How to Develop Good Money Tools So You Can Be As Generous As You Want

I know many kind and generous people who wish to give money to organizations or causes they support, or simply other people in the community who are in need. However, sometimes being clear on how much you can afford to donate is difficult.

To clear this up, you need to develop a solid financial base for yourself. I’m talking about using a spending plan, a savings plan, and money mapping to get clear on where your money is going. Let’s look at how each of these three tools can help you give more easily:

Spending Plan

First, you need to know how much you’re spending and where it’s going. Take a walk through your income and expenses and figure out how much you’re saving, if you are saving. The point of developing a spending plan (also known by the less-fun-sounding-term “budget”) is to get clear on what your spending is like right now, and how it compares to your income. When you look at this, you can see what your spending priorities currently are, and you can start to think about that critically. Do you really want to eat takeout food every week, or would you rather be able to donate that $35 to a conservation campaign like Protect Juristac? Looking at your spending and weighing your priorities can make room for the giving you want to do. To develop a good spending plan, check out my article with ideas and strategies here.

Savings Plan

Saving money gives you serious options, whether you’re saving for an emergency fund or a big purchase. You can also decide to dedicate a portion of your savings directly to giving. Maybe, you decide to save 5% of your income every month and donate it to the COVID-19 Hopi Relief Fund at the end of the year. Whether the giving comes out of your savings or your spending plan, having both gives you a fuller picture of how you can spend, give, and save for your goals. You can read more about creating a savings plan for yourself here.

Money Mapping

Once you’ve got the spending and the saving figured out, you can put it all together into a money map! Money mapping is a visual tool for organizing your own money system. It’s super helpful for both your business and personal finances. I’ve talked about the how-to of money mapping quite a bit on this blog, so I won’t go into detail. I recommend reading my full series on money mapping, and especially How to Use Money Mapping to Give Back.  The big pro of money mapping is that you can visually parse out how you will allocate for giving money. Whether it’s coming out of your business finances, your monthly living expenses, or you’re saving a big sum, creating a money map helps you see that and stick to it.

Want to Give? Get Organized!

The bottom line here is that donating money from a solid financial base requires getting organized. You need to go over your financial priorities and see what kind of money you have to work with. From there, you can make an informed and generous decision about where to put your money, without putting yourself in dire financial straits. I hope you found this article helpful. Currently, I have a few openings in my practice for some personal finance coaching clients, so if you’d like to work closely on your personal finances and develop a giving plan with support, reach out to schedule a free consultation!

 

 

Happy giving!

☮

Angela


This blog post is a re-publishing of the original article, “How to Make Donating Way Easier on Your Finances,” published in November 2020. For more articles on this topic, check out the “giving” tag. 

How to Make Donating Money Way Easier On Your Finances

This time of year, many of us are thinking about giving. Traditionally, we come together to be thankful for our blessings and share generosity. While many aspects of the holiday season will look different this year, your giving doesn’t have to! I know many kind and generous people who wish to give money to organizations or causes they support, or simply other people in the community who are in need. However, sometimes being clear on how much you can really afford to donate is difficult.

To really clear this up, you need to develop a solid financial base for yourself. I’m talking about using a spending plan, a savings plan, and money mapping to really get clear on where your money is going. Let’s look at how each of these three tools can help you give way more easily:

Spending Plan

First, you need to know how much you’re spending and where it’s going. Take a walk through your income and expenses and figure out how much you’re saving, if you are saving. The point of developing a spending plan (also known by the less-fun-sounding-term “budget”) is to get clear on what your spending is like right now, and how it compares to your income. When you look at this, you can see what your spending priorities currently are, and you can start to think about that critically. Do you really want to eat takeout food every week, or would you rather be able to donate that $35 to a conservation campaign like Protect Juristac? Looking at your spending and weighing your priorities can make room for the giving you want to do. To develop a good spending plan, check out my article with ideas and strategies here.

