If you’ve been around here any length of time or are part of any of my courses, I know you’ve heard me preach about not mixing business and personal when it comes to finances. I 100% believe you should have a separate business checking account.
Thankfully most business owners agree and do keep it separate. But what is one thing that I have found that most business owners don’t do?
So today I wanted to chat about some of the reasons you absolutely need a savings account for your business and what you should be doing with it.
First up, you should have a savings account to, well, save! I hope you wouldn’t go through life without a personal savings account, well you shouldn’t go through business without a savings.
It is meant to be there as a cushion, a rainy day fund, whatever you want to call it, and it can come in mighty handy in a pinch. Whether that is a dry season (hello 2020), unexpected expenses, or just a simple splurge you’ve been wanting for your business!
I’ll be the first to admit that my business savings saved my bottom more than once in 2020 when all weddings came to a halt with Covid. I was still able to pay myself my normal salary each week even when wedding season slowed down.
So how do you work on building up this amazing, bottom-saving savings account? Well – there are a few ways you can go about it, no right or wrong!
First – you can (and should) be taking a percentage from all of your net profit and putting it towards your savings. Trust me, every little bit can add up!
I recommend at least 10% of your profits go towards your savings account.
Next, you could go full-on “Dave Ramsey” style and scale back on any frivolous spending or unneeded expenses and spend some time dumping as much into your savings as reasonably possible.
I tend to go that route most often, especially during busy seasons when my net profit is in excess and I have some extra to stash over in savings. Because just like probably any human out there – if it’s there (right in front of you in your checking account) you’re more likely to spend it than if you were to put it aside in savings.
I also use my savings account to sometimes set aside funds from clients when they overpay (pay in full as opposed to their deposit). I don’t prefer it for a client to pay in full, but every so often it happens and I know we still have 6-9+ months until the project is finished, so I don’t like to keep that full balance in my checking, so I push it over to my savings account to sit tight until I’m ready for it.
There really isn’t a “bad” reason to have a savings account. Most people either just don’t think about it or don’t know what they would need one for. I hope that some of these reasons I listed about as well as ways to build it up have helped you see that it really isn’t that hard, and in the end, it can truly benefit your business.
Well, if you take anything away from this, open a savings account! And if you already have one, start using it!
Please note that while our website contains affiliate links, we only share content or resources that we either personally use, or can personally vouch for. We may receive a commission on any links clicked.