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3 financial realities for work-at-home parents

A big thanks to Citi for sponsoring this campaign. Click here to see more of the discussion.

finances for WAHMs

Maybe it seems like a pipe dream: the idea that you can make an income from home, working around your family’s schedule. But plenty of parents are doing just that.

When I speak to groups of aspiring entrepreneurial women, though, I tend to hear a few common concerns: work-at-home moms often worry about investing family money into their own businesses (so they try to do everything themselves), feel guilty about taking time away from home and family for their business ventures (so they shy away from hiring help or child care), or they view their income as “bonus money” and spend it all without ever investing back into their business.

I’ve been self-employed for 10 years, and have definitely made some mistakes along the way (financial and otherwise!) But as I’ve turned my home-based business from a source of extra cash to a full-time income, I’ve learned these financial truths about working from home:

1You will have expenses.

When you first start earning money from your at-home job, it’s tempting to think of it as a direct drip into your family bank account. But even the sort of business with a low overhead will have expenses, and they can add up fast. Be sure to keep some of your revenue in your business checking account to cover expenses like web hosting, business-related travel, and of course, taxes. Once you get to the point where you’re earning steadily, come up with a regular “salary” to pay yourself out of your earnings, and retain the rest to invest back into your business.

Note: if you work at home but are somebody else’s employee, you might still have work-related expenses to budget for. And even if you don’t own your own business, I think it’s a good idea to invest money in yourself professionally: keep your skills sharp, your online portfolio up-to-date, and make sure you have the technology you need to make a good impression on your current employer and any employers or clients in your future.

2At some point you will probably need household help. 

It may seem counter-intuitive to consider hiring a sitter, if the whole reason you’re working at home is to avoid having to use child care.

But here’s what tends to happen: you start out slow, with few or no clients. It’s easy to fit in your workload around your baby’s nap or by burning the midnight oil.

Then you land a big client. Or your baby turns into a toddler. Or you find that you don’t particularly love feeling like the walking dead all day. Or you suddenly have a bunch of orders to fill and find yourself sobbing in a ball on the floor because you can’t get your preschooler to stop singing “WHAT?” long enough to let you concentrate.

Either way, if your business grows, chances are good that at some point you’re going to have to enlist help —or fall down on the job. Whether it’s regular daycare, an on-call sitter or other help, like an errand service or housecleaner, plan for it and – more importantly – budget for it.

Note: while technically child care isn’t a “business” expense from a tax perspective, I think it’s important to create a special category for family finances you’ll spend to help keep your business running.

In other words, if you feel like you have to sneak money from the grocery envelope to pay for an hour of babysitting so you can survive the week, it’s probably time to sit down with your spouse and have a meeting. Consider creating a separate line item in the family budget that’s all about supporting you and your business in direct or indirect ways.

3. You have to spend money to make money.

Early in your work-at-home venture, you might not have a lot (or any) capital from which to pay an assistant, graphic designer, or marketing professional. But as soon as you’re able, start brainstorming ways that spending money might pay off exponentially.

For example, I have a good enough understanding of HTML that I can usually fix small coding snafus on my blog by myself. But if a coding fix or update will take me 2 hours but would take my web designer 20 minutes, it makes a lot more sense to pay her for her time so I can get back to earning from mine.

What surprising financial truths have you learned about working from home?

A big thanks to Citi for sponsoring this campaign. Click here to see more of the discussion.

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