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Why You Need to Manage Your Money as a Blogger?
Online revenue for bloggers has exploded over the past few years. Social media platforms, courses, ebooks, affiliate income, webinars and so much more have helped bloggers just like you turn their sites into legit companies. Proof that you’ve got to be savvy when you manage your money as a blogger.
Every Time I click on Pinterest, I’m stunned by all the income reports from successful bloggers. (Kudos to them!)
Michelle at Making Sense of Cents -$112,000+ in July
Regina at byRegina – Earning 6 figures in one year
Mariah at Femtrepreneur – A case study earning $10K a month from a $97 product
It seems to be the “norm” to make $5,000 plus each month as a blogger (if you do it right). Which is a legitimate business for sure?
There’s a lot of people out there teaching you HOW to make the money (which of course is super important), but not a lot of people teaching you WHAT TO DO with your money once you make it. That’s where I come in.
Isn’t it just as important to know what to do with your money once you’ve made it so it can continue to grow and work for you?
I’ve been an entrepreneur since I was 19 in college and started my first non-profit business. It was a giant crash course in how to manage a budget, save money, be resourceful, PR, marketing, event management and so much more. I like to call it my real life MBA (I have an MBA from a University too, but I learned more from this experience than I did from the MBA I paid for).
What Do You Need to Know as a Blogger?
Know Your Numbers!!!
Knowing your numbers is probably the most overlooked step for anyone when it comes to effectively managing your money as a blogger. I understand why – it’s time-consuming, and most of us just don’t want to face the real hard reality of what we’re spending our money on.
Knowing your numbers as a blogger is so critical to your success – being able to manage your money in the good months and also in the not so good months is so important. You can’t always count on a big month, like the one you had when you launched your course or your article went viral with affiliate links.
You’re the CEO of you. You’ve got to act like a CEO would, even if your business is just you. While you’re kicking butt at systems, sales funnels, webinars and such, you also need to kick butt in how you handle your finances.
The Know Your Numbers System
- Download your most recent bank statement
- Grab a pack of highlighters (and a beverage and snack)
- Put all your expenses in categories – eating out, business expenses, clothes, shopping, etc. Make sure to notate whether it is a business expense or a personal expense
- Add up all the expense categories
- From there, figure out what are the expenses that you ABSOLUTELY have to pay (things like rent/mortgage, minimum credit card payments, car payment, groceries (but not eating out), student loan payment, etc.
- Once you have that number, you’ve created your baseline number. The other expenses are your “over the line” expenses
Be a Budget Master
Does anyone like to budget?
Of course not, even I struggle with budgeting, and I’m a financial professional. The difference is I know how valuable a budget is to you as an entrepreneur. It will be your lifesaver in the bad times and your best friend in the good times.
I’ve got an awesome Start Up Money Checklist that you can use to help get your business up and running, or simply give your current business a new strategy when it comes to managing your finances.
Click on the image below to download the checklist use it as your guide
You should have both a business budget and a personal budget. Your income and expenses then flow through to your personal budget each month. Keeping them separate will not only help you at tax time but also psychologically.
You’re a business owner – the CEO of your business – and so you have to think like a CEO.
You’ve gotta get a system down for budgeting because you probably weren’t even taught how to budget (so it’s not your fault). I did a video a while back detailing my entire system about how to budget in 20 minutes a month.
Budget With Inconsistent Income
When you’re trying to budget with inconsistent income knowing your baseline number will save you. You can keep this number as what you need to bring in each month. Anything above and beyond that number can go towards lots of smart money moves including:
- Funding your retirement account (cause you’ve gotta do this if you don’t work for a company)
- Investing back into your business (conferences, systems, equipment)
- Paying off debt (slowly over time, so you don’t burn through all your cash)
- Building your emergency fund (YES, you need 6-12 month’s worth of expenses saved as a pad)
- Saving for a vacation (cause you gotta get away)
- Paying off student loans (blah, don’t panic over these, we can handle it)
- Launching new products and services
Just in Case
Having a solid emergency fund is also a smart money move to make as a blogger and entrepreneur. This should be the first place that you start saving money and your aim should be to have somewhere around 6-12 month’s worth of expenses saved for emergencies like:
- You have a slow couple of months
- Your car breaks down
- You have unexpected medical bills
- You need to go to a bunch of work conferences
Virtually anything unexpected can be considered an emergency. As a blogger and entrepreneur, you already know that you have inconsistent income (which could be regarded as an emergency), so your job is to make smart money moves to counteract your flux in income.
High-Yield Savings Account
It may take you a while to fund your emergency fund, and that’s ok. Break it up into bite-sized bits that you can sock away each month. Use high-yield savings account too (like Ally, Synchrony or Capital One 360) to earn extra interest on your savings.
FYI- traditional bank savings accounts are great, but they’re paying hardly any interest on your money.
