One of the challenges I find with being a business owner is breaking the mindset of having a “payday” and a regular paycheck.
A paycheck mentality is when you rely on getting the same amount of income at the same interval (i.e. weekly, bi-weekly, bi-monthly, monthly), and you make financial decisions based on that.
There is a difference with being self-employed and being an employee. When your self employed, the business comes first, money comes in and you have to pay taxes, pay monthly business expenses, replenish inventory, reinvest in the business, and take what ever is left over as your salary, if there is anything left over. When your an employee, you do your job, get your paycheck, if you work a set amount of hours per week or on salary, you can expect the same amount every pay.
When you are a business owner and see an increase in income one month, it is not the time to go splurge you have to think ahead, what may be a windfall this month, you might have to use to carry you through the next month. You can’t put off important expenses assuming you will always make the same amount. Unless you have a contract or a grant that guarantees you make the same amount each month, and even in that scenario, a business owner has to always think ahead and put the business first.
It is hard when you see profits rolling in, not to want to celebrate and splurge a little, and not get caught up in the idea that it will always be like this. The truth is, your going to have some good months and some bad. The good months will cover you through the bad months if you put your business first.
All in all you have to think like a boss, not an employee.
Have you had any challenges with having a paycheck mentality?
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