Cash Flow is King: Why Every Small Business Owner  Needs a Financial Plan (Not Just More Work)

Cash Flow is King: Why Every Small Business Owner  Needs a Financial Plan (Not Just More Work)

May 21, 2025 | Building Financial Muscle, Credit Score, Debt, Debt Payment, Debt Repayment, Educational Series, Financial Education, Financial Freedom, Financial Health, Financial Management 101, Mindset, Mortgage, Net Worth, Relationships, Retirement, Saving Money, Self Development

If you’re a tradie, Franchisee or small business owner, chances are you’ve said this before:

“I just need more work.”
“If I can land that next big job, I’ll be sweet.”
“Once I get through this month, I’ll finally get on top of things.”

Sound familiar?

We’ve been sold this idea that working more hours or taking on more jobs is the key to financial stability.

But here’s the truth…

More work won’t fix your money problems if your financial plan is broken.

Let me say that again: More work won’t fix broken cash flow.

In fact, working harder without a system can actually worsen your money stress – leading to burnout, resentment, and a business that runs you, instead of the other way around.

In this blog, I’ll break down why cash flow is king, how small business owners end up in the trap of “more jobs = more chaos”, and what you can do to take control of your money (without working yourself into the ground).

The Myth of “More Work = More Money”

Let’s say you take on 3 new clients this month as a tradie. Awesome, right?
But then:

  • You buy more materials
  • You spend more hours on-site
  • You hire a subbie to help out
  • You juggle more admin
  • You forget to invoice someone
  • And suddenly – you’re busier than ever… but your bank account doesn’t show it

That’s because revenue doesn’t equal profit, and being busy doesn’t equal being financially fit.
You can be flat-out all month and still feel broke.

That’s the trap, and I see it every week with tradies, franchisees and business owners who are absolutely brilliant at what they do… but never learned how to manage the money side of things.

So What’s the Real Problem?

It comes down to one powerful truth:

Cash flow – not just income – is what makes or breaks your business.

Cash flow is the movement of money in and out of your business.

Not just how much you make, but:

  • When you get paid
  • How consistently money comes in
  • What goes out each week
  • Whether you’re left with a profit (or just scraping by)

If you don’t have control over your cash flow, you’re always reacting. You’re playing catch-up. And that stress leaks into everything – your health, your relationships, and even the quality of your work.

Here’s What Cash Flow Chaos Looks Like

If you’ve ever experienced any of these, you’re in a cash flow crunch:

  • You avoid checking your account because you’re afraid of what you’ll see
  • You wait until BAS is due to realise you owe thousands
  • You struggle to pay your own wage regularly
  • You’re always chasing late invoices
  • You can’t take time off because you’re constantly hustling to “keep up”
  • You’ve had to dip into your personal savings more than once

Sound familiar? You’re not alone. But the good news is – it’s fixable.

The Solution: A Simple, Small Business – Friendly Financial Plan

You don’t need a finance degree or a fancy accountant to get this sorted. You just need a clear plan for how money flows through your business. Here’s how to start building one.

1. KNOW YOUR BREAK-EVEN POINT

This is the minimum amount of money you need to earn each month to cover:

  • Business expenses (tools, fuel, phone, materials, subs, etc.)
  • Your personal wage
  • Tax and super
  • Any loan or debt repayments

Without knowing your break-even, you’re guessing. You’re flying blind. Once you’ve nailed this number, everything becomes clearer.

Now, you can set targets based on facts – not hope.

2. PAY YOURSELF A WAGE – YES, YOU!

This is the game changer. Every time income hits your account, it should be split into different buckets. That way, you’re not tempted to spend what should’ve gone to tax, bills, or your own pay.

Here’s a simple version that works great for small business owners:

✅ Income Account
Where all your payments land. This is your holding zone.

✅ Owner’s Pay Account
Your regular wage. Non-negotiable. You work hard, you deserve to be paid consistently.

✅ Expenses Account
Materials, suppliers, fuel, subscriptions, etc.

✅ Tax & BAS Account
Put aside 25 – 30% of every payment for Tax plus the GST portion. No more panic come BAS time.

✅ Profit Account
Even just 5% of each job. This is for rainy days, growth, or peace of mind.

You can set this up in 30 minutes through online banking. Once you do? You’ll sleep better knowing your money is finally working for you.

