Unfortunately, a crisis can come sooner than you think. For example, because an important customer suddenly drops away or because you have made a wrong business decision. Therefore, you should be able to make ends meet for about three to six months even without a high income. This is possible if you build up reserves in good times and keep an eye on costs.
Why you should build up reserves in good times
To analyze your costs
Get an overview of your monthly expenses – both business and personal. To do this, look at your bank statements and enter recurring expenses in an Excel spreadsheet or other list.
In addition, you should still estimate the expenses that occur irregularly and only when needed. Then add up the totals for personal and business expenses.
As you scroll through the list, you may notice one-time or special expenses where you feel the investment has not really paid off for you. Ask yourself the following questions:
- Why did I make this investment?
- Is there a cheaper alternative?
- Can I negotiate a discount?
How you build reserves
You build reserves by setting aside money on a regular basis. You can start at any time and transfer 1% of your income to a separate account or sub-account. In the long run, you should raise the amount to at least 5%, for example by cutting costs.
Please note that the reserve is not there to build wealth, but to serve as a nest egg for a possible crisis. Therefore, you do not need to do a bank research on where to get the most interest. It is best to open an account at another commercial bank so that you are less likely to be tempted to use the reserve for other purchases or tax liabilities.
Building reserves makes sense not only for crises, but also, for example, for future investments or possible back taxes. The best thing to do is to think about the areas in which reserves would make sense, set up different accounts and off you go.