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.
For you together we'll avoid burnout and step into being the smartest, wealthiest stylist that we can be. Hello, welcome back. So in today's episode, we are gonna talk about how to untangle and get organized in your finances. Um, I'm gonna just get right into it. I don't wanna waste your time and I'm gonna give you some actionable steps, uh, on how to do this.
So make sure you have a pen and paper and. Make sure you write stuff down as you go. You can always go back and listen to this again, but let's get down to it. Okay, so whenever I first started doing hair, I was told, okay, make sure that you have a business account and a personal account. Well, I had that. I had a business account and then I had a personal account.
But most of the time, I just ended up spending out on my business account. I was not organized enough to even know how much to transfer into my personal account. So what ended up happening is as I progressed along, you know, I started doing hair when I was 18, so I was very young and I didn't really have my life together or anything.
So, you know, there was shopping, I'd open credit cards, there was, um, Uh, Venmo, cash App, PayPal, all that stuff started happening. So every once in a while, if it was convenient, I'd spend out of my PayPal, I'd spend out of my business account, I'd, you know, buy something on Venmo. I mean, I never was organized in my business spending.
Um, if I did spend something like at a store, I would throw that receipt in a shoebox. I know there are so many out there of you who are still throwing your receipts in shoe boxes. Am I right? Let's not do that anymore. I'm gonna tell you exactly how to not do that. Um, so as it went on, you know, my spending was out of all these different accounts and I had no rhyme or reason to where I was spending those out of.
Well after I had my country Jesus moment in my finances. And I got really serious about getting organized. I realized I had such a huge mess. And I say that, you know, it happened at my come to Jesus moment every year as a self-employed stylist when tax time came. I would scour all of those statements and I would get my high letter out and, you know, spend literally days trying to get everything finished up for tax time to make sure I had all of my write-offs and to make sure all of my income was accounted for.
Well, that's just a disaster, and I just created so much more work for myself. So what I'm going to tell you is, You do need a personal account and you do need a business account. Not only that, I really, really, really urge you to go read the book, prophet First by Mike Malowitz. Um, and then after that one, read the Prophet first.
So, for salons by Ronette Enos, This methodology has completely changed my life and changed my finances for the better. Um, but we're not gonna get too much into that. I'll, I'll touch on that at the end. Let's dive into actually untangling your finances. So in order for you to even know where you're at, how much money you truly make, How much income you're truly taking home and what your expenses really are, you need to be totally organized and diligent in that.
So how you do that is I want you to print off statements. Really the whole 12 months worth, so maybe even work off last year just to get familiarized. Then started on this year. We're only in February, so you have now to start and really, really get organized in your finances and have an incredible year.
Knowing what your numbers are, because if you know what your numbers are, you can budget in your business and your personal life, and once you can get, you know, being self-employed, once you can get organized in your business and personal life, you can make leaps and bounds on paying off debt or reaching those goals or whatever you're excited about.
You can invest in those things because you have the money to do so. You know what your numbers are and you know what you can invest or you know what you can set aside for family vacation. So you're gonna print off 12 months worth of statements. Let's just say we're gonna do it from last year. Anywhere that you could have spent business money out of, print it off if it's Cash App, Venmo, PayPal.
Your 17 credit cards, your one credit card, your debit card, your personal debit card, your business checking, savings, you know, whatever you spent business expenses out of. You need to print those statements off. And then what you're gonna do is you're gonna go through and you're going to highlight with, you know, just a regular highlighter, um, every single expense that you had.
For each month, and then at the end of the month, um, oh, I guess I need to tell you this too. So if you are operating out of like Excel spreadsheet or Google Docs or whatever, you, you need to have something. I, and you could even do a paper ledger if you wanted to, but you need categories to break down.
Where are your spendings going? So on my website, if you go to www.smartwealthystylists.shop, s h o p, um, you can type your email in there and I will send you the free PDF that I use in my business. It is expense categories that my accountant gave me. That she uses in my taxes for my write-offs. So the categories are all totally aligned with taxes.
Um, after you go through and highlight each of those expenses, You will plug those totals per month into your Excel spreadsheet in that category. So for example, I go through all of my statements and I see that I spent stuff on Amazon for, like I bought a framer belt for do I do invisible beat extensions.
