Learn how I went from a $200k job in the corporate world to fumbling along in my own business until I learned one simple concept: pay yourself first.
Do you know what to say to family members and friends when they ask you how your startup is doing?
Think you’re the only entrepreneur fumbling around for an answer or sugar-coating the struggle?
Here’s the story of how learning to pay myself first changed my business, and my life.
It’s Not Always as Simple as Getting Paid
Many of you have probably heard me say this before but I’ve worked for Coca-Cola since I was three years old.
That’s right, 3!
While I wasn’t necessarily earning a paycheck, my brother and I would tag along with our father while he worked there. Basically growing up in Coca-Cola, I seamlessly transitioned into one of the largest corporations in the world.
I took on various jobs for the company to help support my time in university and, once graduated, started out on the ground level like most. From there, it was a steady corporate climb from sales rep to marketing director.
From the outside looking in, leaving Coca-Cola may have seemed completely unreasonable at the time. I had met my wife in the company, I’ve made lifelong friends in that community, not to mention my steady stream of promotions over the years and a $200,000-income.
The decision to leave wasn’t an easy one, and then explaining it to friends and family was a puzzle all its own.
Like most of you reading this, you’re probably looking for a lifestyle as well as a certain meaning to your life that a corporation simply cannot give you.
The more success I achieved in the company, the more difficult it became to keep my priorities straight and my values clearly aligned with my job.
Keeping my family as the highest of my priorities was becoming practically impossible. I often found myself sacrificing precious time with them in order to meet the needs of my job.
Also, as you can imagine, the core of most corporations is riddled with politics. I’ve always been able to freely speak my mind and be open about my values. But, the higher up the ladder I climbed the more I realized the people around me valued saving their careers rather than taking care of shareholders. This lead to a lot of secrecy and competition where people heavily guarded their expertise in fear that they may be “one-upped” by their colleagues.
If these reasons weren’t enough, I was also diagnosed with Polycystic Kidney disease which required many hours a few days a week of dialysis treatment. This became absolutely impossible to manage with the responsibilities of a six-figure corporate career.
So, no; leaving corporate wasn’t a simple decision for me to make but, as you can see, staying at Coca-Cola was no longer a viable option either.
Pay Yourself First
In the excitement and the trepidation, in the whirlwind and the worry of becoming an entrepreneur, your top concern is probably in making sure you have a well-rounded and functioning business.
In your grind to get it right, you, as a founder, may forget one thing: to pay yourself!
While this may seem like a given and the very reason we’ve branched out on our own, I’ve seen so many new entrepreneurs struggle with two things: time and cash.
There are many great ways to handle control of your time. Thanks to technology and a little thing called globalization, various online platforms as well as the concept of outsourcing are great tools and avenues to explore in order to leverage your time.
Income, on the other hand, always seems to be the trickier of the two. When it comes right down to it, there is no web-based platform or online tool that can help to leverage bad habits.
Why You Should Pay Yourself First
I’m sure you’ve heard of this concept before. Easier said than done. Putting money away first thing after receiving your income seems counterintuitive. You likely have very pressing financial issues that can be dealt with right away in your business.
The fact of the matter is there are so many variables in business and in the economy that you can’t control. You can’t control inflation, how well or poorly the markets are doing, or consumer purchasing power. You can’t control the random obstacles in life like having your best employee out sick for a month.
Paying yourself first isn’t about making sure to get your cut but, in fact, to ensure that when your business is having a downswing that you can still manage to run it.
Having that extra cushion is also about being prepared, not just for the rough times in your business but also for any opportunity to take your business to the next level.
What if you came across a potential investment that could truly help your business grow? What if you didn’t have the funds to meet that opportunity head-on?
During the beginning stages of my business, the lifestyle was great. I was able to manage my own time which was literally a lifesaver when it came to regularly attending dialysis treatments. The family and I were able to take small vacations practically whenever we pleased.
However, I had promised my wife that a certain amount of money would be saved every month in our account. I simply couldn’t reach that goal on a monthly basis. Mind you, I successfully paid everyone else, just not me!
Quite simply put, if you pay yourself first, you can feed your family. This seems self-evident but most people simply don’t have enough money saved in case of an emergency. Even less are comfortable with saying that they have enough money saved for retirement.
When it comes to money, your habits more than any outside circumstances are very real factors in your success. Even your own revenue has little to do with your net worth. It’s not how much you make but how much you keep.
Simple Ideas to Help You Pay Yourself
As an entrepreneur, you don’t have a bi-weekly paycheck to count on, so your budgeting habits are crucial. Here are just a few simple tips to help you pay yourself:
- Think of your budget in terms of percentages and not necessarily dollar amounts. Your goal is to establish a budgeting habit. Commit to saving at least 5% of your money every month. The focus is less on how much you’ve made as long as you manage to put away 5% of it.
- Set up different savings accounts. I strongly suggest an emergency fund; you don’t want to be dipping into your credit cards or your retirement savings when something bad happens. Don’t let one financial hitch completely uproot your entire financial game plan!
Depending on your goals and needs, you might find it necessary to have a short-term and long-term account as well. Take the time to assess what will work for your family and business.
- Lastly, be conservative in your perspective of how long it’ll take to build a solid and substantial business. For me, my lifestyle was set up almost right away with the freedom I had to control my time. But, my finances took a lot longer than I expected.
Recognize and honor your values, establish and commit to the right habits, and remain consistent with your work ethic. Trust me, these effects alone will compound into something bigger than you’ve imagined.
Living the dream
When I found myself in such a financial bind that the threat of going back to corporate loomed closely overhead, that’s when I knew I had to make a change. Things began to turn around when I started to pay myself first and make a few changes to my business principles.
I made sure to get a mastermind group, a team of like-minded individuals to help me stay accountable, as well as a clear roadmap for my business. Within six months, my business was completely booming and my own community was thriving.
I love being able to control not only my time and money but also my values.
In corporate, as I briefly touched on earlier, I was basically selling sugared water, a real contributor, in fact, to kidney disease. Now, I help fund a lot of the research here in Australia that goes into Polycystic disease.
Before my business, my kids had this corporate guy trying to be a father; now, they actually have a dad. This is something I would never trade ever again.
With my own business, I help other business owners stand by their values while providing a service that can actually render them a profit. I finally know what to tell people when I go to family barbecues and I feel great about it.
Life obviously isn’t always about being monetarily successful. If it were, I’d still be in corporate.
The great thing about entrepreneurship is the challenge of creating something of and for myself and watching it benefit others.
What a way to make a living!
Are you tired of doing it all yourself, genuinely want to build a dream business, and take some time off? Join my upcoming free live webinar “Rapidly grow your dream business”.