take anything away from this post, I hope it’s to create and follow a bills calendar. What have you done that helps you manage your money? I hope you’ll share!