Padding Your Nest
When planning a budget around your career as a tradesperson, the first thing to consider is lean times. Lots of construction and contracting work is seasonal, with business waning when the cold sets in and rising again once warmer weather breaks. This is one reason why you need to stick extra money aside when business is good. Determine how much you require in terms of salary, then set aside enough to cover at least one month of personal and professional expenses without business revenue. As time goes on, plan to set aside at least three to four months of salary for times when workloads drop.
Repairs and Replacements
Broken or lost tools can bring your job site to a screeching halt when you work in the trades, and for that reason, you should set aside enough money to cover the basics should incidents involving your equipment occur. A good way to determine how much you need to save is calculating how much it would cost to fix or replace the key items required for you to work efficiently and productively. If you save enough to purchase a new piece of equipment entirely, it might be prudent to upgrade, then keep the replaced item on hand for emergency use.
Separate Your Money
To establish clear lines between uses for your money, consider setting up multiple bank accounts. This helps you separate money you must pay to cover quarterly or annual taxes, funds you need to cover business expenses, your personal salary, and your personal retirement funds. You can also set up special savings accounts to cover the repair and replacement cost budget mentioned above to ensure you don’t spend it on other things and find yourself totally without a source of income due to lack of equipment.
If you’re just starting out in your career as a tradesman, you can start out right by creating a budget that guides you through your company startup. This helps you determine how much money you have, how much you can spend, and how much you need to earn to meet your professional goals. As your business takes off and grows, you should refer to this budget to keep yourself on track for success, but be willing to make performance-based adjustments as needed. Using a budget template can take the guesswork out of planning by pointing out things you might not have considered.
Whether you’re going into trade delivering food across the country or flowers across town, opening a plumbing or machine shop, or throwing your hat into the contracting or construction business ring, creating and holding to a budget can set you up for long-term success. Plan your expenditures carefully, and always ensure you have enough funds on hand to cover essentials plus some extras.