The Business of Buckets

Question


Hi Scott,

I love your book and love passing it on to other people. But what comes back to me from some of my self-employed friends is that do not have a steady income. What is your recommendation for these people in setting up their buckets?

Deb

Scott's Answer


Hi Deb,

My book sets out how I manage my own money: I’m self-employed, and it works!

When small business owners tell me that the buckets strategy doesn’t work for them, it’s nearly always because their business isn’t making enough dough.

And it’s also because they don’t keep their business and personal finances totally separate. It’s all mashed together.

So, the key for small business owners is to ‘know your numbers’ — that is, the absolute minimum you need to earn in your business to keep the doors open and the absolute minimum you need each month to live on personally.

Then you set up your personal buckets up accordingly.

But I also have some business buckets:

I transfer 40% of whatever the business earns into a seperate business savings account to meet my tax obligations. (Yes, it can sit there for months … but I’m conservative. I’m simply the bagman for the taxman.) In addition, I have a business Mojo account (for emergencies) and I keep a very close eye on our working capital, so I can always meet my obligations.

If you think this sounds difficult, try running a business without it.

Scott