6 Ways to Save Your OWN Money to Fund Your Business

Make saving money a priority! Particularly if you have to provide the initial line of financing for your business.

We’ve all heard the phrase, “I can do anything if I put my mind to it!” Well saving money is no different. Regardless of your income, you can save money and get that business started, but it takes discipline! You have to make a firm decision to save and stick to it! Tried and true money advice to save money!

1. Set up budgets.

  • It’s very important that you have a personal budget and also a projected business budget.
    • (Projected simply means an estimate of what you realistically expect to obtain)
  • Gather both your personal and business monthly bills, pay stubs, account statements and receipts from the last 3-4 months.
    • Separate into a “Business” stack and a “Personal” stack.
  • Also, note the due dates for these expenses. Avoid paying bills late at all costs! Late fees and interest charges amounts to money that you use to pay down debt and contribute to your business venture.
  • Using the gathered documents, develop categories for the items you spend money on. Some examples are: Restaurants, Website Costs, Banking Fees, Grocery, Health Expenses, Insurance, Entertainment, Grooming, Clothing, Gifts, Utilities, Rent, Employees, Production Costs, etc.
  • Google “budget templates” for sample budgets or check out the templates in Microsoft Word. However, if you use a template, please remember to customize it to your specific bills and needs.
  • Now, this is where you part ways:
  • Use the “Business” pile and any estimates you have (if your business does not yet have any expenses) to create an itemized list of expenses. At this stage, do not consider the income that your business may generate.
    • Calculate the total expenses (Take into consideration the expenses that will require an up-front cost and won’t necessarily generate a monthly expense (ie. the cost to register your business) and include those as “One Time Fee- xyz” line items). Multiply the total expense number by 3, if you are currently employed and plan to stay employed while starting your business. If not, multiply this number by 6. This number represents that total amount you should have in order to comfortably finance your business.
  • Use the “Personal” pile to create your personal budget. (You will consider your present income for this budget). After calculating your expenses and income, subtract the total expense number from your income number. This number will represent the amount of extra income you have to devote to your business. Include a line item in your Personal budget for “Business” and include this number there. If you calculate a negative number, see the last tip!

2. Pay yourself first.

  • Make sure that your personal budget has a line item for “Saving” and your business budget has a “Salary” line item. These are requirements, NOT options. Pay yourself like you pay a monthly bill, even if you have to set up an automatic withdrawal. It’s very important that you are still able to financially manage your personal necessities.

3. Give some away.

  • I am a firm believer in paying tithes, which is 10% of all of your earned income. Any financial book you read will advise you that a sure-fire way to receive and keep money is through charitable giving. Whether to a religious institution, your favorite non-profit organization, or to somebody you know in need, it should always be a part of your budget.

4. Open a SEPARATE checking/savings account.

  • Seems like a no-brainer, but you’ll be surprised at how many people attempt to juggle business expenses in the same account as their personal account. Although your business must be registered and have a tax id number (EIN) before you can open a business account, I highly recommend saving for your business in a separate account.
  • Make sure neither account charges membership or annual fees.
  • Look for high-earning interest rates on savings accounts.
  • If you have an issue with overdrawn accounts, make the investment into Overdraft protection for your accounts.

5. Kill debt!

  • Saving by its very nature is to have a surplus or an excess. Until you level your current debt to $0, it will be very hard to actually save money, however it IS very possible to set money aside while tackling your debt at the same time. You want to start your business as financially free as possible!
  • Get rid of credit card debt! The interest rates alone have the ability to keep you in financial bondage forever.

6. Shave, shave, shave!

  • Take a look at your Personal budget and shave it down so that you can increase the amount of money you save and put towards your business.
  • Look to save the following ways:
    • Prepare food at home or eat at home before heading to social events.
    • Commit to never go grocery shopping while you’re hungry.
    • Try out generic brands.
    • Change your cell phone, cable, internet plans to match your current need. Look into pre-paid options and utilizing free wi-fi at public libraries and other local venues.
    • STOP using credit cards! If you do not have the cash for a purchase, strongly consider whether you really need it.
    • Take a car pool to work or consider public transportation options.