Using the Found Money Method in a Small Business

Found Money / Monday, November 5th, 2012
Little amounts of money can make a big difference when you give them a job.

Recently I took the found money method that I’ve used to help pay for my daughter’s college, buy a used car with cash, and pay off debt, and put it to work on the business side of our finances.

First, a little background: The bulk of my husband’s business income comes in one lump sum each month. That is the income stream that funds his business and provides for our family.

But there are small amounts of money that regularly come into the business from different sources that are not part of the major income stream. They come in the form of small checks that get deposited into the business account. (Thank you Bank of America for making an iPad app that lets me make deposits online and has eliminated many trips to the bank!)

When we were in debt repayment mode, I used to use those small influxes of money as extra debt payments. But when we moved beyond that phase, I decided to do something I’ve been wanting to do for a while: set up a savings account for the business.

We had two goals for the business savings account:

1. Provide a financial cushion for the business.

2. Be a source of future funds that could be invested back into the business to grow it.

In August I set up an ING Business Savings account and started funneling those small, miscellaneous amounts of money there. Since that time we’ve made nine deposits totaling $783 to the account. The largest amount was $274, the smallest amount was $11 and the average amount was $87.

Soon we’ll be able to make another substantial deposit to the account using a source of found money that we also use in our personal finances: cash back from a debit/credit card.

Almost two years I switched our business credit card from one that rewarded us with airline miles (not a good fit for us) to the Chase Ink Business Card, which offers cash back. We started using the Chase card with no special plan for the cash back rewards; in fact, I kind of forgot about them.

Recently I checked on the status of the rewards and discovered we were eligible to receive $491 back in the form of a check or statement credit. I requested the check and as soon as it arrives will use it to supercharge the business savings account.

I’ve discovered that the found money method I use for our personal finances works just the same for a small business:

1. Identify small streams of income (in this case miscellaneous revenue and credit card cash rewards).

2. Give them a job to do (i.e. fund the business savings account).

Again, I’ve been amazed at how small amounts of money can add up to something bigger when you do these two things.

Do you have a small business? Do you have savings set up for it?

P.S. I’ve added a Found Money link at the top of the blog. It contains a quick description of the Found Money Method and also a link to all the posts about finding and using it.

10 Replies to “Using the Found Money Method in a Small Business”

  1. Thanks very much for this post. I’m planning to start using the found money method, opening a separate account and depositing the money I make from selling off Baby Skint’s clothes, toys etc that she’s outgrown. Likewise cashback from credit cards as your post has given me the inspiration to get going!

  2. I really like this idea. I need to implement it for myself. My husband’s income is more variable and harder to predict from one month to the next. Yet, I should be able to take small payments and give them a job.

    1. We live with a variable income, too, LH. Such is the nature of a small business/self-employment. I think that’s why the found money method works so well for us. Let me know if you give it a go and how it works for you.

  3. A friend of mine set up a savgins account at the bank but made it so she can’t pull the money out until she had at least $ 1000 in it. Maybe do that and direct deposit your checks right in there.Short of doing something extreme like that, I guess you just need to ask yourself every time you go to spend money if this purchase is worth putting you behind on getting your camera. Seriously every time you pull out your money stop and think about it for a minute. Is this more important than the camera? If no put it back.

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