A Nashville entrepreneur breaks down the 5-step 'profits-first' system she uses to keep her money automated, unemotional, and growing (2024)

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• Julie Sellers' money-management system was inspired by the book "Profits First."
• She splits money into needs, wants, and savings, using multiple bank accounts to keep it straight.
• She says automating her system frees her up from constantly monitoring where her money goes.
• This article is part of Women of Means, a series about women taking charge of their finances.

For Julie Sellers, having structure to her finances means having freedom.

"I want to invest in the structure so that I can be useful and be free," she told Insider. The founder of Ellevated Outcomes, Sellers is an entrepreneur living in Nashville, Tennessee.

When she's thinking about her own household finances, she likes to keep things automated and unemotional. To do this, she uses a personal-money-management system to optimize her six-figure income to have as much freedom as possible to do her work and live her life without worrying about her money on a day-to-day basis.

Here she breaks down for Insider exactly how it works.

1. A 'profits-first' system prioritizes saving

Inspired by the book "Profits First" by Mike Michalowicz, Sellers implemented the author's business-cash-management system into her personal finances.

Essentially, this means a portion off the top of her income (and her husband's) is immediately stashed away and saved as "profit" for the household. The way they use profit first in their life, Sellers says, "is just thinking proactively about what do we want to invest in and our future."

In essence, it's very similar to a pay-yourself-first method of budgeting in which money is saved at the beginning of the month instead of at the end with whatever is leftover.

2. She then splits the money into needs, wants, and savings

After deciding on a profit-first system, Sellers and her husband worked out what percentage of their total income should go toward it. They separate their money into three large categories: needs, wants, and savings.

Profits fall into their savings category (in addition to the money they set aside for taxes on an Airbnb they own). Wants are things like eating out or clothes and other discretionary spending, and needs are things like mortgage payments and groceries.

To determine how much money goes where, they went over their financial statements for the previous six months, taking into account how much they were already spending in these areas and how much they'd ideally like to be spending.

Through this exercise, they were able to determine that their income should be divided as follows:

• 40% needs
• 32% wants
• 28% savings (6% of their total income goes toward saving for taxes, and 22% goes into the profit bucket)

3. She uses multiple bank accounts to keep money straight

Sellers' system requires multiple bank accounts to work correctly. Every pay period, both Sellers' and her husband's income is deposited into an account they've titled "income." Her husband works a W-2 job, and Sellers pays herself a set salary from her business.

Using their predetermined percentages, on the 10th and 25th of the month, they drain their income account and split the money into four bank accounts:

• 40% to an account called "living expenses"
• 32% to an account titled "discretionary spending"
• 6% to one called "taxes"
• 22% to "profit"

When they have to pay a bill, it comes out of the living expenses account. Likewise, a restaurant dinner comes from discretionary spending. Not only does this keep their spending on track — when a fund is empty, it's empty until the next scheduled deposit — but it also eliminates the need to constantly monitor exactly where money is going.

4. Once a quarter, she divides up the profits

As the couple was building out this system, they sat down to discuss where they wanted their profits to go. For the two of them, they outlined a few major areas: an emergency fund, a dream-home fund, an education fund, long-term financial planning, charity, and other investments.

Day to day, most of the money Sellers spends is either coming out of the discretionary-spending account or the living-expenses account. But once a quarter, they divide up the profit account among these goals.

Ten percent off the top is automatically set aside to give to charity. The remainder of what's left is then divided among various accounts that correspond with their goals: Some goes to retirement, some to a dream-home fund, and so on. "I'm crazy about efficiency, so it's nice to only have to do it once a quarter," Sellers said.

5. Once a year, she reevaluates the system

"Once a year, I like to do any annual money planning and take stock of things," she said. This includes adjusting any percentage categories and reevaluating which goals they'll focus on putting their profit toward.

"Some people would salivate over this structure, and some people would run for the hills," Sellers said, "But this system makes me feel good."

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