Most business owners never truly become wealthy.
But it’s not because they do not make money, but because they never learn how to manage their money.
Here’s how, in 4 simple steps.
The other day I was on a consulting call with a client.
“ I’ve seen an almost 200% growth in my income since we started working together.
And still, I don’t see any evidence of that in my bank account.
What am I doing wrong? ”
I’ll tell you what I told her:
The cold hard truth is that most business owners never truly become wealthy.
The reason for that is not because they can’t earn money.
That part is pretty straightforward and all you need is a simple and strategic plan to get you going and to see sales begin to roll in.
The reason why most business owners never build wealth is because they never learn how to manage their money.
🏀 Take highly-paid professional athletes for example:
A report done by Sports Illustrated proves approximately 60% of all professional NBA basketball players end up broke within five years of retirement.
🔢 Same goes for lottery winners:
According to a study by the National Endowment for Financial Education, almost 70% of them lose all that money within a few short years.
It doesn’t matter how much you make,
if you cannot manage or keep it
Most people? They never get there.
“I first have to make a lot of money. Then I’ll learn how to manage it”.
But that never works.
Because if you won't learn to handle and manage what you already have, you're not going to be able to manage or handle more.
We humans are creatures of habit.
The habit of managing your money is more important than the amount.
Luckily, it’s easier than you think.
And right now, we're going to break down the process of money management into four easy steps you can begin applying to day.
These 4 habits will allow you to:
Stop being afraid of money (so you can handle it once you earn more)
Feel a sense of security with your money
Begin accumulating wealth, instead of letting all your hard-earned income escape from between your fingers.
Let’s get started:
💸 Step 1: Separate your business and personal accounts
The first thing you need to do is open a separate account for your business.
This will help you distinguish between your personal finances and business revenues, allowing for more organized tracking and budgeting.
💸 Step 2: Pay yourself a “salary”
Next, consider giving yourself a monthly "salary" from your business income.
Think of yourself as an employee of your company.
In the early days, your income might be mostly salary,
or maybe you have a side hustle and don't take any salary at all.
Either is fine.
The important part is getting into the habit of budgeting and living within your means.
💸 Step 3: Create a Tax Account
Open a separate account for taxes.
Many entrepreneurs forget about this crucial step.
The last thing you want is to spend everything you’ve earned and then get hit with a tax bill you can't pay.
By doing this, you’ll ensure that you'll always have the necessary funds when tax season comes around.
💸 Step 4: Learn to track your business’s finances
Each month, take the time to review your business's finances using a simple Profit & Loss (P&L) report.
This habit will give you a clear picture of where your money is going and how to adjust your spending:
Want a summary? Here’s the TL;DR :
Most business owners never become wealthy not because they do not make money,
but because they never learn how to manage their money.
Here’s how to start managing your money in 4 easy steps:
Step 1: Separate your personal and business finances.
Step 2: Give yourself a monthly "salary".
Step 3: Keep funds ready for tax season.
Step 4: Regularly track your finances with a P&L report.
Implement these steps, and you'll be well on your way to not just making money, but building wealth.
If you want a rich life, it's time to move beyond simply earning to truly managing your finances.
That’s it for today.
I’ll see you next Saturday, for the next issue of The Digital CEO.
- xx, Nataliya.