How the Money Flows in My Business and Personal Life
This is a little nuts-and-bolts post about keeping your business finances clean and clear.
Here it is:
- I use one checking account and one credit card in my personal finances. No savings account.
- I use one checking account and one credit card in my business finances. No savings account.
I don’t use savings accounts because a) they pay pennies in interest per year, b) it gives me one more acccount to keep track of, and c) I use my budget to keep track of cash reserves and taxes — I don’t need separate accounts for those.
(If that sounds revolutionary to you, go ahead and sign up for the Budget Nerd mini-course using the form at the end of the post. That’s where I break it all down in detail.)
The credit cards are totally optional, but I use them for security and rewards. I use a Capital One miles card in my personal finances and an Amazon points Chase card in business.
Sometimes my clients tell me they want to use the same card for business and personal transactions. Meh. Here’s why that logic doesn’t hold up:
1. You can use two separate rewards cards, earning points on each. None of the bookkeeping hassle, all of the benefits.
2. If you choose to use the same card for business and personal, the extra bookkeeping headache will cost you (either in time or money, maybe both) more than the value of the rewards earned.
That’s not to mention the damage to your decision-making that comes from muddying your business finances with personal transactions.
If you want to take this to super-pro level, set your credit cards to pay themselves off automatically. One of the beautiful benefits of using a budget effectively is I never know what my credit card balances are, and I never have to remember to make payments.
Cool, huh? As long as I’m operating according to my plan, I don’t have to babysit my credit cards. No interest, no late fees. (If your credit card company doesn’t offer this feature, I’d start shopping for a new card!)
That’s it. Nothing flashy or motivational – just a simple account setup that will keep the mess and stress to a minimum in your budgeting and bookkeeping.