Self-Employed Financial Management 101: 3 Strategies to AdoptBy
As a parent who is self-employed or works from home, you are no stranger to the struggle of time management, multitasking and prioritization. Carving out that precious, uninterrupted time for yourself is a necessity to get anything done, but it requires a lot of juggling to get there, with school runs, snack prep and babysitter scheduling.
Most days it feels like you can barely keep your head above water, but somehow you still manage to get many of the most important things accomplished. However, there are many less time-sensitive to-dos that often get pushed down your priorities list that could really use some attention — like financial management. Here are three strategies to implement to make your money management more efficient and effective.
Stay on Top of Bookkeeping
It’s easy to get caught up in the day-to-day work duties and overlook seemingly simple tasks like bookkeeping. Then, all of a sudden, the year ends and you begin scrambling to file your taxes and realize that it’s been over six months since you last properly tracked your business expenses.
Avoid the headache of trying to get everything done at the last minute by automating your process as much as possible. Sign up for cloud-based software like QuickBooks Online or Xero to track all of your business expenses in a format that your accountant can easily work with. Choose a service that syncs with your business banking institution so that you can skip entering every line item manually and instead simply categorize and approve each expenditure before reconciling your records with your bank statement every month.
To avoid months of bookkeeping work piling up, create a recurring calendar event every month a few days after your monthly bank statement becomes available so you can update everything for the previous month. Typically, this will only need to take an hour or two.
Diversify Your Income Stream
For the majority of people, working on your own means forgoing a consistent paycheck in favor of flexibility. Sure, by the end of the year, you may even make more money than you would working for someone else, but that money is never really a sure thing until the work is complete and you get paid, making it somewhat unpredictable at times.
To balance things out and try to make your income a little more predictable, try diversifying your income stream. Choose a reliable form of income like renting out a real estate property that you own for a minimum a one-year lease. Or take advantage of a gig economy opportunity with a company that has a strong focus on creating jobs in the U.S., like Amway.
Create a Monthly Budget
If you thrive on structure, a monthly budget could really help you save more money while still covering all of your family’s basic needs. Since your income likely varies on a monthly basis, aim to underestimate your income and overestimate your expenses to help make sure there is money left over for your savings.
If possible, “pay yourself” first by putting a predetermined amount of money into a savings account or 401K at the beginning of every month before you start paying for other routine expenses. If you procrastinate doing so until later in the month, you’ll be less likely to actually put any of that money away and will often use it to pay for other less necessary expenses ahead of time.