Savings Plan

Saving money gives you serious options, whether you’re saving for an emergency fund or a big purchase. You can also decide to dedicate a portion of your savings directly to giving. Maybe, you decide to save 5% of your income every month and donate it to the COVID-19 Hopi Relief Fund at the end of the year. Whether the giving comes out of your savings or your spending plan, having both gives you a fuller picture of how you can spend, give, and save for your goals. You can read more about creating a savings plan for yourself here.

Money Mapping

Once you’ve got the spending and the saving figured out, you can put it all together into a money map! Money mapping is a visual tool for organizing your own money system. It’s super helpful for both your business and personal finances. I’ve talked about the how-to of money mapping quite a bit on this blog, so I won’t go into detail. I recommend reading my full series on money mapping, and especially How to Use Money Mapping to Give Back.  The big pro of money mapping is that you can visually parse out how you will allocate for giving money. Whether it’s coming out of your business finances, your monthly living expenses, or you’re saving a big sum, creating a money map helps you see that and stick to it.

Want to Give? Get Organized!

The bottom line here is that donating money from a solid financial base requires getting organized. You need to go over your financial priorities and see what kind of money you have to work with. From there, you can make an informed and generous decision about where to put your money, without putting yourself in dire financial straits. I hope you found this article helpful. Currently, I have a few openings in my practice for some personal finance coaching clients, so if you’d like to work closely on your personal finances and develop a giving plan with support, reach out to schedule a free consultation!

 

 

Happy giving!

☮

Angela

 

Roundup: At Peace With Money’s Best Educational Posts to Level Up Your Financial Learning

This week, please enjoy a roundup of some of my best educational posts yet. I’m getting close to my two-year blogging anniversary! In that time I’ve written up quite a few how-to’s, exercises, and perspective pieces on handling money. Below, I’ve pulled out some of my favorites, in the categories of business finance and personal finance.  I’m recommending these articles in particular because they contain foundational info that informs my practice as a profitability coach. The tips and perspectives that I blog about here are tried and true. I share them because they make a huge difference to my clients, just as I hope they’ll make a difference for you! If you’re looking to kick your financial learning into high-gear, let these resources be your guides:

Personal Finance Articles

Business Finance Articles

Suggested Readings – My Favorite Financial Books

I hope these posts are helpful for you! I find that the practice of writing a blog has been a great practice in building up an archive of knowledge – one that I hope is just as helpful for you as it is for my clients.

☮

Angela

The One Indispensable Spending Guideline: Needs Vs. Wants

One spending guideline that is indispensable is identifying your needs versus your wants. Difficulty understanding this can result in either over-spending or over-saving. Ultimately, it can reflect a lack of clarity around our values around money. If you feel stumped by this concept, or aren’t sure how your spending behavior measures up, don’t worry! We’re going to parse out the details right here:

Needs vs. Wants

Many of us are familiar with differentiating between needs and wants. It’s a skill we cultivate throughout our lifetimes. Although we sometimes run into pitfalls, we are ultimately making thousands of decisions a day – it’s important to have a little compassion for ourselves when we’re thinking about our financial decision making.

So, what makes a need, a need and a want, a want? Basic necessities you need to take care of yourself and live with a certain degree of comfort are needs. Nutritious food, sound housing, quality clothes and shoes, and things like electricity, car insurance, etc. definitely fall into the need category. We also have needs related to caring for ourselves. This is where things can get tricky – many people have difficulty differentiating between needs and wants here. When considering a purchase, it can be helpful to try and identify the underlying need. For example, if you want to spend money on a day-long spa retreat, but what you really want is some quiet time to yourself, there are likely other ways you could meet that need. Especially if it’s a matter of staying in your budget or not, sussing out the need underlying the want can be very helpful.

Over-spender, or Over-saver?

You may have some idea of whether you fit into either category. If you’re not sure what over-saving is, I recommend reading my article about it – it could be enlightening. When it comes to identifying needs vs. wants, over-spenders and over-savers tend to behave differently. Over-spenders frequently feel every purchase is filling a need, while over-savers tend to see every potential purchase as a want. In both cases, these spending habits can cause problems. Over-spenders can find themselves without important savings accounts or in debt, while over-savers can hold off on essential purchases like medical expenses. Both behaviors result in a deficit of self-care. To really take care of ourselves financially, we need to find a midpoint, where we have our needs met, and a few of our wants too. Someone who has really good thinking about this is Vicki Robin, who speaks poetically about finding your “enough” in Your Money or Your Life. You can read my book review here.

