How to Stay on Top of Your Business Finances: The Weekly Checklist

How to Stay on Top of your Business Finances- The Weekly Checklist.jpg

My favorite dad-joke about being a freelancer or small business owner is how we end up getting jobs that we never applied for.

No matter what you do, when you first start out, you do it all. You’re the head of marketing, the VP of sales and the director of finance.

If you’re in business, and you’re a little lost on what you need to be doing to stay on top of your finances, here are the things you should be looking at every week to make sure your business will be sustainable in the long run.

Review transactions + update your books

Record all your weekly transactions (cash you received from your customers and money spent on business expenses) into your bookkeeping software. It’s possible to use a spreadsheet for bookkeeping, but the benefits of using proper bookkeeping software far outweigh the costs. You can easily run financial reports which will help you with tax filings and understanding how your business is doing. 

Review your cash - specifically, how much do you have and how much do you need to spend?

First, please check the balance in your business checking account(s).

Then, take a look at what your upcoming expenses are for the week. Expenses are the bills you have from vendors and contractors, the regular business expenses from subscriptions and office expenses, any debt payments for credit cards or loans and the salary or draw you’ll be paying yourself. You can do this by hand, or use a spreadsheet, a budgeting tool or application specifically for forecasting. Whatever feels comfortable for you and allows you to connect to the numbers.

Make sure you have enough cash to cover your expenses.

If you don’t, you have figure out why. Is it because you have more expenses than income? Or is it because the timing of your income and expenses are off? In other words, do you have lots of expenses landing all at once, while the income trickles in?

If it’s the former, you have a fundamental problem that needs solving or your business will not survive. Here are questions you can ask to figure it out: 

Are your expenses too high? Are you spending too much on creating the product or service? Are you spending too much on general business expenses? You need to dial in your costs and expenses.

Is your pricing too low? Or do you need to sell more of what you’re selling? You need to dial in your pricing and marketing.

Focus on this until you find the answer. 

If you have cash flow issues, first of all, you’re not alone. It’s a common problem a lot of businesses face. Here are some things you can do to get out of the cashflow crunch:

  • Can you change the due dates for bills and expenses?

  • Can you pay larger bills in smaller amounts? For example, instead of paying your contractors or employees monthly, can you pay them twice a month?

  • Can you cut back on expenses in the short-term to build up more cash reserves? The best way to cut is to look at how much your business spends on things like dining out or subscriptions you might be using enough. Can you dial it back?

  • If you’re working with big clients who take a long time to pay, can you renegotiate the terms of the payments?

  • You can borrow the money by using credit cards and paying them off when the cash comes in. You can also do this with a line of credit. If you borrow money, you need to keep an eye on this. Make sure it’s really, truly, sincerely because of cashflow timing and not because of an unprofitable business. Of course it’s normal that young businesses tend not to be profitable in the first few years, but you should understand why that is - it’s usually because of high start-up costs and initial investments.

Invoice customers and follow up on outstanding invoices  

If you sell a product online, you’re probably not sending out any invoices. 

If you’re running a service-based business, can you invoice your customers for prior week’s work? If you outstanding invoices from prior weeks, send a friendly reminder.

A note about how often you should invoice:

I’ve worked for businesses that invoice customers once a month, once a quarter and once a year. I’ve worked with businesses that invoice me twice a month. Figuring out what works for you is a factor of how much revenue comes in and what your expenses are. There are pros and cons to each method. Invoicing less frequently is less of an administrative pain, but if the invoices are large, they might stay outstanding longer if your clients are also managing their cashflow. If you invoice more frequently, it means you’ll need to spend more time invoicing. Smaller, more frequency invoices might mean you get paid more frequently and faster. Regular cash flow can make managing expenses easier. 

Review revenue goals and projected revenue

Look at how much revenue has come in that week and for the month thus far. Are you on target with your income goals? If not, how will falling short of your goal impact you and your business? Will you have enough cash to meet your expenses? Will you need to cut some expenses or reduce how much you pay yourself?

Save for taxes

Transfer the amount you’re saving for income taxes into your income tax savings account. A general rule is to save 10-30% of income, especially if you’re a freelancer and you aren’t paying into payroll taxes. Disclaimer: please get tax advice from your accountant. This isn’t tax advice. Here are some more tips on how to save for income taxes.

Pay yourself and your staff

Whenever this applies (weekly, monthly or bi-monthly), make sure to either initiate payroll through your payroll service provider or make a transfer if you don’t use a payroll service.

Pay bills and file receipts

Review any outstanding bills that are coming due and pay them.

