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How to Use Money Mapping To Give Back

By |2020-06-17T17:40:33-07:00June 17th, 2020|Categories: Uncategorized|Tags: , , , , , , , , |

At this moment, we are being called to give money to many different places. Community organizations need resources to respond to COVID-19, and so do many different non-profits, scholarship funds, etc. On top of that, the worldwide movement for Black lives has sparked a renewed need for donations. Last week, I discussed how a business owner can leverage their business to rise to this moment. Today, I want to talk about giving. Specifically, how to use money mapping to know how much to give!

Money Mapping: A Crash Course

If you’re not familiar with the term money-mapping, it’s essentially a visual way to track and create a system for your money. When I work with my clients, we create these systems for their business together. By figuring out how much money you need to cover taxes and business expenses, you’re then able to see what’s left over. How you allocate that money is up to you. Typically it’s split between profit and pay for the business owner. In this article, I’m going to discuss how you can carve out a chunk of that money for donating to organizations you want to support. Earlier this year, I wrote a series on how to implement money-mapping for your business and personal finances; read that here. Here’s a diagram to give you a better picture of what I’m talking about.

Factoring in Giving

There are several different ways you can factor giving into your money map. If you’d like the donation to come directly from your business revenue, perhaps you decide that the 5% in the profit account will go to a certain organization. Depending on your flexibility, you could also simply choose to add another account altogether, and split up your revenue five ways instead of the four outlined in the diagram above.

If you’d prefer to give from your individual finances, your options are similar. Perhaps you can carve the donation from your savings allocations (perhaps replace “new mattress”). Or, you can choose to make room in your living expenses, provided you have that flexibility.

Sticking to a Timeline

When using the money mapping system, it’s good to use a timeline to know when it’s time to examine your accounts and move or use money that’s collected there. In my work with clients I usually suggest that they move or use the money in their profit account on a quarterly basis. If you’ve decided to use this money for donations, perhaps you can set up a system in your business to switch up where those donations go every quarter of the year.

Why Use This System?

Using money-mapping and seeing your donation as a percentage of your overall income strengthens the power of your giving. It helps you see exactly how much you can afford to give, and helps you make mindful choices about amount, rather than purely emotional ones. It can be helpful for people who are prone to over-spending and those prone to over-saving. Looking at your money as a full system also helps you assess your values and re-structure your priorities if needed. If you decide you’d rather donate to Black Lives Matter than eat out in the month of June, referring to your money map can help you make and track that choice.

If you’re looking for places to donate money to in order to support the movement for Black Lives, please consider checking out these organizations:

Happy giving!

☮

Angela

Image By:  Milada Vigerova 

The In-Depth Guide to Mapping Your Money, and How It Can Fortify Your Business, Part III

By |2020-01-17T22:12:46-08:00January 20th, 2020|Categories: Personal Savings, Personal Spending, Small Business, solopreneurs|Tags: , , , , , , , , , |

In the last two parts of this in-depth guide to money mapping, we’ve talked about why it’s helpful and how to get started. We’ve also touched on creating a system of accounts to set up a regular paycheck for yourself and an assurance of profit. Creating your own money map based on these ideas takes a lot of evaluation of your finances. You need to assess your operating and tax expenses and analyze your living expenses and savings goals. Once you’ve assessed these amounts, they translate into the percentages you put into each account.

What’s Your Percentage?

I help clients figure out what their percentages could be. We assess the needs of their business, and we figure out how much they actually need to live on. We discuss their life goals, and how those relate to money. There are good benchmarks for each percentage, which are suggested by Profit First. For your reference, the suggested percentages are: 5% profit, 50% owner’s pay, 15% taxes, 30% for operating expenses. This breakdown applies to most solopreneurs (anyone under $250,000 in annual revenue).If this doesn’t feel doable for you right now, don’t sweat it. It takes a lot of work, evaluation, and good financial habits to create a sustainable money system.