3. TRACK YOUR MONEY CASH FLOW

Once a week, check in on your numbers. This doesn’t need to be a 2-hour admin marathon. I’m talking 20–30 minutes to:

  • See what came in
  • Check what went out
  • Update your numbers
  • Chase unpaid invoices
  • Move money into your buckets

Make this a weekly ritual (I call it a Money Date) and watch your confidence skyrocket. Because the more you look at your money, the less power it holds over you.

4. TRACK YOUR MONEY CASH FLOW

You can have all the work in the world, but if your prices don’t reflect the true cost of running your business – you’ll never get ahead.

Too many small business owners undercharge because they’re afraid of losing the work.

But if you’re not charging for:

  • Admin time
  • Quote prep
  • Travel
  • Time off tools
  • Overheads
  • Profit margin

…then you’re not building a business. You’re building a time bomb.

You should be pricing with confidence, knowing that it covers everything – not hoping for the best.
Inside The Edge, I teach you a simple pricing calculator so you know exactly what to charge and why.

5. BUILD A BUFFER FUND

We all know some work can be seasonal or unpredictable.

A job gets delayed. A client pays late. You get sick. And suddenly your cash flow takes a hit. That’s why a buffer fund is crucial.

Aim to build up 1–3 months’ worth of business expenses in a separate account. This gives you breathing space and avoids making panic-driven decisions like slashing prices or taking on crappy jobs just for quick cash.

Start small – $50 a week adds up. Automate it. Make it part of your money system. 

Build a Buffer Fund

The Truth? You Don’t Need More Work. You Need a Better Money Plan.

You don’t need to hustle harder. You don’t need to take every job that comes your way. You need to manage your money better so the work you’re already doing actually pays off. Imagine this:

  • Getting paid consistently – even in quiet months
  • No more panicked BAS seasons
  • Knowing exactly what your business needs to earn each week
  • Saying YES to time off without financial stress
  • Watching your bank account grow, not shrink

That’s what happens when cash flow becomes your king, and your systems support you, not sabotage you.

And That’s Exactly What We Do Inside THE EDGE

THE EDGE is a 6-week coaching program for tradies, franchisees and small business owners who are ready to stop guessing and start owning their business money. We’ll help you:

✅ Set up a cash flow system
✅ Price for profit
✅ Get your BAS and tax sorted
✅ Pay yourself consistently
✅ Build a buffer
✅ Plan for growth (without working more hours)

It’s simple, structured, and built for people who are great at their trade, not spreadsheets.

Final Thoughts: Work Smarter. Get Paid Properly. Stress Less.

You didn’t go into business to work 24/7 and still worry about money.

You started your business for freedom, flexibility, and a better life. And the path to that life isn’t more work. It’s better cash flow.

So if you’re ready to take the pressure off and finally feel in control of your business money…

Join THE EDGE: 6-Week Coaching Program

Your business doesn’t need to change, it just needs a plan. Let’s build it together.

BOOK A FREE "THE EDGE" SUCCESS CALL
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The 5 Biggest Money Mistakes Small Business Owners Make (And How to Fix Them Fast)

The 5 Biggest Money Mistakes Small Business Owners Make (And How to Fix Them Fast)

May 19, 2025 | Building Emotional Muscle, Building Financial Muscle, Credit Score, Debt Payment, Debt Repayment, Financial Education, Financial Freedom, Financial Management 101, Self Development

Let’s face it – being a small business owner is no joke.

You’re juggling clients, projects, quoting jobs, doing the work, chasing payments, paying staff or suppliers, and – somewhere in there – trying to make sure you actually get paid.

But if it feels like you’re always hustling and still living week to week, chances are… your money systems are working against you, not for you.

And here’s the thing: it’s not about how smart you are or how hard you work. Most business owners weren’t taught how to manage their money. You were probably just thrown into the deep end, figuring it out as you go.

The good news? You can stop spinning your wheels, and it starts by avoiding the most common financial traps.

In this blog, I’ll walk you through the 5 biggest money mistakes I see every week and more importantly, show you how to fix them fast so you can take back control and finally feel financially secure in your business.

Mistake #1: Not Paying Yourself a Regular Wage

Let’s talk about one of the most common (and painful) mistakes small business owners make: they don’t pay themselves consistently.

You might be saying:

“I take money out when I need it.”

“There’s never enough to pay myself regularly.”

“I’ll pay myself properly when things settle down.”

Here’s the problem with that: you’re running your business like an ATM, not a real operation. And that mindset will keep you broke – even when you’re making good money.