If you have any receipts that you’ve kept from the prior week, organize them now. If you have bookkeeping software that allows you to upload the receipt so that it’s attached to the transaction record, do that. If you’re keeping receipts on a drive, snap a pic with your phone or use a phone scanning app and upload it to the drive. Here are some pro tips on how to keep this organized. 

  • Create monthly folders and upload the receipts to the corresponding monthly folders. 

  • Name the pic or pdf of the receipt something like “date - vendor - expense category”.

  • For example, “11-04-18- Mc Donalds - meeting with Jay Moneybags.”

This system will make it easier if you need to search or reference a receipt.

Research, read and learn

Read finance articles you’ve bookmarked, research and explore financial topics you’re curious about, or keep reading that one finance book that’s been collecting dust on your nightstand. 

Focus On Earning Money

Focus on Earning Money.jpg

Saving money is important. So is not spending more than you earn. And so is understanding the implications of big financial decisions like taking on student loans or a mortgage. All of these are crucial for long-term financial sustainability. 

But one huge piece of the equation that not a lot of people focus on is the earning money part. As you can imagine, I spend a lot of time thinking about this concept.

I also spend a lot of time thinking about you. Yes, you - the person reading this.

Through the years, I’ve learned a lot of you struggle with the same things. It’s something along the lines of: I live in an expensive city and I struggle with figuring out how to allocate all the beans I earn. From normal life expenses, to unexpected things that pop up, to student loans, retirement and what about an emergency fund? Oh yeah, I hate budgeting too. Sound familiar? Yeah. Same, dude.

Observing this alongside America’s totally eff’d income inequality has pushed me to shift my focus from being frugal and keeping a meticulous budget to figuring out how to earn more.

I Was Focused on the Wrong Thing Too

When I entered the workforce it was 2008, just as the ass was falling out of the housing market. With my degree in finance, I felt lucky - no, I felt downright #blessed to have landed a job that was in the financial service industry. The pay was fine for an entry level position, but what happened over the next 7 years was discouraging. By the time I decided to leave traditional employment in 2014, my base salary hadn’t grown more than 5% since entering the workforce. That’s despite the fact that I was positively impacting the bottom line of the companies I worked for.

Yes, circumstances were at play here, but that’s exactly what the problem was. Up until then, I just blindly accepted my circumstances. I wasn’t focused on earning. I was tremendously focused on reducing my expenses and trying to save the little money I had. I was focused on the wrong thing. It’s easy to do that when you think the only thing you can control is what you spend and not what you earn.

Then one day, I realized that if I wanted to live a drastically different life, I needed to do something dramatically different. I needed to seriously increase my income. I needed to f*ck up the equation.

What is F*cking Up the Equation?

The equation is as follows:

Expenses + Savings + Investments = Income

or it can be expressed this way:

Income = Expenses - Savings - Investments

There are limited to how much you can decrease the non-income side of this equation . Expenses will be fixed at some point and over your lifetime, they’ll probably slowly increase. 

That’s if everything goes well. If you have been unfortunate in any way, like a chronic illness, death of a close family member or perhaps you have crazy student loans, your expenses may increase at a greater rate and by a greater amount than your income does. 

Or perhaps you’re like me, a marginalized person that society has collectively agreed should be paid less than my equally-qualified counter parts. 

There are a multitude of ways you can be unfortunate. And that’s why I say you need to f*ck up the equation and not quietly hope that you’ll get paid a lot more or live an insanely frugal life where you eat canned beans for the next 30 years so you can max out your retirement contributions.

How to F*ck Up the Equation?

It’s simple, but might not be easy at first. 

If you’re employed, you need to get a raise. You can also start a side business or a main business. Of course there is always winning the lottery, marrying into wealth or getting a large inheritance, but those aren’t strategies I've focused on so I don’t have much input there.

Get a Raise

Your boss or the company you work for won’t suddenly and significantly increase your salary out of the goodness of their hearts. Sure, you’ll probably get annual raises, but those likely hover in the 3-6% range. If you don’t have a large base salary, that kind of raise nets you a hundred to a few hundred bucks a month. If your base salary is $65,000, a generous 6% raise is $3,900 for the year, or $325/month. That’s better than no raise at all, but when you sit back and think about trying to do big things, like getting out of crazy student loan debt, buying a house in a major city, starting a family or living a life less centered around your job, it starts to feel impossible. 

You have to position yourself so that your bosses can see that you have earned and deserve a raise. 

You have to add value and/or be valuable to the company.

The most persuasive ways to do this are to increase the company’s earnings, solve problems rather than cause them and reduce costs. 

