Nov 26, 2020
Saving is an essential practice for businesses of every size. But it can be hard! The benefits of saving are monumental, and the downsides of doing it improperly can be crippling. Debt, business expenses, and other costs can add up. So, how do we get ahead? Today, Jill is breaking down her tips for saving.
There are certain priorities when it comes to saving and paying off essential expenses. Firstly, if you have debt, then it’s crucial to pay that off first. However, there are ways to shave off percentages of your profit and tax accounts to lessen the overall blow and account for those costs slowly over time. It doesn’t have to be a debt either--it could be any large, lump sum that you have to save for or even something like a trip for you and your employees.
In the end, it’s about developing good habits early on, so you can create a cushion for yourself by saving at the same time.
By creating multiple accounts, you can better adjust percentages of other accounts to make a saving account work.
Remember to start small--1%, 2%, 3%. You don’t want to go all-in at 25%, because you’ll get hurt. These habits of taking a small percentage of certain accounts to save for another are building blocks. You can focus on these habits long-term and reap the benefits. When you couple this with lowering your cost of living, you can really establish healthy accounts.
Jill recommends having a separate account for just about everything that has a cost. That way, you’re able to physically look in an account and see where you are at, which is much more effective than a spreadsheet. Also, you’re able to move and make adjustments as necessary in real-time.
Jill’s process is this: take the total of whatever it is that you're saving up, and I divide it by how many months you have left. Then, take the new dollar amount that you’re being charged, because it might've changed, and build in a little bit of an extra. From there, take that bumped-up number, divide it by however many months are left, and use that new percentage to go off of. And then that is what I'm transferring out every single month. By the time you need to pay, you're already used to having that amount taken out of your budget.
As an extra tip: make the accounts you normally borrow from, the ones you’re saving with, as inaccessible as possible. This is a little mental trick to help you get into a rhythm.
Key Takeaways:
- If you have debt, then it’s crucial to pay that off first. However, there are ways to shave off percentages of your profit and tax accounts to lessen the overall blow and account for those costs slowly over time.
- It’s about developing good habits early on, so you can create a cushion for yourself by saving at the same time. Start small--1%, 2%, 3%--These habits of taking a small percentage of certain accounts to save for another are building blocks. Long-term, you’ll reap the benefits.
- Have a separate account for just about everything that has a cost. That way, you’re able to physically look in an account and see where you are at, which is much more effective than a spreadsheet. Also, you’re able to move and make adjustments as necessary in real-time.