? The Fix:

Set up a dedicated Owner’s Pay account, and start paying yourself a consistent wage every week or fortnight. Even if it’s only $200 to start, build the habit. When you get paid from clients, transfer a fixed percentage into your Owner’s Pay account – just like you’d pay an employee.
This does two things:

  • It forces you to treat your income seriously.
  • It allows you to plan and budget your personal life better.

The Edge coaching program teaches you how to calculate your break-even wage and build a cash flow system that actually works for your business.

Why Hard Work Alone Isn’t Paying Off

Mistake #2: Mixing Personal and Business Finances

It might seem harmless to buy a Bunnings tool on your personal card or pay the rego for the work ute from your grocery account – but over time, this creates a total mess.

It’s impossible to track how your business is performing if everything is muddled together. You won’t know what you’re spending, earning, or saving – and when tax time rolls around, you’ll be in a world of pain.

? The Fix:

Set up two separate bank accounts at the bare minimum:

  • One for business income and expenses
  • One for personal living

Better yet, I recommend creating five simple business accounts:

  1. Income – all revenue lands here
  2. Owner’s Pay – your regular wage
  3. Expenses – for bills, tools, and running costs
  4. Tax & BAS – set aside 25 – 30% per payment
  5. Profit – for business growth or rainy days

Once this is in place, your financial clarity skyrockets. You’ll know exactly where your money is going, and you’ll be less tempted to “accidentally” spend it.

Mistake #3: Ignoring the Numbers

This one’s a biggie, and I get it. Many small business owners avoid looking at their numbers because they’re overwhelmed, too busy, or just afraid of what they’ll find.
But let’s be honest – if you don’t know your numbers, you don’t know your business.
You can’t improve what you don’t measure.

? The Fix:

Start by checking these numbers weekly:

  • Revenue: What came in?
  • Expenses: What went out?
  • Net Profit: What’s left over after expenses?
  • Break-even: How much do you need to earn to cover costs and pay yourself?

Create a simple weekly “money date” even just 30 minutes every Friday, to review your finances, send invoices, follow up on payments, and track your progress.

In The Edge, we give you simple templates to track this in under 10 minutes a week (no accountant brain required).

Mistake #4: No System for Tax and BAS

You know the drill: things are going well… until BAS time hits. Suddenly the ATO wants thousands you didn’t put aside, and you’re scrambling to pay.

Sound familiar?

Many small biz owners treat BAS like a nasty surprise – but it’s completely avoidable if you plan for it. Any case remember it’s not your money in the first place.

? The Fix:

Every time you get paid, immediately transfer 25 – 30% into your Tax Account for taxes and BAS. Pretend it’s not yours. Because technically – it’s not. That’s the ATO’s cut.

If you’re registered for GST, track your income and expenses monthly and lodge on time. Using software like Xero, QuickBooks, or even a simple spreadsheet will make this 10x easier.

Imagine having a tax bill and already having the money sitting there ready. That’s the kind of peace The Edge helps you create.

Mistake #5: Undercharging for Your Work

This one hurts because you’re working hard, showing up, and doing great work… but the money just isn’t adding up.

Often, it’s because you’re undercharging. Maybe you’re pricing based on what others charge, or you’re too scared to raise your rates in case you lose clients.

But here’s the thing: if your pricing doesn’t cover your expenses, time off tools, admin time, and leave a profit – you’re not running a business. You’re running a charity.

? The Fix:

  • Add up everything it costs to run your business monthly (including paying yourself)
  • Work out how many hours you realistically work and how many jobs you can do
  • Divide your monthly costs by the number of billable hours or jobs – that’s your true minimum rate
  • Add a profit margin

Also, factor in time spent quoting, driving, admin, and materials. You’re not just being paid for the hour on site, you’re being paid for all the time and expertise it takes to do the job well.

In The Edge, we give you a simple pricing tool to calculate your true rate with confidence – so you never wonder, “Am I charging enough?” again.

Bonus Tip: You Don’t Have to Figure This Out Alone

Here’s the thing most people won’t tell you: money stress isn’t about how much you make. It’s about how you manage what you’ve got.

And most small business owners were never taught how to do this. You’ve just been doing the best you can with what you know.

But what if there was a better way?

What if, in just 6 weeks, you could:

✅ Pay yourself regularly
✅ Get your tax sorted and stop panicking at BAS time
✅ Know your numbers and feel in control
✅ Charge with confidence
✅ Build a buffer so you’re never caught off guard
✅ Actually enjoy running your business again?