You understand the business you’re working in. What problem does the business solve? How does the company earn money? Where does it lose money? Are there inefficiencies that can be addressed? Can you make your bosses life and job easier? Can you help the company do a better job at solving the problem for it’s customers? Is there a problem within the company you can solve? Can you help the team you’re on be more effective? Yes, depending on what you do for work, these might be stupid, meaningless ways that you use your time, but if you aren’t focused on increasing your income, you’ll have to be focused on decreasing your expenses. What set of problems do you want to deal with?

Make sure you know the market well.

When you’re applying for job, make sure you know what the going rate is for the position. If you grossly underbid a job, you’ve just negotiated against yourself. 

You might need certain credentials, education or skills for a certain job. Make sure you understand the cost of acquiring these things and how it will impact your earning power.

You have to learn how to negotiate.

Even if you aren't straight up saying, “I think $10k is more appropriate for the what I’m bringing to the table", you should ask what you need to do to get closer to that number.  Can you have a performance review in 6 month as a condition for accepting the offer? Can you have more time off or additional benefits to bridge the gap? 

Start a Side Business or a Main Business

If you haven’t started a business it might feel really daunting. But it’s just like getting good at anything else. 

Think about something you used to suck at, but now you’re good at. It could be anything - painting, cooking, Brazilian Jiu Jitsu, whatever. You learn what you need to learn in order to get started. For example, you learn about what tools you’ll need and where you’ll take some lessons. And then you just keep building and learning as you go. You experiment with things and learn more about what you’re good at, what you like and your place in that world. 

So what are the first few things you need to learn about starting a business?

Solve a problem.

First, you need to figure out what problem you’re solving. It could be a problem that you have encountered or a problem that you keep hearing about. 

That’s how I ended up starting my bookkeeping agency. I just worked with so many small business owners who kept asking me for referrals for bookkeepers. A lot of the time they were looking to find a new bookkeeper to replace one who wasn’t meeting their needs. So I just kept asking the seekers what is it that they weren’t getting. 

After I all that research, I realized, given my work experience, education, and approach that I could solve that problem. I knew exactly how to solve the problem for a specific group of people because I had spent so much time listening to them tell me all about the problem. That was a huge part of my market research.

Solve a problem for a specific group of people.

It’s important to solve a problem for specific group of people or a niche. Having a niche allows you to get good at solving a problem for a specific person or group of people because you’re focused on their specific issues. For example, a web designer who focuses specifically on e-commerce businesses knows the specific pain points and issues an e-com business faces when it comes to web design and building their business online. 

You can’t be everything to everyone. If you try to do that, it just gets weird. Your marketing message will be unclear because instead of speaking to a specific group or person directly, you’ll be trying to reach everyone and the result could be that you reach no one. 

Make sure  you don’t suck at what you’re doing.

If it’s directing or making ceramics or horticulture. Whatever it is, put in the time to not suck at it.

Try to find people to pay for your solution. 

First try to find one person. Then try to find two. Then three. See where I’m going with this?

Write cold emails, make cold calls, post in Facebook groups, put up a website, talk about your offering on Instagram, ask your mom for referrals, talk to strangers at parties. 

If you are really trying and nobody pays you, maybe you need to re-evaluate some things. Maybe it’s that people won't pay for the problem you’re solving because it isn’t that much of a problem. Maybe you’re charging too little or too much or maybe your marketing is super wack.

Run experiments and focus on what’s working.

So much of business is just hypothesizing, running experiments, collecting data and then re-hypothesizing. 

Stay connected to the outcome.

It’s easy to get discouraged. It’s easy to protect yourself from failing by never trying. It’s easy to give into distraction. But stay connected to what the outcome is. Is it providing for your family? Or not being crushed by debt? Or trying to end the poverty cycle with your generation? Whatever it is, stay connected to the outcome; stay connected to the feeling you’re seeking - freedom, joy, relief, power.

My endless optimism makes me believe that we all have the power to impact our lives. But I realize sometimes circumstances are powerful waves that can take you under and I’m sorry if you’re reading this and you're feeling that way. 


How to Tell If You Need to Hire a Bookkeeper

 Photo by Phung Hi

Photo by Phung Hi

In the early stages of running a business, it’s easy to get away with a hobbled together, spreadsheet-based bookkeeping system. But once your operation starts to expands, the financials tend to get more complicated or you have less time to manage all the administrative stuff. At that growing pain point, you’ll realize you’re in over your head and that it’s time to hire a professional bookkeeper.

There no set point that determines exactly when you should hire a bookkeeper. But the following symptoms will present themselves, making it more obvious that it’s time for you to bring on professional help.


