Personal savings vs. Business savings

Wouldn’t it feel good to not worry about money? Wouldn’t it be good to have money for not just one rainy day but a couple of rainy days? With all that is currently going on with this pandemic; I see a lot of people stressing about money. How am I going to pay my rent? How am I going to pay my gas and electric? While this is a valid concern. I have another concern. Where are your savings accounts? Where is that emergency money set aside for things like this? Things happen all the time. We can’t change things that are out of our control. But we can change our spending habits. We can change our way of thinking about money. We can get better prepared to take care of ourselves mentally, physically and financially.

There are two different types of savings you should have. You should have a personal savings and a business savings (if you have a business, or strive to have one). I will start off with the personal savings.

Your personal savings account should consist of money for rent, gas and electric, phone, internet, trips, shopping for essential items (soap, toothpaste…etc). You should not just be saving for the month. You should have enough for each thing to last you a few months. You should have 3-4x your rent and other expenses or more. You should have enough to keep you comfortable. Enough to not be stressing yourself out when things happen outside of your control.

A business savings should consist of money for your inventory, expenses (website, email, building rent…etc), marketing and anything that is essential for your day to day operations. Same as the personal account; you should have enough in this account to be comfortable. You should not be searching for money to pay for your website, when you know its something you have to pay for to keep orders coming into your business. All these things should be handled to relieve stress.

It is extremely important to separate these accounts, manage and budget your expenses and set goals and expectations for the accounts. The last thing we should be doing is trying to search for money that could have easily been there is we were being responsible and living within our means. Of course we can enjoy ourselves, go out to eat and do all these other things we enjoy. But, I don’t do any of these things until I first pay myself by putting money into my savings, pay bills, set money aside for food, gas and electric. Whatever is left over is what I will use for any extra curricular that I want to participate in. It’s not hard to save; you just have to make it a priority sooner than later.

Nia Kamau, The Urban Author

Website: http://www.theurbanauthor.org 

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