Money Advice for Young CEOs Who Are Trying to Build a Business

Key Summary

• Prioritize Financial Stability Over Appearances: Avoid the pressure to project a "flashy CEO" image; true professional respect comes from restraint and discipline, not luxury travel or expensive status symbols.
• Establish Strong Financial Boundaries: Treat your personal budget as "insulation" against business volatility, and avoid using personal spending as an emotional response to professional stress.
• Focus on Building Liquid Buffers: Instead of worrying about traditional investment percentages, focus on saving enough to cover three months of personal expenses, which provides the stability needed to make smarter, less reactive business decisions.

Are you starting a business young? The good thing about doing this is that the experience is probably going to come with a strange mix of confidence and constraint. Why? It’s because you will most likely be spending your days making decisions that shape your company’s very future, all the while still dealing with personal finances that might feel very “up and coming.” (Which is a nice way to say that your personal finances probably aren’t going to be that great yet. Sorry!)

But hey, there’s nothing to be ashamed about, young CEO. As a matter of fact, learning how to save money in your personal life while building a business in your work life can equip you with skills that will separate you from the type of business founder who gives up easily and burns out early. Now, we’re not saying you need to live in an empty apartment with a mattress on the floor and a refrigerator full of condiment packets from fast food restaurants. Although that might not hurt. At least it will make for great bio copy.

Instead, let’s look at how to give yourself room with your personal finances to handle the pressure as a young CEO.

Business Ambition vs. Personal Spending Habits

As a young CEO still scraping by in your personal life, one of the struggles you may face right away is wanting to live the CEO lifestyle. Don’t fall into the trap of caring so much about how your life looks from the outside. You don’t need to travel first-class, wear suits that cost more than your car (or bus fare for the year), or multi-course dinners at fine dining restaurants.

And if your personal spending starts to become an emotional reaction to business stress, then whoa, forget about it. You probably need to build a strict budget. If it makes you feel any better, you can say “it’s not about restriction; it’s about insulation.” However you phrase it, it’s important to keep the highs and lows of your fledgling business from “hijacking” your personal bank account.

If you know exactly how much money you need to live each month, you can know how much of your own money you can slip into keeping the company afloat — and how much you can’t.

Go Easy on Credit

Credit can be a young CEO’s friend, but only if handled responsibly. As a young founder, you may be targeted by financial institutions of all kinds. Used wisely, you’ll have a better chance of staying out of a deep mire of debt. Here’s an example: buy now, pay later can help you make necessary purchases without draining your liquidity at the wrong moment in time. But be vigilant; be careful how you use credit. You don’t want to lose your business just before you “make it” because you wanted a really cool office chair.

Living Below Your Means

Contrary to what some of your peers may tell you, there is actually quite a bit of wisdom to be said for living below your means. Don’t give in to the pressure to look the part of a successful CEO. And don’t worry that your clients, investors, or partners are going to have less faith in you because you don’t fly first class or put on a good bling show. The truth is, most serious people in business respect restraint far more than they respect flashy spending.

Now, once your business starts to earn, living below your means doesn’t mean hiding your successes. It just means refusing to spend all your money on outward appearances. Stick with an apartment — and an office — with rent that leaves you some breathing room. Get a reliable car that doesn’t scream “flashy CEO” when you start it up every morning. (If "the Zuck" has been seen driving inexpensive hatchbacks, can you do without a McLaren for now?) Travel, if you want, but do you really need to fly first class to the Amalfi Coast?

You may find this ironic now, but one day you’ll realize: This is the kind of discipline that makes respected business people trust you more, not less.

Personal Savings

How should you handle your personal savings as a young CEO? The traditional financial advice assumes you’re getting a steady paycheck. But as an entrepreneur, focus on building buffers instead of worrying about a percentage of your income. We find ourselves coming back to, “How much do I need to live off of for a month?” Then build your savings, trying to see how many months of personal expenses you can cover without touching the business. Start with one month, then two, and then three. Can you stash away enough money into personal savings to last three months without dipping into the business?

Be a Good Leader

There’s an emotional payoff to all of this advice, by the way. When your life starts to feel stable, you’ll find that your decision-making skills improve. You’ll be less reactive with employees, less defensive in meetings, and less tempted to chase opportunities from a place of insecurity.

Being wise with money doesn’t need to make you an ineffective CEO. Instead, it makes you steadier. Hopefully, your team will feel that steadiness even if they never see into your personal finances.

Connect with an Old National Small Business Banker for more insights to help your business grow.

This article was written by Kimberly Zhang from Under 30 CEO and was legally licensed through the DiveMarketplace by Industry Dive. Please direct all licensing questions to legal@industrydive.com.