You’re Always Behind on Your Bookkeeping

You’re always behind on your bookkeeping, so you never actually know the state of your business finances. It’s stressful and mildly infuriating that you don’t have this information. You’re discouraged from getting caught up because it feels like an impossible task. And if you’re never known the beautiful glory of not being behind, you can’t truly understand why this is important.

With proper bookkeeping, you know how much money your business made last month and all the months before it. You know how much your business spent and if you’re even making a profit. With a great bookkeeper, you receive your monthly financial reports on a regular basis.

Being and staying caught up on bookkeeping is literally a whole new world of clarity and understanding.


You’re Freaking Out At Tax Time

Tax season doesn’t have to be fraught with multiple, confused emails fired off from you to your accountant at 2 am. It also doesn’t have to be you printing out 200 pages of bank statements, using six different color highlighters and a calculator to figure out your profit and loss statement on your office floor. I promise you, it doesn’t have to be this way.

In fact, it should be a pretty smooth process. I know your accountant wants that too. Here’s how it should go down:

  1. If you’re like most businesses, your accounting period will close along with the calendar year on December 31 and you close out your bookkeeping for the prior year sometime in January.

  2. You send your financial reports and all your other tax documents to your accountant and they file your taxes for you.

  3. If you owe taxes, you already knew you would because you were keeping your books all year long and you saved for taxes as you earned income. Or you get a refund, yay!

Tax season isn’t stressful if you go into it being prepared. And being prepared is something totally within your control.


Your Accountant Does Your Bookkeeping

You might think you’re a genius for forgoing monthly bookkeeping and having your accountant haphazardly put together your books right before tax time, but here are the pitfalls of this strategy:

  1. You aren’t watching your business finances month to month, so any business decisions you’re making aren’t rooted in actual data. For example, can you really afford to hire someone? Or does it make sense to stop offering a particular service because it’s not as profitable as other services?

  2. You’re probably spending more having your accountant do your bookkeeping since accountants tend to charge more per hour.

  3. Your bookkeeping probably won’t be done in as much detail. This is fine, until it isn’t. Meaning, sometimes when you realize you need the data, you realize you don’t have it - like during a small business loan application or when you’re trying to understand the value of your business because you’re going to bring on a partner or investors.


What To Look For

So now that you know you need a bookkeeper, what are the qualities you should look for in a bookkeeper or bookkeeping firm?


Clear Communicators

A good bookkeeper can effectively communicate with your accountant and you. They should be able to explain your financials to you in plain language.


Accurate and Timely Delivery

You should be receiving your financial reports in a timely fashion so you can use the data to help you make decisions. A timely delivery is receiving your financial reports no more than two weeks after the close of the month. If you don’t receive reports for months at a time, you’re flying blind.

Your bookkeeper should work with you to make sure your reporting and categorization is accurate. They should make sure your bank balances match and they’re taking your accountants advice into consideration.


When it’s time for you to upgrade your from DIY to a professional bookkeeping solution, check out our guide to help you understand your options.


How To Map Out Your Monthly Income Goals

 Photo by Simon Migaj

Photo by Simon Migaj

My wife is a woman of many, many talents, but cooking is not one of them. I marvel that the same woman who is militant about being creative everyday is somehow baffled by the challenge of a freestyle kitchen session.

Besides her lack of interest in preparing food, I think the fact that she doesn’t spend time strategizing and coming up with a plan is a huge factor in her adversity to cooking. And we all know once you’re hungry, you’re no longer a rational person. You’re a shell of a human, hijacked by your emotions and panicked because your tiny brain thinks you aren’t going to survive.

This exact approach, or lack thereof, is how a frightening number of freelancers and small business owners approach the income side of their economic equation. If this is you, know that I’m not judging you nor am I throwing shade. Just realize that if you don’t spend the time strategizing and coming up with a game plan for your monthly income, you may find yourself becoming irrational, taking on weird jobs or working with less-than-ideal clients because you fly into a panic-induced survival mode.

This can set off a chain reaction of problems. For example, let’s say you agree to work for less than you should because you have no clue how much money you’re earning, you just know you need to earn money. And if you’re earning less, you’ll need to work more. And if you work more, you have less time to for the things that bring you joy. And with less joy in your life, you’re a bummer to be around. If you’re a bummer to be around, you don’t attract your ideal clients who can actually afford what you’re selling. And you’re trapped in this cycle.

