I was reading an article today that mostly revolved around how you shouldn’t try to grow too fast in a business as it can create financial obstacles. It then talked about how you should always expect the worst as well and to make sure that you are financially prepared to go through periods of limited income flow.

This made me think about personal finance too in terms of how much funds people usually establish to consider it as their safe nest encase something happens. Some people call it their emergency funds. Most people that I talk to seem to think between $2000 to $5000 is the good base to go by.

For some reason I tend to just be general and say that a good safe nest is about five times the amount of essential expenses that you pay per month. In most cases I also still use the mentality of if you can’t payout the expense right now if there was say a yearly contract to it then I tend to not do it. That’s one way to help ensure that income flow won’t be an issue in terms of creating a debt regardless of what happens to you financially.

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Today I went to get a haircut at the usual place that I go to and the couple that own and operate the business came back from a vacation. As expected, they mentioned that they had a wonderful time and their kids didn’t want to leave.

The lady mentioned how it wasn’t too bad financially as the whole two week trip for everyone came out to around $3000. While she mentioned she would love to do it again since it was so cheap, she brought up the point on how a lot of people neglect to remember that at the same time when you don’t work you are losing even more money in multiple ways. Example, no revenue is coming in and your building rent is going to waste.

With that in mind, that’s always the main reason why it is wise to try and establish some form of passive income source so that you can still generate an income even while you are not there. With her situation it kind of forces you to be more diligent with money since there is a business involved. In general though, it’s all about understanding where your money is coming and going.

Like with the vacation example, if you just see it as you have $3000 so it’s time to take a trip, it’s kind of a setup up to be living in a just getting by situation. Always have an income plan for downtimes as well.

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Around this time of the month I would get my cell phone bill and as you all know I switched to a new plan not too long ago. This month was my first billing under this new plan. I was just looking at the bill compared to last month on how much money is going to be saved once I saw this:

Granted every month it is a little different, just looking at the $55.93 total from last month to $17.87 this month while getting more features than before is quite a substantial difference. If those numbers were consistent, that would roughly mean a $456.72 savings a year.

While many people say who cares to a little bit of savings on various things, a little bit of effort to get a better deal can sure look nice in the long run.

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I had a conversation with a person today in regards to a cell phone bill as last month he racked up a three figure bill. He did mention how he was used to US plans instead which offered more for less, but that’s another story.

What this did remind me of is how a lot of people place restrictions and credit limitations on various service subscriptions to prevent any type of overspending. For example, when it comes to cell phone services, a lot of people use pre-paid cards to prevent any surprises.

I think the only time I did this was back when dial-up Internet was pretty much the only feasible option as the service would just get cut off after X amount of hours instead of going on a plan that continually billed by the hour. It tends to make you a little more money conscience too with your finances I think.

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There are a lot of people that decide in preparing their taxes right now and one topic that came up was how people can save money by creating an incorporated company to enable themselves to write off a lot of expenses while receiving more tax breaks.

I actually had an unrelated conversation with a person recently about setting up an incorporated company as I wondered why he didn’t register his company that way instead. His answer was a pretty common one where he thought it was only for large companies that generate say millions of dollars a month while costing thousands to do so.

While you should consult with a professional, creating an incorporated business can be a very straight forward process. Some examples of people incorporating themselves even though they are the only person are photographers or even say actors.

The money then earned goes to this corporation that you created and can be retained with tax benefits. Afterwards, you can either pay yourself a wage or say dividends. People usually only do this if they have an excess amount of funds to handle as the paper work and accounting can get a little redundant if you don’t exactly save a lot of money.

Everyone’s situation is different though, so you should definitely research thoroughly beforehand.

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