At the end of a two-week vacation in Italy with my mom, I spent the last night in Rome. No, I didn’t spend it throwing coins into the Trevi Fountain. Instead, I got busy invoicing all of my clients. I had taken two full weeks off — something that would’ve been unheard of at my previous jobs. But this was one job duty I was happy to do. After all, invoicing clients means I get paid.

But once I tallied up the total, I was shocked. I had invoiced for half of what I usually make. Sure, I took two weeks off, but I thought that I had “worked ahead.”

Entrepreneurs Need More Than Your Average Rainy Day Savings Fund. Many entrepreneurs find themselves asking, "Can I use my 401(k) fund to start a business?" Well, you can... but should you?

I thought I had a plan in place. But the numbers didn’t lie. There I was, my last night in Rome, worrying about — of all things — money.

I had saved up for the Italy trip so that I could avoid credit card debt. What I hadn’t done was save up for any potential income hits from my vacation.

Build an Emergency Savings Fund With a Money Market Account — Get Started >>

After being upset for a while, I had an epiphany. I need to create my own vacation fund, I thought. When I was an employee, I always had paid vacation time. As a business owner, there’s no such thing. If I don’t work, I don’t get paid. But this Italy trip taught me how much business owners need to protect their finances on so many different fronts — saving up for their own vacation time, sick days, and retirement. Totally unsexy, I know, but absolutely necessary.

When you’re an entrepreneur, no one will pay for your vacation time, your retirement, or your sick time but you.

For your business to be viable in the long-term, it’s crucial not just to have an emergency savings fund, but also to fund those other benefits you used to get at a real J-O-B.

Starting an Emergency Fund

As an entrepreneur, you take a lot of risks. "Given that, how big should my emergency fund be?" we hear you ask. Check out these tips. #emergencyfund #entrepreneurWhen I first started freelancing, nearly every article I read on entrepreneurship said, “Create an emergency fund!” Everyone needs an emergency savings fund. And true, business owners may need a bigger cushion to combat dry spells. But your business isn’t just about saving for emergencies.

If you’re like me, I bet you started your own business so that you can have freedom. So that you can do what you want, when you want. The reality of being a business owner, though, is that money still rules a large part of your life. And if we want to take time off or retire early — or, God forbid, we get sick — we need to have savings in place to recoup those lost funds.

Build an Emergency Savings Fund With a Money Market Account — Get Started >>

Nobody wants to come home from a life-changing vacation only to feel stressed over money. You don’t want to suddenly get ill and try to force yourself to work because you can’t take the financial hit. You may be asking yourself, “How much should I have saved for emergencies?”

How do you start an emergency fund? Start by creating several savings accounts.

It's important to have not just rainy day savings, but other savings, too.

I’m a fan of Capital One 360, which allows you to open up to 25 savings accounts and give them fun nicknames. My savings accounts are called “Sick as a Dog Fund” and “My Stress-Free Vacation.” I also save and invest for my retirement through a brokerage account.

Keeping these savings funds separated is key because when your money is all sitting in one pile, it’s easy to use it for something else and be unclear about your goals. Being clear on what each savings fund is for and how it should be used is important.

So How Big Should My Emergency Fund Be?

You may wonder how much you should save for your vacation and sick time. How much do you need for your retirement? Well, it all depends on what you typically make.

Let’s say you typically make $200 per day on average. Not sure how much you make each day? Divide your net income by the amount of days you work each month. If you want to create a flush sick-day savings fund with at least five to 10 days’ worth of “sick day” money, you’d want to save $1,000 to $2,000.

For your vacation fund, same thing. Let’s say you want at least two weeks off per year. You’d want to save at least $2,800. How much you want to save for retirement depends on when you want to retire, as well as what your income looks like, but a good rule of thumb is that you should save 25 times your annual expenses.

Build an Emergency Savings Fund With a Money Market Account — Get Started >>

How Can I Save for This?

As a business owner you’re probably thinking, “How in the world can I save for this?” The key is to start small and build up. Every time you get paid, put a percentage of your income to your three buckets: sick time, vacation fund, and retirement (assuming your emergency fund is already built up).

You can start really small at one percent, if you feel like it’s going to be a burden. If you can afford it, strive for 10 to 20 percent. Treat each savings fund like a bill — like an employee you need to pay. Why? Because this is your life, your future, your happiness, and your stress-free days. This is your freedom card and your ability to deal with your life and your feelings as they happen, and not just worry about the money.