Today, I want to have a conversation with you about money, how to spend and save wisely. Also, I will share my thoughts about credit cards and setting yourself and your business up for success. So, if you’re ready to handle your finances like a boss, let’s get started!

I think you’re going to be really excited about the tips that I have for you today, because honestly, I think money and finances are one of those things that can be really overwhelming and daunting and something that we can let fall by the wayside when we are busy juggling all of the other things.
So, I really want to share with you some of the tips that I have learned along the way that have proven to be helpful for me. These tips are going to be extremely helpful, whether you’re just starting your business or you’re a few years in and are ready to manage your finances like a boss. So, I hope that you will find value in these tips and put some of them into practice.

1. Don’t Treat your Business like a Slush Fund

This one hits home the most, because I spent so much of my entrepreneurial life treating my business just like fun money. It was something that we didn’t rely on and so, it just spending money. I used it as a slush fund for a lot of personal expenses, which was a huge no-no! I honestly didn’t know that when you have a business account and you have a business; you cannot use your business account for personal expenses. You have to physically move money out of your business account, into your personal account as a “paycheck”.

If you are still using your business debit card for personal things, here is the biggest piece of advice I can give you.

Leave your business debit card at home to avoid personal spending. You should know in advance if you are going to make a business purchase.

Picture This…

Imagine your business is bigger, and you have multiple employees. You’ve given them each a business card to use. One day, you sit down and begin to review their monthly expenses. You see that one employee has used her card at Home Goods to buy some decor for their home, then another charge for coffee that was not business related and you see another personal charge for groceries.

Of course, you initiate a sit-down conversation with this person to find out why they were spending their business debit card on personal expenses. Would you keep allowing them to use your businesses’ money for their personal expenses? No! You would totally put a stop to that, and you would remind them their business debit card is for certain expenses only.

Now put yourself in that employee’s shoes!! Is that you? Are you doing that? If so, you’re not alone. I’ve been there too. I finally came to the realization that I was stealing money from my business and put an end to that immediately. What I did to put an end to this was to start giving myself a paycheck.

2. Pay Yourself on a Percentage Scale

So, as business owners, we all work on commission. We get paid when we get work that comes in or we get paid when we have sales come in. So, think about paying yourself on a percentage scale; this could be something you do bi-weekly or monthly. But pick a certain time that you are going to pay yourself.

My husband also works on commission, but he gets paid actually what’s called flat rate, which means that every single paycheck is different. He works at a dealership, so all of his work comes in regularly; so, it’s consistent in some ways, but also hard to budget for in other ways. He gets paid through his employer bi-weekly, and that is when I decided to pay myself bi-weekly.

Firstly, I tally up all my income for those two weeks and then I start to divide my revenue by percentages. So, for me, the breakdown is as follows: 10% as our tithe for church, 50% goes for my paycheck, 20% as operating expenses, 10% is allocated for sales tax that has to be paid to the state of Arizona, and lastly 10% goes into savings. You might be wondering where is your percentage for self-employment taxes? For us, since my husband does get a W-2 from his employer, we withhold more so that it covers what I would owe. So currently, I don’t save for self-employment tax, but once I start to make more revenue, I will have to do that.

I want to put a disclaimer in there that your percentages might need to include self-employment tax, just based on your financial standing and your family income. I recommend that you confirm this with an accountant just to be sure as that’s not my area of expertise and I do not want to misinform you.

3. Pay for Subscription Services Monthly

I recommend that you pay for subscription services monthly until you’ve used a program for more than a year. What I mean by this is that there are so many different programs and apps that you can utilize as a business owner to help make your life and workflow more efficient. However, it may be cost effective to purchase the monthly or yearly membership package as you can get them at a discounted rate.
And I would agree that when you do the math that it makes sense, however, I want you to pay monthly until you’ve used a program for at least a minimum of 6 months or more than a year. This way, you are making sure that you’re actually using and loving this program or service and not find something better and be locked into that membership.

4. Cancel Your Business Credit Card

This is controversial and you may not like it, but I am talking specifically to those businesses that are smaller and do not have multiple employees.

