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 Tailor Your Income Goals to Your Life

One of my favorite sayings comes from the artist-turned-business mind Jennifer Armbrust: “A business is a needs-fulfillment machine.” Your business exists to support you; to fulfill your needs. However, if you don’t have a clear picture of what those needs are, it can be difficult for your business to fill them. This week, I’m suggesting that to really financially care for ourselves, we investigate the true costs of our lifestyles. By doing so, we will be able to make informed decisions about what income goals we’d like our businesses to meet. 

The Process

Time to take a realistic look at how much money you’re spending every month. Dig up the past three months of your bank and/or credit card statements. (For most of us, these should be available online). Go through line by line to see where your money is really going. Total up all the expense categories, i.e. groceries, utilities, rent, etc. 

Once you’ve got your totals, you have a realistic picture of how much money you need on a monthly basis. At this stage, you may find it helpful to look critically at your lifestyle, and see if there’s anything you’re interested in culling. If you’re looking for some ideas around creating a budget or spending plan, I’d recommend these articles of mine. Click here. 

Set Informed Goals

Whether you decide to create a spending plan and reign in your expenses, or feel satisfied with your lifestyle costs, you now have a complete picture of your financial needs. At this point, you can now set informed income goals that are designed to meet those needs in your personal life. Without this crucial information, your goals will just be shots in the dark, aimed at an amount of money that “sounds nice” but doesn’t tangibly satisfy a need.

Additionally, once your have this information, you can also take a look at how your business is doing in its current state. Is it making enough to support you? Whether you’ve got a side hustle or something you want to stretch into a full source of income, checking in with this question is important. If your answer is no, you can start to strategize around how you might close that gap. For more ideas on this, check out this post.

I hope this post inspires you to keep working to create a business that truly meets your needs. If you would like to work with an accountability partner and guide to identify your values and shape your finances around them, check out 4 Week Money Refresh, a package of 4 private 1 hour personal financial coaching sessions on early bird sale through April 15th!

Angela


This article was originally posted in 2019 as part of a month-long series on  financial self-care. Specifically, I’m focusing on what you can do with your money to take care of yourself and improve your business in 2019. You can read the whole series by clicking here. 

Image:  CoWomen

The Life-Changing Magic of Using Money Tracking Software

Many of us resist looking at our finances on a regular basis. We ignore looking at our bank accounts and just “hope for the best.” This strategy leads to financial anxiety, even though that’s often what we’re trying to avoid when we do this! Using a money management software is often the secret ingredient in transforming this anxious-avoidant cycle so many of us engage in. Money management software provides us with an easy way to keep track of our money, where it’s coming from, and where it’s going. Getting an easy glimpse at this on a regular basis can simplify financial decision-making. In the long-term it can help us significantly reduce our money stress. If you think I’m being hyperbolic with the title – I’m not. I’ve seen serious transformation happen when people start tracking their spending. 

So, what are some money tracking software options? If you read my last blog post, you’ll know that I have a few tried and true options I recommend to my clients. Here, I compare and contrast these:

  • Good old-fashioned manual tracking. You can do this with paper and pencil or in a spreadsheet. Some people who have a lot of cash transactions in their business or personal finances might prefer this one. Especially in your personal life, it can be nice to keep a notepad or a note on your phone to record cash transactions so you don’t forget about them. However, this is definitely the most laborious way to track your money, and the amount of time you need to put in to do it effectively can prevent people from keeping up the habit. For this reason, I generally don’t recommend it, unless you know you’re someone who will keep up with this system at least once a week.
  • I have personally been using Mint for the last five years. It’s free, it connects to all your accounts and automatically imports your spending information, and it’s very easy to use. It has an app, which is really convenient. However, what I don’t like is that in order to get all the info that’s really valuable, I need to download the data into a spreadsheet. I personally do this at the end of every month to wrap-up my finances. It’s also important to note that as a free program, they are keeping (and likely monetizing in some way) data on your spending habits, and they are constantly advertising to you on this platform. It’s important to be wary of the barrage of credit card offers, banking deals, etc. It’s very basic, but it’s a great tool to get started with tracking your spending. 
  • MoneyGrit is a new software from Karen McCall who runs the Financial Recovery Institute, and I’m loving working with it so far. The interface provides a more intentional and hands-on experience when it comes to planning your spending. They actually lead you through a process of reviewing your intentions when setting up your spending plan! This emotional dimension can be really helpful in creating a connection between you and the decisions you make with your money.  The program also includes extras like worksheets to set goals and plan out financial self care action items. Lastly, this software factors periodic expenses into your spending plan, which is something a lot of money tracking softwares miss completely. 
  • Your Need a Budget, or YNAB, does a great job of emphasizing putting your money to work for you. While I’ve personally never used this tool, a lot of people love it for that reason.
  • Quickbooks is the standard when I’m working with clients on their business finances. This is less tailored to personal financial self care, but worth mentioning here because business and personal finances are interrelated

The main takeaway here is that there are many different tools you can use to track your spending and make financial clarity more accessible. I definitely recommend using an automated software over manual tracking, because most people are more likely to actually use an automated program. Tracking your finances is truly life-changing. You can see the effects of the financial decisions you’re making in real time. When you choose to save money, pay down debt, or spend on something you really value, a tracking program reflects that back to you. Using a tool helps you keep track of your financial growth and provide transformative motivation.

If you’re interested in doing this work with an accountability partner, we go deep into looking at your spending from a non-judgmental point of view in my private coaching offering, 4 Week Refresh, which I am offering through the end of January. Check out the details of that program and reserve a space here.

☮

Angela

Image: Ben White

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

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 II

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

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

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