Applying the Model

Let’s look at an example of all of this mapped out. In this example business, the owner is using the ideal benchmarks and keeping a cushion in their Owner’s Pay account. What they do take out is then subdivided, with 20% of their pay taken off the top for three savings goals (I like to call this “paying yourself first.”). The remainder of this money goes to living expenses. While this model might be unrealistic from where you stand, keep in mind that this is something my clients work towards. I’ve included it here so you can start to picture what your own money system looks like.

If you enjoyed this guide, I recommend also checking out Part I, and Part II. And, try going to the Tools page, where you can play with an allocations calculator. Plug in your revenue and your preferred percentages to see what your amounts are! Then you can start filling in your money map.

Money mapping is an important tool, and one that I enjoy walking clients through. If you’re interested in working with me, check out my services page to check out my packages, and schedule a call.

☮

Angela

 

Image by:

Estée Janssens

The In-Depth Guide to Mapping Your Money, and How It Can Fortify Your Business, Part II

By |2020-01-17T01:48:43-08:00January 17th, 2020|Categories: Personal Spending, Profit First, solopreneurs|Tags: , , , , , , , , , , |

Last week, I talked about money-mapping, why it’s helpful, and how you can get started. Today, we’re going to dive into more money-mapping using the Profit First methodology. Profit First posits its own money system, pictured in the above map. Its goal is to ensure that you as the business owner get paid.

Solopreneur Paycheck

In order to ensure that you actually get paid by your business, you need to portion off a certain percentage of your income, and then designate that for your personal finances. This portioning off is exactly what the Owner’s Pay account is for in the Profit First system. The Profit First system advocates for creating separate accounts for all your different pots of money associated with your business. If you can’t do that or don’t want to, I advise using a spreadsheet. You can use this to keep track of how much money is designated for Profit, Owner’s Pay, Taxes, and Operating Expenses.

So, back to that Owner’s Pay Account. Once you put a percentage of income in it, you then transfer some portion of that to your personal account, which serves as your solopreneur paycheck. When I work with clients, we work to figure out what portion should go into this account. That amount depends on how much the business makes in revenue, and what portion of their personal expenses they want to cover using income from their business. If income in their business varies month to month, we decide on an amount that they transfer to their personal account, leaving the leftovers to act as their cushion during slow months. This way, the business owner receives a steady stream of income, even if their business varies from month to month. This is the solopreneur paycheck.

The Function of Profit

Cordoning off funds for operating expenses and taxes may seem practical enough, but the Profit account is what makes the Profit First system unique. The profit account accumulates and then is distributed quarterly. Business owners are encouraged to use their Profit Distributions to reward themselves for their hard work. This keeps the owner excited about and invested in the business. It also discourages any tendency to reinvest everything back into the business, or over-save.  Rewards can range from a day out to charitable giving, to really anything you want!

In part three of this series, I’ll discuss what applying this model to your business can look like, and integrate all the info we’ve gone over so far. If you’re enjoying this and would like more, check out part one! You can also head to my services page and schedule a call with me. Money mapping is one of my favorite subjects. Come talk about it with me!

☮

Angela

The In-Depth Guide to Mapping Your Money, and How It Can Fortify Your Business, Part I

By |2020-01-17T01:49:14-08:00January 7th, 2020|Categories: Personal Savings, Personal Spending, Profit First, solopreneurs|Tags: , , , , , , , , , |

Keeping track of your money and where it needs to go may feel like a difficult task. That’s why visually mapping it can be especially helpful. When I work with clients, I help them create a visual flow chart to show where every dollar goes. Today, I want to walk through why I do this, and how you can get started on your own money map.

Simplify Decision-Making

The goal of money mapping is creating a clear visual guide of what to do with every incoming dollar. If you’re confused about where to put incoming money, your systems can quickly get out of whack. By drawing out the paths your money can take, you make it clear to yourself where everything needs to go. You also simplify the decisions you need to make, because you have everything spelled out right in front of you! This way you’re able to take action to put your money in the right place quickly and easily.

