3 money management lessons I learned as a teenage business owner
- I wanted to channel my love of horses into a business, so I opened my own LLC as a teenager.
- Managing my money for a business taught me many financial lessons that I still use today.
- I learned a lot about tracking expenses, budgeting, and the importance of emergency funds.
- Learn more about Personal Finance Insider.
In my late teens, I decided to venture into uncharted territory and open my own Limited Liability Company (LLC) for a business idea I had.
I am a horse lover and have a lot of experience with them so my business has involved me going to birthday parties, community gatherings and other events with miniature horses and handling them for crowd pleaser. None of my immediate family or friends owned a business, so it was a steep learning curve for me.
I ran my business for almost three years. I decided to close my business when I was in college due to my heavy course loads, but I don’t regret the time I spent running it.
This experience taught me a lot about budgeting and saving at a relatively young age, and I’ve been able to apply those lessons to my personal finances to this day. Here are three things I took away from managing money as a first-time LLC owner.
1. Follow all your income and expenses
Seeing the total monthly and annual income I was getting from my business after expenses, I learned very quickly the importance of keeping detailed financial records.
Initially, I only considered big expenses such as insurance, horse feed, and other major purchases when tracking my business expenses versus my personal expenses. However, over time I began to see the value of including all business expenses, no matter how small, as they add up over time.
Until I started factoring in all the small expenses of maintaining my horses for the business, I had a skewed picture of my income, which affected how I budgeted. Keeping detailed records helped me budget more accurately later.
Tracking has also become very important when it comes to paying my taxes. When I started, I was able to write off a lot of my business expenses because I wasn’t making enough money from it yet.
The man who helped me with my taxes encouraged me to keep track of all financial records – even the money I spent on gas to get to the various events I went to. hiring. Keeping these records also helped me in case I was audited and needed all my financial information readily available for inspection.
2. Establish monthly and annual budgets
As a teenage business owner, budgeting wasn’t something I had much experience with when I started. However, once I got the hang of it, it completely changed the way I look at my finances.
For the first few months, I noticed a recurring problem where I was spending too much on my business and then using money from my personal bank account to pay for things. So I set out to make my business fully self-sufficient.
With that in mind, I came up with a budget to achieve my new goal. The biggest challenge was that my monthly income from the business depended on how many events I hosted and what type of events they were, which could vary greatly. I also had to factor in my larger annual business expenses, including vet checks, hay, and insuring my horses.
In the end, I stuck to a minimalist budget and saved what I earned during good months for big annual expenses or put it into my emergency fund.
In numbers, I was able to keep my monthly expenses at $200. I charged $150 per hour-long event, so I only needed 2 events per month to be self-sufficient for my business without dipping into my personal account for expenses.
3. Always have an emergency fund
When one of my miniature horses became extremely ill, I had to rush him to an emergency equine vet where he underwent expensive treatment over several days. Luckily she survived, but it was a huge financial setback when I received a bill for $1500.
At that time, the business was new and hadn’t made much money. I was just a teenager at the time, so I didn’t have that kind of money either. Because of this, I had to dip into my university’s fund to pay the bill.
After that, I knew I needed an emergency fund so that if something like this happened again, I could afford the setback without taking money out of my tuition.
I started putting all the extra money I earned each month into a savings account just to be used for emergencies.
Fortunately, I no longer had to worry about the health of the horses. However, later my trailer broke down and I needed a new one to be able to continue attending events. Thanks to my emergency fund, I was able to buy one without too much stress.
Comments are closed.