Knowing your baseline monthly income can help you escape the dipping into your business bank account to fund your personal finances cycle.
You know the one…you need to buy groceries but your bank account is a little thin and you just received payment from a client so you transfer a little money to your personal account. I mean this in the kindest way, your business bank account is not your personal piggy bank and dipping into it is keeping your business from growing.
So how do you figure out exactly how much you need to make per month/shift to cover all your costs?
Tally up all the places your money NEEDS to go to cover your bills/expenses each month.
- Start with FIXED recurring expenses or bills that are the same amount every single month (not including discretionary spending): Rent, car insurance, health insurance, cell phone bill, gym membership, internet, savings
- Next list all your fluctuating monthly payments: gas, groceries, utilities
- Last list all your discretionary spending (these are items you could cut if it came to it): Netflix, Spotify, monthly subscription boxes, spending for eating out and shopping.
When you total all of these up you have the total you need to cover all your expenses (baseline monthly income) AND you can see how much your life costs.
Is it more than you thought? What can you do to lower it?
Look at discretionary spending, negotiate down fixed monthly payments, etc.
It’s easier to break down how much you need to bring in from your business when you know how much you *actually* need to make to cover your personal expenses.