When you allow yourself the time to project your income for the month (or months) ahead, you’re allowing yourself to have insights, to make plans for future growth or plans to slow down to keep a manageable pace. After you make the projections, you can observe the results. Which allows you to realize what’s working, what isn’t working, what predictions were right and which ones need to be refined. In other words, it’s a way more chill way to be, dudes. And yes, this is the method I use to make sure I’m on track with my business goals.


How Much Do You Need to Earn Each Month?

This is the first step; it’s the prequel. You have to first calculate how much you need to earn each month. A good place to start is to look at your expenses. How much does it cost you to stay alive on this lovely planet? And what are the other things you’d like to spend on each month? How many box subscriptions does one need to attain happiness and enlightenment? If you still to figure out how much you need to earn, here are some methods to go about doing so.


Make Time to Map It Out

Once you know your monthly income goal, you have to make time to see how close or far you are from that goal, given the information you have at the moment. For the sake of example, let’s say you need $4,000/month to live your best damn life. Here’s what you’ll do during your mapping session.

Pick Your Method. You can go analog with a pen and paper. You can use a fancy calendar app or a quick-and-dirty spreadsheet. Choose a method for mapping out that resonates with you. It’s helpful if it’s a method you feel comfortable using so you’ll keep using it. Set yourself up for success; don’t create barriers to doing the work you need to do.

Do The Math. Once you choose your method, make a list of how much money you know you’ll be earning for the month. List how you’ll be earning it. For example, you have 5 clients who committed to one-hour breakdance lessons at $100/hour. So, 5 hours x $100 = $500. And let’s also say your beautiful face is getting paid $2,500 to be a model for vegan, artisanal, shaving cream or something weird like that.

As of this mapping session, you expect to earn $3,000 ($500+ $2,500), which means you’re short of your monthly income goal by $1,000. If this is where you’re at, I can understand why you have avoided mapping out your revenue. It sucks to have a goal and not achieve it. So process those feels and let’s get on with figuring out a strategy.

Strategize. I think there might be a few options if you’re short of your goal.

Option 1. Learn to live on less. This is a totally viable and reasonable option. It’s all about living with the compromises and understanding the tradeoffs.

Option 2. Do nothing and have good luck and/or good timing. Possible, but maybe not probable?

Option 3. Do things that may help you earn more money. The following is a list of things you can do: Reach out to potential customers who might have previously expressed interest in working with you, try a new marketing channel, try a marketing campaign that makes you stand out, send out an email blast, change your pricing, change or repackage your offering, ask customers for referrals, put a product on sale, sell something you haven’t sold before, ask your friend who runs a popular website to feature you in an article, etc. There is a universe of possibilities here. Go on, get creative.

As an added incentive, knowing your deficit means you need to be specific about the amount of money you need to earn to close the gap. And being specific is perfect because it helps you discern what opportunities to say yes to. And oddly enough, sometimes when you aren’t specific, you fail to see opportunities.

And if you’re reaching your monthly income goal, that side of the coin has plenty of options to weigh as well. Should you keep things the status quo or scale back or raise your prices? Should you take a nap? The possibilities are endless.


Track Your Progress

It’s really easy to make predictions and forget about tracking or revisiting them, especially if you’re worried about not reaching your goal.


At Least Monthly

You should track your progress at least monthly, if not more frequently. Twice a month or once a week are both great time tables for assessment. Daily might be a little too crazy - unless you’re running a restaurant, in an specific industry or in a critical time where meeting daily goals can have a dramatic impact on the long-term survival of your company.


Know When To Change

If you’re consistently not meeting your goals, then think about changing something. The trouble is not just knowing when to change, but also what to change. Are your goals too lofty or are you not hanging on long enough to see true results? Can you move the needle in a meaningful way with small tweaks to your copy or do you need a new marketing strategy? Does one thing need to change or does everything need to change?


Listen, Reflect, Be Open

Remember fifth grade science when you learned the Scientific Method? Here’s a refresher: Make an observation, form a question, form a hypothesis, then conduct your experiment, observe the data, analyze and interpret it and come to a conclusion about your hypothesis. That is basically what I’m telling you to do, just through the lens of earning income.

So much of being a freelancer or running business is about experimenting. We have an idea about a problem that we can solve, we start figuring out how to solve it, how to speak to the people who will buy our solution, how to make adjustments to refine our offerings and reach our targets. Make sure to listen to the market and your customers and to be open that the answers are all around you.

How Much Money Do You Need to Make?

How Much Money Do You Need to Make.jpg

Knowing how much money you need to make is crucial when you’re thinking about or have just started your own business.

In theory it’s simple, but in practice it can be challenging.

It starts with understanding how much money you typically spend and save. And it takes into account how much you want to change your spending and saving.