I hope these thoughts will help you examine your own spending behaviors. If you’re interested in a little more self care, check out my Facebook page for Financial Self Care Fridays, all month at 8am PST via FB Live. I’m providing prompts and accountability to help you develop a financial self care habit. I hope you’ll join me!

☮

Angela

Image by: Artem Beliaikin

Why Your Business And Personal Finances Are Definitely Interrelated

Perhaps it seems like a no-brainer, but it’s important for business owners to keep in mind: Business and personal finances are intimately related. All of us have personal financial lives, and they dictate what we’re able to do in our business. In the same way, how our business is doing financially vastly informs what we’re doing in our personal financial lives. Today, I’m talking about how the two effect each other and why it’s important to be aware of that.

Where Business and Personal Meet

In the past, I’ve written about the importance of separating the two by opening different accounts. Keeping things separate means more clarity about what’s going on in both financial realms. However, just because you want to look at them separately, doesn’t mean they shouldn’t inform one another. I’m also in support of checking in with your lifestyle costs and making sure your target revenue aligns with those. I’m a firm believer in making sure your lifestyle costs and your life’s goals are the things that inform how much revenue you want your business to take in. 

Many finance and business coaches like to throw out round numbers: “Increase your revenue by $5,000!” “Have your first $100K year!” However, these are more helpful in their marketing schemes, rather than your real life. Personally, I find that when your income goals are directly linked to your lifestyle costs and your long term goals, they have much more meaning to you. Doing the work of figuring out what your costs and goals are also keeps you checked in with where your money is going, and where you are going in your life. The way we spend our money and what we do with it directly correlates with how we treat ourselves. In my mind, a revenue target should be an invitation to self care and personal fulfillment.

Working Backwards

If you’re struggling to picture how your business income goals can be informed by your lifestyle costs, I invite you to try a little exercise. In my money-mapping series, I go in-depth on how to create a money map that encompasses your business earnings and your personal accounts. You can sketch one up for yourself, and then start from the personal end on the right. Total up the amount of money you need for financial goals and living expenses, and then move toward the business end and see whether your business is producing that amount of revenue. A big part of this exercise is actually understanding what your lifestyle costs you – and that’s important to your business finances too!

The Whole Pie

The bottom line here is that it’s important to look at both your personal and your business finances separately, and as they relate to each other. We have to look at the whole pie, so to speak. Many business owners might have one field or the other down pat, but having confidence in both areas takes a bigger understanding of how they work together. If you feel you have a lot of clarity in your business but struggle to pay personal bills, or vice versa, it’s time to take a step back and re-evaluate. The two inform each other.

If you appreciated this post and found the opportunity to think about personal and business finances helpful, you’re in for a treat! I am beginning to add personal financial coaching into my practice, and this month I’m looking for three small business owners to get started working with at a special low introductory fee. If that’s something that interests you, click here to set up a free 30-minute consultation, where we can see if we’d work well together.

☮

Angela

My Current Financial Goals!

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

 

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

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 I

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

All About Oversaving, And Why Overcoming It Can Strengthen Your Business

Often issues with money stem from not having enough – so when you hear the word “oversaving,” it might not sound bad. However, oversaving can be a serious issue that may be blocking the potential of your business. It may also point to anxieties that need to be resolved. Let’s take a look at what oversaving is and what you can do to overcome it.

What Is It?

If you experience anxiety or guilt over spending money, even on basic necessities, you may have oversaving tendencies. You might struggle to spend money on your business or operating expenses. Alternatively, it might be hard for you to spend on something other than reinvesting in your business. Or, you might have a hard time parting with any money know you could save it for retirement or business emergencies.

Oversaving both stems from and enhances anxiety, stress, and burnout. It often comes from a fear of scarcity. While saving money is an important skill, if it’s taken to an extreme, it can keep you from spending money to solve urgent problems in your business and your personal life.

