How to Rock Your Finances While Self Employed

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Keeping an eagle eye on your business and personal finances while self-employed is highly important. When your business is having a cash flow problem your wallet is also having a cash flow problem.

Here are ways to rock your business and personal finances while running your own show:

Overplan for Emergencies

Your household’s emergency savings account is going to be your savior in situations when checks don’t come in. Clients can pay late or you may lose a client altogether. You need to be prepared for all circumstances.

The typical amount that everyone should have socked away for a rainy day is about three to six months of household bills. Self-employed workers may want to have a few more months of bills in savings. Your income is variable, so an extra bit of cushion can be a lifesaver.

Choose a Savings Vehicle

Traditional employees can take advantage of company-sponsored 401(k) plans with company matches. There’s also a 401(k) solo plan for self-employed workers that comes with tax benefits and allows you to make employer contributions from your own business.

For 2018, you’re able to contribute up to $18,000 into the 401(k) solo account as an employee. Your business (employer) can make contributions of up to 25% as well.

Aside from the 401(k) solo account, Traditional IRA, Roth IRA, or SEP IRA accounts are other options. Social security is not something you can rely on to live comfortably in retirement. Make sure you have your own savings plan in place.

Keep Your Money Separate

At first I kept my personal finances and business finances combined. It’s a nightmare. It makes record keeping difficult and filing taxes tragic.

Set up a different checking and credit card account for your business. Save for taxes and pay your business expenses before giving yourself a paycheck. Choose an accounting system for business bookkeeping that will make sending invoices and collecting payments a breeze.

Set Up Two Budgets

Don’t feel bad if you’re a little bit disorganized right now with your money as long as you commit to making a change. Create a budget for your business. This will help you monitor how much money you’re spending to operate. It’ll also keep you aware of whether or not your business is profitable.

There may be some months (or even years) when you’re business is not profitable or breaking even because you’re investing in resources, tools, equipment, or coaching. This isn’t a bad thing if you’re aware of it and investing with a purpose.

Final Word

Even the most organized people can find managing business and personal finances difficult when working for themselves. There was definitely a learning curve for me. I kept a meticulous budget that helped me save and pay off debt aggressively when I worked a full-time job with a steady paycheck.

Having a variable income threw me for a loop for a while, but it was something I got better and better at managing over time. Experiment and find a system that works for you.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer

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CMX Gold & Silver Corp.

CMX Gold & Silver Corp is an exploration stage company. The Company is engaged in the acquisition, exploration and development of silver and copper/gold properties in the USA.