Implementing the Profit First method into your personal finances is a simple process and helps you manage your cash flow effectively. The Profit First method is a system in which business owners take a percentage from each sale as profit as a priority before any other expense. The traditional profit formula deducts expenses from sales, leaving the remaining amount as profit. The Profit First formula flips the script on how business owners typically think about accounting and budgets. It is designed to help you build your business in a sustainable way for long-term profit and success, and is an excellent way to help you achieve your financial ambitions.
At Cloud Accountant we utilise Profit First in conjunction with our accredited expertise to execute every action, making you and your company more profitable.
Will Profit First work for my personal finance?
The basic principles of Profit First can be adapted to help your day-to-day expenses, making sure that you don’t overspend and save money every month. By spreading a percentage of your salary over a series of accounts you assign your money to a purpose, giving you a more accurate way of keeping track of your money.
Profit First suggests around five accounts in which to divide your money.
This can be adapted to help your personal finances as follows;
● Income – The main account that your income gets paid into.
Then four more accounts that your income gets divided into;
● Reward/Profit: This is the money put aside that you can spend on whatever you like; even if this is a small percentage of your overall income.
● Tax: If a part of your income is not on the payroll, you can use this space to put your income in a savings account. Try to choose the account with the best interest rates, so you can earn money whilst waiting for tax bills.
● Savings: Put aside money for a wedding, new home, or emergency fund. A goal you can work toward.
● Monthly Bills: Anything that comes out of your account on a regular monthly basis.
A percentage of your income is then worked out for each account. Each section can be easily customised to suit your needs and monetary requirements. You may need to put another account if required. Ultimately this method is put in place to create a high rewarding foundation that gives you peace of mind.
Whatever route you choose, we hope you achieve the financial goals you’re striving for. We are well-equipped to provide you with the right level of guidance and support to achieve your goals; we even have a high recommendation from the man behind Profit First, Mike Michalowicz. Contact us today on 0113 323 1960 or Itjustclicks@cloudaccountant.com to discuss how our experts can help you!