TCFBO #030: Budgeting Principle #1

Read Time: 2.5 minutes

Let's talk budgeting.

For us, budgeting wasn't an overnight success.

And as the owner of a small business we’re pretty sure you’ll understand the pressures that come with unpredictable income streams, unexpected expenses and having to maintain a cashflow that keeps the business afloat.

Although we knew what budgeting was, we only really started to understand how to budget effectively in our 30’s.

And from there it took practice, patience, and a fair bit of trial and error to find something that worked not only for us a couple, but something that could be applied to both our personal and business finances.

Because budgeting is not just a practical way of managing money.

It’s far more about mindset and the beliefs we have around money.

And it can take time to become aware of those beliefs and to then change them.

However, we now follow a method that has worked for us for over a decade.

It consists of five principles that have helped us remain focused when things are good and when things are not going so well.

Even when we’ve felt our backs were up against the wall, it’s helped us maintain a sense of perspective and peace of mind.

So, today we’re going to share the first principle.

Budgeting Principle #1:

“A part of all you earn is yours to keep.”

We first came across this principle in the 1926 book "The Richest Man in Babylon" by George S. Clason.

The book, set in ancient Babylon, offers timeless financial wisdom through a series of parables.

One of the most important lessons is the concept of paying yourself first.

This fundamentally changed how we approached our personal finances and business budgeting.

It suggests that before you pay your expenses, debts, or reinvest in your business, you set aside a fixed percentage of any income for yourself.

But it is more than just paying yourself first.

It’s not about paying yourself first and then going straight out and spending it.

A key part of the rule is that it is yours to keep.

This money is for your future, your financial stability, and your peace of mind.

It’s the seed capital for you to invest and grow into a larger amount.

So why is this rule so important?

Primarily, it’s because it forces a change in mindset.

By paying yourself first, you acknowledge the value of your work and the importance of your financial well-being.

It’s not just a monetary transaction.

It's an affirmation of your worth.

It reinforces from day one that the business is there to financially support you, and not for you to financially support the business.

Secondly, it instils discipline and commitment.

By committing to pay yourself first and then consistently setting aside a percentage of your income, you give yourself the evidence that you actually do what you say you are going to do.

(You can read more about the power of keeping your word here).

By building this habit, over time you can build a firm financial foundation.

This gives you peace of mind and allows you to plan for future investments, retirement, or expansion of your business without undue financial stress.

Now, a key thing to note is that this principle doesn’t mean neglecting your business needs.

Instead, it encourages you to operate your business within it’s means.

By paying yourself first, you’re forced to look at your business expenses and investments more critically.

You’ll find yourself prioritising those that offer real value and eliminating those that are money drains.

Implementing this principle from "The Richest Man in Babylon" can be transformative.

It's about making a conscious choice to prioritise your financial health, which in turn, supports the health and longevity of your business.

We’ll be sharing the other principles in future newsletters, so be sure to keep an eye out for them.

In the meantime, let us know how you get on and we’ll see you next week.

Paul & Philly

P.S. How do you manage your personal finances in relation to your business? Do you follow this principle already? We’d love to hear your experiences.

Whenever you’re ready, there are two ways we can help you:

1. Discover how to create a life and business you truly love with your copy of “Backwards Planning - A Simple Method to Move You and Your Business Forward” from Amazon.

2. To work with us through the entire “Backwards Planning” process outlined in the book, you can apply to join The Clear Focus Business Academy.

The first step is to book a facilitated Life Vision Session which we conduct one to one over Zoom. This session will not only give you clarity on what you want from your life but will give you the opportunity to experience how we work and ensure we're a good fit for each other before deciding whether The Clear Focus Business Academy is right for you. It comes with a 100% money back guarantee, so if you're not entirely satisfied, simply let us know at the end of the session and we'll issue a full refund.