For extra points, you can automate some of these transfers each month, so that you don’t have to move everything manually. If that sounds interesting, you might like to read “Pick One of These 5 Tips to Automate Your Wealth”.

How Much Do You Need?

In order to create that map and streamline your decision making, you need to do the math up front. It’s important to think about how much you need for your own pay, business taxes, and operating expenses. When I work with clients, I help them determine these numbers in the process of creating their map. If you want a DIY version, you can check out my articles on financial self-care, which will help you determine your personal expenses and understand how they relate to your business finances. Going through your records and averaging your operating expenses can help you get a good idea of what that percentage might be.

The above image is an example map from Hadassah Damien at Ride Free Fearless Money. In this example, you can see that she’s fleshed out the necessary percentages of income that need to be set aside for savings, taxes, business expenses, and personal expenses. In part 2 of our discussion of money mapping, I’ll talk about Profit First and what these percentages are according to their theory.

From Income to Final Destination

Above all, the goal of money mapping is to know where your money is going every step of the way. From the moment you receive income, to the moment that money is saved for taxes, invested for retirement, or put away for a savings goal – you’ve got a plan. Consequently, this is an opportunity to define those final destinations. Creating a tax savings account and an operating expenses account come in handy here. You can also think about creating savings goals for yourself, and making a plan to contribute regularly to those.

If you found this article interesting and helpful, I invite you to download the first 5 chapters of Profit First! The book has its own suggested money map that I’ll also talk about in part 2 of this series. If you’re into this kind of thing, I’m sure you’ll enjoy the book.

☮

Angela

Reduce the Hassle: 3 Tips to Keep Your Money System Simple

By |2020-01-27T21:52:59-08:00January 27th, 2020|Categories: Banking, Financial Clarity, Small Business|Tags: , , , , , , , , , |

When I work with small business owners I often run see this one unfortunate pattern; many business owners believe that your money system has to be complex in order to work. The reality, however, couldn’t be further from that. We’ve already talked about how important having a money system is, and how to visualize it with money-mapping. Keeping your money system simple and streamlined makes it easier to visualize, but also much easier to follow through on and keep organized. If a system requires a bunch of checking in or spreads your money into a bunch of accounts you forget about, it’s not worth the maintenance. Here are three strategies you can use to pare down your business’s money system to a manageable size.

Limit Your Cards

If you’ve got a ton of cards under your business, keeping track of all of them and keeping them paid off can be difficult. To make it easier on you, I suggest paring down the number of cards you use. This will help you better keep track of your bills, credit rewards, and any other info associated with your cards.

Please note, I’m not advocating for closing any of your credit cards, as this can lead to a lowering of your credit score. However, here’s a good guide on how to do that, if you’re interested.

Under One Roof

One recommendation I regularly make to my clients is to consolidate their money into one institutions. If you have business bank accounts at three, four, or five different banks, that’s gotta be hard to stay on top of! Getting it all under one roof will help you keep an eye on your finances as a whole more easily. If you have multiple banks and you’re wondering how to go about consolidating, you might like to read this piece about switching banks we featured a couple years ago. It contains a guide to comparing banking offers and picking to the best option.

Keep Track

Making a regular habit of checking in with your finances. Make this easy by consolidating your passwords to your different accounts and portals. If you don’t have to go searching for passwords before you begin your checkin, you’re way more likely to actually do it!

I also recommend using an app or other tracking system. I especially like Mint.Others also like YNAB, or paper money tracking. Digitally tracking your money can save you some time, while also giving you a quick snapshot of your accounts when you need it.

If you found these tips helpful, you might also like this article on automation, which is another money hack to keep your systems tidy!

☮

Angela

My Current Financial Goals!

