It’s time to pay yourself first. Yes, you heard me! You work hard, and you deserve to earn a piece of the pie that you made! You may be thinking, “You’re right! But I can’t do that right now” or “I want to do that, but I have no idea how.” Well, you came to the right place! I’m here to walk you through the what, why and “how to” of paying yourself first. My goals are for you to leave here feeling inspired and confident, being able to implement this as early as the next month. Let’s jump in!

What does it even mean to pay yourself first?

Paying yourself first is an important step that all entrepreneurs growing their business should take. This concept has existed outside of small business in personal finance for a while now. You take your biweekly salary and automatically distribute parts of it towards savings, retirement, etc. But let’s step back. What does this mean when running a small business? It’s actually quite a simple explanation! It means that you prioritize your owner’s compensation or salary first. I know, you’re going to say that your business needs all the money it makes to run the business, right? I get that it may require money to run the business, but the business also needs its most important ingredient: YOU! You are the motor that keeps revenue flowing and customers happy. And you can’t keep yourself going without paying yourself. 

Why should I implement the pay yourself first system?

So, you’re interested? Let me convince you this is something you should do right away! Like I said, you are the most important ingredient for your business success. Whether it’s a side hustle or a full time hustle, you’re not treating yourself fairly by working so hard and not taking any piece of the pie! By no means does this piece have to be massive. It can start small and grow over time as the business grows. But to continue to ignore your needs by not paying yourself enough will only wear you down. It might actually hurt your business in the long run. You can’t be at your best for your clients. You may not be able to be as creative as you need to be. Planning to pay yourself first will also help the business have a predictable forecast, allowing your planning for future revenue and expenses to be easier.

How do I pay myself first?

Putting this into practice takes a little organization at first, but I promise it is worth it! You will be paying yourself first in no time! The first step is to tally up your future revenue. You can start with what the business will bring in next month. If you want to and are able, you can forecast your revenue out to six months to a year from now. You want to be able to see how much the business will bring in during whatever period of time you chose. Next, tally your monthly expenses. Include a monthly salary that you want to pay yourself that is both fair and you believe possible for your business to support. Put these two numbers (monthly revenue and monthly expenses) side by side. Subtract the expenses from the revenue and you get your business monthly profit. Ideally, it is a positive number!

More on what you should do with that in a future blog post, but look: you have just factored in paying yourself first. You did it! Now you can pay yourself monthly for the hard work you do to run your business.

I’m looking forward to seeing that business grow and can’t wait to continue to help you accomplish your goals!