I help entrepreneurs leapfrog over the typical potholes that derail most small businesses with inspiration, motivation, education, and support across a wide range of business topics drawn from over a decade of running my own business, teaching entrepreneurship for the City of New York, and coaching and consulting privately with dozens of women and minority small business owners. Honestly, why go it alone when help is an email away?
Saving for a Rainy Day
Shortly before I graduated with my MFA in Writing, I turned my temp job into a full-time job offer.
The money wasn't good—I had to take a second job once my student loan repayment kicked in. Eventually, I negotiated a raise for myself that enabled me to quit my moonlighting.
At that point, I set-up a separate 'rainy day' savings account into which I direct deposited $25 dollars per paycheck without fail, even though I was literally living payday-to-payday.
When I decided to leave that organization several years later, I was contributing more than double per paycheck to my rainy day fund. As a result, I had a nice tidy sum available to me.
I used that money to travel and volunteer in the Pacific Rim for 6 months and provide cushion upon my return while I looked for my next job.
As I write this, we've narrowly escaped (for now) a government shutdown in the US and are staring down the barrel of another potential interest rate hike before year-end.
The instability of our economy—not just here in the States, but around the globe—means we all have to be smarter with our money and our financial strategy.
That's why, we need to create rainy day funds for our businesses as we do for our personal lives.
Because the one thing that's certain is uncertainty! (And taxes, of course!)
If you're new to emergency financial planning, here's how to do it:
- Assess Your Current Financial Situation
Take a close look at your finances. What are your monthly expenses? How much revenue do you generate? Understanding your financial baseline will help you determine how much you should set aside.
- Set Clear Savings Goals
Start by aiming for a fund that can cover at least 3-6 months' worth of operating expenses. Adjust this based on your industry, cash flow, and risk profile.
- Create a Separate Account
Separate your emergency fund from your regular business accounts. This prevents you from accidentally dipping into it for non-emergencies.
- Make Consistent Contributions
Set up automatic deposits or transfers so you're treating your regular contribution like a required payment in your budget. Think of it as a non-negotiable expense, just like rent or payroll.
- Track Your Progress
Monitor your fund's growth over time. Celebrate milestones as you reach them, and consider increasing your goal as your business grows.
- Explore Investment Options
Once you've built a substantial cushion, consider investing some of the surplus to help it grow even more. Consult with a financial advisor to identify safe investment options.
- Review and Adjust
Regularly review your emergency fund strategy. As your business evolves, your financial needs may change so be sure to adjust your goals and contributions accordingly.
Not only does an Emergency Fund help you weather difficult economic times but it can also help you build investment capital so you can take advantage of unexpected opportunities that arise.
In other words, you're not just ensuring your business's survival but its ability to thrive regardless of economic factors.
If you need some help navigating these uncertain times and setting yourself up for success, we should talk!
Hey, thanks to everyone who reached out in response to last week's It's a Small World message. It definitely resonated with a lot of you, and I love getting your feedback and hearing your stories.
So, please, keep them coming!
Until next time,
PS - Want some more emergency planning advice? Check out Hope for the Best.
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I help entrepreneurs leapfrog over the typical potholes that derail most small businesses with inspiration, motivation, education, and support across a wide range of business topics drawn from over a decade of running my own business, teaching entrepreneurship for the City of New York, and coaching and consulting privately with dozens of women and minority small business owners. Honestly, why go it alone when help is an email away?
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