The Financial Wellness Framework for Digital Entrepreneurs

You probably would agree with me when I say that financial wellness is important and you need to be smart with your money, especially as an entrepreneur. That’s a no-brainer.

But what does financial wellness really look like?

You could say that you’re financially healthy as long as you’re able to pay the bills and keep a roof over your head…

But why not dream of MORE?! Why not dream of abundance and prosperity? Why not dream of eliminating financial stress and not leaving room for the unexpected to create disasters in your wallet?

In this post, I’m going to share with you my Financial Wellness Framework that I teach across my platform. It’s a system that was originally designed with small business in mind, but you’ll also see adaptations for personal finances in each section!

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One. The Bank Accounts

Bank accounts are obviously important to finances since they house your funds, but what makes them a part of financial wellness?

Think about how a child’s home life can impact their performance in school and how they function in society. That may sound like a bit of a stretch for money, but it really isn’t!

Your money’s “home life” is critical to your ability to manage it elsewhere.

We could spend hours comparing bank accounts that are out there, but it really just comes down to a bank that you can trust, a bank that makes your funds easy to manage (online banking interface), and separate accounts for certain types of funds.

Let’s focus on that last one: If you have a business, or are starting to spend money on a pursuit that you plan to make money with, you need to open a separate checking account for it. Absolutely no question about it. It’s better for organization and money management, sure, but also for bookkeeping, taxes, and legal compliance!

I usually recommend that people have at least one personal checking and one personal savings account as well as one business checking and one business savings account.

You’ll hear of other money management methods that teach you to have more (like Profit First, which teaches you to have five business accounts), but for now, you should at least have the above.

Two. The Tracking System

This one is more important for the business, as it’s incredibly necessary for taxes. You need to have an accurate record-keeping system in place to record all of your business financial activity.

At the very least, this means income and expenses. But it also means tracking bank balances, loan and credit balances, how much you pay yourself, etc.

Some people are okay starting with just an income and expense spreadsheet, but you will eventually need a more robust accounting system. The sooner you get started the better! It’s way easier to start a new accounting system while your finances are simple rather than later when there are years of backlog and incorrect data to sift through.

If you need something free, I recommend Wave! But, if you can spare a few bucks a month, I really encourage investing in Quickbooks Online (the Simple Start plan is perfect for most people), as it’s a cleaner interface with better features. (Plus, most accountants, bookkeepers, and tax preparers are more familiar with QBO than Wave.)

>> Learn more about DIY bookkeeping with my Bookkeeping 101 series!

(This is a bit of a spoiler for later, but for most of us, an organized budgeting system can provide enough of a historical record for personal finances.)

Three. The Organization System

Beyond a tracking system, you should also have an organization system for all those supporting documents.

When I worked in a tax office, clients used to bring us their tax forms crumpled up in gallon Ziploc bags. I used to get so frustrated trying to keep the Ziploc bags with the client’s papers because we had a policy of returning everything the client brought in.

Ziploc bags are slippery and hard to find in stacks of tax returns. If you’re a Ziplog bag client, stop being a Ziploc bag client. Please.

Instead, create a paper/digital/hybrid system for your online business activity and another one for your personal finances. Do what works for you, just keep it simple and easy to maintain!

You’ll want to hold onto anything from a third party (as in, not your own spreadsheet) that proves your major financial activity.

For business, that’s invoices, receipts, bank statements, payment processor statements, credit card statements, Form W-9s from contractors you pay, etc.

For personal, this will probably be bank statements, retirement account statements, loan statements, credit card statements, documents related to major assets (home, car, equipment, etc), pay stubs, any tax forms used to prepare your returns, etc.

And while this step of the framework applies to more than just tax-related documents, know that you should typically aim to keep all your tax docs for at least seven years after the filing year.

Four. The Planning System

This one is my favorite part. Everything up until this point has been about laying foundations and creating structure. But now? Now we make plans. Now we make decisions.

Budgeting your money - both personal and business - is about being proactive. In my experience, it is the single greatest way you can remove risk and uncertainty from finance and bring true financial wellness into your life.

I teach my clients to break the traditional budgeting mold. We don’t just sit down once a month, project income, estimate expenses, and then meet up in 30 days to see how we did.

No, we budget continuously and intentionally. We make a plan for every dollar of income that actually enters our bank account so we’re working with real numbers, not guesses.

This is how you make a budget that works!

A Tool to Get You Started

And there’s your basic framework! These are the different elements you should focus on with your business’ financial wellness. Then, don’t be afraid to also adapt these to your personal finances!

Obviously, there’s a lot more that goes into each of these. But that’s what I’m here for! My mission is to educate you in these areas to make sure we’re creating a fool-proof system for your money.

If you’ve got the itch to get started, click here to learn more about my totally FREE CFO Starter Kit - eight resources in one designed to place you in the seat of Chief Financial Officer of your own online business.

As always, feel free to reach out with any questions!

Until next time,