And so I bought one of those tool belt. That way I'm not having to lug a cart around with me picking up clips and all that stuff while I'm stitching. So I got a little tool belt to put all my extension stuff in. I bought that off Amazon. I used my credit card for it. Well, I loved framer's new foil launch, so I went and bought that off my PayPal.
So those are considered supplies. So every single statement I'm gonna go through and I'm gonna highlight those supplies. And then you tally all of those up per month and then put that in the supply category under the month. So we're starting in January cuz we're doing 12 months from last year. You go to the January up above, you'll be able to see up above where the month is, and then you're gonna go down the left hand side and find supplies and you're gonna put that total for supplies.
In that box, you're gonna continue to go through and do this for every single month In every single category there are, uh, supplies. I do extensions, so there's a hair category, there's color, there's booth rent, any category that you might need for your business. Even health insurance is on this spreadsheet that I provide you, and these are the categories that my accountant gave me.
So you're just gonna go through and highlight every single thing off of every single statement, and I know it's a lot of work, but. If your goal is to get out of debt, or if your goal is to be as organized as possible in your finances, or if your goal is to maximize your profit, You have to do this, and you have to be organized in your finances so that you can absolutely thrive.
I literally spent years floundering around having no idea what my numbers were. I had absolutely no structure for where things were being spent out of, where I was making money. I had no clue. So it's absolutely vital that you do this. Um, after you put all of those in and tally those up, you're also going to put in your income for each month at the top.
You know, like I said, there's, there's gonna be an income line, and then you're gonna have your months at the top. That's where you're gonna put your income and unpopular opinion. Here, I count my cash and I count my tips. You heard that right? I count every single penny that I make in my business. My dad always wanted me to be sure that I was independent, that I could make sure that I could take care of myself, that I didn't need no man.
Which I do have a husband, and he's wonderful and he loves that about me. But what happens if your spouse dies unexpectedly? Are you gonna be able to go out and purchase a home? Are you gonna be able to finance a car on your own? Are you gonna be able to take care of yourself? Are you gonna have enough to be able to invest in retirement?
You know, if you go to the bank and you say, listen, my husband passed away. I don't have his income anymore, but here's mine. You know, it shows you made $30,000 last year. But you tell the banker, well see, actually I, I, I made $80,000. I just didn't count that. Do you think they're gonna give you the loan? No.
They don't care what you counted, what you didn't count. If it is not on paper and you did not file your taxes that way, they will not give you the financing. So I absolutely count every single dollar I. Are my taxes more? Yes, but you know what? I implemented systems in my business so that my tax taxes are paid for every quarter.
When quarterly taxes roll around, I'm not trying to scrounge up money or have a garage sale to pay my taxes, my business. Pays for my taxes because of the systems that I implemented in my business. After you go in and plug in your income into those Excel spreadsheets, you can see right there, you can tally up all of your expenses for that month and see your income, and then you'll know what your net.
Profit was that month or your net income was that month. Um, net income is the money that you take home after all of your expenses have been taken out of your gross income, which is the money that you make behind the chair without any expenses being taken out of. If you want to budget and set goals in your personal life.
You have to know those numbers too. Um, getting untangled and truly having a grasp of what your numbers are is just such an empowering feeling. It always seemed so difficult for me and such a stretch to accomplish. Like I would always just think, I can't do this. This is just too hard. But you can. And it's really not that hard.
Yes, it takes some time, but you could tackle it one statement at a time. You know, just maybe print off one credit card. Do those 12 months worth of statements, do the next one. Then do those 12 months worth of statements, and you can just add those totals to the total that's already in your column whenever you go to add it to those categories.
I really, really want to encourage you because I know whenever you get into this you'll be going, oh my gosh, why am I even doing this? But if I could just, if you could just feel what I'm feeling like it's such. A clear path and such exciting feelings around knowing my numbers. You truly feel in control of your business.
You are the c e O. You know what is happening. You know your numbers, you feel in control. It's just. It's just really amazing and it's also exciting because when you start actually counting all of your cash that you're making, you're making a whole lot more than you think and all that money that you're just stuffing in your pockets and going shopping with, or you know you're going out to the bar or whatever you're doing with that extra cash that, you know, you don't, you don't count.
