Ever feel like your business budget is more of a suggestion than a strategy? Today we're breaking down how to create a budget that doesn't just look good on paper, it actually works in real life. Stay tuned to learn the three crucial elements most business owners miss when budgeting. And if you're like us and believe budget is a curse word, you're really going to love this episode.
In a world where chaos seems to reign supreme, where uncertainty lurks around every corner and financial markets are now more unpredictable than ever. There's one place you can turn to to find clarity and control. Welcome to the Wealth Wisdom Financial Podcast. Hey, I'm Brandon. And I'm Amanda. Join us as we dive deep in the world of personal and business finance to assist you in navigating through the chaos and building the financial future
you deserve. We believe when conventional financial thinking doesn't get you where you want to go, you need wealth wisdom. So if you're ready to take control of your financial destiny. Tune into the Wealth Wisdom Financial Podcast because in a chaotic world, your money shouldn't be. Subscribe now and never miss an episode. Welcome back. You know what's funny about budgets?They're like. New Year's resolutions for your business. Everyone makes them, but few actually stick to
them. Yeah, almost like goals. That's New Year's resolution. Yeah, yeah But today we're going to change that narrative. Get real about why most small business budgets fail. It's not because business owners can't do math or don't understand their numbers. It's because traditional budgeting methods don't account for the
dynamic nature. Of small businesses, just like the folks at You Need a Budget, YNAB for short, rewrote the rules of personal budgeting to account for the variation of our personal income and expenses. The rules of business budgeting need to be flipped upside down. So take a minute, just sit right there and we'll tell you what actually works. So number one, give every dollar a job. Move income to buckets, profit, owner's comp, taxes, operating expenses and all of that are good
starts. Break those buckets down into categories. Yeah, so you're not budgeting for money that you don't even have yet. You're taking the money you've actually received and you're moving that money into categories or buckets and then breaking down some of those buckets into other categories like operating expenses. You might have payroll and rent or mortgage and. All the things that's under that operating expense budget to kind of assign jobs to your dollars. As business owners, we love
assigning jobs to to people. Assign those jobs to your dollars, the ones you actually have, not the ones that haven't even entered your life yet. So I have no guilt or shame when adjusting. Things never turn out as planned. I mean, if you've been a business owner, you know that no one ever perfectly predicts their expenses. And when you overspend in one area, adjust and move from another area, the only rule is to not judge yourself. Instead, notice as how you might need to adjust going forward.
You know, one entrepreneur told me that she was part of this business development program. It's very popular. And she told me that the best part of that program was that they would not let you lie to yourself about your numbers. No, you don't have to be part of some, you know, program and, you know, be chosen out of all the businesses to be part of it, to be honest with yourself about your numbers. That's what we're talking about here. You're going to take the money that
you have coming in. You're going to assign it jobs, right?Put it in a different bucket. But things are not going to go according to plan. You're going to move money between buckets, between categories in the same bucket. You just want to be honest with yourself. Come move it, but have no guilt or shame about moving it. That defeats the purpose, right?There's a reason that we have the ancient proverb, though.