Once you have a general range of how much you need, you can start to do things to impact the income number. Control the things you can control like investing in your company to earn more or cutting back on unnecessary expenses.  

If you don’t even have a target, it’s tough to know where to aim or how to make your chances of hitting the target better.

The first step to figuring how much money you need to make is knowing how much you need for your personal expenses.

Step 1. Get the Data Together

I come from the school of thought that the best way to figure out how much to budget is to track your expenses for three months. I use actual data as a basis because at least you’re starting from reality and not your beautiful and wonderful and robust imagination. (Read: I don’t trust that you know how much you spend on things like clothing or over-priced avocado toast).

Your first option is to pull the last three months of statements, use a calculator and spreadsheet.  It’s tedious but it’s accurate, but you can start now.

Another option is you can track expenses for the next three months using mint or personal capital or some other app out there. It’s less tedious and you push off being financially responsible for three beautiful months.

Another option you have is to use the bank’s technology to help you. Most banks compile a year-end summary or a year-end spending report. Download yours from last year. It might have inaccuracies because the bank’s AI machine thingy is doing it, but it might be a good place to start.


Put Together Your Budget

After you choose your method, download the data you need and get organizing.

Even if you use an app, I still like using a spreadsheet, obviously because I’m a dork, but I like the creative control I have over how I see the data.


The first layer of expenses are fixed expenses. There are the bills and expenses you have that you are obligated to pay each month. So things like rent, utilities, groceries and any loan payments. I call this category fixed expenses, even though groceries can vary, they’re fixed because you must spend in this area every month.

The next layer of expenses are called discretionary. They’re things that you don’t necessarily need to spend on each month, but they make life better. Often it’s clothes, your hobbies, your vices and other fun, recreational stuff.

The third layer of expenses are what I call ancillary expenses. Think of these as expenses you’d cut if you had to go on a wartime budget because you’re pivoting your business and it’s slow or your company isn’t as profitable as you thought it would be. So things like putting away money into savings, investments and giving it away as charitable donations.

Sidebar: Taxes I add taxes into this category to because they’re a function of income. If you aren’t earning money, you don’t pay taxes. But taxes are unique snowflakes, they’re dependent on everyone’s unique situation. More on that later.

If you’re only looking at the last three months of expenses, don’t forget to add in things you might pay only once or twice a year like property taxes or insurance payments.

Whether you use a spreadsheet or an app or a website, get a monthly total and an annual total. If you get sticker shock because of how much you spent, maybe you should create a projected budget and modify some of the figures.

Adding in Business Costs

Next, figure out how much your business will cost you… to set it up.

If you haven’t started your business, how much are startup costs or pre-launching costs. Do you need to pay for a website and business cards? Do you need purchase $10,000 worth of Herbalife before you can start selling (please, don’t do that). Or do you need to buy a building and set it up to grow 100 lbs of cannabis because you want to start a cultivation center? Figure that number out.

Then, figure out how much it will cost you to run your business each month. What are your monthly bills? How much is your email service and all the apps you need? If you’re already running your business, then take a look at the last three months of expenses and figure out an average cost.

You can also look at a range of how much spent. For example, $25-50/month.

The safest bet could be to take the maximalist approach and assume you’ll spend the higher number each month. It can be scary to take the maximalist approach, but likely safer because you’re building fat into the budget.

You’ll have variable costs the way you do with your personal budget. Things like the costs of having coffee meetings or marketing expenses.

Don’t forget the one-time costs like paying your accountant or if you pay for annual subscriptions.

A little commercial about taxes. Disclaimer, Im not an accountant, so this isn’t tax advice. This is advice that you should get tax advice. If you have a pass-through entity, like an s-corp or LLC, your taxes might be limited to city taxes or sales taxes and not federal income taxes.

But remember what I said earlier? About taxes being unique snowflakes. Let’s look at an example. Let’s say Marion is a florist and he pays himself $46,000 from his s-corp. His company, Flowerz by Marion, ends up with a profit of $50,000 at the end of the year. Now let’s say Charlie runs a company that teaches little kids how to play golf, Putz by Charlie. And she also pays herself $46,000 in salary, but her LLC ends up with a $15,000 loss at the end of the year. Even if their salaries are the same, their companies financials vary.

What I’m trying to convey is that small business owners have an additional layer of tax complexity because with pass-through entities (s-corps and LLC’s) the net profits (or losses) flow through to the owner’s personal taxes.

So now you can figure out your business’ monthly and yearly expense.


Figure Out How Much You Need to Earn

Now that you know that, I want you to breakdown how knowing your monthly number breaks down into income goals.

