how to

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 an Income Account Can Help You Make More Money

How an Income Account Can Help You Make More Money.png

For the past year, I’ve been using an income account as a part of my weekly accounting process.

Accounting process sounds fancy, but it’s just a workflow process that I use every week. The reason I started using an income account was because I wanted to have a better understanding of how much I truly needed to earn. I also wanted to see if I could run my business with less money each month by only giving my business a certain amount of money to work with.

So about this time twelve months ago, I opened up a new checking account and called it my "Income Account.” And what I learned from doing this over the last year, was that this method is some next-level jedi shit. It helped me reframe how I was looking at my business finances. I learned that if I was diligently focused and tracking income every week, I was diligently focused on increasing the income. Before we get to that, let’s dive into the basics.

First, what is an income account?

Introducing the Income Account

An income account is basically a clearing account. It’s a separate checking account where all my income - which is revenue from products and services - gets deposited. The income account is where I deposit checks from clients and where I set up my payment processors, like Stripe and PayPal to deposit my business income into.

Then every week, I disburse the money that’s sitting in the income account in the following fashion: 

  1. I transfer a portion into my business operating account,

  2. a portion gets saved into a tax savings account and then,

  3. I pay myself via a transfer into my personal account (my bills, bills, bills account).

I never pay for any business expenses from my income account; I only use it to receive income and then make the disbursements I mentioned above.

Here’s what it looks like in practice:

How to Use an Income Account

What’s An Operating Account?

An operating account, or OPEX for the accounting nerds, is the business checking account used to pay for your business expenses. Business expenses are all the costs that are 

"regular and necessary” for running your business. Some examples of business expenses are things like rent for your co-working space, the cost of your contractors, the endless amount of apps and softwares you use, paying your bookkeeper and your lawyer. 

How Much Should You Transfer? 

Before you dive in, first, let’s look at the amount of income your business generates as 100% of a pie. Trigger warning: math ahead. Figuring out how much you should transfer is figuring out how to divide the pie. 

At minimum, you’ll need to figure out how much you’ll pay yourself, including saving for taxes and how much you'll use for business operations. That’s three pie slices. You can always have more pie slices, like retirement savings or a business savings fund, but let’s first just look at these three slices to keep it simple.

Currently, here’s how I allocate 100% of my revenue:

  • 55% gets moved to the operating account,

  • 28% gets paid out to me for my salary,

  • and 17% gets transferred to an income tax savings account.

Dividing the income pie

When I first started this system, I had a larger allocation going to the operating account and less being saved for taxes. That was because I needed more money going into the business to feel comfortable with being able to meet my expenses and have enough cushion. 

In order to figure out how to subdivide your pie, first let’s figure out how much you need for each piece. We do that by looking at how much you’ve allocated in the recent past.

Work Backwards to Deconstruct What You Need to Earn

One thing I really liked about this new process, was how it forced me to look at how I’d been allocating my income. After looking back, I had a better understanding of how my income needed to change in order to impact my pay and how much I could be invest in the business. 

So first, you need to look at recent history to come up with an idea of what this system will look like in practice and if those numbers will work. Yes, it’s time to open up a spreadsheet. 

Calculate the Average Monthly Business Income

First list out how much your business has earned each month over the past twelve months?

Next, figure out what’s the average monthly income has been.

What Did You Pay Yourself?

First, list out how much have you paid yourself each month over the past twelve months? 

Next, figure out what’s the average monthly pay has been.

Then, express that average monthly pay as a percentage of monthly income.

How To Do the Math: Take your average monthly pay and divide it by your average monthly business income


Average pay = $2,167

Average monthly income = $6,250

Pay expressed as a percentage of income = ($2,167 / $6,250 =  .0346) x 100 = 35%

How Much Was Spent on Operating the Business?

Please tell me you have been doing your bookkeeping each month. 

If so, run your profit and loss reports to see your month over month expenses over the last twelve months.

Next, figure out the average monthly expenses.

What is that expressed as a percentage of revenue? 

How To Do the Math: Take your average monthly expenses and divide it by your average monthly business income

Average OPEX = $3,667

Average monthly income = $6,250

Pay expressed as a percentage of income = ( $3,667 / $6,250 =  .0586) x 100 = 59%

Income Tax Savings

If you owed taxes last year, how much did you owe?

Did you have a savings plan? If you did, did you save enough?

Next, express the amount of taxes you owed as a percentage of income? 

How To Do the Math: Divide the annual taxes owed by your annual income. Or you can divide monthly taxes owed by your monthly income.

Example: $10k owed annually divided by $100k of annual income is 10% taxes.

Here’s what your analysis might look like:

What happened.png

Projecting Forward

Now that you can see what your business did, it’s time to make adjustments to income to see how it impacts how much you pay yourself, how much you save for taxes and how much you have for business expenses.

