whyifailed.com Blog

Keeping Your Money

If there’s one subject that people know less about than making a living/building a career, it has to be money. Though we have a general sense about the subject – go to work, get paycheck, pay bills, spend the rest – I suspect most people feel money is controlling them instead of the other way around. And despite the fact that musician’s multiple streams of income can provide security, unsteady and unpredictable pay-days make this subject tricky.

Getting Finances Done tackles the subject of budgeting under these circumstances in a post called Budgeting on a self-employed or irregular income. This step by step guide covers everything you need to get started. It’ll come as no surprise that the key is discipline, but beyond that there are some important revelations I wish I had known 20 years ago.

My favorite is the idea of “chunking” out your money to yourself. The goal here is to create a steady paycheck for yourself (You, Inc. pays on the 1st and the 15th) despite the fact that your business gets money in randomly. This does two things that are critical to your survival and prosperity. By creating a buffer between your life and your work, it brings balance in an area that can be unnerving. It also protects overflows from being spent. Any extra money left in the account after the 15th is just that – extra money.

In my experience, extra money was spent before I even knew it existed. And it was usually just a matter of days before I REALLY NEEDED THAT EXTRA MONEY because I wasn’t working or I was waiting on a check. Paying yourself a steady income prevents this delimma by smoothing out the irregularities. It also does one more thing. It gives you a clear and accurate idea of whether you’re making it or not. Once set-up on this plan, it will only take a few months for you to know if you’re working enough or not. If you are, great, if not, you can do something about it. Quickly.

In the end, the greatest advantage of this budget isn’t day-to-day, month-to-month. It’s year-to-year, when the “overage” starts to add up to something substancial and useful – for investing for your long term security.

After all, it’s not how much you make, it’s how much you keep.

This entry was posted on Friday, September 29th, 2006 at 7:57 am and is filed under Money, Personal Development, Success. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.