By |2020-09-03T18:58:53-07:00September 3rd, 2020|Categories: Financial Clarity, Personal Savings|Tags: , , , , , , |

So frequently, I talk about goals and planning and money systems here. But rarely do I share with you what’s going on behind the scenes for me. Today I want to give you all a look into my financial goals, and how systems work in my business.

System at Work

In my own business, I use a money mapping system that helps me allocate funds from my business for different purposes. If you haven’t read my full series on money mapping, I recommend doing so by clicking on the links above. My money mapping system helps me to allocate a portion of the income I make for saving up for my financial goals. I have a habit of over-saving, so it’s important for me to have a system in place that helps me navigate how much to spend and how much to save. If this sounds familiar to you too, check out my article on over-saving, and how overcoming it can help you! Making this discovery has definitely been helpful for me.

Goals: Big and Small

The goals that I’m currently leveraging my money system to save up for range from small things to big life events. Last November, I bought a 2016 Rav-4, so one of the goals I’m working on is paying off my car loan. I am also saving up to do a motorcycle tour of New Zealand! Originally I had a target date for this goal, but now things depend on when COVID-19 is no longer an issue, so things are a bit more flexible. You can read more about my motorcycling journey (and how being a small business owner helped me with that!) here. My last goal has less to do with saving and more with just practicing good financial hygiene. My husband is hoping to retire soon, so we’re keeping an eye on our spending to make sure we can live within our means when that happens!

Hopefully this post has given you a flavor for my goals, and helped you think about what yours might be too! For more help here, check out my article “Know Your Money Why.”

☮
Angela

 

How to Do a Business Check-In

By |2020-07-31T15:24:48-07:00July 31st, 2020|Categories: Financial Clarity, Money Mindset, Small Business|Tags: , , , , , , , , |

So, how is your business doing these days? We find ourselves just past the halfway point of an exceptionally challenging year.  It’s likely circumstances in your business and your life have changed. Now’s the perfect time to take a pause and check in with your business. How are you doing with your goals? In the thick of things, sometimes our focus on our goals can get a little murky. Below, I share a process for reviewing your business with an eye towards those goals, and celebrating what you’ve already done. Here’s the step-by-step:

Review

When you take a look at the goals you’re working towards, it’s easy to get bogged down by focusing on what you still need to do. Instead, train your focus on what you’ve already done.

Start by making a list of milestones you’ve hit or steps you’ve completed. Rifle through your day planner or old to-do lists if you need a refresher. Go back through the year, month by month. Especially because it’s likely this year required you to adapt to COVID-19, there are likely some changes to note.

Now, it’s time for a little introspection. Take stock of all the actions you’ve taken towards your goals, and then ask yourself a few questions: How do I feel about this goal? Do I still want to achieve it by the end of the year? Is that feasible? At what pace have I been able to work toward this? What’s my capacity been like?

Don’t be afraid to drop things or add new things. Some goals may simply no longer excite you, or you may have realized that another objective is more important or time sensitive.

During this review process, it’s also helpful to take a look at the systems and work routines you have in place for your business. For example, you may have set an intention to review your numbers once a week, or you may be trying out the a money mapping system. Evaluate the effectiveness of your systems and routines. Are they working for you? Do you have time to do these things? Are you consistent? You may find that your routines need to be simplified or tweaked to be more pleasant or attainable. Or, you might find that your systems and routines are working just fine! Both are vital evidence when checking in on your business.

Finally, it’s a good idea to check in on how much you’re earning. Perhaps you’ll want to take time to consider your hourly wage, or look into revenue cycles in your business. Checking in with where your business is at financially is key in this step.

Learn and Adapt

Next, it’s time to use all of that evidence you’ve gathered to adapt your goals and practices. First, notice if you have any goals that you are either discarding or adding. Then, examine the pace at which you’ve worked on your goals. These pieces are important when it comes to planning out the rest of your year.

