Estimated reading time: 4 minutes
As business owners, we sometimes struggle with our finances because our income can be very irregular. Budgeting becomes a hassle because we don’t know how to budget for an uncertain amount.
Here’s how to take control of your finances as a solo entrepreneur. These are things I do that help me manage my finances:
- Pay yourself a salary. Pay yourself minimum wage. Just enough to cover your needs and a little extra for wants. Remember, needs are things that you cannot do without. Rent, bills, food, transportation. Wants are things you can afford to do without. Eating out, ordering food, buying new clothes, entertainment and recreation. Know your wants vs needs.
- Budget anyway. Use what I call the Reverse Budget Psychology. Don’t wait till you have the money before you budget where you want your funds to go to. They must go to serious things like investments, school fees, a new laptop, house rent, vacation and emergency fund. Set a budget for these and decide on how much you want to allocate to each of these budget buckets. Get my printable savings chart to help you budget and save. It’s what I use to save for different major expenses.
- Your total budget will determine how much you must earn at a minimum every month. If your salary and all these other money buckets you budget for yourself adds up to $3,500 per month, then you know that you must not earn below $3,500 per month. Your financial plans will help you get serious and keep sight of your business and drive your efforts in your marketing plan.
- Have a vision board of all of these things you have budgeted for, coming true. Have a picture of your investment account statement with your complete investment figure reached, that new car, your new house, children in that better school, or that holiday destination. Take a picture on your phone and set it as your screensaver. Let is serve as a reminder whenever you want to buy that suya or that new wig or shoe.
- Set reminders on your calendar to save. Have one income account, one salary account and multiple accounts for these different savings. Always Zero your income account. I have at least 10 accounts for different things. My money does not mix. That way I can keep track of the progress of my different budgets.
- Keep track of your income and expenses. I mean every single penny that comes into your account or leaves it. I have been writing down my income and expenses by hand since 2017, down to the last kobo. I can tell you exactly how much I make and spend each month.
This helps me keep track of where I’m overspending and what areas need attention.
You can track yours using an excel sheet or a budgeting app. I’m old school. I do mine by hand before plugging into a spreadsheet every quarter.
- This is my rule of broke: If there’s money in my income account, it means there’s money to spend or waste. I strive to be “broke” all the time. Being broke is not a bad thing. It doesn’t mean I’m poor. It just means I don’t have money for unnecessary spending.
As money comes in, I immediately transfer it to one or more of my budget buckets and track it with my printed savings chart. That way, I will always stay “broke”. You cannot borrow people money or spend out of your income account. You can only spend out of your salary account.
- If you finish your salary before the middle of the month, you cannot touch your other accounts. In fact, do not have Debit cards or bank apps or even register for USSD on those accounts except your salary account which should be the only account you spend out of.
- As you hit each savings goal, set bigger ones. Level up and force yourself into an uncomfortable position where you have to earn more in order to save more.
Trust me, there’s no feeling like the feeling of having money saved for investments and major expenses. That feeling of self-assurance is something everyone must strive to have and keep.
