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The Fine Art of Stress-Free Finances

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I got a call the other day from a virtual assistant who was in a bit of a panic. Business was down, money was tight. What should she do?

The truth is, my business is down, too. In fact, in December we had a 20% drop in revenue thanks to a couple of lost clients. We have some new opportunities this month, but in reality, we likely won’t be back to “normal” until next month–or even the month after that.

But not only are we not stressing over this dip in income, we’re even making plans to buy a new home. That’s how stress-free our finances are. And yours can be, too!

Know Your Budget

I’m not an advocate of complicated spreadsheets and tracking every penny. I’m guessing you’re not either, since you’re reading this.

But that’s not to say I don’t know how much our expenses are each month. I do. And we are careful not to overspend, often planning large purchases (and sometimes small ones) weeks or months in advance.

For example, we knew for months that both my husband’s and my cell phones needed upgrading (I was still using an iPhone 4), so we were able to plan for the purchase by setting aside a little money each month. In December we bought two gently used iPhone 6’s without denting our budget at all.

Plan for the Future

Before I quit my job, we had very little money in the bank. We were stuck firmly in the “paycheck to paycheck” groove, and when you’re looking self-employment in the face, that’s no place to be. The first order of business was to build a tidy nest egg.

In the weeks leading up to me and the day job forever parting ways, we ruthlessly banked the cash I was earning with my new part-time business. I had a nice little side gig going, so we were able to put aside about $2,000 each month in a “just in case” fund. I highly recommend you do that as well.

And if you’ve already quit your job without benefit of that slush fund, it’s not too late to start. Yes, you might have to work a bit harder, and yes, your savings might build up a bit slower, but trust me when I say, paycheck to paycheck living is stressful as hell when your paychecks are inconsistent.

If the electric bill has to wait until your client pays her invoice, you’re living too close to the edge for comfort. Make it a priority to build your savings until you have at least a month’s worth of expenses on hand, even if you have to do it $5 at a time.

Cut the Excess

Do you need two new cars? The latest mobile phone or tablet? A new Coach purse? Dinner out every week?

Probably not. And if you can learn to live with (and on) less, you’ll find your stress levels–at least when it comes to money–dropping considerably.

Of course I’m not suggesting that you do without all the modern conveniences and comforts, but I will say that financial freedom comes from making wise choices and practicing a bit of delayed gratification.

Keep the Funnel Full

No matter what business you’re in, the only clear path to financial security is to keep your prospect funnel full. This is a long-term goal and something you’ll need to work on every single day.

You can’t wait until you find yourself with one part-time client to start looking for more. You must be constantly prospecting, even if you’re so busy you simply don’t have the bandwidth to handle another client. Put them on a waiting list, so when someone drops off your client list (as they inevitably will) you have several people waiting in the wings that you can call on.

Income Ups and Downs are Inevitable

It’s how you handle them that will make all the difference in your business.

When you have a job, it’s easy to get complacent about your finances. Broke this week? No problem. There’s a fat paycheck coming in on Friday.

Self-employment doesn’t come with such comforts. That big project you were counting on may not materialize. A favorite client might close her business. Even worse, you may become sick and unable to work.

For a lot of reasons, your income as a self-employed person can be inconsistent (or even non-existent), and the only way to smooth out those valleys and avoid the stress that comes from cash-flow trouble is to plan ahead and stash those pennies away for a rainy day.

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