Here are some examples of how you can project forward:

Step 1: Project a new income number

Step 2 - 4 are interchangeable. 

Play around with the numbers and make sure that the $$$ splits equal the income and the % splits equal 100%.

A Few Big Fat Caveats


Depending on your income, you might save more for taxes, but I’m super not bummed about that. You can use the extra cash for retirement savings, you can reinvest it into the business or you can pay yourself a bonus.

Contractors + Payroll

You might have some logistical issues if you’re using a payroll service provider and paying contractors. You’ll need to make sure your operating expenses will always cover your contractor and/or staffing costs.

Keeping Track 

The only way that this method works, is if you use it consistently. I know, how annoying of me to ask you to look at your finances on a regular and consistent basis, but it’s like all the other things in your life. Here are some examples that will not just annoy you, it will help me drive the point home. If you want to be a writer, you probably have to write every week, if not every day. If you want to be fit, you have to consistently not eat crap and consistently move your body. If you want to get good at playing an instrument, you have to practice a little bit over a lot of time. See how that works?

So the best way to keep track is to use a spread sheet that you update each week. I made one for you, because I’m fucking cool like that.

The Results

What I learned looking back was that I needed to increase my income by a lot more than I thought. Over the last twelve months, by looking closely at income, I was able to examine what my opportunities were. I looked at ancillary services I was providing and realized by amping that up, I could easily hit higher targets. Thinking about your business in this way is essential if you want to run a business.

Paco’s Law: Expenses expand to reach the limits of what's available to spend

Paco's Law.jpg

I’m sure you’ve heard of Murphy’s law; an old adage that states "anything that can go wrong, will go wrong.” And then there is Parkinson's law that basically boils down to: work expands to fill the time available for its completion.

Now, I’d like to introduce you to Paco’s law. 

Paco’s law says that "expenses expand to reach the limits of what's available to spend”. In other words, you’ll spend whatever is available to you to spend. This isn’t true for every person out there and (disclaimer) the data set I’m observing is incredibly flawed. But the amount of people who reach out to me who are looking for help, advice or tips in this specific area of finances is so huge that there should be a law for it. 

Step 1: If You Didn’t Know, Now You Know

Knowing about Paco’s law is the first step to not totally becoming a victim of it. Understand that if you have observed yourself to be in the majority of people who spend as much as they earn, then you should start setting up systems to protect yourself against yourself. 

Step 2: Setup Separate Spending Systems

The key is to exploit the loophole in the law and limit what’s available for you to spend. I’m an annoyingly vocal proponent of having separate accounts for your bills and your non-essential spending. Let’s call the non-essential stuff, fun and b.s.

In order for the system to work, you must earn enough to cover your bills, debt payments you have, savings and then whatever is leftover can be blissfully spent on crap you probably don’t need, but you definitely want. (Read this if you need to help figuring out how much you spend on bills each month).

It might sound like having another account to simply your life is counterintuitive, but you need to keep the bills and the fun separate for two reasons. The first is to make sure you don’t accidentally spend bills money on fun stuff. The second reason is to make limiting your fun + b.s. spending super freaking easy. So easy that you won’t have an excuse for not “budgeting” anymore.

In practice, there are two ways to do this. The first option is to put your entire paycheck into your bills account. Then make transfers to savings and the fun + b.s. accounts. So money goes into the bills account and then you transfer it out of there to the other accounts. This first option is perfect for people with variable income. It’s also great for when you’re first getting started and used to this system. Here’s what it looks like in practice:

Paco's Law

The second option is to send money from your paycheck to your bills, various savings and your fun + b.s. account. The second option forgoes first putting all the funds into your bills account.

This option is great for people who have a fixed paycheck. You might be able to set it up automatically - which can be a good and bad thing. Good because you remove yourself from the equation. Bad because if you aren’t involved, you might become disengaged. Engagement is the key to making this work.


Step 3: Would You Just Look At It?

If you have lots of cash in your accounts and you do a great job already, you can probably go more than a week without eyeballing your accounts. But if you’re not a jedi yet, you have to look at your accounts. YOU. Not your partner or your mom or your assistant. YOU, homie. Stop not taking responsibility for your shit.

Caring about your finances: this is your life meow.

How to Save for Taxes

How to Save for Taxes.jpg

Disclaimer: I am not an accountant and this is not tax advice. There are different methods and strategies for saving for taxes. This is one I’ve found to be very simple.

If you’re tired of being totally freaked out about owing taxes because your business earned money, listen up. Instead of being unsure about how you’ll pay your tax bill, you can get ahead of the curve by saving for your taxes as you earn income.

It is very, very simple. But if you haven’t built the habit, it can seem overwhelming. Here’s what you need to do.

