Money 2025

Follow-up to this Medium post on personal finance.

This was my diagram from 2023:

Going through this process taught me a lot about securities, risk, time and a lot of other ideas about how to grow money. I cleaned up my accounts and put most of my money into long-term investments. Then I took on some debt to improve my savings before quitting my job.

This is how I’m thinking about cash flow now:

• My main source of income is a job, but the studio pays me too.
• Combined income is split between budget, savings and debt.
• I use budget accounts to control spending by limiting cash.
• Savings have a cut-off point at which they go into investments.
• Investments are low to medium-risk e.g. ETFs or real estate.
• I fund high risk investments e.g. crypto from budget.
• Equity is a last line of defense.

The studio, on the other hand, operates on the profit-first model: we take out a percentage of revenue and put it in a separate profit account. The rest is carefully allocated between owner’s pay, operating costs and taxes.

The idea is:

1. We’re always making a profit.
2. We take care of ourselves first.
3. It constrains our operations to how much we’re making.
4. It simplifies tax - we’ll never be owing.

We’re starting with an allocation that keeps the business running, but the goal is to grow our revenues to have sufficient operating capital for a long period of time. At this point, we can afford to allot higher percentages to other buckets.