Category: Finance

I grew up living the so-called American Dream. But the cold-hearted truth is that this “Dream” is less about reality and more about appearance. It’s less about being and more about showing. 

We want to look like we have money, but we HATE openly talking about it. My parents didn’t even tell me they had taken student loans for my college or how they worked! 

Money and personal finance were sources of incredibly high stress on my household, but we couldn’t let others know –that was taboo!

Something wasn’t right. I didn’t want to have the same relationship with money my parents had, nor the tension and arguments that came with it. 

I wanted to educate myself financially, learn about money management, and understand money –not fear it or endure its pressing stress.

One thing I started to uncover is that money doesn’t have to be such a closeted subject. 

There’s a clear resistance to openly discussing anything even slightly related to money –both in our personal lives and in business.   

And we need to overcome it.

That’s why we now share our financials statements every month at my company Jakt: to help other companies in the same position as we once were and to make an active effort to start a conversation about money. 

Not talking about it skews our understanding of money and inevitably gets us in trouble later in life.

We live in an economic system that promotes overspending and undersaving. 

We are taught from a very early age that it’s ok to spend money you don’t have to impress other people. But keeping up with that external facade of having money can get very expensive. 

And that’s a problem that follows you no matter how large your income gets —10% of individuals making over $100k/year say they still can’t make ends meet. 

People don’t like to talk about how much money they make, or how much they spend on things, or their real net worth: if you have $10K in credit card debt and $1K in your bank account, yes, you have a negative net worth. 

Most people don’t even have the most basic knowledge about how money works. Rather, we are taught to use credit cards, borrow money and live a blind fantasy taking out unnecessary loans. 

69% of Americans have less than $1,000 in savings and 78% of full-time workers live paycheck to paycheck. 

Yet most of us live above our means and don’t really know how interest rates work and how quickly we can go under. 

Instead of facing the reality that we have a negative net worth, we kid ourselves into thinking we’re well off and own “assets.” When, in reality, we’re one big walking liability. 

By the way, if you are unsure, an asset produces money and gives you a return. That $1,200 jacket you just bought is not an asset –even if repeating “but I’ll wear it a hundred times” or “but it’s 70% off!” helps you sleep at night. 

And when our expenses rise and reach a breaking point, what do we do?

We use credit and high-interest loans… anything that will allow us to maintain our fabricated image for just a bit longer. 

I’ve seen countless people spend money on credit cards like it was free money. 

There’s no blue genie behind it with unlimited funds, I promise. They don’t understand for a second that, when you carry the balance, the $10,000 watch they bought actually cost them $12,000 after the card company charged their interest.

And it’s not just about being in financial trouble. When you owe money to someone –a bank, a family member –you no longer have control. 

You’ve lost control of your money, yourself, and your freedom.

Instead of ignoring your personal finances, spending unnecessary money every month, and putting what you can’t afford on your credit card, look at your balance right in the face and don’t shy away from it. 

It’s a reality check and you might not like the answer –but it’s better now than later. 

Breaking out from the money taboo

We fear money. We’ve been told it is not polite to ask questions about other people’s finances –you should mind your own business, right?

But the truth is, it is okay to talk about it. 

Money is just a tool. Nothing more, nothing less.

And this tool allows us to fairly exchange value, keep (ours and other) businesses running, and advance as a society. 

Life and business are just one big game, and money helps us play it: from hiring employees, renting office space, to purchasing products and services we need. 

The problem is when you tie how many zeros your bank account has to your self-worth. You are attaching an emotional element to money –and that leads to showing off to people that you have money (even if you really don’t).

Your self-worth does not depend on how much money you dropped on a Gucci belt. Nothing will change, well, other than the skyrocketing credit card debt you owe the bank. 

Flaunting and trying to keep up with the Joneses will only lead you into financial trouble. 

Either you use money or it uses you.

Linking your happiness and well-being to the immediate gratification from material objects is a very short-sighted play. Americans between the ages of 55-64 (just inches away from retirement) have a jaw-dropping average net worth of only $45,447 –and plenty of them are still in debt. 

Considering that we now live longer than ever and Social Security does not account for that, the future looks bleak for many. 

When you retire at 65 (and you still have 20-30 years to live), what money are you going to live with? The government can’t and won’t take care of you –you have to care of yourself. 

For some (and I’d say many), the problem is not that they didn’t make enough throughout their life. It’s that their relationship with money was so messed up that they simply threw it down the drain with unnecessary purchases and high-interest debt. 

You don’t want to retire at 60 (or 70, or 80!) after decades of working and have zero dollars in your pocket or negative net worth.

Emotionally overspending will keep freedom –doing things by choice, not because you have to– the dream that always remained a dream.

Money doesn’t have to be a taboo or the root of all evil. 

But we are hesitant to talk about it, we don’t educate ourselves on how to manage it, and we care more about other people’s opinions than being financially responsible. 