For example, once you realize you need to earn $8,000 to pay yourself and run your company, how can you frame that in regards to how you make money? If you charge $150/hour, then you’d need to bill about 54 hours a month to earn that income.

If you work on an $8,000 a month retainer, how many clients on retainer do you need each month?

After you make your income goal, it’s up to you to reflect on how realistic the goal is. Maybe you need to change your spending and pay yourself less or maybe you need to raise your rates so you don’t have to work crazy, long hours.

A Totally Not-Boring Guide to Getting Your Financial Shit Together

    Photo by Verne Ho


Photo by Verne Ho

This is a beast of a checklist. It’s pretty high-level overview of the things you need to do, questions you need to answer and math problems you need to solve to feel like you've got control over your finances.

It’s going to take time. You might get stuck on the budget step for a while or on the figuring out how to make enough money to live your life step for a while.

You can do some of the steps concurrently, but you’ll see that it’s hard to jump around the list and make headway.

The contents of this checklist comes from an amalgamation of my formal education (s/o to everyone with a degree in finance) and my work experience in the years I was a financial planner, a small business consultant and how I work with folks currently.

Please realize that this is all total and absolutely nonsense, but it can help you feel a small sense of control in a universe of uncertainty; It can help you exist in the world we live in today, one that is governed so profoundly by economics and money.

1. What the hell do you want to do with your damn life? And how much will that cost you?

Figure out what the hell you want your life to be like. Am I asking you to create goals for yourself? Yes. Am I asking you to take a hard look at your life and to figure out what you want out of it? Yes.

Here are the questions you should ask yourself to help you figure out what the hell you should be doing to get your damn life together.

  • What are your personal values?

  • What are your personal goals?

  • Map out your goals in terms of timeframe: short-term, intermediate, long-term.

  • What are your business values?

  • What are your business goals?

  • Map out your goals in terms of timeframe: short-term, intermediate, long-term.

Not only am I asking you to explore the inner terrain of your damn self, I’m also going to make you turn that shit into a math equation.

  • For your personal goals: breakdown your goals into dollar amounts. How much money does each goal need? Use the time frame to help you understand how much money you should save over time. For example, if you want to save $10,000 and you can save $500/month, that means you can reach your goal in 20 months. These figures might be arbitrary right now because you still don’t have a clear picture or other important aspects.

  • For your business goals: breakdown your goals into dollar amounts. How much money does each goal need?

This breakdown will help you prioritize your goals and figure out which ones you can start moving towards. For example, maybe you think buying a house is a short-term goal, but the fact that you need to save $120,000 for a fucking downpayment might make you push it further to a long-term goal or maybe you’ll realize you ultimately value flexibility and you will decide to build equity and wealth in other ways.

2. Get Good At Earning Money

Now that you know what your goals are going to cost you, you may need to earn the money to make it happen.

Here are some questions you should ask and answer that will help you on your journey to stacking the cheese:

  • What problem does your business/freelance work help solve? (If you work for an employer, what problems can you solve for your employer?)

  • Who are you solving it for?

  • Will those people pay you to solve their problem?

  • Can your potential customers/actual customers afford to pay for what you’re offering?

  • Is the price you’re charging a reflection of the value they’re getting? Is it too cheap?

3. Know Your Numbers

As you’re getting good at earning money, you should figure out how much you need to earn to live day-to-day, week-to-week, plus additional cash you need to stack for your silly goals. Here are the questions you need to ask yourself and answer to find out how much cash you need to be bringing in.

First, figure out how much do you personally need to live?

  • Add up all your bills, monthly obligations, cash for spending on having a good life.

  • Don’t forget to include savings and debt payments.

  • Express that amount in terms of your business model. How many hours do you need to work, projects do you need to sign or milestones do you need to reach each month to fund your life?

Next, figure out how much your side hustle/business needs to earn to run.

  • Add up all your business expenses. Don’t forget to include expenses that might happen in lump sum like insurance.

  • Add in the amount you need to pay yourself (the first part of this exercise).

  • Express that amount in terms of your business model. How many hours do you need to work, projects do you need to sign or milestones do you need to reach each month to fund your business?

  • Taxes are also a variable. Talk to your accountant to help plan for this.

Figure out how you’ll keep your budget. Will you actively manage your budget or passively set up systems to protect you from overspending?

Finally, do a Reality Check: Can you realistically earn what you need to support the numbers? You might need to rework the numbers if it’s not realistic. Maybe you need to adjust savings goals for a longer term. Or maybe you need to do some Tony Robbins, voodoo magic shit to make your wild dreams come true.

