Why Aren't You Paying Yourself?

In the world of money management, there's a simple yet powerful concept: pay yourself first. Inspired by Michael Michalowicz's book "Profit First," this approach flips the script by making sure you're taken care of before anything else. It was mind blowing to me and has actually made me excited to do my books each month and feel in control of my small business finances. Let's break down how using Profit First principles can make a real difference in your business.

Your Money, Your Priority

In traditional business models, profits are often an afterthought, with expenses and bills taking precedence. Instead of treating your earnings as an afterthought, Profit First encourages you to prioritize yourself. This not only ensures you're rewarded for your hard work but also instills a sense of financial security and motivation.

Getting Organized 

One of the first steps in Profit First is organizing your money into different bank accounts for different purposes, such as profit, owner's compensation, taxes, and operating expenses. This helps you see exactly where your money is going and makes it easier to manage your finances effectively.

Keeping it Simple with Percentages 

One of the key principles of Profit First is the 50-30-20 rule, where 50% of your income goes to operating expenses, 30% to owner's compensation, and 20% to profit. This simplifies money management and ensures you're not neglecting your own needs.

Staying on Track 

The key to making Profit First work is consistency. Stick to your percentage allocations, regularly check your accounts, and make adjustments as needed. This keeps you focused on your financial goals and prevents surprises down the road. 

Celebrating Wins

As you see your profit account grow, take a moment to celebrate your achievements. Whether it's treating yourself to something special or reinvesting in your business, acknowledging your progress keeps you motivated and engaged.

Growing Together

Profit First is a flexible system that evolves with you. Monitor your financial accounts regularly, adjust percentages as needed, and continually strive for improvement. As your business grows, so can your profit allocations, leading to greater financial rewards.

By embracing the Pay Yourself First mindset inspired by Profit First principles, you're not just managing money more effectively—you're paving the way for long-term financial success and personal fulfillment. Start prioritizing your profits today and watch as your financial journey transforms for the better!