But money itself, away from personal attachments and preconceptions, is just a tool! 

And by keeping it close to our hearts and not discussing it openly, we are making it extremely hard for others to rewire their relationship with it.

Money is meant to be used and multiplied, but as long as you let money control you and you don’t know how to use it, it will use you and you’ll never be free. 

Instead, shift your mindset towards money as an approachable tool that lets you keep playing the game and help more people. 

When running a business, it’s easy to let your heart and gut drive your decision-making and forecasting. If you aren’t measuring actions and results, forward progress is difficult and unpredictable. A guessing game of sorts. Defining important metrics that you’ll keep an eye on, tracking them over time, and continuously analyzing them will help you monitor the health of your business.

I have taken this to heart in all the companies I run. And that’s something that, while it might seem tedious and repetitive, I pay a lot of attention to. I can look at them and see ahead at what’s coming or uncover why something happened.

How have I done this?

Through creating scorecards for every system in my business.

They allow me to quickly monitor our progress, make any necessary changes we deem necessary, and execute them going forward. But before I tell you all about them, let’s first take a step back.

What are Scorecards?

Scorecards are documents used to track how your business is performing over a period of time.

But it’s not just about measurement.

They are also management tools that help guide your actions and help you achieve your company’s goals.

Basically, they let you, the business owner, see “ahead of the curve” at what might unfold and back at the reason behind things.

As many fellow entrepreneurs, I didn’t take enough time to define, fulfill, and audit them at first.

In some ways, I felt like I was blind. I kinda knew we were going the right direction, but I had no way to know for sure.

I knew we needed to sell more and our revenue was going up. But I couldn’t say with confidence that would happen because I wasn’t tracking my marketing and sales activities well enough.

When I started working with my coach, however, I started taking these scorecards more seriously.

We now track financials and Key Performance Indicators (KPIs) through scorecards for every system within my company:

1.    New business system
2.    Production system
3.    Back-office system
4.    Financial system

But Why Are They So Important?

Scorecards tell you how your business is going. Where it may be off-track, and where you may need to make adjustments so that each system is working efficiently.

But here’s the thing:

You can see the future with them.

No, I don’t mean they are literally a crystal ball. But they do illustrate, metrically, if something may go wrong down the road.

How?

Scorecards are especially useful when measuring leading indicators. Through them, you can see what will happen weeks, months, and even years in advance.

Leading indicators –and I’ll make an article on them specifically– can help both your decision-making and forecasting.

Let’s say you check out your financial scorecards and realize that you have under-collected money from your customers. What does that tell you?

That you might run into a cash-flow problem in the near-term. So you might have to take out money from your retained earnings to make payroll.

Much better to know now than in a month when the water is up to your neck, right?

Another question I often get is—

How Often Should You Look at your Scorecards?

And it’s interesting because I’ve seen everything on the spectrum. Some business owners review them once a month. Others once a quarter. Others once a year. And others, well, never because they don’t have them (they don’t usually last though).

I personally checked almost all of them on a weekly basis. As we’ve grown larger, I’ve started checking some of them monthly. I have a management team that I trust so I don’t have to monitor each week.

Maybe that’s just me. But I would rather make sure I’m up to date on our numbers before it’s too late.

Scorecards and the New Business System

One of the best ways I can think of to share the importance of scorecards is through the New Business System.

The New Business includes the people, tools, and processes that work to generating leads and close clients.

Back in the day, I used to do what many other entrepreneurs do. I tried to go out and sell as much as I could –but I wasn’t tracking anything other than the most basic stuff.

At the end of the year, I’d look at our numbers and say: “Oh, I closed this much business. I thought it would be more/less.”

Now, I look at this whole system differently—

It works like a funnel: generate leads → qualify them → close them. Since I have tracked our average closing and qualifying rates and deal value, I know exactly that…

If I want to make $4M in revenue, I’ll need to generate X number of leads. And then, I can break those leads down per quarter/month/week.

A quick glance at my scorecards will tell me if I’m on track for the time period I’m checking out. If we have to generate 10 leads this week and we’re at 20, things look good ahead. But if we’re at 3, something’s not working.

So, your scorecard isn’t just a tracker. It can tell you what you need to do to hit your goal and helps show if you are on track to hit your goals or not.

Who owns the Scorecards?

Each company and industry should have its own scorecards that need to be filled in, measured, and analyzed. But who is responsible for them?

In the early days, it was just me. I’d be the one tracking how much business we closed, what was our customer LTV, etc.

But, as we grew and I started working ON the business, things changed.

Now, every scorecard is owned by someone. There is an individual responsibility to track, quantify, and evaluate it.

For example, the Head of Sales could be responsible for the New Business Scorecard. Or the CFO for the Financial Scorecard, etc.

