I have a girlfriend who is embarking on a new and exciting business. She is starting to make money and asked my opinion on what to do with it. She isn't interested in adding it to the household budget at the moment because she doesn't want to become dependent on it and she isn't interested in adding it to their regular savings. My suggestion would be to open up a separate savings account for it.
The other thing to think about when starting a small business is keeping your personal and business accounts separate. It is much easier to track income and expenses when you have a separate account. And it simplifies life at tax time. Start a file with all work related items tossed in there. Be sure to have invoices tracking the sales and income. Now this doesn't have to be complicated. As you get busier then you can add a computer program to track all money transactions, print invoices, and other reports. In the beginning Keep It Simple. As you move along in this fashion you will find what you need the most help with and then can decide on the software that meets that need.
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I can truly appreciate not wanting to depend on the income from a new venture. We never depend on my income in our daily lives. That is our "fun" money. We don't depend on my income for a few reasons. One of them is that we move frequently so my income becomes fleeting. And another is if push came to shove and one of us HAD to stay home to care for the kids or an ailing parent some day then we could make that decision easier.
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Here's an update on my Lenten challenge...as of today we have "saved" almost $400. I am calculating that based on the credit card statement ending balance last month and the one this month. We are pretty happy with the results so far. Even the littles are getting in on the challenge. As we drove by Mellow Mushroom today, one of them mentioned that we haven't been there lately. The other responded that it is non-essential spending LOL Then she proceeded to critique my spending lately...even funnier!
2 comments:
Yes, our lives are transient so having the money in a regularly used account could only set you up for dependence. Thanks for the advice!
Great advice...keep it simple is so important. And we also keep my money separate from the household budget for now. Living on one income is very freeing, and having 2 is fun.
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