4 Money-Management Tips To Help You Bootstrap Your Business…

Sometimes, people who aspire to be business owners have this idea that they’ll pitch their idea, get millions of dollars in funding and start spending money like pro athletes. But, if they’re anything like the average American, they’ll have an average $1,000 in savings (if that).

Related: 5 Things You Need to Do When Bootstrapping Your Startup

They’ll also have $17,000 to $137,000 in debt. If these numbers describe you, then borrowing money, applying for a loan, relying on credit cards and finding an investor may not be your best move. Instead, you should bootstrap your business.

My co-founder Dan Foley and I bootstrapped Tailored Ink back in August 2015. We spent a combined $1,000 to get it off the ground and kept our costs low. Flash-forward to today, two years later, and we’re swiftly closing in on the $1 million mark. We still haven’t maxed-out our credit cards or applied for a business loan.

Want to know how we did it? Here are some financial habits we learned on our way to becoming successful business owners.

1. Spend within your means.

When I was making $40,000 a year, back in 2012, I was eating frozen TV dinners every single night. Aside from my desktop computer, which cost only $300, there was no furniture in my apartment to speak of. I even slept in a $25 inflatable bed.

Most of my friends and colleagues who had tons of college debt and were making about the same as me were literally pissing money. When they ran out of cash, they would max-out their credit cards.

Despite everything you may have seen on TV, this is not how to  behave if you want to become successful. You’ll never accumulate wealth if you spend it as soon as you get it. Debt and loans do not equal wealth.

How do you keep yourself disciplined and spend less money in a credit-dependent and debt-ridden culture? By practicing delayed gratification. It’s the key to financial success. You need to believe that your short-term sacrifices will result in long-term gain. And they will.

Related: 5 Quick Bootstrapping Tips for Entrepreneurs

2. Save way more than you spend.

With that in mind, you should aim to save as much as possible. Some people will tell you the exact opposite, as in, “Don’t worry about saving until you’re 30.” These are the same people who’ll work until they’re 65 and wonder why their savings accounts are so small.

There are plenty of secrets to growing money, but there’s no secret at all to saving it. You just need to tuck in your belt and control your spending. Many financial advisors recommend saving at least 10 percent of income per year, but that’s not enough if you want to be rich one day.

Saving as a business owner is even trickier because you’ll have other people to think about. Let’s say you make $10,000 a month at your new business. That sounds pretty great — but after you pay 20 to 40 percent of that revenue for tax, 25 percent for business expenses and 25 percent for living expenses . .  .  there won’t be a whole lot left.

If you’re running a B2B business, you’ll also have accounts receivable to think about. Not all of your clients will pay you on time, if at all.

Dan and I save way more than we spend and put most of what we make back into the business. That way, we can afford to pay all our vendors before we pay ourselves. We keep a two-month runway in our business bank account at all times.

3. Always pay off your debts (or don’t borrow at all).

America has a serious credit problem. We’re brainwashed into believing that borrowing huge sums of money on a regular basis is smart. That’s why we do just that for college, cars, houses and even businesses. It’s why Americans had nearly $1 trillion in credit card debt back in 2015.

If you really stop and think about it, though, this is insane.

Warren Buffett has some pretty strong opinions about debt and loans. “You don’t really need leverage in this world much,” he said. “If you’re smart, you’re going to make a lot of money without borrowing.” Buffett indicated that he was especially leery of credit cards. “Interest rates are very high on credit cards,” he said. “If I borrowed money at 18 percent or 20 percent, I’d be broke.”

So, just as an example, let’s say you charged $5,000 to your credit card with an APR of 15 percent, and you paid the minimum 2 percent each month. After 14.3 years, you’d have paid out an additional $5,614.44 — more than you borrowed.

4. Don’t just leave your money in the bank.

Speaking of savings accounts, they’re pretty much worthless. The interest rates at nearly all banks are so low that they’re insulting. Yet most people continue to think that leaving money in the bank is the safest thing they can do.

But you have other, better options. Nearly all banks and brokerages give you similar insurance — just through different providers. Banks give you insurance for up to $250,000 in cash from the FDIC, while brokerages have the same coverage through SIPC.

In other words, as long as you have less than $250,000, your savings are just as safe in a brokerage as they are in a bank. You can trade stocks, bonds and funds without worrying that someone will steal your money.And if you follow Warren Buffett’s low-risk advice to invest in different index funds, you can earn upwards of 5 percent to 10 percent per year. The S&P 500 Index, for example, returned an average of 11.69 percent per year in the years from1973 to 2016. Compare that to 1 percent, which is the highest interest rate generous banks offer.

What’s in your wallet?

Bootstrapping a business isn’t that hard. You just need a basic understanding of how wealth accumulation works, and accept that your money-spending habits may not currently be aligned with success. That’s the hard part.

But if you dream of owning your own successful business one day or becoming a millionaire before you retire, you’re going to have do some soul searching. Are you willing to delay your gratification and make some sacrifices in the near future so you can reap the rewards down the road? Will that sacrifice be worth it to you?

Related: 6 Money Management Tips for First-Time Entrepreneurs

For me, the answer is an easy and resounding “Yes.” What’s your answer?