I recommend drawing or writing out a map for the next six months. Include any events relevant to your business, like conferences, trade shows, or gallery openings. Then, begin to write in milestones you hope to meet in the next six months. Make sure these are realistic! Don’t pressure yourself to level up in three months if it took you six to get where you are now. Instead, allow yourself the space and time to achieve things incrementally.

When you’re making your plan, be sure to adapt your goals to what’s worked so far this year. If you really love a certain routine or feel fired up to keep working toward a certain goal, go for it. If you’ve stalled on a project because you need to do more research, carve out some time to go back to the drawing board. When charting your course, keep your own needs and preferences in mind.

Now that you’ve reviewed your work so far and adapted your strategies and goals appropriately, it’s time for the next few steps. These are intended to really up the feeling of getting a fresh start, while enjoying your business for what it is: a way to meet your life goals.

Refresh

For an extra dash of clarity and focus, include a refresh in your review process! Now is the time to do whatever necessary maintenance you might need to grease the wheels of your business. You might clean your workspace, clear your inbox, or centralize your passwords. Attend to your physical and digital spaces. Check in with your finances, and schedule an appointment with a bookkeeper.

This is usually my favorite part of the review process, because I make time to do all the little things that have been nagging me, like scheduling lower priority appointments, finding that one piece of paper, and sometimes making a new goal chart for myself. Giving yourself the space to get organized can save you time and effort down the road.

Celebrate

Go back to step one, and take stock again of all you’ve done this year, including this review process. Chances are, you will find you’ve done quite a bit of work towards your goals, no matter how close you might be to completing them! Take some time to celebrate all the work you’ve done. Treat yourself to an afternoon off, a fun or inspiring event, or whatever you’d like to do to celebrate your achievements so far! Being a solopreneur is hard work. If you’ve done the work, you deserve to cheer yourself on once in a while.

I hope this outline has given you some ideas for checking in with your goals and your business. If you’d like someone to engage in this process with you, this is something I love to do with my bookkeeping and coaching clients. Please feel free to review my services and schedule a curiosity call.

☮

Angela

The Best Thing You Can Do For Your Business

By |2020-07-10T13:20:06-07:00July 10th, 2020|Categories: Profit First, Taxes|Tags: , , , , , |

Today I am excited to bring you a client success story. With the tax deadline coming up swiftly, tax preparations have been on my desktop and my mind. But they haven’t been weighing down my clients, because of the tools we use to prep for tax season.

The Story

I have one client that I’ve worked with for several years now. In the beginning of my time working with them, taxes were a huge, stressful burden. By using a money mapping system that relies on Profit First principles, we were able to start setting aside money to pay taxes. In 2019, the client had an excellent year and made a lot of money. In ordinary times, this would be great. However, because we faced lower income this year due to the pandemic, if we hadn’t saved ahead of time, we would have found ourselves in disaster come tax season. Thanks to the money system we instituted, we had our tax payments completely covered, even with lower revenue this year.

The Success

Now my client and I are happily relishing in a worry-free tax season. Saving for taxes is one of the best things we’ve done for this business. It’s helped us avoid a lot of sticky financial problems and kept things running smoothly.

Our success is all thanks to the money mapping system we use. I’ve written a series on money mapping that you can read through to get a sense of how to put this tool to work. Aside from tax season, it has a lot of other benefits, like reminding you to save and making your work in your business feel meaningful. This process of creating a money system is a big part of what I do with my clients. You can book a curiosity call with me if you want to know more about how the process might apply to you.

