Back in the day, people who wanted to stick to a budget and be responsible with their money used an “envelope system.”
Remember when grandma would pull out that paper envelope full of cash at the grocery store check out? Or when your parents would pull money out of an envelope labeled “furniture” when they were heading out to buy that new couch?
At some point you’ve likely come across this in some manner- even if it was as simple as cash stuffed under a mattress.
The envelope system is a way to organize your personal finances in a simple way. When paid, you take the cash and split it across envelopes for specific budget categories (groceries, spending money, bills, etc.)
In the digital era, this money management method has moved from physical envelopes to online envelopes. However, while it looks different, it still works the same.
If only there were a system like this for businesses. A system that allowed you to clearly organize your finances in a simple way.
Allow me to introduce you to Profit First.
Profit First is a money management system that puts profit first. The system works by assigning a percentage of your income to specific accounts: Profit, Owner’s Pay, Taxes, Operating Expenses, and Income. In a sense, they are like “money envelopes” for your business.
Whenever you receive money, it goes into the income account. Then, based on specific percentages, you divide the money across the other 4 accounts on a weekly or bi-weekly basis (much like putting cash into paper envelopes in your personal budget).
When implemented consistently, this system encourages small business owners to prioritize their profits while also managing their spending more effectively.
Ultimately, Profit First works because it instills the habit of proactively planning for the future, rather than just reacting to current cash flow. It is a simple, straightforward system that can be implemented quickly and easily with minimal disruption to your day-to-day money management.
By following the process of allocating income into different accounts as it comes in and keeping expenses steady, Profit First helps ensure profitability—and peace of mind—for small business owners.
With the right budgeting strategy in place, you can stay on top of your finances and make sure that profits are always a priority. And when combined with other sound business practices like smart marketing, effective customer service, and careful financial planning, Profit First can help propel any small business to greater success.
Benefits of the new money envelope system
The benefits of using Profit First are numerous. It helps you to stay organized and on top of your finances, keeps expenses in check, and encourages you to prioritize profits over other spending needs.
Additionally, Profit First can help boost your morale; the knowledge that you are proactively keeping a watchful eye on your financial future can be empowering and motivating.
Finally, it ensures that small business owners are able to make quick decisions when opportunities arise without having to worry about how those decisions will affect their bottom line.
With Profit First, success is always within reach. By taking a proactive approach to budgeting with Profit First, small businesses can position themselves for long-term success.
This system ensures that profits will remain a priority while also helping entrepreneurs manage their spending more effectively so that they can make smart decisions that will help their businesses grow.
With Profit First, small business owners can rest assured that their finances are in good hands. By following these simple steps, small business owners can implement the Profit First system into their financial planning:
- Assign percentages to each of your accounts based on how you want your money to be allocated (e.g., 10% of revenue should go into the profit account).
- Record all income and expenses in the appropriate accounts each month.
- Monitor cash flow regularly and adjust allocations as needed when one category runs low or has too much in reserve.
- Automate payments and transfers when possible to simplify your bookkeeping

How to get started with your “envelopes”
Getting started with Profit First can feel intimidating, but it’s actually quite simple. The best way to get started is to create a budget and assign percentages to each of your accounts.
You’ll want to be sure that you are putting enough money into the profit account each month in order to ensure that your business is profitable over time. Once you have assigned percentages, it’s important to track your income and expenses closely against these numbers so that you can adjust allocations as needed.
It’s also helpful to set up automated payments or transfers when possible in order to simplify your bookkeeping efforts.
Finally, make sure that you are monitoring cash flow regularly so that you can make informed decisions about where funds should be allocated in the future. With just a few steps, you can start using Profit First to ensure that your business remains profitable and secure.
Tips for using Profit First successfully
Using Profit First successfully means being mindful of your budget and staying organized. Here are some tips to help you get the most out of this system:
- Set realistic budgets, percentages, and goals for each account in order to stay on track.
- Monitor cash flow regularly and adjust allocations as needed in order to ensure that funds are always available when they’re needed.
- Automate payments or transfers whenever possible in order to simplify bookkeeping efforts.
- Use Profit First as part of a larger financial strategy that incorporates other sound business practices like smart marketing and careful planning.
- Work with someone, like our Profit First certified coaches, to help you do it correctly and save thousands of dollars along the way.
By following these simple steps, small business owners can easily incorporate Profit First into their existing financial plans. With this system in place, entrepreneurs can rest assured that their businesses will remain profitable and secure.
Profit First is an excellent tool for small business owners who need help managing their finances in order to ensure long-term success.
By assigning percentages to each account, tracking income and expenses closely, regularly monitoring cash flow, automating payments or transfers when possible, and using Profit First as part of a larger financial strategy, small business owners can set themselves up for success by taking a proactive approach to budgeting.
With Profit First in place, small businesses can prioritize profits while also being able to make quick decisions when opportunities arise without having to worry about how those decisions will affect their bottom line.