What Can You Do About It?

Saving money is a great habit, but the key to overcoming the oversaving habit is to get strategic about your saving. Rather than living in this panicked feeling of “I have to save every dime I possibly can,” create some money systems! Coming up with savings goals, establishing a spending plan, and automating your money are all great ways to introduce strategy and systems. 

Savings goals can be especially helpful, because they can lend purpose to all that saving, but they also create an end point you’ll eventually meet. Limiting and directing your savings in this way can help curb the habit and assuage your anxieties. When you use the Profit First system, you put aside money to pay yourself first, but you also save for taxes, put aside money for operating expenses, and also distribute profits every quarter, which are meant to be spent by YOU so you can reward yourself for your hard work. If you’re interested in learning more about the Profit First System, check out the first 5 chapters of the book here.

Doing some emotional work around money can also really help you clear up your oversaving. I recommend reading Bari Tessler’s The Art of Money for more ideas about this. She helps you unpack your feelings around money and combining the practical with the emotional. If you’re interested, check out my book review.


Oversaving can be a sneaky habit, difficult to catch and overcome, but I believe in you – you can do it! And anyway, saving is so much more effective when it’s done in order to meet a goal. If you enjoyed this article, I suggest looking into Profit First. If you want to chat more about these ideas and take a look at your money, you can take a look at my service packages and book a call. You have a few more days left to set up a Quickbooks 2020 Reboot, which you can schedule here. Doing a year-end review could help you identify a couple goals to save for!

☮

Angela

Photo by Sharon McCutcheon

Financial Advice: How to Avoid the Bad and Find the Good

Financial advice is important, but the wrong resources can steer you in a rough direction. You don’t want the resources you’re looking at to lead you to a place of boredom or despair due to unrealistic goals. Last time, I gave some tips on finding the right financial advice for you, but today I want to break down some red flags to avoid. Then, we’ll look at some signs that show you’re on the right path!

How to Discern an Unhelpful Resources

A financial resource may not be right for you if:

  • The resource is targeted to an income level higher than yours. Even if you aspire to increase your income, financial advice will provide you with feasible next steps if it acknowledges your starting point. Starting out by reading investing guides for people with a $100k to distribute might leave you feeling alienated.
  • The resource chastises you or shames you for habits or behaviors. While many of us do carry emotional baggage around money, I firmly believe we should not be put down for this, or for our financial habits. Shame and blame do not facilitate financial learning. If a resource is telling you to quit things that make life enjoyable, or scrimp every penny as a path to wealth, evaluate these strategies carefully.
  • The resource uses financial jargon you don’t understand. Something like this can quickly lead you to boredom or discouragement. You can always look up the vocabulary words you don’t know, but finding something more accessible makes for a more pleasant and sustainable learning experience.
  • The resource doesn’t reflect your vision for your business or personal finances. Not everyone needs or wants piles of cash – so you won’t enjoy a book about how to get that if that’s not what you want!

Signs the Resource is a Good Fit

Alright, we’ve looked at red flags, now let’s talk green flags. A resource can be great for you if:

  • The resource acknowledges and takes time to help you work on your emotional stories and stressors around money. (One of my faves for this is The Art of Money by Bari Tessler)
  • The resource is accessible, easy to read or consume, and enjoyable. The more you want to come back to something or refer to it, the more helpful it will actually be!
  • The resource is tailored to your version of financial success and gives you steps for moving towards it.
  • The resource is targeted towards your income level.
  • The resource focuses on long-term solutions like mindset changes, money systems, and improved habits rather than “hacks” or penny-pinching.

If a resource ticks all these boxes for you, it will probably set you down the path to financial wellbeing! And it will feel a lot better than trying to read something that just isn’t for you. Next time, we’ll talk about starting the search for resources. For now, feel free to do some good ol’ googling. You can also check out my article on some of my favorite resources. I post more resources and video summaries of important concepts on Facebook, so check that out and see if you get green flags!

☮

Angela

Image Sources:  David Iskander, Thought Catalog

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