A Smart Guide to Saving Money as a New Entrepreneur
Starting a business after a corporate job will most likely lead to a change in lifestyles – not only in terms of work habits and goals but also financially. I started my first business after a high-flying corporate job with a related salary. Due to my finance background, I carefully made calculations about capital spending for the product but also relating to my personal spending. I read countless articles on how to save money as an entrepreneur before leaving my job. However, most of those articles were of a generic nature.
Hence, I decided to share what helped me to save money in the early stages. Even if you do not plan to start a business, I think these may be good ideas to cut unnecessary spending, be smarter with your money and spend it on things you really appreciate.
1. Make Sure You Have Savings and Make a Plan
Obvious, but very often underestimated. Make sure you have saved enough capital to not only finance your business but also your life. I started to take notes about my daily expenses in addition to fixed costs such as rent. After about two weeks, I had a rough idea about what I need. I then calculated how long I could support myself with my savings.
2. Cut Unnecessary Spending
I used to be a major shopaholic. Every time when I had a bad day at the office, I would stop by at designer boutiques to buy things – mostly shoes. When I knew I would quit, this was the first thing I cut out. It was the most obvious and easiest step to save – a ton of – money. Since I left my corporate career, my lifestyle in general has changed a lot. I still enjoy a shopping spree. But I have become smarter about it. I do not shop for a trend, I look for unique items which I will enjoy wearing
for a long time.
Parties and Alcohol
As a very social person, this one really hurt in the beginning. I used to be a regular at all the parties and trendy bars. There were times where I would go out almost every evening after work and party through the weekends. Apart from a general change in my lifestyle – needless to say my hours skyrocketed after becoming a founder – partying is expensive. I cut alcohol drastically. Now I still enjoy a nice drink and a crazy night out. However, I became more choosy about which parties to attend.
Another major part of my spending went into coffees. I used to have two to three coffees a day – most of them outside. If you think that a coffee is on average 3 Euros, this twice a day and 30 times per month, that is 180 Euros just for coffees – 2160 Euros per year! As a coffee snob, I still spend a lot of time in cafés. But I tried to limit it to one coffee per day – usually when I wanted to work from a café for a bit.
Taxis are a big temptation – especially in many Asian countries. They seem to be really cheap. However, if you take taxis, Uber or Grab all the time, your costs skyrocket. I had days where I spent 30 to 40 Euros only on cab rides. When I did my personal finance calculation and saw this, I was shocked. I became more strategic about taking taxis – to destinations I cannot reach by public transport, to important meetings or when it is just too hot to walk.
Unless you already live in your forever home, I would not recommend to go all-in on expensive furniture. For me it was an easy decision because I knew I would be on the move a lot. I also drastically cut my spending on interior decor items. Decorating an apartment is important because it will make you feel at home; especially if you also work from home. But I do not think it is necessary to overspend on designer decor items. I became really crafty and bought a lot of decor items at markets during my travels. It is not only more affordable but also a nice reminder of special moments while travelling. If you would like to get some inspiration for what I have in my place now, check out the home decor section on my online store Pelagona.
Staying fit is important but it does not mean that you have to be a member at multiple gyms and studios. I think if you live in many places across Europe and America, there is no real need for a gym actually – at least in the warmer months of the year. You can exercise outside and maybe do some online videos or body weight exercises at home. I also had some dumbbells and exercise bands at home. In Asia, due to the climate and, unfortunately the pollution, I think a gym makes sense. I chose my gym wisely – a good and accessible location and a big range of workouts – high intensity, cardio, swimming, and classes. Even though you may end up quite a high membership fee, it will pay off in the long-run.
I love good mani-pedis. Nevertheless, time-wise I find them quite challenging. I usually sit there for an hour staring into space and waiting for it to get done. Furthermore, it is quite an expensive way of me-time. I still go to the salon and treat myself. But it has become less regular and I usually schedule it as a fun activity with friends. I invested in some good home spa tools to do the mani-pedi myself – in half the time and for free.
If you think you need extra money, go through your closet and see if you can sell some of your clothes. I am sure you can. If your closet looks anything like mine, there is always something you have not worn in years. However, I do have to mention that I was not really successful with selling my things:
I tried to sell most of my designer shoes when I left my corporate job. There was a fairly new app in Austria using GPS for selling second hand fashion. I was in my parents’ basement where I stored most of my things which I did not take abroad with me. I felt really hyped and posted all of my shoes – Jimmy Choos and the like. When I was done, I realised that due to the GPS, I posted the shoes in the Austrian countryside – where the potential buyers of this kind of second hand fashion are a minority. Everybody in my parents’ hometown knew who the crazy woman with the designer shoes was after that incident…
Well, maybe you are more successful than me. 😉
I hope you found some inspiration in this article to become smarter about money. What are your tips? I would love to hear about them, share them in the comments, send me an email or get in touch via Facebook or Instagram.