A Little Reminder

Just in case you don’t get my newsletter, here’s a PSA: By July 15th, your 2019 taxes are due to be filed and paid, if you owe. You are also required to turn in your first and second quarter estimated taxes for this year. Please read my article on 5 Steps to Get Ready for Tax Time to get prepped. I’m also happy to offer my services – please don’t hesitate to reach out

☮

Angela

Image by Javier Sierra 

How to Step Up For Your Community As a Business Owner

By |2020-06-10T10:17:45-07:00June 10th, 2020|Categories: Money Mindset, Small Business, solopreneurs|Tags: , , , , , , , , |

Community is absolutely key to the business owner. Recent events have called on us over and over to think about how we’re all connected. The COVID-19 pandemic made it more obvious than ever how we all depend on each other, while the protests happening around the country call on each of us to reflect how we interact with each other and the ways we enable racist policing to continue. Throughout all of this, one of my main pieces of advice has been to stay checked in with other business owners, clients, and other community members. From staying in touch with your audience via social media like Bri Crabtree, to leaning on your money team to make financial decisions, community is very important to a business. No solopreneur exists in a vacuum. So, during this time of unrest and reckoning with our racist past and present, it’s important that we each recognize our responsibilities as community players. 

In this post, I’ll talk about the importance of taking time to reflect on your role in your community, and what you can do now to support Black lives. Whether its fellow business owners, youth in your community, or medics and community workers, many people are in need of support and resources. This is our opportunity to step up as business owners. Let’s dive in: 

Reflect

Take time to consider how you’ve shown up in your community prior. Whether it was donating your goods or services to a local fundraiser, or starting a project that raised money for a specific cause, consider your past efforts. If you’ve never embarked on a project like this, have you had any ideas about it in the past? Reflect on your values and your personal desires to get involved and be supportive to others. What motivates you? It is to your great benefit to build a network in your community of people and causes you support, and who support you in turn. 

Reach Out for Feedback

Ask friends who are involved how your business could support community efforts. If you have friends who are currently involved in anti-racism work, ask them how you could support them or amplify their message. You’ll likely receive some fresh suggestions.

Take Cues From Other Businesses

In my newsletter this month, I highlighted Ben & Jerry’s statement on recent events, “Silence is Not an Option.” Along with this statement, they have also released a new flavor that benefits four different organizations “working on the front lines of the peaceful resistance, building a world that supports their values.” While Ben & Jerry’s is a fairly large corporation, their example is inspiring for businesses of all sizes. 

Here’s an idea more to scale for many of us. Many solopreneurs on Instagram are participating in the #amplifymelanatedvoices challenge, to uplift Black and Brown solopreneurs. Quieting their own social media presences and spotlighting these creators helps them materially, but also creates stronger networks of community among these solopreneurs. Some business owners have also been donating free services or products to Black people and organizations. For example, I’ve seen several herbal apothecaries that are offering free herbal products and consultations for Black people and organizers. 

Do some research and find out what others in your industry are doing, and how businesses in your area are responding to the moment. Then think about what you can do for your community that is authentic, helpful, and realistic given your resources. To ensure your actions are concretely helpful to the Black community, check out this read on do’s and don’ts of allyship

Consider Your Resources

All businesses are not alike, and while you may not have the resources to release a new ice cream flavor, perhaps you can use your platform to speak out. Simply adding your voice as a business owner to the current discussion around the importance of Black lives and the horrors of police misconduct can be helpful. The same goes at another time for another issue.

Perhaps you can donate your time or services to a cause, or offer them for free for Black or low-income people in your area. You might create a fundraising offering, where a certain percentage of proceeds goes to fund an organization in your community. If you get creative, there are many ways to chip in and stay in your business’s budget. Next week, I’ll be talking about how to use money mapping to figure out how much you can give to causes. Stay tuned for that. 

Above all, remember that whatever effort you make to contribute to your community, if you make it with good intentions, know that it will be appreciated, and likely returned to you down the road. The more we create good networks that are based truly on helping each other, the more we can each succeed in our endeavors. If you’d like another reflection-based exercise to go along with all this, check out my posts on how to do a mid-year review

☮

Angela

Image by Joan Villalon

Tools

By |2020-04-16T22:07:14-07:00December 5th, 2018|

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