Honesty is the best medicine. If you have any kind of sickness or just not perfection in your business right now, honesty, not lying to yourself, is going to help you fix it. Guilt or shame is definitely not going to help you fix that. And don't just avoid it or put your head in the sand either. Like, make sure you're that's a form of lying. Yeah, embrace the non-monthly expenses. The reason our cash flow gets thrown off is often because of a large expense we
weren't prepared for. Like, I don't know, a flood or something. You know, non big expenses. Yeah. So here you can think of the of a probably a few non-monthly expenses right now, an annual subscription, a quarterly maintenance, a biannual equipment upgrade, things like that. Start breaking those down into monthly amounts and set aside for the funds for them regularly in those categories like we talked about earlier. Earlier, you might not get the estimate
right on. It's not about perfection here. You might not even be able to set aside of funds every single month to do it. But having something for them beats having nothing, right?That's kind of like the emergency fund. That's well, we're gonna talk about that next. There could. There could totally be non-monthly expenses that you're unaware of. An unexpected emergency, the need to hire and train new staff, an opportunity to
grow. We love setting aside anything extra from our operating expenses into a category that we call a our growth fund. We don't call it an emergency fund or a rainy day fund. Even if we use it for an emergency, we believe it's still protecting the business to help it grow. And so it's always a growth fund no matter what. And that actually gives us more excitement and more energy to make sure that there's always some money there and that we're consistently moving money
to that fund. It was because we had that sort of fund previously that we were able to sell a business shortly after it was shut down for a few weeks because of the flood. We get we had that bucket, not the flood, but a flood. Yeah, that'd be hilarious if we were around for the flood. So move funds to hold accounts and the vault. You know what they say?Out of sight, out of mind. Profit First has the inconvenience bank where you put your hold accounts for profit hold and tax hold.
These are funds that are harder to get to, so you can't gain access so that you won't touch them for purposes they aren't meant for. Yeah, so in the digital banking age, I have my personal bank account, my business credit union. They're all on my phone and I can tap and with Face ID, I can see my account values anytime. Super easy, super fast. I could do the same with my hold credit union, but I intentionally chose not to do so because I don't want to
be able to see the values in real time. I want that little bit of out of sight, out of mind. One of the dangers of the digital age is too easy access. I mean, hello, one click buying that makes us spend more than we intend. Thank you, Amazon, right?The same goes for your hold accounts. Out of sight means not having them digitally available
quickly. Tap and Face ID is so much different than having to open a browser, type in a URL, log in, you confirm the multi-factor identification code in order to finally see your values. That little bit of separation can make a big difference in terms of how you treat your hold accounts. On a side note, I do remember watching a video on the invention or using a debit card when it was first used and how people were like, oh, this
is so easy and convenient. We were not used to that kind of thing and it now takes seconds versus hours or days. And then to further remove temptation and get our money working harder for us, we also use what's called the vault. Now, Mike Michalowicz talks about the vault on pages 150 and
151 in Profit First. Our sister podcast, the Not Your Average Financial podcast this past year had an episode where the host, Mark Willis, asked Mike what he thinks about using a bank on yourself type whole life policy as a vault for Profit First for, you know, the profit hold tax hold. You might move that into the vault. And Mike said he not only approves it, he does it. We'll put a link to that episode in the show notes if you want to check it
out. As you have funds build up and your hold accounts, the bank on yourself concept can step in and do some amazing things for a lifetime of stability. Stay tuned after the break for us to talk through some common objections to what we're sharing. Ready to take the next step towards securing your financial future?Whether you're planning for retirement, saving for your dream home, or you just want to make your money work harder for you, the team at Wealth Wisdom Financial are ready
to assist you. And now it's easier than ever to see how we might give you a boost on your financial journey. Schedule a 15 minute discovery call with one of us today. And let's discuss your questions and your financial goals together. Don't wait any longer. Your financial freedom awaits. Schedule your discovery call at www.wealthwisdomfp.com/call. Now, I know what some of you are thinking. This sounds great, but my business is different. Even if that's not the sound of your own voice, that's
what you're thinking. My business is different. Every business owner says that. And guess what?You're right. Your business is different. It's the Unicorn. That's exactly why traditional budgeting methods don't work. Here's the thing. The principles we're discussing today aren't about forcing your business into a rigid framework. They're about creating a flexible system that adjusts to your business while
maintaining financial control. So we hear lots of common objections when we talk about Profit First, YNAB, Bank on yourself. One is, well, I can't predict my income. Well, that's exactly why you only assign the dollars you have, right? Not dollars that you think you might have. There's also my expenses vary too much. Well, that's exactly why there's no guilt or shame when we make adjustments and why we don't move too quickly to the target allocation percentages in profit first, right?
