Ryan Vaughn explains how to use separate bank accounts, or buckets, for different expenses: owner pay, payroll, taxes, operating costs, and profit. This system prevents overspending, makes your financial health visible, and signals when you can hire or need to cut back. Set aside money for quarterly taxes and annual costs so big bills don't surprise you.
Okay, I am excited to share with you another budgeting tip and trick. So this one is all about how to organize your money. This is a question that so many people ask. They'll get their taxes in order, they'll get their bookkeeping in order, and then they're like, well, what do I do with the cash that's coming into my business? How do I know how much to pay myself? How do I know how much to pay my people? What do I do with all this cash? And so what we will tell them is create separate bank accounts for different buckets. The reason you want to do this, it goes back to another tip and trick about paying yourself first. When you have a big pile of cash in front of you, you feel like you're on the top of the world. If you have 10 grand in front of you, you are so excited. You're like, oh yeah, I'm going on a cruise. I'm buying steak for my family tonight. Like, we are going to treat yourself today. What you forget is you do have cash, which is great. However, you also have these expenses, right? You have people to pay, you have Rent to pay, et cetera. So what we do is instead of having this big pile of cash in front of you in one bank account, we say create separate bank accounts for different expenses. So things like have an owner's pay account. This is the money that you put for yourself to pay yourself into that account. This is money that you get to take and spend on whatever you want. Same with doing things like paying your people. Put it in a bucket. You can pay yourself, your people this much. If you are not paying your people, like if you're not taking all the money out of that bucket, then maybe you're in a place where you can hire someone If you need that. If you are going over that bucket, maybe it's time to look at, is everyone being as efficient as they should be? Is it time to downsize? Is it time to upsize? This will help you make that decision. On top of that, we're also gonna do like the large expenses and annual expenses bucket so you can save for those big expenses that come once a year or maybe quarterly, but not monthly. So that again, you're saving money throughout the month and into that bucket so that you're not stressed when those big payments come. So different things like that. Other buckets that we recommend are profit buckets, tax buckets. The tax bucket is just so you can save up money. So at the end of the year, or when you make your estimated tax payments, you're not worried about it. It's kind of like the large expense bucket, but for taxes. The profit bucket is we want you to put a percentage of your money aside so that once a quarter you can treat yourself and go on that cruise with the money that's in that bucket or whatever else. You have an operating expense bucket. This is just your monthly day-to-day operating expenses, like, you know, paying your rent, whatever else. Maybe, maybe you have like a cleaning team that you pay all the time, different things like that. Your payroll bucket, your large expense bucket. Again, the reason for having these different buckets is it's going to allow you to take this big pile of cash and organize it quickly in your brain instead of seeing $10,000 and being like, all right, let's go crazy. You're going to see, okay, I have $2,000 in this bucket. I have $1,000 in this bucket. I have $5,000 in this bucket. I have $2,000 in this bucket. And in my owner's pay bucket, I have $4,000. Great. I'm gonna take that money and do what I want with it. Now, you have still gone and given yourself a great treat. You also have made sure that your business will continue to thrive, that your expenses are paid for, and that you are ready to go. So make these separate buckets. And again, if you're nervous about this, if you're looking at this and you're like, what is happening? I don't even know how to start deciding how much to put in each bucket. Go ahead and reach out to our team. This is something that we do every day and we love doing every day.
