How to Tackle Your Personal Finances as a Startup Founder

Photo by Travis Essinger on Unsplash

Entrepreneurship is blooming. Tons of talented individuals are building projects that they had in the back of their mind for years and while it’s rarely a success, it’s empowering to see people dedicating themselves to one idea that almost becomes part of them.

An interesting aspect of entrepreneurship is that when you talk about your project to your inner circle, almost everyone is caressing the idea of doing their own thing. However, the #1 reason why businesses are not started is money-related.

People are scared of losing money, being out of a job, going into debt, selling their house, and their cat, being back to eating ramen like in college, etc. You get what I mean. That’s why it’s important to tackle personal finances for founders.

Whether it’s ramen profitability (yes, the ramen is back again 🍜!) or money management tips for entrepreneurs, the goal is to make you understand the correlation between your personal and your startup finances. Hopefully, this article will convince you to do that final jump into the world of startups.

Since there’s a lot of elements related to personal finances and that the founder journey is quite complex, I’m going to concentrate on the seed or pre-seed startups. Let’s tackle the different aspects of personal finances you’ll have to face as an early-stage entrepreneur.

*Disclaimer*: This article is not financial advice. It’s merely opinions that you can take with a grain of salt. You’re responsible for your own financial decisions and investments.

Balancing your startup and your personal finances

Moving head first into a startup is the beginning of the journey, but whether you choose to take the VC road or stay bootstrapped, you still need to get your business off the ground.

It depends on your financial situation, but you should put money aside to cover future expenses of your startup, such as website, servers and other fixed costs. Building your MVP will also cost money but there’s a handful of tools that are affordable.

Usually, the highest cost is going to be sweat-equity — you’re spending a lot of your personal time building your startup while working your day job. My advice would be to follow the following steps, but instead of putting money towards a large purchase or a personal investment, allocate funds on your startup.

When you start generating revenue, you can reinvest it into your company. You can even get outside investments from friends/family or bank loans, but that’s totally up to you. As long as you develop the habit to save money early. However, I believe that it’s not a good idea to go into debt to launch your business.

The best way to balance your startup and your personal finances is to start a budget. It doesn’t need to be super precise, but the goal should be to understand your income and expenses relationship and how much money is left once the necessary stuff is paid.

Get a mortgage as a founder

Getting a mortgage is probably the biggest investment of your life. However, as a startup founder, your average income will be on the lower side. Even if your company ARR is at 4M, it doesn’t reflect your income forms like W-2 in the US or T4 in Canada.

However, it’s still possible to qualify for a mortgage with bank statements based on your deposits/withdrawals in the last two years and tax returns based on your income. Those two statements can help you, but tend to require more paperwork.

Then, if you decide to put a down payment on a house, it’s important to do a budget to understand what is your threshold to make sure you don’t have any problems with the bank. The important aspect here is to develop great saving habits. Afterward, you can do what you want with it and invest it.

Recently, some initiatives are coming up to help people that don’t necessarily have an income to qualify for a mortgage. For bitcoin owners, the startup Ledn can help you get a mortgage if you have a bitcoin portfolio, so more and more solutions are getting built to solve this problem.

Investing in the stock market

Compound interest is an unrelenting force that you should leverage at all costs. But there’s timing to take into account. If you’re in debt or if you don’t have an emergency account, it’s reckless to invest money in the stock market when that could be spent on more pressing matters.

What I did before starting to invest, is plan out my goals for the next five years with the yearly amount I need to save. By doing that, I was able to understand how much money I needed in the short term, so I invested a small part of my portfolio in an index fund composed mainly with bonds. The bigger part of my portfolio went into another index fund focused on stocks.

I like index funds because they are easy to understand, the MERs(management expense ratios) are rather low, you’re getting a broader market exposure and it doesn’t take time to manage every month. As a founder, time is one of the most expensive resources, so if you’re playing with different stocks, it can take a toll on your schedule.

Another option is to get a financial advisor. It’s not for everyone and some require a minimum holding amount, but it can get you interested in finance and show you the ropes until you’re ready to do it yourself.

Planning your retirement

Retirement is this objective that seems so far but when you look at it, it’s closer than you think. A lot of startup founders are not eager to plan their retirement because why would you lock your money away until you’re 65 instead of spending it directly on your business?

And to a certain point, that makes sense. But not all ventures are bringing a return on investment down the road. It depends on your age too: if you have kids and a family, you want to prioritize your loved ones but if you’re alone in this project, you kinda want to go all in.

It’s best to analyze your situation and just diversify your portfolio sometimes and then switch that money towards retirement than making sure it stays locked until you’re ready to embrace your golden years.

What startup founders think

I thought it would be great to get the opinion of multiple founders on their personal finances. I was wondering what their advice regarding personal finances for founders, a mistake they made and why they think personal finances are important.

William Lindsay, Co-founder at Allswealth

Sasha Bondar, Founder at Reintech

Michael Truong, Founder at Dotling

Let’s see what they have to say:

  1. What is your best advice for founders regarding money management/personal finances?


“Like personal finance in general, build a budget, keep track of your expenses, and save for a rainy day. It will help you keep on top of your expenses by increasing your understanding of their sources and also give you a strict limit that you shouldn’t cross; don’t let those expenses creep up on you! By keeping track, you’ll have an easier time with your personal taxes as you’ll be able to refer to the work you’ve already done to claim them as business expenses.”


“My best advice is to track your expenses for each cent.”


“My best advice is: don’t buy materialistic things to impress people you don’t care about.”

2. Tell me a mistake you made that people should not repeat?


“Not having savings for unexpected expenses was a big one. Those expenses can sometimes come out of nowhere and be really painful. But ever since I added an element to my budget to save for those, they don’t sneak up on me and that has reduced my stress overall.”


“If you are a developer and want to start a business to make money, it is better to build a career instead.”


“A mistake that I regret is renting a 1 bedroom apartment when I got my first developer job. I should have either rented a room in a shared house or lived out of my car.”

3. Why personal finance is important to you and how that helped you?


“I’m a firm believer in not spending more than you earn and having a budget that I strictly adhere to is very important given that it gives me a framework to base my decisions around that is non-negotiable. Having that framework / process allows me to create some order from the chaos that can occur if I don’t keep track of the finer details. It may seem like more work but it simplifies making decisions and makes them less stressful which is a win in my books.”


“Lack of money brings uncertainty and huge limits to your actions, so there is much less courage to take risky steps. Also, a good credit situation allows you to make bolder decisions.”


“I highly value freedom and to have an impact in the world. The lack of money is the main obstacle to that.”

If you want to share your opinion as a founder on this topic, simply answer those three questions in the comments and I might add them to this list with a link to your website.

Personal finances for founders is not easy since you have this ultimate project you’re trying to bring to life, but if you develop the big picture of how your startup is positioned with your finances, things will get easier.

And if you’re located in Canada, feel free to check out Allswealth. We’re all about making sure Canadians can tackle their personal finances and stay on track to achieve their goals.

P.S. If you like this article, consider joining my monthly newsletter where I talk about personal finances, fintech and investments.



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