Setting out on your own and embracing the freedom of entrepreneurship feels exhilarating ... until the first time you look up and realize your finances are a mess. Hey, it can happen.
Among all the other tasks you're juggling as you make your way in the YouEconomy, money management is one of the most important and the most often avoided.
The good news is that money management for solopreneurs can be simple and straightforward. It doesn't have to take a ton of your time, and there are plenty of tools to help ease your way. The basic building blocks are the same for most solopreneurs. I've found a few over the years that have made a big difference in the health of my business and made it much easier to scale as I added others to my team.
Check out these money management building blocks:
Face your fear. Until you take a look at what's really holding you back from tackling your money woes, even the best financial app won't make much of a difference. Ask yourself: How would I rate my ability to manage money? Why? What am I afraid will happen because of my money habits? Once you've answered these questions, talk over your answers with someone you trust. Now's your chance to prove yourself capable and confident in money matters.
Set aside regular time. When I first got serious about managing my money consistently, I knew I had to overcome my fear of just sitting down and looking at it. I started by opening my checking account online every day. I looked at each transaction, thought about what bills would be coming in that week, and then closed the browser window. I didn't take any action--just looked. After three months, I finally got rid of my fear around looking at my money. Now, I do a monthly money session so I can check the budget, print reports, and analyze my revenue potential.
Separate your personal and business funds.
Opening a business checking account might seem like just an extra step if you're not operating as an LLC, but it makes a big difference in both your mindset and your accounting. It also makes your taxes a lot simpler. Be sure to reimburse yourself for any personal contributions to your business account, and don't use your business account for any personal purchases.
Save for taxes as you go. You can either use the quarterly reporting forms the 1RS provides, or you can keep it simple as I did in the beginning and pull 20 percent out of every payment you get from clients. Set that money aside in a savings account for...