In case you missed last week’s post, this month, I am introducing four quick ways for you to increase your company’s cash flow in tough economic times. This week’s suggestion may be easier said than done, but it is the best way to build wealth over time.
Week 2 – Save a Set Amount Each Month
Pay yourself first. Create a budget. Allocate a percentage of your revenue toward marketing. These statements are repeated in various financial advice books and blogs. However, they have glossed over one important tactic to ensure that you always have money – save a set amount each month.
Granted, when you are just starting a business, you may not have much (if any) income to speak of, but getting into the habit of putting away an amount that you will not miss terribly is good practice as your company grows. We’ve spoken about compound interest before, which basically explains that $1 is worth more today than tomorrow. Even if CD rates and money market account interest is low, you are still able to benefit from having additional collateral when you apply for loans and lines of credit.
Speaking of credit, an easy way to begin saving money is by monitoring your credit card use. If you use them responsibly (i.e. completely pay them off every month), you can benefit from them. However, the reason most credit card companies make money is because people end up spending money that they don’t have. Unless you are able to pay off the balance in full every month, you’re better off ignoring the promotions that credit card companies use to lure you in (cash back, introductory APR, airline miles, and so on).
Here are some ideas to help you save a set amount each month
- Arrange for an automatic transfer to come from your business checking to your savings account
- Establish a goal (new building, equipment, more staff members) and save this specific amount
- Trim your discretionary expenses and place this money into savings
How much money do you expect to save within one year?