The 3 Dead-Simple Rules of Managing Money for Entrepreneurs
Emergency, budget, and long stretches
Somehow, schools don't teach kids about money. Facts.
This makes managing finances hard. Particularly if you have a fluctuating income. Who's got variable income? Yes, you guessed right. Entrepreneurs. That's why we need to educate ourselves.
Here are my top 3 tips to avoid starvation when things go south.
#1. Emergency Fund
Sometimes I call it "fuck you money".
First, figure out your bare minimum monthly expenses (rent, mortgage, food, health, debt, savings). Next, save up at least 3-12 months' worth of money based on how much you need in a month.
What’s the deal?
You'll get to make your own decisions! Feeling bad about a client? Just walk away. Want to quit your job? Give your two-week notice.
You'll be prepared for the unexpected. Your health might keep you from working for a while, your computer might break, your car might break down, etc.
#2. You need a budget
Budgeting makes financial decisions easy.
Make a list of your most important expenses every month. Make sure you pay your rent, taxes, savings, and groceries before you buy that Apple Studio Display. After all, what good is a fancy new monitor if you can't afford your ramen noodles?
By staying mindful of your budget, and planning, you can effectively assess the value of any purchase - allowing you to make the best decision for your wallet.
#3. Never spend money that's not in your bank account
You might have a project deal almost done, but until you actually start it, you can't be sure.
Many freelancers make this mistake. Pros too. You are shopping on Amazon because you know you will earn a huge amount of money soon (maybe you've invoiced it). It's time to buy something new because you deserve it.
Then you spend it and wait for the income to come in. However, the money never appears. Your client ghosted you.
Shit like this do happen. Think long-term. Only spend money that’s already sitting in your checking account.
4 Tools
Xolo Leap - Opening a company in the EU with e-Residency for Estonia. Compliance, taxing, contracting, and invoicing solution I use to run my European business since 2020. Available worldwide.
Lunchmoney - Personal- and business budgeting made easy. Made by solopreneur, Jen. Supports multiple currencies, auto-syncing a bunch of US, and Europe-based bank accounts, crypto wallets, and many more.
Wordtune - A content-aware writing tool that helps to fine-tune wording and tone. I’m a paid user since late last year and I’m pretty sure it helped a lot with formal communication.
Discord.js - An SDK helping you to write Discord bots. But! Also, their docs and guides are perfect representations of how to write terrific developer documentation. I highly recommend bingeing this instead of Discord chat today.
Content to binge
5 Tools Every Indie Web App Developer Should Use
How principled coders always beat the competition
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Until next time,
David