I recently had a wonderful opportunity to sit down with a fellow entrepreneur and talk all things finance. One of the things we kept coming back to, was this conviction that you should:
- Know your worth
- Pay yourself first
It is so easy for entrepreneurs to miss or skip these two very important steps. But if you are not charging what you’re worth or paying yourself for the work you’re putting in you are setting a bad precedent and doing yourself a disservice.
To catch my full podcast interview with Heather, click here.
So, what does it even mean to pay yourself first?
It means that every time money comes in you are setting aside a certain percentage of it for yourself. Not just to cover your expenses and pay your bills, but to grow your wealth and set yourself up for the future. Having a consistent system in place where you are doing this will lead to greater freedom and will make your business more sustainable.
Nicholas Murphy, a first vice president and financial advisor with RBC Wealth Management in Raleigh, N.C., puts it this way: “In my experience, most entrepreneurs have great instincts, exceptional resolve and business vision, but they rarely have a well-thought-out personal wealth management plan. It’s almost like an attorney not having a will… they’re so focused on their business plan that they forget to develop a personal wealth plan.”
If you are not accustomed to paying yourself first, start in smaller increments—even 2-5% can be a powerful motivator as you watch your savings start to grow. You can always (and should at some point) increase that amount but getting started and being consistent is the main thing to prioritize.
Whether you’re a business owner or not, this is an important financial concept to embrace and adopt. If we are not intentional about telling our money where it should go, we are often left wondering where it went. And, when you don’t do that upfront, you will never have enough “leftover” to truly invest in yourself or your future.
So… are you paying yourself first? If not, why not? And, how can you get started?
Light and love for the new year,
Karen