When you learn about Profit First, you will know it is built around normal human behaviours. Therefore it can be adapted to outside of business.
We have started using Profit First at home and teaching our kids the tools for the future as well.
If we think about it for business, the goal is to take out your owners pay, profit and tax first and then make the operating expenses affordable with the leftovers.
Using Profit First at home
At home when we get our income, normally we sit down to work out the bills and everyday expenses and then see what’s left over for savings and for the things we enjoy doing which usually isn’t very much!
But just imagine if instead we take the money out first for the things we enjoy doing every month and put it into a separate space. For some people this could be nights out, hobbies, family days out etc. Then we also take out money and put into savings for our long term goals. You could even have another pot that builds up for rainy day fund but that once a quarter (like our profit account). We take half of the balance and do something we really want to do with it.
Then just like in business, we need to make our bills and everyday living costs affordable from the leftovers!
This obviously will take time to get it right but you can start right away with small steps and amounts. You could do an expense cutting exercise to see where you are over spending and where savings can be made to get you off on the right foot.
If you have kids, imagine teaching them this from an early age – you could totally transform their future lives if they start off right but its never too late to start!
A great book to teach kids about usinng this method is My Money Bunnies: Fun Money Management For Kids, by Mike Michalowicz, the author of Profit First. He makes it fun and simple to understand - my kids loved it!
Want to know more about Profit First?
We're a certified Profit First advisory firm and along with our sister company Ciara Magill-Lavery Ltd, we are helping business owners understand profit first and how it can help in your business.
Check out our free resources and other offerings here.
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