Welcome to the Smart Wealthy Stylist Podcast. I'm your host, Emily Carden. Over here, we are dedicated to helping hair stylists manage their finances, stay organized, healthy, and manage their time and mental wellbeing. We focus on staying healthy in all areas of life and maximizing productivity. If you're a hair stylist looking for these things, this is the podcast for you.
Together we'll avoid. And step into being the smartest, wealthiest stylist that we can be.
Welcome back. Last episode, we talked about how to untangle your finances and how to establish spending categories. So this episode is going to build on top of that one. If you have not completed the Untangle your finances, it's number two episode, you need to be sure to do that so that we can move forward and I can teach you guys how to budget.
So today's episode, I am going to run through exactly how to budget. The reason that I think a budget is so important is because without a budget I was not able to use my finances to their fullest. I ran across some really shocking statistics when I was doing some research the other day, and I'm gonna read a few of those to you.
And if any of these sound like you, you probably need a budget too. 20% of Americans don't save any of their annual income at. Even those who do save are not putting away very much. Over 40% of Americans have less than $10,000 saved for when they retire. Two thirds of Americans would struggle to scrounge up a thousand dollars in an emergency fund, and the average American saves less than 5% of his or her disposable income.
And the last one is of the Americans who have savings accounts, the median savings account balance is $5,200. It is absolutely wild to me that. That is our statistics as a nation. But I was one of those statistics myself, not anymore, because I've taken my finances seriously and really realized the importance of having an emergency fund and being outta debt and having consumer debt, you know, like credit cards and stuff.
So, I really do believe that having a budget implemented is absolutely of utmost importance. So let's get started on exactly how to implement your budget and how to do it. And I will also post a YouTube video on this because it is kind of hard to tell you how to do this over a podcast because it's kind of a visual thing.
So the very first thing is I am using my budgeting tool that I specifically designed for hairstylists. It is called Your Guide to Becoming a Smart, wealthy Stylist, the Ultimate Planner and Expense Tracker for self-employed stylists. It is specifically designed because it has, um, your monthly budget, it has your expense category section.
It has color tracking, it has goal setting. It has everything that I talk about and. I didn't have a budget tracker that fit my needs. Every time I would buy one, I would end up having to alter it in some way. So I just made my own. And you can get them on Amazon, you can get them on my website. I will link those in the description so you don't have to use my budgeting tracking book.
You can just use a paper ledger if you are that strict on a budget. I am serious at just budget. You don't have to use a fancy planner or a budget tracker or anything like that, but if you do have the funds to purchase one, this is specifically designed for hairstylists. So let's go ahead and dive in.
The very first thing that you have to do is start tracking. In my budget tracker, there is a section called Expense Tracker. And you'll write down the date, what you bought, and then in the category you'll. Pick one of the categories that we discovered in the last podcast, and then the amount, the entire month that you do this.
You're gonna wanna track every single thing that you spend in your business. Then at the end of the month, you are going to total up those categories and see how much you spent in each category. After you see what your totals are, you might be super surprised on how much you spent or even be pleasantly surprised to see that you spent less than you thought you were going to.
Those totals are going to be the number that you use to set your budget the next month. That first month, you can't really set a budget, especially if you don't know. How much you're spending. So that first month is basically just tracking, just to see where you're at, to get a feel, to figure out where you could possibly lower expenses or put more money into another category.
For the next month, you're gonna write down all the categories that you spent out of in the category section with the totals that you spent last month. That is going to be your guide for your. For that next month that you're budgeting. There's also a section in there that says Monthly budget. You can track your income, you can track bills and fixed expenses and cost of goods, so for your income and the cost of good section, I just sum those up weekly.
And then put them in at the end of the week and the bills and fixed expenses. After you've tracked, you can see where stuff comes out every month. So that's bills and fixed expenses would be your booth rent, your health insurance, those types of things that come out on the same day every month. It's nice to have those down and the date so you know when they're gonna come.
So the next month, this is, we're talking month two. You already have your categories established. You already have transferred over how much you spent from month one into month two, and have a guide as to how much you're spending where you need. Or where you want to be at because you've adjusted your amounts to say, okay, well I'm spending too much on products.
I really need to adjust that. I'm gonna drop that by $200. Or you just try to figure out where you need to be financially and what your goals are and adjust those accordingly. This is where it. Exciting. So after you've tracked month two and you, you have your amounts wrote down what you budgeted, and then next to that column you have a column that says spend.
So this is where you're gonna total up what you spent in month two. Then next to that, it says difference. So you're gonna subtract what you budget. From what you actually spend. Sometimes it'll be a negative. Sometimes it'll be a positive, and if you didn't spend anything in that category at all, you're just gonna mark a line through it.
But that's gonna tell you if you went over budget or under budget, or didn't spend at all. And then at the bottom it says totals. So I total up what I budgeted. I total up what I spent out of all the categories, and I total up my difference. And that will tell you if you overspent in your budget or underspent in your budget.
And then I take what I actually spent for that month and subtract that for my income. That will tell you what your net income is. Your net income is what the income that you have left over after all your expenses have been taken out. Your net income is what you're going to work your personal budget off of, but you really can't do your personal budget until you know where your spending's at in your business.
