Mastering Financial Literacy: Why knowing your money is crucial to your business success

I built my business from a $40 blog. No roadmap, no shortcuts, just a passion for personal finance and a mission. That blog has since transformed into a global multi-million dollar movement. So trust me, I know exactly what it takes to grow and scale your business. 

Hi, I’m Tori! I’m a Seattle-based money expert, New York Times bestselling author, and host of the #1 money podcast for women in the world. After successfully saving $100,000 at age 25, I quit my corporate job and started Her First $100K® to fight for your financial rights. 

I’ve helped over five million badass women make more, spend less, and feel financially confident. I’ve seen the impact of financial literacy in the lives of my community members—breathing easier after getting out of debt, negotiating to get paid their worth, and building the lives they want to have. 

Ultimately, money gives you choices, whether that’s in your business or your personal life. And I want you to have choices!

This month is Financial Literacy month but let’s talk about how mastering financial literacy can deliver for your business all year round.

What is financial literacy?

Financial literacy is the combination of knowledge and skills needed to effectively manage your money. It includes several money management skills. Think spending, saving, investing, and paying your debt off. Being financially literate means you have the ability—and confidence—to manage your money.

The role of financial literacy in your business

The concepts are the same when you apply financial literacy to your business, and they’re especially relevant for small businesses where margins can be thin and money decisions can feel personal.

Before we go any further, I want you to know, this is a NO SHAME zone! Very few people get a comprehensive financial education, and I don’t expect you to be a money expert like me.

There’s no benefit in beating yourself up here—just commit to learning more!

Your financial literacy (or lack thereof) will show up in three key ways in your business:

Understanding your present financial situation.

Are you on track to hit your goals? Are you hitting the right balance of revenue and profit?

Without basic financial literacy, these questions are difficult to answer—or to know you should ask.

Knowing how you got where you are.

Did your latest marketing launch make a positive impact? Did you actually sell as much of that product or service as you thought you would? It’s important to be able to answer these questions with real numbers and not just your gut.

Planning for the future.

Are you able to forecast how the upcoming quarter will perform? Do you have the budget to hire more help? I can’t give you a crystal ball, but you won’t even need one once you have a better grasp of your money skills.

So you’re ready to confront your business’s financial situation—what’s next?

Requirements for mastering financial literacy

You might think you need a love for spreadsheets to get your business finances in order, but that’s not necessarily the case. Yes, tools can be helpful when you get to the nitty-gritty (more on that later), but before you do that, you need to address your mindset.

Requirements for business financial literacy:

You want to be financially literate. Even when it hurts!

I call avoiding money the ostrich effect—you’d rather stick your head in the sand than deal with the difficult topic. But to make the best decisions for your business and your life, you need to deal with money head-on.

You believe money is a skill.

Not only that, you need to believe you can learn. I get it—there’s just SO much to learn when you start or lead a business, from operations to hiring to taxes (ugh, taxes). But money is a skill like any other, and it’s one you can learn.

Practical steps to build financial literacy as a business owner

I can already hear you saying it, “Okay Tori, but how do I actually DO this??”

Financial literacy can feel abstract, so let’s get more actionable.

First, set aside time for a Business Money Date

A money date is a recurring meeting you have with yourself (or other important stakeholders in your business) to take stock of your financial health. This is dedicated time to review your money and handle financial tasks. I suggest doing this at least monthly, but you can pick the right cadence for you.

During this time, you should:

1. Review your spending
2. Check in on your progress on your goals
3. Create a short-term plan with action items

Can I just tell you that I implemented this myself and it has made all the difference?

And by the way, this is what I suggest you do for your personal finances, too!

Second, seek out financial education

You know how I mentioned that most people don’t get a comprehensive financial education? Well, we’re going to fix that. Now, this doesn’t have to be formal (though it could be!). You can start small. Read a money book. Start listening to a financial business podcast. Follow folks who share transparent advice on entrepreneurship.

Consider your financial education as one of your primary responsibilities as a business owner.

I know this is overwhelming, so here are two things that helped me:

1. Lean into the content formats you already enjoy. If you hate reading, snag an audiobook. If you like podcasts, look for new shows there. Don’t fight your nature.

2. Focus on one topic at a time. If you’re worried about taxes, start there. (Can you tell what’s on my mind?) You don’t need to learn about taxes, cash flow, forecasting, and risk management all at once.

Third, invest in tools that allow you to get a clear picture.

How can you make this ALL easier?

Invest in the tools that will allow you to get the information you need. Not only will the right tools make this journey easier, but you’ll also get better insights. Higher quality tools mean higher quality decisions.

QuickBooks is an ideal platform for anyone who wants the data and insights that enable a business to thrive.

For the money dates I mentioned, I look at the P&L, or Profit and Loss Report with my leadership team and confirm deposits and cash flow from the previous month. I love the level of detail it gets me—I drill down by category to confirm revenue down to the penny!

I also use the reporting features to solve any discrepancies in revenue reporting, guide monthly goals, and revise strategies and campaigns.

Plus, QuickBooks makes it easy to collaborate. Different team members are responsible for different sections (like invoicing, billing reconciling, etc.) and then the accounting team can pull everything they need for taxes and filings. This means everyone has buy-in from top to bottom and we have a great level of transparency.

Making the right choices for you

At the end of the day, we come back to a simple principle: money = options.

The more you know about your money as a business owner, the more ability you have to make the right decisions for you. You’ll need to develop the right money mindset and take some practical steps along the way, but the rewards are worth it. While I still don’t have that crystal ball, with some time and dedication, you won’t even need it.