We live in a day and age where most entrepreneurs assume that you must go into debt if you want to start a business. This idea is deeply entrenched in our DNA as Americans; it doesn’t even occur to us that we could possibly save up the money we need to cash flow  a startup and avoid going into debt.
One of the reasons this doesn’t occur to us is that many of us don’t have nearly enough cash to start a business. And, because we live in a fast food culture where the word “patience” is absent from our vocabulary, we aren’t willing to put forth the sacrifice it takes to actually save more than a few hundred dollars at a time.
While you, like most Americans, are plagued by these issues, there’s no reason you can’t move past these issues and save up enough money to start your own business. Don’t believe it? Just read on.
The Sad State of Savings in America
According to a sobering 2017 study from GoBankingRates , the average American has a rather abysmal savings account. More than 57 percent of Americans have less than $1,000 in the bank, while 39 percent say they have nothing saved.
Just one in four people have $10,000 or more saved, which means three out of four families would have trouble surviving more than three or four months without any income.
While every situation is different, the general rule of thumb is that you should have the equivalent of your annual salary saved up by the age of 30. And by the time you reach 35 and 40, you should have two- and three-times your annual salary saved, respectively. By the time you reach age 65 — i.e. retirement age — financial experts agree that you should have eight-times your annual salary saved.
The overall lack of savings among Americans is frightening for a number of reasons, but it looks even more problematic when you couple it with our society’s love for debt. High debt with minimal savings is a recipe for disaster. It’s also a huge inhibiting factor in your ability to accomplish important goals — like starting a business.
When you don’t have money saved up to start a business, you either have to table the idea for another day, give up equity in your startup, or attach a bunch of debt to your name. Since none of these scenarios are ideal, it makes the most sense that you would change your personal finance habits and find a way to increase your savings.
How to Save Money to Start a Business
There isn’t a perfect formula for launching a business. Sometimes they start as hobbies and gradually mature into something much grander. Other times, they start as formal ventures and end up pivoting into something else entirely.
Different strokes work for different folks, but there’s tremendous value in cash flowing a business and avoiding the weight and burden of debt on the front end of your venture. But in order to fund your own business, you have to overhaul your savings habits and get a better grip on your financial situation. Here are some ways to get the ball rolling:
1. Get Rid of Your Debt
Let’s start with the topic nobody wants to discuss: debt. We all seem to have it, yet very few of us ever directly confront it until we’re in over our heads.
Whether it’s student loan debt, car debt, credit card debt, a mortgage, a personal loan, or anything in between, we all have it. Run a quick calculation on all of your monthly payments. If you’re like most, you spend hundreds of dollars (if not thousands) per month on debt payments. Now imagine what you could do if these debts were gone.
When you get rid of debt, you’ll feel like you got a raise. Suddenly all of that money that was going towards repaying a debt can be put towards something else — like startup money for business.
2. Slash Your Discretionary Spending
How can you aggressively attack debt on a limited income? The first answer is to slash your discretionary spending and put that money towards your debts.
Between eating out, online shopping, grabbing drinks on the weekend, and buying things you don’t really need, you should be able to come up with a few hundred dollars per month. Over the course of a year, this can add up to a considerable chunk of change.
3. Build Up an Emergency Fund
Before you can focus on cultivating startup money for business, you must build up your own cash savings.
As a general rule, you should set aside at least six months of living expenses before quitting your day job and running a startup. That’s because it’ll take a while — at least six months — before enough money comes in to begin paying yourself a salary. (In many cases, it’ll take more like 12 to 18 months.)
If you can’t build up a sizeable emergency fund to pay the bills, you’ll need some other type of plan in place. For married couples, having the other spouse go back to work, increase hours at a current job, or add another part-time job will help pay the bills. Either way, be sure you have enough money to live on.
4. Automate Savings
It’s easy to get so caught up in spending that you don’t even think about savings. Over time, this can have some pretty dramatic effects. And while there are plenty of ways you can deal with this issue, automating the savings process is one of the smartest options.
If you can find a bank that helps you automate savings, this is a good place to begin. In an article for Entrepreneur.com, entrepreneur Renzo Costarella calls ChimeBank.com one of the best money savings apps  on the market.
“The mobile banking app also offers an automatic savings account, which allows you to start saving money without thinking about it by automatically setting aside 10 percent of every paycheck you deposit into Chime,” Costarella explains. “You can also enable rounding-up on your purchases and have the difference transferred to your savings every time you use the Chime debit card.”
Other good money savings apps include options like Digit, Clarity Money, Qapital, Mint, Acorns, and more. The key is to find a solution that takes you out of it. You are your own worst enemy and automated solutions like these will keep you grounded.
5. Ask Yourself This Question
When you find yourself in a store — whether Walmart, a grocery store, or a pricey boutique — try to remain cognizant of what you’re doing. Before placing something in your shopping cart, ask yourself this one simple question: “Do I really need this?”
Most of the time, the honest answer to this question will be “no.” You might not like this answer, but it’s what you need to hear in order to avoid spending money on things you don’t need.
6. Start Small and Slow
When you first start your business, there’s a temptation to do everything at once. In many cases, this leads inexperienced entrepreneurs to tackle surface level tasks (rather than the foundational building blocks that really make a business).
“Marketing materials are the fun part of starting a business: choosing a logo, designing business cards, picking out graphics and colors for your website, getting business stationary, etc. Unfortunately getting caught up in colors and patterns doesn’t make you money,” entrepreneur Nicole Crimaldi admits. “Yes, marketing materials are important but making money is more important.”
By starting small and slow, you can avoid putting yourself in a compromising position down the road.
7. Reinvest Profits
The final rule of thumb is simple in theory, yet challenging in practice. While your natural inclination is to start spending the money you make from your new business, it’s a much more sound practice to reinvest your profits . This will allow you to continue growing without needing to take on debt.
Get a Grip On Your Savings
When launching a business, how you manage your money is one of the key factors that determines whether or not you’ll be successful . While some people are able to turn a couple of small business loans into billion-dollar businesses, others find it more reasonable and less risky to cash flow their ventures and avoid debt. If you want to pursue the latter path, make sure you having a game plan to acquire and grow startup money for business will help you burst out of the starting gates with great intensity.
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