As a small business owner, it’s easy to put yourself last on the financial priority list. But here’s the hard truth: if you don’t intentionally pay yourself, your business might be earning—but you won’t be.
That’s why the “Pay Yourself First” philosophy has become a game-changer. And with the Profit First Calculator, putting this concept into practice has never been easier.
Why Most Entrepreneurs Pay Themselves Last (And Regret It)
Whether you’re running a solo operation or managing a team, your business income often goes toward:
- Overhead costs
- Vendors and suppliers
- Marketing and tools
- Taxes, loan repayments
By the time the dust settles, there’s little—or nothing—left for you.
What Does “Pay Yourself First” Actually Mean?
It means treating your salary like a non-negotiable business expense—just like rent or payroll. Instead of hoping there’s money left over, you plan for your personal income from the start.
How Much Should You Pay Yourself?
It depends on your business model, profit margins, and cash flow. Here’s a rough benchmark for small businesses:
- 5–15% for early-stage or high-expense businesses
- 15–30% for lean operations or solopreneurs
- 50%+ for freelance or consulting models
Use this calculator to test what’s realistic based on your monthly revenue and fixed costs.
Step-by-Step: How to Start Paying Yourself First
- Calculate your average monthly income
- Decide your personal pay % (e.g., 20%)
- Transfer that amount to a separate bank account the moment income hits
- Run the business on what’s left
This might sound scary at first, but it forces smarter spending and builds a sustainable habit of valuing your work.
Tools That Help You Automate This
- Separate business and personal accounts
- Recurring bank transfers
- Profit First Calculator to model your cash distribution
- Cloud accounting tools like Wave or QuickBooks
What If You Have Debt or Irregular Income?
Even then, paying yourself something—even $100/month—builds the muscle. Start small. It’s about consistency, not the amount.
How the Profit First System Helps You Stick to It
The Profit First method, popularized by Mike Michalowicz, makes this super easy. It flips traditional accounting by putting profit and owner’s pay first. Expenses adjust to what’s left.
Try the calculator now to test how much you could be taking home without harming your cash flow.
Real-Life Example: Solo Graphic Designer
A freelance graphic designer earning $6,000/month started by paying herself just $900 (15%). Over six months, she refined her client base and cut tool subscriptions. She’s now paying herself $2,000 consistently, with profits growing.
Take the First Step Today 💰
Even if things feel tight, your business exists to serve you—not the other way around. Paying yourself first is not selfish; it’s strategic. Use the Profit First Calculator to start modeling a system that finally rewards your effort.
FAQs
What if I can’t afford to pay myself?
Start with even 1–2%. The goal is consistency and building a habit of self-value.
Is owner’s salary the same as profit?
No. Owner’s salary is your compensation for working in the business. Profit is what’s left after all expenses—including your pay.
Should I reinvest instead?
Reinvesting is great, but not at the cost of burnout. Prioritize both sustainability and growth.
💡 Want to learn from a real example? Read our Profit First Success Story here.