So I’ve learned that when you’re self-employed, there’s no such thing as a “steady paycheck.” At least as a full-time blogger and entrepreneur wannabe ;) The money comes in when it comes in, and the idea of a bi-monthly influx of cash is now something of the past. All of a sudden my 2 paycheck budget no longer works! (eek!)
At first I just went with the flow and spent money whenever I needed to – knowing that I had a decent amount coming in every few days, and still keeping track of everything like I usually do. But after a while it just got weird. Mentally it really threw me off. I mean, there was never a starting or ending point?! Or even a “payday” for that matter? Something I’ve planned my entire life around since I was 13 and pimple-faced! I didn’t like it, and I really didn’t know how to budget for it, either.
So I decided to start paying myself just like a normal employer would. It took me 4 months to figure out HOW to do that, exactly, (initially I kept the “every two weeks” system going until I realized it was just extra work) but I think I’m now on the right track and finally up to sharing my new process with you ;) Maybe some of y’all do this too? Or maybe there’s an even BETTER way to do it? I’m sure it’ll evolve even more as the months go on…
The Company Pot
Okay, so the first thing I changed was diverting alllll my income into one main “company” account. (Did I ever tell you I set up an LLC for all my projects? Well, I did :) And it’s even more useful now!) All revenue, ad $, side hustle money – everything. It all goes into one main checking account until it’s time to be dispersed on the 1st of the month. In theory, I should *always* have at least one month’s worth of “paycheck” in there – $5,360. Anything over that stays in the account in case I fall short one month. Or heaven forbid, multiple months (!!!).
My LLC is pretty much my new “employer” – set up to keep some structure around here, as well as a little legal protection. I needed a way to pay myself on a regular basis so that I can continue living a “normal” life! :) And especially for tracking my progress. If money just comes into my personal account whenever it feels like it, and I spend it whenever I need to, there’s never a clear cut paycheck or budget. And I don’t like that (not that I’d never track my income/expenses anyways, but you get what I’m saying). I basically have to trick myself into receiving a salary so I can better understand my situation! No salary = messed up brain.
The Paycheck Breakdown
So. The 1st of the month rolls around and it’s time to pay myself. YAY!!! All I do is log into my main personal account at USAA (who doesn’t offer “company accounts” btw – arghh), and hit xfer. Twice. One lump sum of $3,500 into my checking account, and another of $1,860 into my “tax account” – the one I like to
bitch chat about all the time ;) I initially had it all coming into one main personal account, and then dividing up the taxes accordingly, but now I just throw all the tax money right into my LLC’s savings account to keep it separated. The company stuff stays w/ the company stuff, and my personal money stays w/ my personal money. Nice & easy.
Then once I get this “paycheck,” I do 3 things:
- I transfer my portion of the “house” budget ($2,700) into our house account — to pay for all our mortgages, utilities, etc like we talked about last week.
- I pay off my personal credit card — budgeted for $600, but lately around $400.
- And then I take out $200 in cash for whenever it’s needed. Usually for food and other random stuff I don’t think too much about for the most part (on purpose – it’s my “whatever” money). If I have money left over by the end, I’ll just keep on going and see how long it takes until I need to hit up the ATM again ;) I’ll probably skip 2-3 months this year.
And that’s my new payment plan! :) I now have a system in place that I absolutely love so far, and one that I think should be able to scale as needed. (Like, UP, when I start making more money! Haha…) But the best part of it all? That everything now MAKES SENSE. I know when to pay myself, HOW to pay myself, and most importantly, what I can expect going forward. My mind is clear again and I’m finally back on track, baby! My full-time job feels like a full-time job again. Pretty funny ;)
Featured savings tip
You already know that banks pay $$$ for the privilege of holding your money…it’s called interest. But maybe you didn’t know this: that so-called interest can be as little as .01%. If your cash savings aren’t sitting in a high interest savings account that earns you at least 1%, you’re basically saying “no” to free $$$!
Now, obviously the 1% interest you get with a high interest savings account like the one at Discover bank won’t make you rich, but that extra 1% compounded over 30 years can grow into a *big* pile of cash. And if you wanna hit lofty $$$ goals, you should be looking for every edge possible.
Here’s another way to look at it: if you leave $50,000 in a regular savings account, that’s almost $500 you’re just throwing away, each and every year you don't setup a high yield savings account! Will you do 5-10 minutes of work right now to earn an extra $500/year for years to come?
If you said “heck yes”, then you can setup your high interest savings account here to start earning 1% on your cash savings.