Many marketers are excellent at making money online. However, a lot of them are very poor at Financial Planning.
Despite earning a lot, they fritter it all away. When crisis strikes, it’s not uncommon to see online marketers crowdfunding on GoFundMe.
To avoid such a situation, you must be financially savvy and watch your money closely. At the end of the day, what matters is not how much you earn – but how much you keep.
Let’s look at 9 crucial financial planning tips every online marketer should be aware of…
1. Save up emergency fund
It’s imperative that you have 3-6 months of expenses saved up for an emergency. As a self-employed person, if you’re sick or hospitalized, your earnings will take a hit because you won’t be able to work (unless you have systems in place).
Most beginner and even intermediate marketers are not in a position where their business can operate without their presence.
So by having an emergency fund, you’ll have savings that you can rely on during a tough period.
2. Keep good records for tax purpose
Unlike a day job where accounts are kept and your taxes are calculated by your employer, when you have your own online business, you’ll be in charge of the bookkeeping.
Note down all the income and expenses in your business so that you can calculate your taxes relatively easily. Even if you hire a CPA, good record keeping will make their job easier.
3. Eliminate debt ASAP
Once you start making money online, don’t splurge it all. The main goal you must have should be to become debt-free. Settle off the outstanding bills on all revolving credit.
If you have student loans, make sure you pay them up so that your credit score doesn’t suffer. Always pay your bills on time and in full.
4. Contribute to an SEP-IRA
An SEP-IRA is a type of self employed pension and acts as a retirement savings account for people who work for themselves. Contribute to your retirement account and capitalize on the tax advantages here because it’s tax deductible.
5. Have good health insurance
Medical bills can lead to financial ruin, if you’re not adequately covered by insurance. Ensure that you have a good health insurance plan with broad coverage. Again, essential financial planning.
You’ll also want to put aside money for dental bills, which can be just as hefty should you need a root canal.
6. Have a budget
All businesses operate with a budget and yours should too. Make a list of your expenses and take note of your income after expenses. Allocate money to the different expenses and see if you can trim the costs associated with the business.
Don’t overspend in any one area and go into debt. Many marketers purchase high ticket courses that cost anywhere from $2K-$5K and they get themselves into credit card debt.
More often than not, these courses are just rehashed information presented in a different way. Grow your business without going into debt.
7. Invest in other assets
Making money online is not the be-all and end-all of wealth generation. If you’re making sufficient money online, you may wish to consider investing in stocks or even rental property.
These assets will help to make your money grow and diversify your portfolio.
8. Find ways to legally reduce your taxes
You may wish to hire a CPA (Certified Public Accountant) and discuss with them ways to legally reduce your taxes.
For example, if you work from home and you’re generating an income online, one of your rooms could be considered an office. You can then get a tax break for the home office. This is just one of several ways to reduce your taxes.
8. Plan for retirement
When you’re young, it’s easy to forget that you’ll be old one day. You may not have the mood or energy to work then.
By planning for retirement early and saving up your funds, you’ll be able to retire comfortably and enjoy a good quality of life in your golden years.
Save up your online income and make sure you’re well-prepared for retirement. Essential financial planning.
All online marketers would be wise to take note of the 9 pointers above and apply them to their business and life. The sooner you learn to plan and manage your finances, the better.