Wednesday, February 24, 2010

Q&A - Multiple Income Streams


Avlor said...
How do you manage multiple income streams? (i.e. PayPal and Google checkout). Right now I treat my Paypal account like my checking account and everything is funneled through there. You've hinted at a main account you funnel to and have regular withdrawls from. Have you had issues with the time for Paypal or Google checkout?
Here's the way I have my accounts set up: Once or twice a week I'll transfer money from Paypal to two savings accounts. One is my business expense account and the other is a personal savings account, 1/3 goes to the business account and 2/3 goes to the personal account. Google checkout is set to send any money I make to the business account since it only allows being linked to 1 account.

So if this week I've made $300 that was paid via paypal, $100 goes to the business account and $200 to my personal account. Remember these are savings accounts so they also earn interest (though rates are very low right now).

I have a checking account for business expenses and I transfer money to it once a month. This account is ONLY used for business purchases and that makes my record keeping much easier.

Twice a month I have money automatically transferred from my personal savings account to my personal checking account. I consider this like my paycheck and it's what I use for my personal expenses, I resist the temptation to make extra transfers though as my business grows I give my "paycheck" (the one exception was is the holidays, if your sales tripled like mine did it's okay to give yourself a small bonus). I also have another $50 a month automatically transferred to another savings account that is an emergency fund. The purpose behind this system is to smooth out the variations that any handmade business has in sales and set aside money for business expenses, it's tempting to splurge during good months then you're left with things being very tight during slower months. This also solves the time problem, since everything is scheduled and I know how long the transfers take I know exactly when I'll be getting my money and if I'm uncertain I have online banking set up for all my accounts.

I'm able to keep track of my accounts and see the big picture using Mint.com which is a free personal finance service that lets you track how much you make and spend in an easy way. This is just for simple tracking, I use spreadsheets for keeping track of expenses and income for taxes and that is a whole other topic for another time.

If you have a question you can email me or leave a comment in the Q&A Request thread.
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