Along with the management team, my job to be aware of the big picture trends. See what’s going well and what are the weak links that need to be adjusted. But I don’t go in and work on each individual KPI anymore.

Scorecards Are Crutial 

1. Scorecards tell you how your business is going, where it may be off-track, and where you may need to make modifications so that each system is working efficiently.
2. By tracking leading indicators, you are now able to forecast future trends easily which also helps your decision-making. You can see this by reverse-engineering the New Business System.
3. As you move from IN to ON the business, you’ll delegate ownership of each scorecard to your team. I still check them weekly to see how we’re performing and what needs to be adjusted.

You’ve been lied to about the price of everything you buy.

Oops…

Here’s the thing, personal items are always more expensive than you think when you add your tax rate to it. And your personal finances could be slowing down your business’ growth.

What do I mean by that?

Well, when you make a dollar, the government takes it takes. What’s left is the money you have to spend on things.

That suit you just spent two grand on — you had to earn over $3,000 to buy it.

That $500 dinner plus drinks at NYC’s most trendy place — you had to earn $750+ for that.

And, admittedly, the $25,000 Rolex I bought a few years back really cost me $35,000 – $40,000 when I incorporate my tax rate into the equation.

See what I mean?

Knowledge of personal finance as a business owner/CEO starts with understanding your pre-tax and post-tax income. Your pretax income – the earnings you make after deducting all of your operating expenses (insurance, depreciation, employees, etc.) – really needs to be $550 to pay for that $500 Gucci belt you loved.

There are ways to lower your pre-tax income, such as but that doesn’t help when you’re taxed afterward. Everything is 1.4x to 1.7x (depending on the state you live in) more expensive than you think.

Yup, it sucks.

Recognizing the expense of your overall tax rate is the first step toward making smarter spending decisions and reducing your living expenses. Fight off immediate gratification. 

Now, it’s not all doom and gloom.

If you understand the system, you’ll realize you can use it to your advantage:

Reinvesting in the Business vs. Personal Spending

We’ve talked before about keeping and reinvesting your profits back into the business. It speeds up your growth, it provides a safety net for when the shit hits the fan… But you are also now starting to get why it just makes logical sense:

The government is (indirectly and unknowingly) incentivizing you to spend money in your business.

Here’s how:

If I spend $1000 on a personal item, it’s actually costing me $1,700 because of my tax rate. You know that by now, so I won’t repeat myself.

But, if I reinvest the same $1000 into my business, I can expense the entire thing so my money goes much further. You end up making more money in the long run when reinvesting in your company – and you don’t have to pay taxes until you take profits out!

Instead of going to the government or to Gucci, wouldn’t you rather have your hard-earned dollars go towards hiring new talented people, funding projects, scaling, or investing in new business opportunities? I surely would.  

Note: I am obviously not promoting tax evasion. There’s a BIG difference between that and being smart about how you spend your money and business expenses. Always (and I mean always) be legal and compliant.

It really just doesn’t make financial sense to me to spend post-tax dollars on things that don’t provide me an ROI. You could spend that money tax-free by investing in your business (e.g. spending on marketing that will bring you, new customers).

Personal Finances and Business Owners

Educating myself on personal finances (trust me, it’s taken some rewiring) has proven to be a huge competitive advantage.

At the same time, I sometimes hear from business owners that tell me things like:

“Anthony, dude, I made that money –I deserve the Porsche!” Or “you can’t take dollar bills with ya when you are 6 feet deep.”

They’re not wrong, and neither am I. Both options are viable, and I am no one to tell you how to live your life or how to spend your cash.

And listen, I get it. I bought myself a $25,000 Rolex because I also thought I deserved it –and I probably did. I also knew that its real cost was much, much higher.

But if you’re like me, you already LOVE spending money in your business. It’s not a sacrifice. You want to see your company grow, and you also realize that you don’t need to buy shit to impress other people.

The added benefit is that doing that also makes financial sense. I limit the amount of money spent on personal items as much as possible and throw the rest into my business. I get the most bang for my dollar, and my business expenses become tax-free. It’s a Win-Win.

Crucial Personal Finance Tips:

Next time you’re about to buy something, ask yourself: “do I want to invest $1,000 on a business expense and have the government incentivize me for doing so, or actually spend $1,700 on something personal?”

If the answer is the $1,700, go ‘head and buy it. Just know that you have options. So, three things to remember and apply right away:

1. Know that everything you buy with post-tax money is much more expensive than what the price tag says. Multiply it by 1.4x to 1.7x depending on your tax rate.
2. Leverage the power of pre-tax money by reinvesting in your business. Take advantage of tax-free spending to stretch your dollars.
3. Educate yourself on personal finances for business owners and CEOs. It will help your business and your day-to-day lifestyle.

If you want to read more about personal finances, managing money, and business strategies, sign up to my email list on the form below.