How I Learned to Pay Myself for My Work
My business was earning money… but I wasn’t.
Two years ago my husband lost his job and we managed for 5 months on my income, and our savings. It was a scary and uncertain time.
While our financial situation was unsustainable long-term, we realized we could last for several months, allowing him to fully throw himself into the job search and find a job that would be a great fit with more opportunity than before.
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That time was invaluable and led to a wonderful opportunity for him… that also meant moving out of state. Moving meant my own employment situation needed to change, and after seeing how a couple frugal months led to a more fulfilling employment situation for my husband, I decided to spend a few months pursuing my own ambition of self-employment.
So, in April 2016, I became an online entrepreneur. I make an income from multiple online sources including freelancing, an online store and affiliate income, selling shirts on Print on Demand platforms and more.
It’s going well. I began turning a profit the first month and never stopped. I’m enjoying what I do, and for months I happily plowed every penny of profit back into the business to fuel its growth while we lived extremely frugally off of my husband’s income.
Last fall, we purchased a house. Living on one income had begun to chafe now that my business was making money and the house needed a few repairs.
When it came time to take a paycheck, I really didn’t know where to start. I had spent so many months putting all my revenue back into the business that it was hard to figure out how much profit I was making on a month-to-month basis. I wanted to be paid… but I didn’t want to gut my growth.
I spent hours looking at the numbers, reading articles on how to pay yourself, calculating averages, and talking to my CPA about how much tax I should be withholding if I pay myself. I ended up confused and still not sure how much I could afford to pay.
So I guessed.
In November I paid myself $300. My business didn’t blink and I felt insulted. I had happily worked for free for months, but working for $300 was suddenly extremely depressing. I had to find a better, higher number that would keep me motivated to grow this business, and $300 was way, way, too low.
Starting in January I paid myself $1,000. It was scary and exhilarating and I was convinced my business growth would take a nose dive. To my surprise, growth continued at the usual rate. So, at the end of February, I decided to raise the amount by $100 every month and keep raising it until my business couldn’t afford to pay it. So far it’s worked. At the end of June I made $1,500 which is exactly half of what I used to bring home at my old job.
I’m still scared and exhilarated every time I cut myself a check. At the start of each month I’m nervous I won’t be able to make payroll, but by the end of the month the money is there. After half a year of paying myself for my work, I’m finally starting to feel more confidence in the legitimacy of what I’m doing.
Now I’m beginning to chafe again under this paycheck. It’s not growing fast enough and I want a raise. I’ve toyed with the idea of bumping up my paycheck by $200 a month but then I chickened out. Maybe I’ll do it this month.
If the money is there.
Meg Renninger is an entrepreneur in Texas.