“What should I do with the money that is flowing into my account?!”
Have you ever wondered this? Perhaps you’re wishing you could wonder this!
When your business begins to take off and you start incurring money, perhaps you’re looking at what to do with all the money you’re bringing in.
Do you reinvest some of it back into your business? Do you pay off credit card debt? Do you save some? If so, then how much? Do you hire out?
You don’t want to spend all your money on things that don’t matter, but rather on things that will matter to your business, clients, and revenue in the long run.
Here are the five ways you can consider what to do with your money right now as an entrepreneur:
1. Save Money
There should be a point to saving money for your business, much like a nest egg. According to Investopedia, a nest egg means, “a substantial sum of money or other assets that have been saved or invested for a specific purpose.”
You want to have a savings account for your business so that every time you get paid, you’ll put a percentage in that account. Or direct one of your revenue streams payouts to that account every month. This can be saved for taxes, emergencies, or a sudden bill you didn’t expect.
2. Pay off Debt
Many of us are in debt, including me. We have taken out credit cards to pay for coaching programs or packages to help our business build and grow.
Unfortunately, many of us are stuck paying a credit card payment for the next 5+ years. But what if you want to start paying off your debt quickly because you’re just sick and tired of paying on it (like I am!)?
Then you need to calculate when you want to stop paying your credit card bills (could be months or a year from now) and calculate how much money you need to pay every month to reach it.
What if you want to pay it off now? The answer is YES!
When asked, Experian says,
“It’s an oft-repeated credit myth that carrying a credit card balance helps your credit scores. In reality, high balances on revolving credit accounts can mean high credit utilization, which can hurt your credit standing.”
3. Invest Your Money
One of the ways to make money and save it is by investing it. You probably have heard the term Compound Interest floating around and it simply means, “your money can keep growing, earning interest, and building upon itself.”
That sounds great! Now, how do you figure how much money do you need to invest for it to grow to a sizeable amount over a certain period of time?
You once again have to calculate what you want to have over a certain period of time. You can easily get an idea by heading over here and figuring out what that could look like. But before that, you need to talk to an investor and see which options are in your best interest.
I know, retirement is boring and it’s so far away, right? Perhaps it’s time to start thinking about retirement because, let’s face it, not all of us are going to work until we die. Some of us will because that is who we are, but some of us want to have a life after we close or sell our business.
American Express has a few ideas on retirement plans that you can begin to look into and research, from a tax-advantaged account to Roth IRA accounts. You need to talk to a specialist to determine which would be the best option for you and your business.
If you want to get an idea of what it could look like if you were to start saving now, calculate what you would need to put back every month to reach your retirement goals in the next 20-30 years. You can always change the amount going into your retirement fund as your business or revenue streams grow and prosper.
5. Spend Money
I do think we all need to spend money to not only get it out of our system but to celebrate what we are creating! However, we need to make sure we allow money to be spent, whether that’s allowing money to be spent on coffee, going out to eat, or buying something, we need to be diligent with it.
You need to first know what your budget and hourly wages look like and how to plan for it. Then, set aside a percentage of what you bring in and put it in an account to spend.
Or, if you have a revenue stream coming in, then purposely make that stream a “my spending money” and call it good. Or consider dumping all your money and revenue streams into one account and at the end of every month, a percentage goes towards spending however you want.
One lesson I have learned over the years is that I need to be smart with my money and not allow the idea of “Look at all this money I have!” to fill me with ideas of how I can spend all of it now. I want to be more diligent and smart with what I have and use it wisely.
As your bottom line increases, it’s important to start using that money to pay off bills, debt, save for retirement, and much more. You’re investing in your future while being present to your current needs now.
How are you going to use your money, whether it’s from your main income source or your revenue streams? Let me know by posting in the comments below or heading over to my Facebook Page and letting me know there in a comment. I would love to hear from you!