Introducing: The Edge – Your 6-Week Business Financial Reset

The Edge is a coaching program for tradies, franchisees and small business owners who are sick of just “getting by” and ready to build a business that actually pays them.

Inside The Edge, you’ll get:

? Weekly coaching calls
? Easy-to-use templates and systems
? Real-life strategies that work for time-poor business owners
? Support and accountability from someone who gets it
? A full money makeover – without the financial jargon

It’s not about being perfect – it’s about taking action, building structure, and finally feeling confident with your money.

BOOK A FREE "THE EDGE" SUCCESS CALL

Final Thoughts: You Can Fix This. Fast.

The biggest money mistakes small business owners make aren’t about numbers, they’re about habits.
If you’re not paying yourself, mixing finances, ignoring your numbers, or winging it at tax time… it’s costing you more than you know. Not just money, but peace of mind, time with your family, and the freedom you started your business for.

You don’t have to keep doing it the hard way.

Let’s fix it – fast, together, and for good.

? Ready to stop surviving and start thriving?

Join The Edge 6-Week Coaching Program Now and get the tools, systems, and support you need to take control of your business money – once and for all.

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BOOK A FREE "THE EDGE" SUCCESS CALL
How to Stop the Feast and Famine Cycle and Finally Take Control of Your Business Money

How to Stop the Feast and Famine Cycle and Finally Take Control of Your Business Money

May 7, 2025 | Building Emotional Muscle, Building Financial Muscle, Debt, Debt Payment, Debt Repayment, Educational Series, Financial Education, Financial Freedom, Financial Health, Financial Management 101, Mortgage, Net Worth, Retirement, Saving Money, Self Development

Let’s get real for a moment.

Running a small business is a wild ride. One month you’re rolling in sales and feeling unstoppable. The next, you’re counting coins, putting off paying that supplier, and wondering if you’ll need to dip into your personal savings again (that’s if you have any left).

Sound familiar?

If you’re living in the stressful loop of feast and famine, you’re not alone – and it’s not your fault. Most business owners start their business because they’re great at what they do, not because they’re experts in money management.

But here’s the good news: you can absolutely break the cycle and build a business that pays you consistently, without losing your mind in the process.

Let’s dive into what causes this rollercoaster and, more importantly, how to hop off it for good.

What is the Feast and Famine Cycle, Anyway?

It’s the classic small business trap. When you’re in “feast” mode, you’re busy delivering services, taking on all the clients, and hustling hard. You’re making money, and it feels great.

But because you’re so busy working in the business, you’re not working on it. Marketing falls off. You don’t follow up on leads. You’re not planning ahead.

Then, suddenly – bam! – the work dries up. The cash stops flowing, and panic sets in. So, you hustle hard again to find more clients. And the cycle repeats.

It’s exhausting, stressful, and totally unsustainable.

 

Feast and Famine Cycle

Why It Happens (And Why It’s Not Your Fault)

Here’s what no one tells you when you start your own business: Cash flow is everything.

But too many small business owners don’t have a plan for their money. They treat their business account like a personal piggy bank, or they’re too busy wearing 15 hats to track expenses properly.

Without systems, buffers, and strategy, you’re flying blind. And that’s a dangerous way to run a business – no matter how good you are at what you do.

How to Break the Cycle: 7 Steps to Consistent, Confident Business Finances

It’s time to turn your financial chaos into clarity. Here’s how you do it – step by step.

1. GET CLEAR ON YOUR NUMBERS

Let’s start with a little tough love: if you don’t know your numbers, you don’t know your business.

That means knowing:

  • How much it really costs to run your business monthly
  • Your average monthly revenue
  • Your break-even point
  • How much you need to earn to pay yourself properly

This doesn’t have to be complicated. Use a simple spreadsheet or accounting tool (like Xero, QuickBooks, or even a Google Sheet) to track everything that comes in and goes out.

Knowledge is power, and in business, it’s the difference between survival and success.

2. SEPARATE YOUR PERSONAL AND BUSINESS FINANCES

If you’re still using one bank account for everything, we need to talk.

Mixing personal and business money is a recipe for confusion, stress, and tax-time nightmares.

Set up a separate business account, and commit to paying yourself a “business wage” regularly, even if it starts small. This not only helps you manage your cash flow better, it makes you feel more like the CEO you are.