4. Setup Your Savings

  • First, fund your emergency fund. The general rule of thumb for an emergency fund is 3-6 months of your expenses. Make sure you’ve budgeted for this.

  • Set up a high-yield savings account the bank you don’t have your checking account at (to protect yourself from yourself).

  • If you can set up an automatic transfer each month or twice a month, do that. Get out of your own way. If not, then do it manually, but beware that robots are better at savings than you are.

  • Figure out how much of a cash cushion you need in your business. The exact amount depends on the business, but 3-6 months of expenses is a good rule of thumb.

  • Come up with a savings plan to reach your goal. You can set up your savings with the bank your business checking is at. Try to fund it regularly with an automatic deposit.

  • NOTE: It’s uber important to save even if you’re in debt. So you might have to cut expenses to make this happen.

  • Start saving for other goals in your life the way you do for your emergency fund: What’s the goal amount? What’s the deadline? How much will you save each month?


5. Get Your Shit Together (Get Organized)

The following checklist will help you tidy up your finances. You’ll feel great and you’ll great.  

  • Make sure your checking accounts are only for spending and not for saving. Set up your emergency fund as a separate account from other savings like wedding or retirement or travel savings.

  • Assuming you have the cash, pay your bills on time. Try setting aside time to look at your finances or making it a ritual, get booze involved, or just stop being a baby and handle your shit.

  • Don’t forget about old 401(k)’s. Call HR and ask them where your damn money is. If you have money in an old 401(k), don’t forget about it and maybe even roll it over into a different retirement account.

  • Keep your business and personal separate. Please, for the love of cute dogs, separate your side hustle from your personal accounts. Only business expenses and business income and paying yourself will happen with your business accounts. And everything you spend for personal stuff should be in the personal accounts.

  • Start scoping out your business team: attorney, accountant, bookkeeper.

  • Hire a great accountant.

  • Understand when it makes sense to set up a proper entity so when you get there you know to set it up.

  • Will using technology help you or make you less organized?


6. Make a Plan to Get Out of (High Interest) Debt

First ask yourself, how and why did you get into debt?

Next ask yourself, can you fundamentally alter the circumstances that got you into debt so you won’t get into debt again? Meaning, if it’s something like medical debt that you couldn’t foresee, then can you put systems in place to help you prepare in case something similar happens again?

Examine the options for getting out of debt and determine your plan. Options can include a loan from a rich friend or family member. Warning: there may be psychic or other types of non-monetary interest that you pay when you borrow money from someone you love.

Other options include a personal loan, negotiating with the credit card companies or starting a side hustle for extra income.

7. How to Care About the Long Run

You have to care about your future self because nobody else will. It’s sad, but it’s true. Here’s what you need to do.

  • Understand that investing is magic and that cash can lose value over the long run, which is why we’ve been taught it’s important to invest. Then start actually investing.

  • Your accountant can help you determine what type of retirement account you can and should open up.

  • Learn about wealth and how you can build it, if you’re into that sort of thing.

  • Make projections for how much money you’ll need in the future.

  • First you might need a good cry when you see how much you need to save. The, start implementing a plan for your old self. Some examples include the following: getting a boring job selling insurance so you can earn money and save for retirement, planning to eat cat food in retirement, marrying someone rich. The options are endless, really.

  • Stop not having a will and an advanced medical directive.


8. Love Thy Accountant

Get an accountant whose job is to learn the new tax code and help you navigate it when it comes to your unique tax situation. Here’s what your accountant might help with you:

9. Manage Your Risk

  • Figure out what kinds of risks you’re exposed to and determine what risks you’ll outsource to insurance. For example, driving a car has a lot of risk, but you can outsource the risk by getting auto insurance.

  • Understand what’s out there. In general there is health, auto, renters, homeowners, general liability, professional liability, disability and life.

  • Determine what kind of insurance you need personally and professionally.

  • Determine how much insurance you need.

  • Gather quotes.

  • Choose the insurance, buy the insurance, make sure the insurance policy covers what you need it to cover.

There you have it. The definitive guide to help you get your finances in order so you can live your damn life. If you’re more overwhelmed after reading the list, I’m sorry for the momentary discomfort. And you’re welcome for lighting the fire under your ass. Here are some pro tips to get through the list:


Pro Tip No. 1

Download our free checklist to help you stay on track. 

Pro Tip No. 2

Realize it might take time. Sometimes it takes years to master earning money or reaching a big savings goal. I feel you. I’m an impatient idiot about everything.

Pro Tip No. 3

Don’t beat yourself up. Control what you can, but realize there is a lot you can’t. What a fun ride life is, huh?

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