Has your business savings account been sitting stagnant? Between paying for expenses and saving for taxes, it can feel impossible to grow your savings account. But with some planning and mindset work, you can increase your business savings balance and learn to truly enjoy the process.
Why You Need a Business Savings Account
You probably already know you need to save money for your quarterly taxes, but did you know there are plenty of other reasons to grow your business savings account?
Emergencies. whether it’s a personal emergency that keeps you from working for a few months or a legal issue within the business. Having some savings set aside can radically improve your situation during these times.
Upgrades. Unfortunately, our gear doesn’t last forever. Put some money away for future upgrades to your technology, software, or home office.
Outside support. You never know when you might need to hire outside help in your business. With some savings set aside, you’ll be able to hire a contractor or employee whenever the need arises.
More than anything, a business savings account will bring you peace of mind. No matter what life throws at you, you’ll know you have the funds to handle it.
The Savings Mindset
When I start working with a new client, I usually find that their mindset around savings falls into one of three categories:
They view their savings as an unwanted expense.
These people genuinely dread depositing money into their savings account. Some don’t save at all! To them, depositing money into savings feels like giving it away: once it’s out of the checking account, it’s gone forever. They’d rather spend their money now than set it aside for the future.
They view their savings as a necessary evil.
These people know they need to save, so they continue to do it even if they don’t want to. They might not be entirely committed to their savings goals, but they do make slow and steady progress.
They view their savings as a means to an end.
These people treat every penny they deposit into savings as progress towards their savings goals. They focus on the reason they’re saving instead of the process itself. Even if they don’t actually enjoy putting the money into their savings account, they do get a sense of satisfaction seeing their balance grow over time.
This last mindset is the one we should all strive for. At the end of the day, our savings are a means to an end, the end of gaining financial security, making the upgrades we’ve been dreaming about, or taking the time off we deserve. When you shift your mindset in this way, you can actually learn to love the process of growing your savings account.
How to Grow Your Business Savings
If you want to prioritize your savings, you’ll need a plan! Here’s how to grow your savings account in a sustainable, enjoyable way.
STEP 1: Set your savings goal.
Before you make your savings plan, you want to set a few goals. Having an end goal in mind makes it easier (and in my opinion, more fun!) to grow your savings account.
If you’ve never set a savings goal in your business, here are a few ideas:
Six months worth of expenses. With this much set aside, you’ll be prepared in case you get sick or hurt and can’t work for a while. This should be the first goal you start saving for.
Enough for a new computer, camera, or other piece of equipment. Once you’ve reached your emergency savings goal, why not save to upgrade your tech? Set your sights one a shiny new laptop or camera, and then save towards that total.
Your own year-end bonus. Just because you don’t work in corporate doesn’t mean you can’t receive a year-end bonus! It just means you have to save for it yourself. Set a goal, save towards it throughout the year, and then treat yourself for the holidays. If you have a team, you can also save for their holiday gifts.
Whatever your goal, give it an actual dollar amount. Then, move on to the next step.
STEP 2: Create your timeline.
When do you want to reach this goal? Set yourself a realistic timeline that feels just out of your comfort zone. Then, let’s do some math!
Divide your goal savings balance by the number of months until your goal date. So if you want to save $5000 in a year, that will look like…
$5000
Divided by 12 months
= $416.67 per month
Of course, your timeline may look wildly different. Maybe you want to save way more or reach your goal quicker. Maybe you don’t need to save as much or you can take your time reaching that number. Do you own math to find your monthly payment.
Next, sit down with your business budget and add that monthly payment. I want you to treat it like an important expense. If you don’t feel like you can afford that payment every month, extend your timeline. If that payment feels like a drop in the bucket, challenge yourself to shorten your timeline. Play with your numbers until they feel good!
STEP 3: Make adjustments in your business.
As you’re working your monthly savings payment into your business budget, you might find that you can’t reach your goal as quickly as you want or need to. If that’s the case, you’ll need to make some adjustments to your business finances. Some ideas:
Raise your prices. It’s still shocking to me how many business owners set their prices too low. Raising them can increase your savings and your personal income.
Eliminate unnecessary expenses. The scrappier you can get about your expenses, the more profit you’ll create.
Pay off debt. What if your monthly credit card payment got to go to savings instead? Pay off your debts to make it happen!
If you really want to grow your savings account, there are tons of adjustments you can make in your business to increase your revenue and minimize expenses.
STEP 4: Shift your mindset.
Now that you’ve made your savings plan, it’s time to commit to it!
Keep your goal top-of-mind by writing it on a sticky note and putting it somewhere you’ll see often: above your desk, on your mirror, or next to your bed.
When you’re tempted to spend money on something your business doesn’t need, reflect on your goal. Imagine how much quicker you’ll reach it if you don’t spend without intention. Stay focused on your savings balance, and celebrate as it grows.
Admittedly, it’s easier to make this mindset shift in your business than it is in your personal life. But once you start seeing progress towards your business savings goals, you might just be tempted to set some for your personal accounts, too!
Want more tips like these? Sign up for our Newsletter and don't forget to give us a follow on our IG! @prettypennyaccounting