Managing Your Finances
Filed Under (Finances) by Ross on 10-09-2008
I’ve realized that there are alot of young people reading my posts and therefore I think it’s a good time post something non-facebook related yet very important to an entropreneur. How to manage your finances.
Finances can be a very tricky thing to keep track of by yourself without proper guideance and alot of willpower. Personally my willpower comes from my anal retentive wife who makes me keep track of how much I make per week.
Step 1:
Open up the appropriate bank accounts. I’ve got FOUR (yes 4) bank accounts to make tracking my money easier.
- Company chequing account - The money is deposited into this account and you pay yourself a weekly wage out of it.
- Family chequing account - Money from the business chequing account is deposited to it weekly. You need to pay yourself a weekly salery so if you run into hard times (say all your ads bomb majorly) you have a few months to figure things out.
- Tax savings account - Money towards taxes goes into this account. I’ll cover later on how much you should be putting in. I personally have this account setup as a high interest GIA which pays me 3.25% annually. It’s a pretty easy way to make a couple extra grand for just putting money into an account.
- Family Savings account - You NEED savings. Shit happens and life can go down the toilet. You need to make sure you have the financial backing to deal with it. If your car breaks down or your house has a major foundation issue - you’re covered.
Prior to opening the bank accounts, do some research for what type of accounts your bank offers. For example, both my company and personal chequing account have unlimited withdraws, meaning the only fee I’ll ever have to pay is the monthly charge. Mind you, I havn’t paid that monthly charge as most banks wave the monthly bank fee if you keep a certain amount of money in your bank account for an entire given month. Usually this number is around $3000-$5000. It’s well worth it to keep that money in your bank accounts at all times as it will save you around $250 a year!
Step 2:
- Calculate how much in taxes you should be paying. I set aside 45% of my profit towards taxes based on how much I make. You are going to either have to hire an accountant or do a lot of research to figure out how much you should be saving for taxes. Different countrys have different tax rates, that is why it is imparative that you find out for yourself. It is always better to overdue how much you save for taxes.
- Create a monthly spending budget for yourself. This includes rent, utilities, food, entertainment, gas, insurance, debt repayment and pretty much anything else you spend money on regularly per month. On that money base your weekly wage for yourself. The biggest mistake I see people doing, is living off of what just comes in. It’s impossible to have a good budget without knowing how much you are going to make.
Keep in mind I am NOT an accountant, however this is what works for me. There are different methods of accomplishing the same things.
