Home
>
Small Business
>
Self-Employment: Managing Your Money: Tips for Living with a Fluctuating Cash Flow (Part One)

Self-Employment: Managing Your Money: Tips for Living with a Fluctuating Cash Flow (Part One)

The way you manage your money is one of the first things you'll change when you move from employment to self-employment.

You are moving from an environment where you received income in equal amounts at set intervals to one where your income fluctuates.

Managing money in such circumstances is unfamiliar and, for most of us, uncomfortable.

These are some tips I developed from my experience of 10+ years of self-employment.

? KEEP GOOD RECORDS

When I first got started, an old CPA friend of mine had three words to say. "Keep good records."

Maintaining good records of your money transactions helps you in several ways.

It helps you track your income and spending so you can create a realistic budget.

Your financial records become a management tool for your business. If your records are accurate and up to date, you can track changes in income and spending ? and take appropriate action, when necessary.

There's gold in those records. As a self-employed person you can deduct all kinds of business expenses. But you have to be able to substantiate them with evidence (receipts, invoices, credit card slips, mileage logs, etc.)

Lastly, keeping good financial records keeps the authorities happy when they come calling. The IRS audit rate of self-employed people is higher than almost any other group.

? OPEN SEPARATE CHECKING AND SAVINGS ACCOUNTS FOR YOUR BUSINESS.

Having separate bank accounts in your business's name does a great deal to prove to snoopy tax authorities that you are really running a business and not a hobby.

But more important, it helps you to keep your records straight.

Money you generate and spend in the process of conducting your business goes through your business account, all other money goes into your personal account.

TIP: If you are a sole-proprietor, don't intend to have employees, and don't anticipate a need for business loans, your account can be a separate personal checking account. All that is necessary is that your account be in the name of your business.

If your bank insists that you open a higher cost 'business acccount,' consider going to a credit union, where rates and terms are more favorable than those of commercial banks.

? THE BANE OF FLUCTUATING CASH FLOW

Managing fluctuating income is one of the biggest challenges of self-employment.

The most difficult part of having a fluctuating cash flow is dealing with the anxiety that arises when cash flow is tight.

Most people who have been self-employed for a considerable amount of time develop a simple faith that money will flow again. But it gets uncomfortable for us, too, when the downturn is severe or prolonged.

Here are some tips on coping.

Have a marketing plan and stick to it.

Shift your spending to mimic your cash flow. In other words, spend more when money comes in, cut back when it is not. And put away some cash for a rainy day.

Keep your obligatory monthly payments as low as possible. These are the necessities that are billed monthly such as telephone and other utilities, car payments, etc.

If you must put a purchase on a monthly installment, as, say, most people do when they buy a car, opt for the longest-term loan possible.

A longer loan term lowers your required monthly payment. This makes it easier to fulfill your obligations during lean months. Pay more than is required during fat months to pay down these loans (this will reduce your total interest payments and pay off the loan more quickly).

Rather than paying for web hosting and other services on a monthly basis, opt for an annual installment that comes due during a fatter month. Not only do many web hosts give you a discount for choosing the annual option, you eliminate one payment you must come up with during a lean period.

Continued.

Ellen Zucker has been successfully self-employed for over 10 years.

Self-Employment 101: It's about making a living and creating a life! ... Observations, information and resources for those of us who are self employed or just thinking about it. http://www.selfemployment101.com

http://www.selfemployment101.com can get Ellen's articles delivered to their email inbox.

scheduled maid service Northbrook ..

In The News:

A third-party dental marketing agency's unsecured database exposed millions of patient profiles with personal information that could be exploited for identity theft and insurance fraud.

New York-based Aircela unveils refrigerator-size device that converts air and water into fossil-free gasoline, with initial deployments planned for 2025.

Your home address is easily accessible on people finder sites, putting you at risk for stalking and identity theft, but data removal services can help protect your personal information.

Stay up to date on the latest AI technology advancements and learn about the challenges and opportunities AI presents

Robot combat evolves at Unitree's Iron Fist King event as G1 robots face off in China, featuring knockouts, precise strikes and agile machines that can perform side flips.

Take control of your digital privacy with actionable tips like Facebook privacy checkup, location tracking management and data removal services to protect your personal information.

Smart TVs and streaming devices manufactured in China are being compromised by BadBox 2.0 malware before users even power them on; infections have been detected in 222 countries.

The lightweight, 15-pound Tenniix tennis robot mimics pro playing styles like Nadal and Federer, using AI trained on 8,000 hours of professional tennis data.

Oak Ridge's uranium enrichment facility supports America's AI ambitions amid concerns that China's aggressive nuclear reactor construction could give it an edge in powering data centers.

Facebook scam ads now leverage AI and deepfakes to create convincing celebrity endorsements, targeting specific demographics with sophisticated schemes.

Apple unveils iOS 26, macOS 26 Tahoe and iPadOS 26 with translucent Liquid Glass design at WWDC 2025, featuring ChatGPT integration as competitors advance rapidly.

The Atom Touch prosthetic arm combines an AI neural interface with EMG sensors, allowing amputees to control individual fingers with precision at an affordable $25,000.

Aspen officials aim to have crews on the scene within five minutes — something they say would be nearly impossible without precise location data the AI technology gives.

Tech expert Kurt “CyberGuy" Knutsson says iPads are usually secure, but hackers can access them. Spot warning signs early to protect your data.

Tech expert Kurt Knutsson reveals how to easily move photos and videos off your iPhone or Android to securely protect your favorite moments.

The Social Security Administration is launching digital SSN access this summer. Tech expert Kurt “CyberGuy" Knutsson helps you learn how to use it and protect your identity.

Glide underwater with CudaJet and make the ocean your playground. Kurt “CyberGuy" Knutsson discusses the redesigned tech that might be your next big thrilling adventure.

Protect yourself from login alert scams with five security steps, including avoiding suspicious links, checking account activity and enabling two-factor authentication

Skip the usual Father's Day gifts with personalized ideas for tech enthusiasts, home brewers, pool owners, seniors, outdoor lovers and privacy-conscious dads.

DMV text scam alert: Fraudsters impersonating motor vehicle departments nationwide are sending threatening messages about unpaid tickets and tolls to steal your information.

Fox News' AI Newsletter brings you the latest on this rapidly evolving technology.

E-BAR, MIT's mobile robot, provides physical support for seniors with handlebars that follow from behind, helping prevent falls while maintaining dignity for aging adults.

AI is changing everything – now, we can even use it to generate video. I tried OpenAI's Sora and Google's Veo – here's how they measure up against each other.

Five simple phone setting tweaks that make your device work harder for you, from automatic text message deletion to scheduled focus modes.

Android users can save time with 10 simple automations, including automatic battery saver mode, location-based Wi-Fi settings and scheduled "Do Not Disturb" mode.

Self-Employment: Managing Your Money: Tips for Living with a Fluctuating Cash Flow (Part One)

Small Business