After you're done tracking and going over your budget and where you landed, there is also an income tracker. I track my income daily. I write the date. The source, meaning was it credit card, cash. Whatever it was, and then the amount, and I think that that's really important to have a written account of that, even though I ha, I use vagaro for all of my credit card processing and it's really been a great program.
I've, I switched from Square. I've really loved it, but I still like to keep a paper tracker of that. But after you go over your budget, there is a page in here called, it says notes at the top, but underneath that it says, what can I change next month? This is one of my favorite sections because I think that goal setting is of utmost importance.
So after reviewing your month, you're going to write down, well, I really need to cut spending on. Or I would really like to put more into savings, or I would really like to put more money in my pocket, so I'm gonna do it by doing this. And then underneath of the what can I change next month? There's a top priority section and a reminder section, top priority is after reviewing.
Your ideas on what you can change next month. I like to narrow that down to one thing. If you have one pinpointed targeted goal, it makes your goal reaching happen faster. And then next to that, it says reminders. And sometimes in that one, I'll write any important events that I have coming up, or sometimes it's an inspirational quote because after a while, Budgeting can become a grind.
However, when I see the fruits of my labor, it is so encouraging and exciting because I know that I'm making a difference in my financial journey and I'm making leaps and bounds because I'm staying dedicated to the vision. So a lot of times in the reminders I will write something encouraging or, you know, just keep going.
Thi look how far you've. Then on the page after that, it's another page that says notes at the top, and it has just a really cute little polka.like graph and then just a blank section underneath here. I kind of do brain dumps ideas if I hear something. Like when I'm listening to podcasts, this is usually where I take notes, just quick little jot notes.
Then after that page, it brings you right back to where you start again on the monthly planner page. This is a blank undated 12 month budgeting planner, so you can write in the date and fill in your blank calendar right from the start. This is a great place to write down important appointments. You can schedule your budgeting meetings with yourself.
I try to make budgeting as fun and sexy as possible, so what I do is after I do my morning routine and get ready to go, I get dressed up, do the full hair and makeup, and I get my laptop, my budgeting book, and I head to my favorite coffee shop here in Joplin. And I sit down and have a date with myself. I enjoy a pastry.
I go over all of my budgeting stuff. I tally up all of my spending, and then I plug those categories that I tallied up in my budgeting book into my Excel spreadsheet with my, all of those categories in it that my accountant gave me. This way, not only are you budgeting and staying financially accountable to yourself, but you are staying up to date month to month on your tax stuff.
So when tax time comes, it's all finished. There's no more scrambling at the end of the year trying to get all of your receipts put in and all your stuff put in. It's all done. And not only that, it gives you an excuse to get dressed up, to treat yourself, to have a little celebration at the month end for being diligent in your budget tracking.
It's such a reward. And it just makes me wanna budget that much more. So as you move through budgeting and getting familiarized with it, it's really just rinse and repeat. You just keep copying those same categories. And if you have an extra expense that month at a category in or. If you find that you're never spending out of a certain category, you can take it off of your budgeting sheet because every month you can kind of reassess where your budget's at and see where you can move.
Um, I will also cover personal budgeting on a different episode, but figuring out your business budget is the second most important step next to untangling your finances so that you can implement a personal budget. One last thing that's really important when budgeting is remembering your why. So your why is going to be what you're driving force behind doing this is, is it getting out of debt?
Is it just becoming more organized? Is it wanting to go on more family vacations? Is it trying to save up a down payment for a salon construction loan because you wanna be your own salon owner, or maybe it's you're ready to move out and do booth rental. Whatever your reason is, your why has to be big because sometimes it feels mundane when you're budgeting.
But it is one of the most important things that you can do for yourself to grow your financial wealth and health, and just truly thrive in doing this profession. So let's recap real quick. Month one, you're going to just track expenses and see where your spending is and established categories. Month two, you're going.
Write your totals from month one categories into month two's budget to set the spending limits for your month two budget. Month two, you're going to track all of your expenses once again. Then you will enter your totals on what you spent in those categories into the spent category. You will subtract those to figure out where you overspent or underspent or didn't spend at all, and then the following month, you're going to, once again write three.
You're going to write your categories. Where your new budget is, where you know your new adjusted numbers, and then start tracking all over again. This will keep you in check. You'll feel in control of your finances, and you'll know where you need to adjust spending in order to reach your goal. Hope that this was short, sweet, and applicable for you.
Uh, just a reminder, if you want the expense sheet that I use to plug in all of my stuff for my Excel spreadsheet, it is you just go to my website, scroll to the bottom and subscribe, and I will email that to you. My website is www.smartwealthystylist.com. You can also buy. Budgeting planner on there, or you can go to Amazon and get it on there.
I will link both of them below and this was very helpful for you and I will see you on the next one. Thank you for listening in today. If you have a burning question or a topic you want me to cover, leave a review and ask the question in their review. This is the best way to get your questions answered.
Just remember, you are a smart, wealthy stylist and you are capable of anything you set your mind to. I'll catch you later. Don't be a stranger.
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