So at the start of the year I decided to switch my money management over to a zero budget, I discussed this last month in Zero Budget Method Changed My Financial Outlook and Life. After getting my finances to a zero each month with my budgeting skills one thing I want to make sure to do was be a month a head with my bills. I wanted to alleviate issues of stress if something happened in my business life. I will say making sure I was a month or more ahead with my bills does not include having a savings account for emergencies.
To be completely honest, when I first embarked on trying to make sure I was a month ahead in bills was beyond stressful. It felt like so many bills or emergency popped up and I was not getting to do what I wanted to do with my finances.
Know Your Bills
If you. have finally decided to manage your money welcome to adulting. One of the first things I really needed to do was know all the bills that were coming in and out from my personal and business life. As I talked about in Are Affordable Luxuries Draining A Hole In Your Wallet, I need to get a reign on all those unexpected bills and starbucks drinks. Before doing a zero budget I did not have a car line in my budget. I did have a “gas + car wash” line but not for maintences which happens every quarter and that was eating a hole in my money.
One Bill At A Time
This is where a majority of the stress was coming from. I was trying to put all the money away for an entire month that same month I was doing my regular budget. Let me tell, you that does not work at all. So, just like when I was paying off debt I took the method of smallest bill to largest when it comes to putting that money away. One of my smallest lines in my budget is car wash. Sometime, last year my client and I decided to be good stewards over our cars and that meant getting a car wash once a month. So, I put away $23 dollars to cover my car wash and then I worked my way up. Once, I made it through the whole list of bills I went and started doing another month of bills.
As an entrepreneur, only thing I am able to fall back on if something puts me on the sidelines for awhile is my savings that I have. So, security is very important to me knowing everything will be taken care of and I will not have worries. One of the best things I could do outside of the bills ahead is have an emergency fund, my savings account and paying off debt. Running a small business can be scary and I want to know I am financially secure no matter what is going on in my life.
Paying Off Debt
The main reason I decided to start having a month of head of my bills was my student loan payments. As, I have discussed in How To Tackle Your Student Loan Debt While Starting A Business, Business Life Discussion: Adulting Building Wealth and How To Attack $30,000 In Student Loan Debt, I was causing myself stress and being financially irresponsible for so long. My student loan debt went into to default because I was not mature enough to pay my minimum payment. I did not want to fall into that trap again. So, my student loan account has six months worth of payments in there. I want to know every month no matter what its being paid.
I would personally suggest having the $1,000 in savings then three to six months of living expenses saved. Adding money your budget each month to stay ahead.