Are you struggling with paying yourself first? As an entrepreneur, do you pay yourself first or last on payday? The answer may speak volumes about how much you value yourself and run your business.
How can you pay yourself a salary before you pay your expenses? The logic behind this “sound fiscal advice” is surprisingly rational and what happens when it’s practiced is remarkable. The skinny is this: when you pay yourself first you are creating a healthy habit and setting a tone about value. Salary is valuable. Vacation is valuable. You are valuable. This is a precedent-setting habit.
Just because you have responsibilities in the business doesn’t mean you can’t put aside money for you personally,” says David Blaylock, CFP® with LearnVest Planning Services. “A business owner is no different than anyone else—they still have to look out for themselves as individuals."
Business owners who do the same are investing in their business. How? Simple. When a business owner pays herself first and pays herself an even handed salary that she feels good about, she sets the tone. She sets the bar, so to speak. Do you want to set your bar high or low? Is that even a real question? Of course, you want to set it high!
By paying ourselves the wages we deserve we sidestep the glass ceiling altogether.
The consequences of this one decision can ripple across your business. Pay yourself first and pay yourself well, and then what is left over is used to support the business. Simple, right? It actually is.
This method will quickly show you what you have left over for expenses, additional staffing, and expansion. You want to take your business to the next level, right? Of course, you do! So after paying yourself a healthy salary for the blood, sweat and tears you invest in your business every day (because we know you do all that and more), see what’s left to work with. That is realistic. Moreover, this enables you to take care of yourself first, before bringing on staff or expenses that you may or may not be able to care for.
“Remember, you started the company at least in part to help yourself,” says Gabby Revel of Business Town. “Paying yourself first is one of the best ways you can accomplish that.”
Remember what the flight attendants say if you’re flying with a child: “Put on your oxygen mask first, and then put on the child’s.” This is a metaphor for many entrepreneurs, whether you have children or not. Maybe it’s a pet or a parent or a spouse you are caring for. Whatever the case, when you care for yourself first, you are then better able to care for someone else. This works in business too.
That’s the golden rule for entrepreneurs.
Here are 20 fun facts about paying yourself first:
Frees up resources
Proves a woman can get paid what she’s worth
Creates authentic standards based on values
Makes you part of the equal pay revolution
Sets an example for other women and staff members
Builds healthy business practices
Creates a stable business with a balanced budget
Sets realistic expectations of yourself as a business owner
Promotes company value = founder has value = company has value
Helps to keep business expenses under control and in check
Helps minimize unnecessary expenses
Shows you are a leader who leads by example
Shows you can set the bar for success anywhere you want to
Shows you get to make the rules
Shows you are in the driver’s seat
Proves you can join millions of women who are taking their careers and salaries into their own hands
About the Author: Michele Thompson Rosario, CEO of Bright Effects, helping entrepreneurs get clients, get traffic, and get results.