3. CREATE A MONEY FLOW SYSTEM THAT WORKS FOR YOU

Ever heard of Profit First? It’s a simple but powerful cash management system where you allocate money into separate “buckets” every time income comes in.

Here’s a basic version you can try:

  • Income Account – where all your revenue lands
  • Profit Account – set aside 5-10% for long-term savings or growth
  • Owner’s Pay Account – your regular wage
  • Tax Account – avoid nasty surprises at BAS time
  • Expenses Account – to cover day-to-day costs

The goal is to become intentional with every dollar. This way, you’re not wondering where all the money went at the end of the month. 

4. PLAN FOR THE LOWS – WHILE YOU’RE IN THE HIGHS

In “feast” mode, it’s easy to feel like the good times will last forever.

They won’t. And that’s okay, if you’re prepared.

Start building a business buffer fund – at least one month’s worth of operating expenses. When things slow down, you’ve got breathing room and don’t have to make decisions from a place of fear.

Pro tip: Automate transfers to your buffer fund after every client payment. Out of sight, out of spend.

5. SET REGULAR MONEY DATES (WITH YOURSELF OR WITH YOUR BOOKKEEPER)

You wouldn’t ignore a partner for months and expect the relationship to thrive, right? Same goes for your business finances.

Block out 30–60 minutes every week to:

  • Check your cash flow
  • Send invoices
  • Pay bills
  • Review your numbers
  • Track your goals

Make it fun – grab a coffee and put on your favourite playlist. The more you connect with your money, the more empowered you’ll feel.

6. DITCH THE HUSTLE CULTURE AND CREATE RECURRING REVENUE

Feast and famine often come from project-based or one-off work. If every sale requires a new client or fresh hustle, your income will always be up and down.

What can you do to create consistent income?

  • Offer monthly retainers or packages
  • Launch a membership or group program
  • Create digital products (courses, ebooks, templates)
  • Automate a funnel that sells for you in the background

Even just one recurring income stream can bring serious stability.

7. GET HELP SOONER, NOT LATER

You don’t have to do this alone.

If you’re constantly stuck in financial stress, it’s time to call in some support. A good financial coach (?‍♀️ like me!) can help you set up systems, build a plan, and create a business that pays you – without the burnout.

Sometimes the biggest breakthrough is admitting you need help and taking that first step toward real change.

Bonus Tips for Aussie Small Biz Owners

Since I’m based in Australia and many of my clients are too, here are a few extra pointers:

  • Stay on top of BAS and GST obligations – set aside a percentage of income as soon as you get paid.
  • Consider using accounting software like Xero to automate your BAS and income tracking.
  •  Use the ATO’s small business cash flow projection tool to forecast your months ahead.
  •  Look into government grants or support – there may be funding or mentoring programs available. 

Final Thoughts: You Deserve Consistent Cash, Not Constant Stress

Here’s the truth: You didn’t start your business to feel financially anxious all the time. You started it for freedom, flexibility, and fulfillment.

The feast and famine cycle might feel normal – but it’s not healthy, and it’s not inevitable.

With the right systems, support, and mindset, you can step into a whole new way of doing business. One where you feel in control, empowered, and finally able to enjoy the fruits of your hard work.

Ready to Ditch Feast and Famine for Good?

If this blog lit a fire in you, and you’re ready to say goodbye to cash flow stress, I’ve got your back.

Book a call so we can talk about how I can help you build your financial muscle, take control of your cash flow, and finally get paid like the boss you are.

? Let’s stop just surviving—and start thriving. 

BOOK A CALL TODAY
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Why Every Small Business Owner Needs a Financial Coach in Their Corner

Why Every Small Business Owner Needs a Financial Coach in Their Corner

Apr 30, 2025 | Building Emotional Muscle, Building Financial Muscle, Debt, Debt Payment, Debt Repayment, Educational Series, Episodes, Financial Education, Financial Freedom, Financial Health, Financial Management 101, Home Loan, Mindset, Mortgage, Net Worth, Relationships, Retirement, Saving Money

Running a small business is no joke. You wear all the hats – CEO, marketer, customer service rep, bookkeeper, and sometimes even janitor. The freedom and flexibility of entrepreneurship are amazing, but let’s be real: it can also feel like you’re juggling flaming swords while riding a unicycle on a tightrope. And when it comes to managing money? That tightrope can feel extra wobbly.