Open up a Tax Savings Account

The first step is to have a separate savings account strictly for your income taxes. Yes, this is annoying because you have one more account to “worry about”. But it’s totally worth the hassle. Hear me out. Having this one extra account to care about is worth the I’m-not-losing-sleep-because-I’m-saving-for-taxes feeling.

No, you can’t just pile up all your money in your business checking account because you run the risk of spending your tax money. I’ve seen it happen time and time again. Humans are crappy at this stuff, so we have to create systems that override our terrible decisions.

So march your ass to your bank and open up your income tax savings account. Once you have it open, the next step is to start saving.

Save a portion of your income into your tax savings account

Most accountants will agree with the general rule of thumb that you should save between 10-30% of your freelance/business income for taxes.

Of course there are caveats. You might not owe taxes if your business makes very little money or if you’re operating at a loss. But nonetheless, it’s a good habit to save a portion of your income.

What if you save too much? Awesome! Now you have a cash cushion or extra funds to invest in your business or money to put away for retirement.

No, really, actually do it though

The hard part is actually doing it. In order for this method to work, you have to set aside time on a regular and consistent basis and you have to know how much your business earned so you know how much to save.

How do you set aside time regularly and consistently? You prioritize it and you make time for it. I know you’re just like me wasting hours streaming Netflix and going down a social media k-hole. You can find 15 minutes a week to do this. Open up your calendar and block it off. Make it recurring. And if you can’t find the time… then, damn, maybe you have bigger problems than owing back taxes.

Ok, now that you’ve scheduled your weekly finance time, just start where you are. Look at your accounts and/or your bookkeeping software. Calculate how much income your business earned for the prior week. Then multiply that income number by how much you plan to save. And then transfer that amount from your business account to your tax savings account.

For example, let’s say Alisha runs a mobile dog washing company. Last week she earned $2,500 and she is planning to save 25% of all income into her tax savings account. $2,500 x 25% = $625 to be transferred into her tax savings account.

Go on now, be like Alisha.

How to Care About Your Finances: Schedule Finance Time

How to Care About Your Finances schedule finance time.jpg

The world of finances is wide and deep. From building a budget to understanding insurance and everything in between; it can be intimidating. Jumping in all at once can result in a harsh flop followed by a defeated retreat.

Schedule + Show Up

So here’s the first thing you need to do to start caring about your finances: open up your schedule and set aside dedicated finance time each week. Do it. Now. Block it off. Make it recurring.

Start with 30 minutes or if your ability to focus hasn’t totally atrophied from cell phones and social media, schedule an hour of focused finance time.

Block it off and commit. Don’t schedule meetings or drinks or phone calls or anything during that finance time. Make it a time that you can stay committed to. And just show up.

Look at Your Finances

During your first week of scheduled finance time, start slow. Look at your bank accounts and review your transactions; it’s amazing the insight that comes along with just looking at how you spent your money. If you have debt, look at your balances and recent payments. Once again, just being aware is a really great first step.


After you’ve done that, I invite you to think about this question and maybe go so far as answering it: what are the things in your financial life that you no longer want to tolerate?

Some examples include, but are not limited to: continuously being underpaid, not having a budget, looking at Instagram to quiet your anxieties about finances and turn up your anxieties about some other bull shit, not knowing how much you save each year, not knowing anything about taxes, not knowing if you could be doing something to protect your family if you aren’t around. Here’s our list if you need help with your list.

Get to Work

Once you have your list, you’ve got your priorities. Everything on your list is either something you can learn about and or something you can work on changing. The list might be long, but at least you’ve already set aside the time to work on it.

How to Be "Financially Responsible"

How to Be Financially Responsible | The Basics of Financial Responsibility

One of the most frequent financial struggles that people talk to me or email me about is having trouble being "fiscally responsible".

When it comes to doing the things one ought to do with their money, according to what I've learned from the industry and society at large, we fall short in a few common ways. Most people have trouble saving when you know you should save, curbing spending on bull shit that you don't need and understanding how the financial markets and economics. I get it. I make weird choices too. A lot of us do it because we're emotional creatures that act on our feelings


Five Frequent Finance Fails (and How to Avoid Them)

Five Frequent Finance Fails.jpg

I’ve been in finance for over ten years (wow - how did that happen?) and I’m basically never not talking to people about money. It is a common thread in our society. Our dependence on it unifies us, while our competition for it can be dividing.  

It makes sense that once people find out that, all day long, I sit around thinking about people and their money; there are always questions. So. Many. Questions. At almost every dinner, in friendly exchanges with my local barista or in frantic and panicked text messages from friends - there’s no shortage of money woes.

Throughout my informal, unscientific and ongoing study of people and their finances, I’ve uncovered some common mistakes I often hear people making.


Mistake No. 5: Not Having Any Short-Term Savings

Short-term savings is an emergency fund and/or a buffer in your checking account. It can be harsh to label not having savings as a mistake because some people have been dealt challenging life circumstances, so their lack of savings isn’t entirely because of their lack of virtue.

