I’m thrilled to have a fantastic guest post today by Amber Dugger. Amber is a Money Mindset and Wellness Coach, and I love how she has combined these two areas because they often go hand in hand for all of us.
Amber and I connected a few months ago, and I knew she would be able to share some great tips with you because we all know that income as a health coach isn’t always steady or predictable.
I hope you find this post helpful!
Here’s Amber..
{Disclaimer: Please make sure you talk to your accountant before you make any tax or investment decisions as I’m not familiar with your business or personal financial situation.}
As a health coach, you start off wearing so many hats. You are nose deep in learning about digital marketing, how to get more clients, creating blog posts and opt-ins and trying to figure out how to get that opt-in to connect to your email service. One thing that is less talked about is how to manage the cash as it starts to flow into your business. When it does start to flow in, it can be a bit exciting and confusing all at the same time. Where should I deposit this? What about taxes? Can I cover my bills with this income?
These questions are completely normal. It is also normal to want to put the task off on figuring out what to do with your money. The exciting news is that there is an easy and simple solution to helping you handle this new variable income even when you still have your normal monthly expenses. Curious? Read on, my friend.
Do you feel like creating a money plan will just make you feel restricted and put your freedom in jeopardy? Imagine me jumping up and down for a moment, grabbing you by the shoulders and looking you in the eyes. Hear this – a plan gives you freedom and flexibility.
Saving money successfully and running a financially sustainable business requires two things:
- Clarity of what your money is doing for you
- Awareness of where and when that money is going in and out of your business (this is what I like to call a money plan – it has a better ring to it than the often-dreaded word budget)
To have a successful money plan depends on two things: determining your desired end result and regular income. Screeeeeech. Regular income you ask? As a health coach, you may be thinking to yourself, well, this article is not for me. I don’t have regular income. But I sure do have regular expenses! (Email marketing service, living expenses, social media tools, Facebook ads, etc.)
Regular income is possible for a health coach. You can create this regularity of income in your own business. It just means that when you make a lot of money one month, you don’t pay yourself all of it. You create what many people call a “drip account.” On months where you don’t make as much money, you will use money from previous months where you made more than you needed.
Having a budget is even more important for someone with variable income vs. someone with a regular paycheck. A budget gives you a really clear picture of what your money is doing for you and how long it will last in times where your revenue is lower than your average.
Ready to jump on the exciting budget (money plan) train? Trust me, you will start smiling about your numbers soon. I can share that with experience….just hold on for the ride!
Step 1: Get clear on how much money you need to make to support your lifestyle (not what Facebook ads tell you…i.e., $5K months).
How do you do this?
- Take out a piece of paper (or open a new Google Sheet – my preference).
- List your fixed costs to live – rent, insurance, groceries, utilities, health insurance, car or transportation expenses.
- List any incidentals that you are currently spending money on that are more flexible (Amazon purchases, subscription services, dining, entertainment, gifts, electronics, organic powders, essential oils, supplements etc).
- Take a highlighter and mark all that are absolutely essential.
- Circle (or use a different color) the remaining expenses. We will revisit these numbers later.
Step 2: Get clear on how much money your business is costing you per month to run.
- Take a separate piece of paper (or new tab on your Google Sheet) and list out all of your monthly and annual costs. Email marketing, hosting services, website costs, virtual assistant, Facebook ads etc.
- Highlight the expenses that are absolutely essential. Do you see anything that is overlapping (ConvertKit and Leadpages for example? ConvertKit has landing page options so asking yourself if Leadpages is absolutely necessary is helpful to analyze).
Step 3: Finalize a monthly revenue goal that realistically covers your lifestyle goals and your business expenses.
Determine how much you want to set aside for taxes. There are several ways to do this. You can choose to just put aside 30% and know that most likely you will have money left over to reimburse yourself. You can also use an online tax withholdings calculator to estimate what you will owe or you can ask your accountant to determine your estimated taxes owed. Remember, you will need to make more than just enough to cover your personal expenses. You will need to also make enough to pay tax on the money that you are bringing into your business.
Step 4: When coming up with your monthly revenue goal, it is helpful to look at your specific needs and situation.
Do you have income coming in from other sources? Do you have a partner that is contributing to the household? Do you have freelance jobs or are you still working a day job and coaching in the evenings and weekends? Assess how much money is coming into your life and see how much you need to come up with. Once you have that number, you can see if you are currently averaging that amount (look at the last 3-6 months of income if possible.) Are you currently making that on average? If not, now is a good time to ask yourself how you will come up with the difference so that you can reach immediate sustainability (so you don’t incur or increase debt).
Step 5: From the work above, determine the amount of money that you will be paying yourself from your business account.
This is the amount of money that you will transfer to your personal account once (or twice) a month. This is the amount that you will be budgeting with when it comes to your personal finances. What about the extra that you made? Leave it in your business account for future months when your income is less OR set up a separate savings account so you can accumulate the “extras” and not be tempted to spend them on an impulse (“oh, I need that new camera!”).
*Here are some tips if you have discovered that you are spending more money than what you are currently bringing in and how to correct it:
- Revisit steps 1 and 2 – have you cut down your expenses to those that you truly need? I find that when I do this process with my clients, we continue to find expenses that are not necessary even after the 3rd or 4th review of the same information! Trust me, you will save yourself quite a bit of money – keep reviewing this.
- Look at your package prices and evaluate what your business revenue would look like if you were fully booked at your current prices. Does this amount satisfy your income needs? If it doesn’t, it is time to reevaluate your package prices and increase them so that you can run a sustainable business.
- Is the difference too great? If your expenses are too great and your income is still coming in bits and pieces and not covering your basic costs, administer some tough love and consider other temporary sources of income such as freelance jobs, side jobs or a part time job. Let me clear – this is a decision that many hold off on and regret not taking action sooner. This does NOT mean that you are failing in your business. It is quite the opposite. You are allowing yourself the ability to have additional energy (money) flow into your life so that you can continue to build your business while easing financial stress, increasing peace of mind and creating habits that will lead to building a thriving, impactful health coaching business.
Remember, profitability equals sustainability.
Profit earned authentically and sustainably is the lifeblood of your business. There is nothing wrong with earning a profit. It simply means that you are managing your expenses and being efficient with your business. Profit has little to do with the value of your services and so much more to do with the management of your cash. And by doing the action steps above, you will be well on your way to managing your cash with ease and give yourself the beautiful clarity and awareness of what your money is doing for you and your business.
Remember this – crowding out behavior doesn’t just apply to health, we can do it with our financial behaviors as well. Easing into financial freedom is key for sustainable success. Just take this process one day at a time, and grant yourself a lot of grace and love.
You got this!
Amber Dugger helps health coaches and service-based entrepreneurs sort their money headaches and increase their profit potential.
Learn more about Amber HERE and check out her incredibly helpful tips and resources.
OH, and be sure to join our incredible FREE Mastermind Group for Certified Health Coaches and Fitness Professionals.