It’s even more important that you have a side fund ready for you, so you don’t have to turn to your credit cards to fund the emergency. I see this happen too often, and then you get yourself stuck in the endless drainpipe of paying off debt and interest. If you are going to use a credit card to finance some of your business purchases, make sure you use a credit card that offers you points and rewards.
One of my favorite credit cards right now is the Chase Sapphire Preferred Card.
Create Your Money System
Having a money system in place is an easy way to set yourself up for success each month. I’ve tried virtually every expense management system, and I always come back to *FreshBooks (you can get a month free with this link).
I really can’t say enough about how simple of a system they offer for entrepreneurs. Freshbooks is a cloud accounting service where you can create invoices, track expenses and track your timing on projects.
Once you’ve got your accounting system in place, it’s time to tackle all that paperwork lying around.
What to Keep & What to Get Rid Of
The financial records you can shred
ATM receipts – Save them until the end of the month and once you’ve reconciled these with your monthly bank statements, you can toss these puppies away.
Loan docs that have been paid off – If you’ve paid off a loan, there’s no need to keep all the loan document paperwork. All you need to save is the proof that the loan has been paid off.
Credit card bills – After you’ve reconciled these bills at the end of the month and confirmed all the transactions are correct, go ahead and ditch these as well. Most credit card companies will send end of the year summaries which will tally all your expenses in nice and neat little categories, which makes it super easy come tax time if you need to deduct expenses.
Certain receipts – Keep your receipts for one month until your monthly bank statement and credit card statement has been reconciled. If you don’t need the receipt for a return or warranty, go ahead and toss it. However, if you write off business expenses, you will want to hang onto that receipt. Keep it in a storage container, scan it on your computer, or use a service like Shoeboxed or Evernote to organize and categorize all your loose receipts
401(k), brokerage, IRA, etc. – The good news is that you don’t need to keep all those pesky monthly and quarterly statements. You, of course, will want to look over them when they arrive to make sure all is on the up and up, but the only statements you need to save are the annual statements. Keep those annual statements for the length of your retirement plan, or until you sell the investments.
Insurance policies that you no longer have – If you’ve replaced your health or life insurance policies recently, there is no need to hang onto the old policies or summary booklets. Be certain to make sure if your social security number is on any of these documents that you properly shred them rather than just tossing them in the trash.
Utility & cell phone bills – For some reason we all think that we must hang onto these bills but have no fear, this endless stack of paperwork can be trashed once you’ve paid the bill or the transaction has been reconciled. There’s one caveat of course: if you need your cell phone bill for business deduction purposes, be sure to keep an extra folder on your computer where you save these for proof of the expense.
The financial records to keep (at least for a while)
Tax records – Did you know that the IRS can audit you up to three years after you’ve filed your tax return? Since this is a reality, it’s super important to keep your tax records for at least seven years in case you are audited. You don’t need to keep paper copies; digital records will work as well, however, make sure your tax returns and supporting documents are passwords protected for your safety. There’s a ton of information on those returns that would be an identity theft nightmare. After seven years, feel free to toss everything, unless you want to hold on to your tax return to chart your income over the years.
Contracts– Keep any contracts or non-disclosure documents around at least for a year. It would be wise to store these in the cloud so you can easily access them if you need to reference a contract. Anything that you’ve signed as a business owner needs to be kept until the contract expires.
Car documents – While you don’t need to keep your monthly statements as you’re paying off your car, it’s vital that you keep any title and registration information in a secure place until you sell the car.
Life insurance – When you purchase a life insurance policy, you will receive a copy of the entire policy to prove that you are insured. A life insurance policy is not the type of paperwork that you should just throw in a drawer. Rather, keep it some place safe like a safety deposit box or a fireproof and waterproof safe. It’s also not a bad idea to let the beneficiary know about it (if you haven’t already) and give him or her a copy.
Loan Docs – If you own a home or a boat or just have student loans you are paying off, be sure to keep the documents about these loans in a safe place like a safety deposit box. Once you’ve paid off the loan, you can trash these documents, but not a moment before.
Pay stubs – Keep all of your stubs up until the time you file your tax return. The best way to keep track of these is to make a dedicated tax folder either on your computer or in your house and slip the pay stubs in for safe keeping as soon as you get them. Once you’ve filed your return, you can toss these and get ready to start again for the new year.
The trick to successfully manage your money as a blogger is to make smart money moves always think like a CEO of a large company. Always remember to keep your business and personal finances separate and create a system to easily manage your income and expenses.
You don’t need to understand complicated accounting to successfully manage your money as a blogger. Just focus on the basics and do them well. And, remember these tips to manage your money as a blogger.
Don’t forget to click on the image below to download the checklist
Shannah Compton Game is a podcast host and CERTIFIED FINANCIAL PLANNER of the top-rated Millennial Money podcast. Millennial Money has over 6-million downloads in 164 countries. Shannah’s years of experience as a skilled Certified Financial Planner have set her on a mission to revolutionize how people think, act, and feel about their finances…and have some fun doing so.