How To Budget If You’re A Business Owner

Imagine this...you’re thriving in your business, but your personal finances are all over the place.

Sound familiar? Don’t worry, you’re not alone.

Here’s how to bring the same success to your personal life that you have in your business.

Understanding Your Financial Situation

First things first, create what I call THE List.

It’s the most important list you’ll ever make.

List all your personal assets, liabilities, income, and expenses.

Keep it separate from your business finances.

If you don’t have a tool to do this, download this spreadsheet. It’s set up to make this process easy for you.

Creating A Personal Budget

Next, create a budget for your monthly income and expenses.

Use the same spreadsheet on the tab next to THE List.

(If you prefer to watch, I go over the details here)

You can see exactly how I do this on Too often, business owners obsess over their business finances but ignore their personal ones. This is a huge mistake.

Personal financial issues can lead to poor business decisions.

In my Design Mastermind, I worked with a business owner who took a quick job out of desperation during a bad month.

He underestimated the time and labor, lost money, and missed time with his family.

The root cause of this poor business decision? A personal financial issue.

Turns out his wife had three checks waiting to be cashed, which would’ve solved their problem and prevented him from making an emotional decision.

This is actually very common for many founders and business owners.

So, once you’ve listed everything, set financial goals...

AND WRITE THEM DOWN.

The most important goal is understanding what you need to earn annually to support your desired lifestyle.

If that number is $200,000, aim for around $275,000 gross to cover taxes. This personal goal should tie directly to a business goal with a strong WHY.

Managing Cash Flow

As a business owner, your income likely fluctuates. Here’s how to manage that:

1. Seasonality: Look at trends from previous years and prepare for revenue dips or spikes.
2. 90-day average: If your earnings vary, average your income over the past 90 days to create a monthly budget and then use that number as your monthly income number.
3. Base + Distribution: Set a base amount for your monthly budget and take additional distributions during good times to accelerate your financial goals.

Automating Your Finances

Systems reduce human error and save time.

Go back to THE List and automate payments for every bill possible through a credit card or bank account.

Use online tools to track your spending and the spreadsheet to make financial projections.

Schedule a 30-minute monthly review to stay on top of things without wasting time.

Staying Disciplined on the Journey

You are the Hero of your story. No one is coming to save you.

Schedule monthly check-ins with your spouse if you’re married, or with a friend if you’re single.

Make it fun so you look forward to it.

If you hate tasks like taxes, hire a professional. But don’t get lazy.

Commit to learning and growing your financial knowledge through YouTube videos and podcasts like The Adventure.

Don’t let inconsistent revenue be an excuse not to control your money.

If you can manage your business finances, you can manage your personal ones too.

WARNING: Over 60% of people don't pay attention to this on a monthly basis. If you want to get serious about it and ensure your success, then consider joining the Foundation Mastermind.