Money Moves
When I was in my 20’s my [now] husband and I had a great apartment just behind Electric Avenue, as it was called in the day, and across the street from the Husky House (IYKYK). We both worked in the service industry, spent all our tips at the Ship, relied on our paychecks to cover our rent, and grocery shopped at my [now] in-laws. But we got by! No matter what happened, we made rent, we went for beers, and we had the best time always.
Then we got to the next stage of life: “real” jobs, earning a salary, with benefits. We graduated from our hand-me-down cars to a lease; our rental apartment to a house; and milk crate end tables for Ikea ones.
Want to know what though? Our bank accounts weren’t that different. Sure, there was more money coming in, but just as quickly the money went out. The more we saw in the account, the more confident we were that we could do all the things we wanted.
And so it continued. The more we made, the more we spent. You’d think we’d get ahead, but nope. It was a great time of wanting for nothing, but saving nothing either.
The thing I learned about myself at that time was that I will spend what I see and think is available in our bank account.
That’s when I changed my ways. I opened a savings account and actually USED it. I made it a priority to move money out of our account and “hide” it in the savings account so we couldn’t spend it easily.
When I became an entrepreneur, I took this “savings” thing to a WHOLE new level. I was a bit of a dork with it all and then I read “Profit First” by Mike McCalowitz and I realized my dorkiness was an actual thing. I wasn’t alone!
I highly encourage you to read the book, but if you’d rather spend your reading time on Twilight or Harry Potter (some of my FAV’s!), then here’s my money-moving system.
SCHEDULE IT IN
The first thing to do is make time. I know this seems pretty basic, but honestly, it’s probably the most important step. If I don’t schedule the time in my calendar, like most things, I’ll forget. Also, it takes a bit of time – nothing crazy, but 30-45 min is pretty typical – so planning for it ensures that I give it importance in my schedule.
For me, money moves is a Monday thing. It’s one of those mindless things I can do to ease into my week. It’s also a good chance to regroup and look at the past week to see what happened with sales, expenses, and such.
CHECK YOUR CASH
When your calendar reminder goes off you need to login to your online business bank account. Total up the cash deposited to your account since the last time you were in. I like to go off what I actually get in my bank account, not my “sales”, but that’s cause I don’t have instant payment; even if I do, it takes 3-5 days for me to get that money into my account.
Your end goal is to get that one number: total money IN.
MOVE YOUR MONEY
Now’s the fun part. I’ve got 4 savings accounts, on top of my one main operating account. I have named my savings accounts as follows:
T – Taxes
I – Investment
P – Profit
S – Savings
The amounts you move to each is unique to your business, and depends a lot on:
what do you need to run your business and cover your expenses
what you need to get PAID from your business to cover your PERSONAL expenses – I call this your Survival Score
I’ll spend a whole other post talking about figuring out your Survival Score, but the key here is that you need to ensure that you cover your obligations…there’s no point in moving money to a “savings” account if you can’t pay your bills.
For me, here’s how I move my money:
25% Operations
40% - Me
13% - Taxes (GST & Corporate)
20% - Investment
1% - Profit
1% - Savings
As things grow and evolve, those percentages will change. This is where things are at today, based on what’s going on. Whenever our personal situation changes, or something in our business changes, I re-evaluate those percentages.
I’ve got a new team member starting next week…that’s going to change things. It’s a constantly evolving formula, but you know the super dork in me is eagerly waiting to adjust things.
And that’s it! Once you decide on the percentages right for you and your business it’s easy…
Total Sales x Percentages = Money to Transfer
Repeat this for each allocation and move the money in your online banking.
And repeat this WHOLE process at least every second week; I personally like to do it weekly cause it’s easier for me to stay on top of things, and it feels less painful if I’m only moving little bits of money each week, instead of big chunks.
If you ever need help figuring out your personal formula, or getting into these money habits, book a call, and let’s see how we can make a dork out of you too.