I’m sure if I asked each one of you why you got into your business in the first place, you would share with me your passion for what you do and your love for having the freedom to go and be where you want on your own dime and on your own time. We all do what we do for the love of it, but in the end we still are in our businesses to make money. When we aren’t sure of where we stand financially, it can crumble our confidence as business owners and the negative trickle effect ranging from loss of client interest or revenue up to resenting your business can be detrimental. So how do we manage our relationship with money so we can forget about the “numbers” and tap into the abundance that is already there? Read on to learn more.
Your relationship with money first and foremost needs to be one where you are in CHARGE, not the other way around. And how do you do that? Through organization my girls! Here’s my recommendation on how to organize your business and personal finance accounts so you don’t feel like you’re constantly chasing the penny.
- Start off with a “BUSINESS” CHECKING ACCOUNT aka business income/expense account. In this account you will need debit, checks and bill pay. Here you will deposit all business income and pay all business expenses including your salary (which includes your personal bills), client entertainment, business travel, workshops, membership dues, business subscriptions, auto, phone etc. This account is dedicated to all things business tax deductible/taxable.
- Create a PERSONAL CHECKING (DEBIT) ACCOUNT aka your play account. In this account you need a debit card but no check books or bill pay. Instead, take your salary from your BUSINESS ACCOUNT and deposit your pay (should be enough for your personal bills and spending money) into your personal checking account. This account is your play money, your “self-love” account, if you will.
- Create a second PERSONAL CHECKING ACCOUNT aka your personal bills account. In this account you will need checks and bill pay. Here you will take money from your personal debit and deposit to your personal bills. You can pay all your personal bills from here via online or check and no debit card will be needed for this account.
- Lastly you’ll need to create a PERSONAL SAVINGS ACCOUNT aka stash account. In this account you won’t need debit or bill pay as it’s simply a holding account. For instance, a good rule of thumb is to set aside 25% of all income for tax purposes therefore, each time you deposit income into your BUSINESS CHECKING ACCOUNT you want to transfer approximately 25% of that income and deposit it into this account. The win, if done consistently is that by the end of the quarter you should have enough to cover your GETs so that you’re not paying out unexpected, sometimes large sum of funds.
RECAP: BUSINESS CHECKING ACCOUNT: helps organize and track all business income/expenses. Makes life a littler easier come April 15th and you always know the financial state of your business. PERSONAL DEBIT ACCOUNT: you don’t have to worry if you have enough in your account to cover a pedicure or that blouse you’ve been eyeing again because the only money in this account should be for pure play which is great motivation to grow it the most. PERSONAL CHECKING ACCOUNT: a common culprit of NSF (non-sufficient funds) is that the account holder is debiting from the account but forgot that there’s floating checks out there waiting to be cashed or the date when an automatic deduction for a bill takes place so spending money that’s already claimed hence the bounce. If the only money being deposited here is to cover bills there should be no surprises. SAVINGS ACCOUNT: is where you store money throughout the year for anticipated expenses and can help get you through unexpected financial situations.
If you manage your money like this each month you will save yourself the stress of tracking and only have to run the activity report from your BUSINESS ACCOUNT for bookkeeping needs. And just imagine the relief you will feel knowing your money is organized, on track, and in the right place at ALL TIMES!
Another tip on how to build a positive relationship with your wallet is if you use credit cards, use one card for business only and the other for personal and do your best to not double dip. Use an excel or airtable spreadsheet to budget and keep track of finances too so you know how your time (and your money) is being spent.
Those are a few of my money management tips to help you build a relationship your money get back on the same page. Please contact me if you have any insight or questions and I hope to hear from you soon. XOXO.