as a teenager, i ran a business with miniature horses – this is what i learned from it for my finances
Since I wanted to turn my love of horses into money at an early age, I founded my own company as a teenager.
In the process, i learned important strategies for dealing with finances that i still follow today.
These include constantly monitoring my expenses, following a budget plan, and the importance of emergency funds.
Already as a teenager, I was accompanied by a business idea that had taken root in the back of my mind. Finally, I ventured into unknown territory and founded my own company. i’ve loved everything to do with horses for as long as i can remember, so earning money from my hobby was the obvious thing to do. My business idea was to rent out mini horses for events like birthday parties. Since I also took care of the animals myself, I was always present at the events.
No one in my immediate environment had ever run their own business, so this was uncharted territory for me. However, since I had to teach myself everything, I also learned a lot very quickly. My business ran successfully for three years. To this day I do not regret having started it. However, when I started my studies, I had to stop renting horses because I didn’t have the time.
Throughout the process I learned how to budget and save money. I still apply all this to my private finances today. These are the three most important tips that starting up taught me.
1. Keep track of all your income and expenses
When I saw the statement of my income, expenses and profits at the end of each month and year, I quickly realized how important it was to always have a detailed overview of my finances. At first, I thought it was enough to know about the bigger expenses like insurance and horse feed. Over time, I realized how quickly small expenses added up to large sums of money. So I started to include them in my financial plan as well.
Previously, I had a distorted picture of my income. It wasn’t until I started tracking even the smallest current expenses and recording them in writing that I was able to calculate more precisely and plan more efficiently. Keeping a detailed overview of my finances also helped me with my tax payments. in the beginning i was able to write off a large amount of my business expenses, because i did not earn enough yet.
The person who helped me with my taxes advised me to document all expenses and keep all receipts right from the start. This not only allowed me to check how much I had spent on which item in the last month, but also to be prepared in case of audits.
2. Set monthly and annual budgets
As a teenager, I had no significant experience with budgets. But once I got the hang of it, it changed my whole perspective on my finances. In the first few months it often happened that my expenses exceeded my income and I made up the difference with money from my private account. That was a problem. In the future, I wanted my business to be self-financing.
In order to achieve this goal, i set up a budget for myself. The biggest challenge was that I didn’t have a regular income. What I earned depended on the number of events I was booked for, which varied from month to month. In addition, there were larger expenses that I had to pay once a year, such as veterinary costs, hay and insurance for my horses.
Eventually, I stuck to a strict financial plan, paying only what was necessary and saving profits from good months either for annual payments or setting them aside for emergencies. In figures, I spent only 200 US dollars (about 175 euros) per month. For every hour I was booked for an event, I earned 150 US-dollars (about 131 euro). So I only had to be booked for two events a month so that my business was self-financing and I didn’t have to draw on my personal savings.
3. Always have an emergency fund
When one of my mini-horses suddenly became very ill, I had to take it to an emergency veterinary service, where it was treated for several days. Luckily the horse survived. But when i saw the veterinarian’s bill, i was in for another shock. Whole 1.500 US dollars (approx. 1.315 euros) the treatment cost.
my company was still young at that time and i didn’t have a lot of orders yet. As a teenager, I had no other option than to take a part of my savings for my studies and pay the bill from it. From that moment on, I knew how important it was to have reserves for possible emergencies. Should something like this happen again, I would not have to fall back on my private savings again.
I set up an emergency fund that I filled every month with excess profits. some time later my trailer broke down and i had to buy a new one to continue transporting my horses to events. thanks to my emergency reserves i did not have to worry about financing the trailer.
This text was translated from english by anika faber. You can find the original here.