Ok, so you followed some good advice (hopefully ours with reverse budgeting) and you’ve built up a solid emergency fund. Maybe you’re someone just looking to go full time so you built up enough to give yourself a the runway you need. Or you’re a full time streamer who recognizes that you income is totally based on you so you need to have a buffer in place for illness, unavailability, or just slow times. You’ve gotten to the point where you have some extra money (yes, it can happen!) so what do you do next with your earnings?

Goals

The first thing to consider is your goals. Hard to know what to do with your money if you don’t know what it is you want to do! Do you want to grow your stream and keep streaming forever? Do you want to be able to take some time off? Are you worried about handling taxes or perhaps you want to retire comfortably at some point? Of course, there are many more options than these but I know seeing some suggestions gets my thought process moving.

Reinvesting

First, let’s talk reinvesting in your business. What kinds of things could you purchase that would really help accelerate your growth? A new camera, green screen, or game? Or maybe, a sick battlestation that will make me incredibly jealous? Clearly, the opportunities are endless so it’s up to you to decide. If you’re planning on growing it’s good to actually have a formal plan for what kinds of items will help you a bunch. You also should consider whether or not your viewers might contribute to a dedicated fundraiser for a particularly expensive item.

Next, it could make sense to reinvest by hiring a contractor. There are only so many hours in a day and only so many skills that one person can master. What is it that you do that you wish you could outsource? If you have some extra cash it could totally make sense to bring someone on to help. Unless you’re a really big business it probably doesn’t make sense to actually hire someone full time but there are tons of contractors who could help. Think especially in the space of video editing (Hi YouTube!), website management, accounting, or social media management.

Saving for Enjoyment

I mean, duh. You need some money for you to enjoy. Even if you love streaming (hopefully you do!) everyone needs some variety and some time to themselves. While it’s nice to plan for all of your expenses I think this is a category where you can get away with a little less planning. Just throw some of your extra money in an account that you can draw on for fun. Spontaneous drinks? Great. A trip somewhere? Awesome! Some extra spending cash to splurge on whatever you feel like? That’s exactly the point. Everyone is different in what relaxes them. Just know what you’re looking for and set some money aside for it.

Where planning does come in to play is on larger purchases. If you’re in the US and planning a trip to Australia you’re going to need to save some money just for that. As we’ll get in to with conferences in a moment, this isn’t that difficult. You just need to go through the steps to get there and the activities you’re planning and get a rough cost estimate. That gives you your target. It might be that each month you have slightly different amounts to save because you’re getting more subs or had a large number of tips, so save accordingly. In a good month throw a little extra in. For a lean month hold back.

Saving for Conferences

Conferences are a specific type of reinvesting and it can be harder to define the benefit ahead of time. You get to network with other people in the industry, have fun, learn a whole bunch, and get some time off streaming. So how do you save for conferences?

First, make a game plan. What conferences are you attending? When are they? Where are they? Will you have to fly? Get a hotel? The more you answer these questions in advance the more you’ll know about what you have to save to pull it off. Once you have those numbers, figure out what you need to set aside each month between now and the conference to hit that goal. For instance if you plan to spend $1000 on a conference 10 months from now you need to save $100/mo. I’d recommend a separate conferences/travel account just for that purpose. If you use something like CapitalOne 360 you can create named sub accounts without having to go through the hassle of actually opening a new account, which is nice.

Since you are most likely looking a year out at most it makes sense to just let the money sit in an account, no need to worry about investing it or anything like that.

Taxes

Are you worried about how much you pay in taxes? Actually, you really only need to worry about this if you’re making a ton of money. That being said, it’s a totally legit concern- who wants to pay more of their hard earned money if they don’t need to? Well, Warren Buffett does but he’s on a different level than us when it comes to money.

Anyways, that was a tangent. Implement some of these suggestions if you’re worried about your taxes. First, you can look at opening up a retirement account for your business. You have a business, remember? The government looooves people who start small businesses and gives them tons of options to make their life easier. The cool thing with these retirement accounts is that you’re putting in money pre-tax which is a big benefit in addition to just saving. You pay taxes when you take that money out, but hopefully that would be a long time from now.

As a start, you could look at a Simplified Employer Pension (SEP) IRA. A SEP is a lot like a traditional IRA but it’s available for the small business owner and lets you put away more money. You can put in the lesser of 25% of your net earnings or $54,000 (2017). That’s a lot of money either way! These are pretty easy to set up but do require some thought when selecting investments.

Next, you could also look at a solo 401(k). This is just a 401(k) where you’re the only participant. For these accounts you can also put away the lesser of 25% of net earnings or $54,000. However, there’s a neat trick. Since it’s a 401(k) you, as the employee, can put up to $18,000 in it, assuming you made at least $18,000. Then, the business can put 20% of earnings in there also up to that $54,000 total regardless of your contributions. So basically, if you’re not earning a couple of hundred thousand dollars you might be able to put more away in a solo 401(k).

Retiring

The biggun, for most folk who hate their jobs. Since you’re a streamer I’m assuming you chose the job because you like it. If you know someone who streams but stumbled in to it and hates it let me know because I’m super interested to talk to them. Anyways, you still might look towards a future where you don’t have to worry about earning more money. Grinding’s tough! Luckily, there’s a whole industry of folks, including myself, who make their living helping folks figure out their path to retiring.

So…. What’s the big secret to figuring it all out? Unsurprisingly, the same thing it’s been for all of the other entries! All you have to know what it is you want to do and make a cost estimate regardless of your plan. Are you looking to retire and travel the world for 10 years? That can be pretty pricey. Are you looking to retire straight to your porch’s rocking chair and watch Twitch? You can do that at a pretty low cost. The point is, you need to put together a sense of what you’ll need in the future. Then you can figure out the other pieces but we’ll get in to that more in another article.

There are a couple of options available to you that will help with saving for retirement. First, those accounts I listed in the tax section are the premier vehicles for retirement savings because you can put a ton of money in them. Retirement takes a ton of money. Second, you could look at an Individual Retirement Account (IRA). An IRA lets you put $5,500 ($1,000 more if over 50) away each year with some special tax benefits. You get tax deferral from a traditional IRA, meaning you get a tax break today on the money you put in there. You pay taxes when you withdraw your money.

A Roth IRA gives you a tax break in the future, and is pretty awesome. You put post-tax dollars in a Roth IRA and they’ll never be taxed again! That means any growth you get in there from investing is all yours, which is a pretty incredible benefit. It’s an especially incredible benefit if you’re in a lower tax bracket today. Additionally, you can take your contributions out of a Roth IRA without any penalty if you need the money later. What can I say, I love the Roth IRA.

Conclusion

In this post we discussed what you could do with some extra cash once you’ve built out your emergency fund. Again, I think the emergency fund piece is the important first step on your path as a small business owner. After that, the sky’s the limit. Spend some on yourself, reinvest in the business, or look at saving for the long term. Luckily, there’s no wrong answer and it’s not wrong to do a little of each, either. Essentially, the key is to have a plan for what you’re doing instead of just throwing money around willy-nilly.

Finally, if you have any questions on what we’ve covered today or a topic that you want us to look in to further, leave a comment below and we’ll get back to you.