Enter the financial coach.


While accountants and bookkeepers keep track of the numbers, a financial coach helps you understand what those numbers mean for your goals, mindset, and long-term business strategy. They’re not just here to look at your past, they’re here to help you shape your future.
Let’s break down exactly why working with a financial coach can be a total game-changer for small business owners.

1. Clarity is Power

So many business owners hustle day in and day out without a clear picture of where their money is going or how much they’re really making. A financial coach helps you:

  • Understand your cash flow
  • Track your expenses
  • Price your products/services strategically
  • Set income goals that align with your vision

When you know your numbers, you can make smarter decisions with more confidence. No more crossing your fingers and hoping there’s enough to cover next month.

Understand your cash flow

2. Mindset Matters More Than You Think

Money mindset is one of the most overlooked aspects of running a business. If you’ve got a hidden belief that you’re not “good with money” or that it’s wrong to want to be profitable, it will impact your business.

A financial coach helps you identify and rewrite those limiting beliefs so you can:

  • Raise your prices without guilt
  • Pay yourself consistently
  • Invest in growth with confidence
  • Stop playing small with your money goals

You don’t just need spreadsheets – you need support for the emotional and psychological side of money, too.

3. From Reactive to Proactive

Too many small business owners operate in reaction mode: paying bills as they come, scrambling during tax season, and constantly putting out financial fires. A financial coach helps you shift from reactive to proactive.

That means:

  • Planning for taxes year-round
  • Setting aside money for slow seasons
  • Creating a strategy to build consistent income
  • Mapping out your financial goals and the steps to get there

This isn’t just about staying afloat. It’s about building a solid, scalable foundation that supports long-term success.

4. Ditch the DIY Trap

There’s a lot of pressure on small business owners to figure everything out themselves. Google, YouTube, and online courses can only take you so far. But just like you wouldn’t expect your clients to solve all their problems without your help, you shouldn’t expect yourself to master business finances without support.

A financial coach gives you:

  • Accountability
  • Expert insights tailored to your business
  • A safe space to ask the “dumb” questions (spoiler alert: they’re never dumb)
  • A partner who’s as invested in your success as you are

5. You Deserve to be Paid Well for Your Work

Too many small business owners put themselves last on the payroll. They reinvest everything back into the business, believing that one day, it will all pay off. But guess what? You don’t have to wait to be profitable.

A financial coach helps you:

  • Create a plan to pay yourself regularly
  • Separate personal and business finances
  • Build profitability into your pricing and systems
  • Stop undercharging and undervaluing your genius

Because you didn’t start your business to just survive. You started it to thrive.

Create a plan to pay yourself regularly

6. Create a Business That Supports Your Life

Your business is a part of your life – not the other way around. A great financial coach will always bring the focus back to what you want:

  • More time with your family?
  • Travel?
  • Buying a home?
  • Debt freedom?

Whatever your version of success looks like, your financial plan should support it. A coach helps you design a business model and money strategy that aligns with your lifestyle goals.

Final Thoughts: Your Business Deserves a Financial Wingwoman (or Wingman)

You don’t have to have it all figured out. You just need the right support.

A financial coach isn’t just for people who are struggling. It’s for anyone who wants to grow with intention, take control of their finances, and build a business that actually feels good to run.

At Financial Management 101, that’s exactly what we’re here for. Whether you join our Monthly Coaching program and unlock The Vault, or dive deep into transformation through The EDGE, you’ll get the tools, clarity, and mindset shifts you need to run your business with confidence.

The Edge - 2 Hour Workshop

Let’s build your business into the financial success story it’s meant to be – one intentional step at a time.

Introducing THE EDGE. This 2-Hour Power Session is a fast-paced, simplified version of my full 6-week coaching program for self employed business owners. Click the image below to know more about what you’ll be learning in this power session.

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CLICK HERE TO LEARN MORE ABOUT THE 6-WEEK PROGRAM
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The Big Picture: Why Net Position Matters More Than Budgeting

The Big Picture: Why Net Position Matters More Than Budgeting

Apr 16, 2025 | Book of the Week, Building Financial Muscle, Credit Score, Debt, Debt Payment, Debt Repayment, Financial Education, Financial Freedom, Financial Health, Financial Management 101, Mindset, Mortgage, Net Worth, Saving Money, Self Development, Side Hustle

When people think about managing their finances, budgeting is often the first thing that comes to mind. While budgeting is an essential tool, it’s only one piece of the puzzle. To truly take control of your financial life, you need to understand your net position. This bigger-picture view is the cornerstone of long-term financial success. In this blog, we’ll dive into what net position is, why it matters, and how it can transform your approach to money management.