You're literally blowing so much money. I read a statistic the other day that was talking about opening wrath IRAs in the compound interest and how you could, if you started say at 20 years old, maxing out your IRA every year, you could retire with over $3 million in retirements. So if you look at that, that is a fairly small investment.
Over the course of a year, that's $500 a month. You actually counted your cash and you put all of that cash into an IRA every month you would be growing your net worth and your assets literally millions. And if you are a self-employed hair stylist who is not investing in retire, Yesterday was the day to start.
I've been investing since I was 19 into an IRA Granite. It was only $20 a month, I think, to start out, and now I max out my IRA every month, which is $500 a month, and I want to retire with plenty. I wanna be sure I can take my kids on vacations, my grandkids on vacations. I want to live my life to the fullest when I'm retired.
I want my husband and I to be able to travel together and go and see amazing places, and all of that is possible if you untangle your finances and you get organized in your finances and truly know right where you're at. I really believe that if you do this, you will a hundred percent improve your quality of life.
You will improve your business. You will have such more control and such a better grasp on your business and what you're wanting to do with your future. It's just such an amazing thing that anyone can do. So I would love to hear from you after you've done this or if you have any questions, feel free to send me a message on my Instagram.
It's Smart Wolfy stylist on Instagram. Um, I try to get back to messages every. And also you can post a question in the reviews on this podcast. That's the very best way to get me to answer your questions. I really, really, really hope that you utilize this. I hope that you take the plunge and actually do this.
Do it for yourself. Do it for your future. Do it for your children. But I promise you, you can't afford not. If you already are organized in your business and you know what your numbers are, I urge you to move forward and read Profit First. Profit First is such an amazing program and a system that you can implement in your business, and basically what he has you do is he had to open seven accounts, five at one bank and two at another.
And with Profit First, you collect a profit right off the top before any of your expenses are. When you open your five bank accounts, you'll have bank, you'll have a profit account, an owner's pay account, a tax account, and an operation expense account. So everything goes into your income account. And then on the 10th and 25th of every month, you move money from your income account into those other four accounts.
And they're based on percentages. Um, like I said, you just need to go and read the book or you can even Google it or YouTube it and try to figure out your numbers there. In my book, I go over in depth how to do this. Um, but I'll just give you kind of an idea of where I was and where I'm at now. So ideal numbers for Profit first in our industry are.
5% profit, 50% owners pay 15% taxes and 30% operation expenses. I'm operating at those now. However, whenever I first started doing Profit First, my business, so out of whack, I was only able to. Much different allocation percentages. When I first started out, my allocation percentages was 1% profit. 25% owners pay 9% tax, and 65% operating expenses.
So what the system does is it gives you a paycheck. All of your taxes are covered. You're taking profit before your expenses even come out and you have all of your expenses paid for. You know exactly where you're at. You have kind of a, I don't wanna say predictable income cuz you know, being self-employed, it does vary from month to month, but you have an idea of what you're going to make.
If you want to implement systems in your business, you have to know where you are, to know where you're going. So by untangling your finances and getting organized, everything else will be possible. So anyways, I don't wanna drag this on too long. Apply these actionable steps. Let me know how it goes. I would love to see you tag smart, wealthy stylist in your stories.
Um, you know, share with others how you're bettering your business. Like I would love to hear how you're bettering your business. So anyway, I will get off here and next week we are going to talk about how to set a budget, cuz by then you will have your expenses all organized and you'll know where your money's going and where it's coming from.
Um, I also have lined up some guest speakers coming up. One of my dear friends here in Joplin, she's another salon owner. Her name's Alicia and. Does a no spend. It is such an amazing thing. She does long, long, no spends and it just really ramps up her business. It ramps up her personal life. It's such a great exercise of using self-control.
Um, she will be coming on the show at the end of March. I can't wait for you guys to hear from her. Um, I also have a dear friend of mine who is a cleaning expert and she is so good at keeping your life organized, prioritizing time at home with your kids, really great cleaning, cleaning tips. She's just so phenomenal.
So anyway, I will talk to you guys soon. And I hope that this gives you clarity in your business and actionable steps, and I hope you all have an awesome day. Talk to you soon. 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 the 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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