Why You Need Separate Bank Accounts For Your Personal And Business Finance
I was recently invited to speak at Dr. Ben Carvosso (The On Button
) Mentor Live Session.
One of the things we spoke about is having separate bank accounts for your personal and business finance.
You absolutely need to have separate bank accounts and if you don't already have that, I'd be pretty surprised.
When we work with clients, normally a business will be structured as a company or a trust depending on the business owner and what's more applicable to their family. And so, you actually need to set up separate bank accounts for it.
This has also helped with my relationship with my wife, Stevie. Really early on in our relationship, when we started combining our finances, it was actually quite tough to communicate about money because, especially as a new business owner, the money in the bank account went up and down and so did my emotions and our ability to spend money on things like a date night. One week, when there was $20,000 - $30,000 in the bank account, we'd go out to dinner, have a nice date night. Then the next week when Stevie was like, "Oh, let's go out again." I'd say, "No, we can't because there's hardly any money in the account." That's not a really functional way of communicating about money.
One of the big things we did as a result of that was consistency. Basically choosing a weekly amount that you pay yourself as a salary or depending on your structure, it could be as a drawing from your business.
Choose a weekly amount that's consistent. If there's money in the business bank account, don't just say, "There’s $20,000 - $30,000 in there. I can take $20,000 of it." You need a consistent amount that comes across from your business accounts into your personal and that's what you work with. You've really got to separate the two in your mind.