The One Mistake That Will Cost You Thousands of Dollars and Your Sanity 

By David Richter, author of Profit First for Real Estate Investing  

Do you want to feel in control of your cash? Every human has some emotional tie to money. It’s frustrating and stressful when it feels like your money goes in one door only to go right out that same door the next day. How about those gas prices, huh? Or as a real estate investor, what about those interest rates? Completely out of your control. 

Maybe you’re doing great or maybe you’re feeling stuck in the grind, living deal to deal and wondering where all your cash is going.  

As a fellow real estate investor and business owner who helps entrepreneurs become more profitable, I’ll show you real, actionable steps you can take to take back control of your business. 

After talking with hundreds of business owners, I’ve discovered that the ones who feel financially out of control have the same underlying problem. They’re making this one mistake that is costing them their sleep, sanity, time, and money – they are running their business (or life) with only one bank account. 

Tossing a Cash Salad 

Money Salad hutterstock_110003627 How can having one account cause so much trouble? 

When you have one account, you don’t have control over your cash. Your money flows in, and your money flows out. And whenever you open your banking app to see your bank balance, you wonder if what you’re seeing is a true reflection of what you have. 

Are you making a smart, informed business decision? Or are you about to make a costly mistake? Is this your money to spend or is it owed to someone else? 

Are you sure you can afford that $5,000 marketing campaign? Or a virtual assistant for $8/hour? Or have enough to subscribe to the latest property management software? 

You might say to yourself: 

“Let’s open up the app and check the balance to see if we have it… 

“Oh, we have enough? Then let’s spend it! You have to spend money to make money, right?”  

What you’re really doing with one bank account is tossing your cash – like a cash salad. Money in, money out, throw the money all about. Close your eyes, swipe your card, and hope you’ll have enough in the account for tomorrow. That’s how most people make the money decisions in their business. If you are this person now, you are not alone. There is a better way! 

The Better Way 

There are two parts to fix the mistake of one account.  

  1. Bank Balance Accounting

Most business owners look at their smartphone banking apps 10 times more than they look at their P&Ls and Balance Sheets. Leverage what you’re already doing instead of trying to become a financial expert overnight.   

  1. Modernized Envelope System

If you’re a fan of Dave Ramsey, you may have heard about the envelope system. This is where you stuff cash into labeled expense envelopes for your personal life to track your budget in various categories.  

For example, when you spend all the money in your Grocery Expense envelope, you’re out of grocery money until you get paid again. We will use this concept in tandem with bank balance accounting to help fix the mistake. The modernized envelope system is the process of opening multiple bank accounts and naming them specifically for your business, so you know that every dollar has a purpose and a home. 

Combining the Parts 

4 Jars of Money Shutterstock_375083389 All you need to do is open these four bank accounts (and learn how to “flow” your cash) to have control of your cashflow and your business. 

  1. Income
  2. Profit
  3. Owner’s Pay
  4. Owner’s Tax

Next, you’ll want to change the name of your single bank account from “Cash Salad” (just kidding) to “Operating Expense.” Essentially, we’re transforming your all-purpose account into a single-purpose account where you’ll pay your business bills and employees.  

The Flow 

Any time you get revenue from your business, you’ll want to put it into your Income Account. Next, you will allocate (or flow) your Income Account money to your other bank accounts according to a dollar amount or percentage you set for yourself.  

Here’s the purpose behind every account: 


This is your reward account for being the owner who decided to take a risk, invest your hard-earned dollars, and endure sleepless nights to keep the business alive. Once a quarter, you’ll draw from this account to go on that dream vacation, make memories with your family, or even pay down your personal debt. 

Owner’s Pay  

A separate bank account just to pay you – the owner – so you can support your current lifestyle. No more hoping for leftovers at the end of the month or year.   

Owner’s Tax  

A “do-not-touch” bank account where your business puts away money for your business and personal taxes. As the business owner, the business should be paying for YOUR taxes, not the other way around. 

Operating Expenses 

Your newly named bank account where all the leftover money goes to pay your company bills and employees. 

Here’s an example flow table for all you visual learners: 

Account Name 


Current Percentage 

Pro Tips 




This is what you collected this month 




Always start with at least 1% and build from there 

Owner’s Pay 



This covers over what you (the owner) need each month 

Owner’s Tax 



Consult your CPA on the estimated amount of tax money you’ll need to save for the whole year 

Operating Expenses 



The leftovers go to your Operating Expenses 

The beautiful thing about this flow is that it forces you to focus on the health of your business first (profitability) and to get creative with what you have left over (in Operating Expenses). 

I know this seems simple – elementary even. Well, good! Now you have no reason to NOT go out and take action.  

Building the Wealth Habit 

Consider this: Have your habits up until this point brought you to where you want to be?  

The single action of opening multiple accounts and transferring every dollar into those accounts is earning you a spot at the table of the wealthy. Wealthy people control their money and know where every dollar resides. They don’t just let it happen by accident. Just like you won’t accidentally gain financial freedom.  

FREE Resource for AAOA Members 

The purpose of this guide is to give you straightforward, simple action steps to help you grow your wealth ASAP. To help you get there even faster, I want to share a resource that will show you what percentages financially elite businesses use to control their cash and grow their business – The Target Maximizer. 

As a member of the American Apartment Owner’s Association, you can access this tool by visiting You’ll also receive resources to help you implement the modernized envelope system outlined in my latest book Profit First for Real Estate Investing 

About the Author 

David Richter Headshot David Richter Book CoverDavid Richter is an active real estate investor who has been essential in closing over 850 deals which include wholesale, turnkey, BRRRR, owner finance, rentals, lease options, and any other exit strategy you can think of. While growing and building a real estate business from 5 deals a month to over 25 deals a month, he realized that as much money was coming in, it was going right out. 

With the unique opportunity of being in every seat as a real estate investor, he found a calling to the company’s finance seat to help them see where their money was really going. David has helped real estate companies completely turn around from going out of business to building cash reserves through his profit advising company Simple CFO Solutions, LLC. He is the author of Profit First for Real Estate Investing.  

His goal in life is to completely transform the Real Estate Investing industry when it comes to how real estate investors view their finances – and bring them true financial clarity and freedom.