For those of you that have bigger businesses and may need a business credit card and that works for your business, that’s cool. But I’m talking to those people right now who are not there yet as I want them to get into the habit of spending only money they have.

For me, when I have employee’s in the future, I will be giving them a flexible spending card that had pre-loaded money on it. They will be given a budget for certain expenses which will help me keep track of everything. The biggest problem with credit cards is that it’s so easy to swipe a card and not feel any emotional attachment to the money.

I know there are people out there who feel that is easier from a cashflow perspective to just put everything onto a credit card, and then pay it off at the end of the month. However, I do feel like a lot of people get in trouble with a credit card because you easily tell yourself to just charge it to the card and pay off next month but then you realize your bill keeps racking up and you’re not able to pay it back as easily as you though.

I have never had a business credit card, and I’ve been in business for over 10 years. This has made me slow down my purchases and if I don’t have the money, I don’t buy it. Remember, credit card debt eats into your revenue because you are constantly a slave to paying back all of the purchases on your credit card, instead of paying yourself the paycheck that you deserve.

So, my recommendation is, that if you’re a newer business, do NOT get a business credit card and if you have one already stop using it and get rid of it.

5. Keep Overhead Business Expenses at a Minimum

This one seems super obvious, but I know that it can become an issue. And I see a lot of business owners out there jumping onto the next best thing and racking up just tons of subscriptions and memberships, but not really ever fully utilizing each one.

So really take a look at your expenses and look at where you can cut. If you have programs that you’re not using, don’t pay for them and try to find other ones that streamline everything. One of my absolute favorite subscriptions is Honey Book, and I recommend that to anyone and everyone that has a service-based business. It has so much capacity to do so many things, but I use it specifically for lead generation and tracking and invoicing and contracts. I have a code here for you guys if you want to try it out, [insert code]. So rather than using four different programs that do the same thing, find one that does all that you need for your business and just revisit your expenses and cancel what you’re not using.

6. Keep Organized Records

Keeping your records organized is not only fantastic when it comes to the end of the year and you’re doing your taxes, but it’s really helpful for you to stay on track of how much income you have and the expenses going out. You can categorize your expenses, and this just helps you really focus on what is important in your business; you can review your revenue versus your profit, and you can see where you need to adjust. So, keeping track of those numbers and knowing when you need to adjust is crucial.

So, you might be wondering, how does keeping an organized record keep more money in your pocket? That sounds really great, but I just don’t understand that. I learnt this the hard way, where I was not keeping a record of my expenses and that got me into trouble with the IRS and I had to pay additional taxes. I had one of my highest revenue months, and I remember paying the IRS what I was supposed to and just forgot about it. Well, four weeks went by and I went to go pay my sales tax for the next month and realized that my previous month’s payment had been returned and now I owed that in addition to a late fee and current month’s tax.

As you can imagine, I was extremely frustrated and angry at myself that I didn’t pay attention and I had spent the money that was in my account, never realizing that the tax payment never came out. After that, I got my records in order, and I do just want to mention that has never happened again. So I’m imploring you all not to make the same mistake that I did.

7. Create a Budget and Revisit it Often

So as a business owner, we all work on commission, and it’s hard as business owners to know how much money we can count on every month. What I want you to do is to think about your lowest average income and if you’ve been in business for a while, you can go back and look at each of your previous months or last year’s records, and find out what you made during this month. By doing this, you can forecast and average your income. If you’re a newer business, obviously this is going to take a little bit of time for you to kind of get into the groove of what your average income could be.

The next thing I do is to create a spreadsheet of all of my recurring monthly expenses. These can include my subscriptions that I have as well as the yearly ones that I am signed up to. So, for example, my domain and my website hosting as well as my membership for styled stock photos through Haute Stock. It’s an incredible subscription service where they have amazing styled photography stock photos and I actually have an affiliate link that you can check out if you are interested.

