![]() Allow for easy liquidation so that you can have the money for business purposes within three to five business days. ![]() (Financial industry jargon alert!) Typically I invest this money in short duration Municipal Bond ETF’s that accomplish three things: I help my entrepreneurial clients park this money in a Low Volatility Brokerage Account. I’m far better off parking my extra cash in an account I can access to take advantage of these opportunities rather than tying it up for the next 20-40 years in a retirement account.” When I think about making this choice, it goes something like, “I have many, incredible opportunities to expand my business. You are effectively letting yourself know that you are confident in your ability to grow your business. Funding this account prior to funding your retirement account sends a powerful signal to your subconscious. Next on your list of accounts as an entrepreneur is your Business Expansion Account. Money Bucket #4 – Business Expansion Account I prefer Ally Bank based on their attractive interest rates and ability to directly link to my Personal Expenses Account. Also, since this is seldom-used money, consider parking it in an online savings account to grab a little interest income. Open this as a separate account from your Personal Expenses Account. Stash at least six months of living expenses into Money Bucket #3 to take short-term money worries completely off the table. Financial emergencies happen, whether in the form of unexpected, large medical bills, major home repairs or loss of employment. Money Bucket #3 can also be referred to as your Emergency Fund or Rainy Day Fund. Permanently park at least two to three months of business expenses in this account to avoid the need to micromanage the flow of cash in and out of your business and instead use your creativity to tap into that next great business opportunity. And similarly to Bucket #1, avoid riding the edge with this account as well. Much like your Household Expenses account, your business expenses account is a checking account used to cover all of the costs of running your business and receive revenue from your customers and clients. Keep at least one to two months of living expenses in this account at all times. Your time is better spent figuring out new ways to grow your business rather than constantly shuffling money around to make sure you can pay the mortgage and credit card bill. Put yourself in a situation that you do not need to watch and monitor this account on a weekly or daily basis to make sure it’s sufficiently funded. It’s the checking account you use for things like paying your bills, making withdrawals from the ATM, and receiving paychecks. Consider structuring your finances in terms of 6 Money Buckets and work your way through the list in order on the road to financial security.Įveryone has this money bucket in some form. Once you start making some money as an entrepreneur, a natural question is what you should do with the extra cash.
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