But for those who are making a living wage and then some, I often see folks putting too much money into retirement and not having enough cash for the short-term. Another more common mistake I’ve encountered are creative freelancers with lumpy cash flow, where some months they make a big pile of cash and other months no cash at all. When the big pile comes, they use it to pay down the credit cards they were using during slower months, without putting anything into savings. This sets them up for having to rely on them again when there’s a slow month.

The solution to this is a very annoying solution. It’s the answer your friend who lost a bunch of weight gives you and you hate them for saying those words to you. Diet and exercise. Diet, meaning, reduce unnecessary expenses for a short-term so you have excess cash. And exercise, go through and do the exercise of making a budget so you can understand from where and how you can reallocate your income. It sucks, I know.


Mistake No. 4 Budgeting Based on Your Imagination and Not Reality

Speaking of budgets… The most common budgeting mistake I see is making a budget based purely on imagination and not fact-checking with reality.

Yes, a budget is aspirational. And yes, you should use your imagination when it comes to what you want your life and your future to look like. So I’m not saying don’t imagine - I’m not a monster - I’m saying that you need to look back at how you’ve spent your money in the past to help guide you on creating a budget for the future. It’s hard to guess if you haven’t looked at what you’ve spent.

I’ve sat in hours and hours of budget meetings with clients whose historical budgets I’ve personally created. And then I ask  them what they think they’ve spent each month in categories like clothing or Amazon or drugs. And sometimes they’re in the ballpark and sometimes they’re way off.

It’s important to get in the range of reality because otherwise, you’re misallocating and you’re working your ass off, but you’re doing it based on misinformation.


Mistake No. 3 Mistaking the Noise for the Signal (Worrying About the Wrong Things)

Here are the three things that people focus on intensely- like a dog mystified by its own tail, chasing it until exhaustion.

Credit score obsession. Yes, your credit score is important because it impacts whether you can borrow money and how much it will cost you. And yes it often plays a role when it comes to employment and getting housing. So I feel you, make sure you check in on it every quarter. But don’t obsess.

Here’s how you can have a healthy credit score. Always pay your bills on time, but realize most lenders won’t report your delinquency until you’re 30 days past due.  So don’t freak out if you’ve paid a bill within the grace period. Try to keep the amount of balances you carry no more than 33% of the total amount of credit you have available. Do this for each individual credit card and for all your credit cards in total. This is called your credit utilization ratio. If you’re shopping for a loan, inquiries may impact your credit score, but not in a major way.

Individual investments. A lot people believe they should care about individual stocks and bonds. And if you’re gambling and having fun pretending to be a day trader, you can totally go down the rabbit hole. I won’t rob you of that joy.

But if you’re a regular sentient being who just wants to “do the right thing” when it comes to investments, you need to understand investing is more about the overall flavor of the dish (the amount of risk you’re taking on as a whole) and the only thing that has been reliable in terms of investment strategy is diversification.

Mutual funds and exchange-traded funds are investments with exposure to many different stocks and/or bonds. It’s a way to diversify, but to still target a certain amount of risk. (P.S. This isn’t investment advice).

Getting the right tools. You know that friend you have who wants to get into photography, but instead of just taking pictures with the camera he has, he thinks he needs a bunch of gear before he can start. Don’t get too bogged down researching budgeting apps or aggregator apps. 


Mistake No. 2 Leaving Money on the Table

If you’re an employee and your employer offers a retirement plan and offers to match any amount of your contribution and you don’t do this, you’re saying, “That’s a no for me, dog,” to free money.

People often leave money of the table mostly because they don’t know it’s being offered. So, if you have an employer and you don’t know whether or not they offer a retirement plan. Go to HR right meow and ask if one is offered and if you’re eligible to participate. Also ask if the company matches any of your contributions. And if the answer is yes, take that goddamn money off the goddamn table and give it to your future, cute, wrinkly, old self.

Another reason people leave money on the table is because it’s easy to put it off and say, “Oh, well, I’ll do it tomorrow.” But tomorrow can last five years and putting it off means you’re missing out on the money growing into more money.

If you’re leaving money on the table because you’re overwhelmed with having to “choose your investment options,” then the next sections is the gentle boot up your ass that you need.


Mistake No. 1 Being Afraid to Just Start

The world of finance - just like modern marketing - is constructed to make you feel inadequate, afraid, stupid and that if you make a mistake, you’ll ruin your life forever.

But the only way to get over this crippling, paralyzing fear is take action and just start where you are. Pick one thing to learn about - perhaps something that is timely and relevant to you at the moment and just go for it. Get a book from the library or frantically text your friend who works in finance. There has never been a time where so much information is available for free and you can do it all in pant-less comfort from your couch.

I believe in you.



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.