Keeping your money stable when nobody paying you a salary

Do you remember when having a Government wuk (i.e. being a public servant) was a big deal – the ultimate sure thing? It meant a permanent job, sure salary, paid sick leave and vacation and your pension safe when you reach 60. Those of us running our own businesses know that there’s no such thing as a sure thing, and the only thing we can depend on is ourselves. 

As a business owner, your income is yours but…you don’t get sick days and you gonna wuk ‘till you dead (though, hopefully, it’s work you love or something you believe in).  But in terms of guaranteed benefits? Nah, dat gone since granny’s time, right?

Remember, entrepreneurs don’t lose a boss, you become the boss. Working for yourself means that you must put your own money guarantees in place.

When you’re self-employed, your income can be unpredictable and variable. How can you have income stability when nobody is signing salary checks? We talked about emergency funds in a previous article.  The idea here is similar.  You need to age your money.  Don’t pay this months’ bills with new money you earned this month. You pay it with money you earned last month or better yet a few months ago. The most important method to achieve this is to consistently spend less than you earn.

Now, what about paid sick leave? If it’s just a couple of days home with ginger tea and Vicks, you should pull your pay from your emergency fund.  If you get hurt or sick for longer than that and it stops you from working for a long time, crapaud smoke your pipe right? Unless…you have insurance.

Nobody ever told you insurance can replace a salary? Doh worry, it was once news to me, too.

We’re talking about a specific kind of insurance here – disability or personal accident insurance.  Its purpose is to pay you a percentage of your usual salary if you’re injured or sick for longer than the elimination period (usually a month).  We won’t lie, some of the clauses can get a little technical but it’s one of the most important insurances for an entrepreneur to have. You can qualify if you’re self-employed, you may just have to provide some additional paperwork like income records or accounts to show a history of income.

We’ll save financing paid vacations and pension for another day.  Entrepreneurs have a few options and maybe even benefits that surpass the folks holding down a j-o-b.