Issue link: https://www.massageandbodyworkdigital.com/i/1492048
When you are self- employed, it's wise for your business to also keep savings aside for sick time, vacation time, and perhaps funds to expand or make purchases for your business. You decide what you and your business need to be protected from calamity and when you're comfortable taking time off. We like to have a specific savings account assigned to each purpose to keep it simpler and more structured. If you like organizing and tracking your money and have good self-control with money, one big savings account to hold all your funds may work for you. You may choose to add some companion savings accounts to your current business checking account or use a separate bank altogether. If you find it tough to discipline yourself with money and think you may "borrow" from a savings account when money gets tight, put your savings accounts in a separate bank and make it harder to access (and don't link those accounts). EMERGENCY SAVINGS This is reserved for a real emergency, something you can't predict. Having an accident or illness that pulls you out of work for a few months, suddenly needing to take time off to care for an ill loved one, or your office f looding and being closed for repairs for two months are all emergencies. How much you keep in your emergency savings is a personal decision. Ideally, you can keep enough money aside to pay your office bills and your wage for the time you need to take away from work. Everyone has a different comfort level with risk, so think about how much you need to save to not panic about money when a crisis hits. 82 m a s s a g e & b o d y wo r k m a rc h /a p r i l 2 0 2 3 essential skills | BLUEPRINT FOR SUCCESS Savings Accounts Can Keep Your Business Stable By Allissa Haines and Michael Reynolds There are many, many parts of running a massage business that are not glamorous. Cleaning the bathroom, awkwardly enforcing a cancellation policy, researching the features and best pricing on an electric massage table, reading tax code as it applies to the ADA deduction for that table . . . and, possibly the least glamorous, but very necessary thing: savings accounts. Stashing away money for some unseen, unexciting purpose is way less fun than buying a weighted blanket for your massage table or paying yourself a little extra during your birthday month. And yet, saving money is demonstrating savvy business skills and a kindness to the future you who will experience ups and downs in your business. You don't need to be a full-on massage business owner to benefit from a solid savings plan. If you are an independent contractor, you will likely need the same financial cushion; and if you are an employee, your benefits may vary and be limited or not include sick time or vacation time. So here we go. The most commonly thought of savings account is an emergency savings. An emergency savings protects your business and finances if an unexpected event happens and you can't work. YAROSL AV DANYLCHENKO/STOCKSY We like to have three months of office expenses and wages saved so we can keep paying ourselves at a regular rate, even when we're not working. Three months is also typically enough time to figure out a plan B if you know you'll be out of work for longer. SICK AND VACATION PAY SAVINGS It's inevitable you will catch a cold or some other illness that will take you out of work for a few days. If you are the primary caregiver for kids or other loved ones, you can triple the likelihood you'll need to take time off for someone else's illness. It's hard to know how much sick time you will need in any given year, so we estimate two weeks. If we need to be out longer, it becomes an emergency-savings situation. Two weeks' worth of sick savings would mean saving half our monthly expenses and two weeks of take-home pay. A break from work in the form of a vacation is also important for a sustainable business. If you're someone who doesn't take a full week off and instead just takes lots of three-day weekends, you may not need much