So, I make sure that all of that information is included in a spreadsheet and I am able to forecast every time that I get paid. I can ensure that all of my expenses are being covered, which is that 20% that’s left in my checking account for operating expenses. So, it’s just really helpful for me to be able to reference and know exactly what is coming out and the dates they are due and forecast something that is due within the next 3-6 months.
So, transitioning from business budgeting, to crafting your personal budget, my family has adopted budgeting techniques from Miko Love, who is with The Budget Mom. She has an incredible workbook called the Budget by Paycheck Workbook and so I use her method for our personal finances.

First, you write your budgeted income, and then you write down all of your bills when they come out and how much you are anticipating them to be. So, her techniques have really helped us to stay on track with our spending. And I’m going to walk you through a couple of the strategies that we use to keep our spending in check.

8. Move Money to Separate Accounts

So, when money comes into your account, whether it’s business or personal, you need to have a plan for where that money is going to go and how it’s going to be spent. We use some principles developed by the financial guru, Dave Ramsey. My husband and I took his Financial Peace University class when we were newly married, and it really changed everything for us and truly saved our marriage. During our first year of marriage we fought about money so much and we really started to get a handle on our finances after taking his class. We’ve actually taken it twice because you always need to revisit these principles.

But it just gave us this foundation of what we wanted for our money and that it was so important that we told our money where to go. So that’s a principle that Dave Ramsey talks about all the time is a budget, tells your money where to go, and you should always have a zero-based budget. So, you always need to know where your money is going.

Just to give you an example, between my husband and I, we have seven different bank accounts. There are accounts for my three businesses: The Purpose Gathering, my photography business and a photo booth business. So, my photo booth business is actually a DBA, which is doing business as under my photography business and I only have one bank account for that. My second bank account is for The Purpose Gathering, and these are two separate business checking accounts. Now I have one business savings account, my husband and I have one joint checking account and we also have a joint savings account, an emergency savings, and then a vacation pay savings account where his vacation pay is deposited into.

So, get in the habit of moving that money around, and when money comes in, you need to have it place for it whether it’s going to bills or to savings.

9. Use Cash for Variable Spending

So, some ways that we keep more money in our pocket is by using cash for our variable spending. Now I know this is not going to settle well with everyone, but we have been trying to use cash with groceries and stay on a budget with groceries.

Because it is so easy to overspend at the grocery store, if you don’t plan for it. And also, if you do not stick to your budget, you would go through the store and put everything into your cart, and by the time you check out you’re in shock at the how much money you spent. Well it’s because you were not keeping track of how much you were spending and you also were just spending on impulse, not necessarily on budget.

So, we put aside cash in envelopes for groceries, for paying our house cleaner, doing house projects, for eating out or just simply spending money. And this has been really helpful for us because once the cash envelope is empty, then we cannot spend any of that money.

10. Set Up Sinking Funds

A sinking fund simply involves setting aside a little bit of money each month towards a bigger goal or something that you’re saving up for. So those things or events that always creep up on you, that happens the same time every year or the things that you need to be saving for. Things like kids’ birthdays, yours or your spouse’s birthday, family birthdays, vacations or even Christmas. All of those things you can save for using a sinking fund.

A business example would be if you need a new computer or for me a new camera or new lens. I would be putting away a little bit of money into a cash envelope to save up for this. That way, I am not seeing the money in my account and I’m not tempted to use it. And I know that every single month I’m going to put a certain dollar amount in there, a little bit at a time, and I’m going to pay cash for whatever it is that I need.

So that’s what I have for you guys today, 10 ways to keep more money in your pocket. I hope that you have found some of these tips to be helpful and that you put them into action and actually do the work. Looking forward to hearing what you think about these tips and how they help impact and change your business finances.

I would love for you to share this with more mamas and spread the word that business and motherhood does not have to be lonely and does not have to be hard.

As always mama, I am here rooting for you and you are not alone on this journey

xoxo, Ashley

Resources:

Honeybook – Manage projects, book clients, send invoices and get paid all in one spot. Get 50% off your first year, use the link above.
Haute Stock– Access to thousands of gorgeous curated images and design assets for less than the cost of a single photo shoot.
The Efficient Mompreneur – The ultimate road map for mompreneurs to achieve maximum results with minimal effort.
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Financial Peace University – Dave Ramsey