Yep. What about this?I don't have time for complex budgeting. This system requires very little time. Just allocate on the 10th and the 25th. And you can trust that your the numbers that you see when you log into your bank account on your phone, you know, face ID, that they're accurate and that you can make good predictions off of them because they're broken into different accounts, not just as one big pile of money that could be for Uncle Sam, could be for this, could be for that. You don't know
unless you break it down. And yearly we do what we call the expense challenge or different things to make it better. Yeah, there's lots of stuff in the Profit First book that we're not even talking about today. Consider it this way. When you get to December 2025, do you want to be proud of a sticking to numbers your January self set up no matter what happened in the business or B adapting to fit circumstances as the year changed to be in a better spot than your January
self thought was possible?If you're an entrepreneur at heart, we believe that you'd pick. B So why budget as if A is what you want. This is so weird. But seriously like would you let let's go back over that like so you don't get distracted. Would you rather set numbers now and be really proud in December that you stuck to them and no matter what happens or. Be able to adapt and change as the year changes to try to get into a better spot than maybe you thought your current self
thought possible. And we believe if you're an entrepreneur at heart, you're hands down picking the latter. You're picking, you know, I wanna be able to adapt and change so I can get to a better place. You're a Captain Kirk, right?Not a Spock, like we've talked about in previous episodes. So why budget as if you are gonna be so rigid about it? Let's conclude here with some. Set like bringing it all together. The key to a working budget that helps increase profits isn't perfection.
It's not about strictly adhering to preconceived expectations for your year. Business budgeting that actually works is about other P's progress, patience, persistence. If you want more profit, you can't have perfection, but you can have progress, patience, and persistence. You can take this mindset that we're sharing here and use YNAB score rules. Use the profit first system together for wherever you're starting at right now, whether in early stage, growth stage, exit planning or everywhere in
between. We know this system works. Brandon's going to recap the keys. So the keys are allocate the money you already have, not money you don't have. Adjust with no guilt or shame. Embrace non-monthly expenses. Move money to the hold account and to the vault. Does that seem too simple?If you just did those four things, you're like, really?That's it. Good. The best things in life are simple and but they also have this depth to them that you can
spend a lifetime getting to know. We've been using YNAB since 2014 and started some profit first concepts somewhere around 2013, but it could have been 2015. I don't remember exactly. We for sure started using Bank On Yourself back in 2013. These truly are concepts, right?We're 10 plus years later now that we believe can carry us for the next 10 to 30 years. And the more we see about them, the more there is to see. And we believe that could be for you too. So don't discount this because
it's simple. Believe it because it's simple. And I think it's way past 30 years, actually. But you know, right, rightYeah. So is 2025 your year to implement sound money practices for your business that work for you as the entrepreneur?Are you ready to work with your human nature rather than have to become a robotic accountant to control your cash flow?Then this is the perfect time to get your taste of the Wealth Wisdom financial community.
You can join as a premium member and get access to a library of how to guides, monthly group coaching, and a mini course to help you set up your success dashboard. You could check out our mini course that teaches you how to set up. You need a budget to be friendly with Profit First. You can check out our mini course to help accelerate your Profit First implementation. We even have the ultimate guide to bank on yourself. We'll put links to all of those in the show
notes, those great resources. Pick one that you'd like to start with and get started today. Let's make this year the best year for you ever. And if you really want guided attention from us specifically, join us at wealthwisdomfp.com/PPN. That's Profit Planning Network, where we will personally guide you through setting up the systems and be your. I don't know CFO of sorts to help you build the system like we would
and then stay tuned for next week. We're going to talk about a little bit more with systems that we put in place to help us consistently use profit first throughout the year without it eating up our time. Thanks for sticking with us and being loyal listeners, so. Don't forget to hit that subscribe button. The topics presented in this podcast are for general information only and not for the purpose of providing legal, accounting, or
investment advice on such matters. Please consult a professional who knows your specific situation.