What is Net Position?

Your net position is the difference between what you own (your assets) and what you owe (your liabilities). It’s essentially your financial scorecard, giving you a snapshot of your overall financial health. Here’s a simple formula:

Net Position

Assets include things like your home, car, savings, and investments. Liabilities include mortgages, credit card debt, personal loans, and other financial obligations. Knowing your net position helps you understand whether you’re building wealth or accumulating debt.

Why Net Position Matters More Than Budgeting

Budgeting is about managing your monthly cash flow, how much money comes in and goes out. While this is important, it doesn’t give you a complete picture of your financial health. Here’s why focusing on your net position is a game-changer:

1. PROVIDES A HOLISTIC VIEW

      • Budgeting focuses on short-term goals, like paying bills or saving for a vacation. Net position shows your long-term financial standing, including the value of your assets and the weight of your debts.

2. HELPS SET REALISTIC GOALS

      • Understanding your net position allows you to set achievable financial goals, whether it’s buying a home, retiring early, or becoming debt-free.

3. REVEALS FINANCIAL TRENDS

      • Tracking your net position over time helps you see whether your financial health is improving or deteriorating.

4. GUIDES BETTER DECISION-MAKING

      • Knowing your net position helps you make informed decisions about spending, saving, and investing.

Common Misconceptions About Net Position

Budgeting is about managing your monthly cash flow, how much money comes in and goes out. While this is important, it doesn’t give you a complete picture of your financial health. Here’s why focusing on your net position is a game-changer:

1. “Only Wealthy People Need to Track Their Net Position”

      • False! Everyone, regardless of income level, can benefit from understanding their net position. It’s about knowing where you stand and where you’re headed.

2. “Budgeting Alone is Enough”

      • While budgeting is crucial for managing day-to-day expenses, it doesn’t address your overall financial health.

3. “It’s Too Complicated”

      • Tracking your net position can be as simple as listing your assets and liabilities in a spreadsheet or using a financial app.

Steps to Improve Your Net Position

1. ELIMINATE HIGH-INTEREST DEBT

      • Focus on paying off credit cards and personal loans first. These often carry the highest interest rates and can significantly impact your financial health.

2. INCREASE YOUR SAVINGS

      • Build an emergency fund with at least three to six months’ worth of living expenses. This provides a financial safety net and reduces the need for high-interest debt during emergencies.

3. INVEST WISELY

      • Grow your assets by investing in a diversified portfolio. Consider long-term investments like retirement accounts or real estate.

4. REDUCE LIABILITIES

      • Pay down loans and avoid taking on new debt unless it’s for a strategic purpose, like buying a home.

5. TRACK YOUR PROGRESS

      • Revisit your net position quarterly or annually to measure your progress and adjust your financial plan as needed.

How Our “Know Your Numbers” Course Can Help

Our “Know Your Numbers” course is designed to take the guesswork out of understanding your net position. Here’s what you’ll learn:

1. HOW TO CALCULATE YOUR NET POSITION 

      • Step-by-step guidance on listing your assets and liabilities.

2. TOOLS AND TEMPLATES

      • Access user-friendly calculators and spreadsheets to track your progress.

3. STRATEGIES FOR IMPROVEMENT

      • Learn actionable steps to grow your assets, reduce your liabilities, and increase your net worth.

4. REAL-LIFE EXAMPLES 

      • See how others have transformed their financial health by focusing on their net position.

Success Stories

1. JOAN’S TRANSFORMATION

Joan discovered her net position was negative due to high credit card debt. Using strategies from the course, she paid off her debt in two years and now has a positive net worth of $20,000.

2. PETER’S JOURNEY

Peter thought he was doing well because he had a high income. After calculating his net position, he realised his debt outweighed his assets. He’s since restructured his finances and is on track to achieve financial independence.

Know Your Numbers

Conclusion

Understanding your net position is the key to unlocking financial freedom. It’s not just about how much you earn or spend; it’s about the bigger picture of what you own versus what you owe. By focusing on your net position, you can make smarter financial decisions, set realistic goals, and build a secure future. Ready to take control? Join our “Know Your Numbers” course today and start your journey toward financial clarity and success.

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