Are you one of the 73% of Gen X women who say that their financial situation keeps them up at night? That’s a staggering number. Of millennials, 77% of them are reporting that they’re up at night because of their finances. Those are staggering numbers.
Men tell me that women don’t want to learn about financial literacy because it’s not sexy enough. Yet when I meet women, and we talk about money, they all say they want to increase their financial literacy. Sounds like one more area that we might be misunderstood in terms of what men think turns women on. Today, we’re going there, financial literacy.
Financial literacy is your knowledge and understanding of money and money-related concepts.
It’s important, but it’s not the only factor in creating financial well-being or wealth in your life. I think of financial literacy as understanding how money works, that it’s a tool in how you can use it to create more in your life, more fun, more joy, more health, more time, and more growth as a human being. These are important things that help us thrive.
Knowledge is critical, but having a clear plan with actionable steps is even more important, especially when it comes to long-term financial stability as a business owner. Financial health and physical health are very similar. You want to schedule regular checkups, make sure you’re hydrated, get enough sleep, practice good hygiene. One of the reasons why we want to practice good hygiene and take care of ourselves is so that we don’t get sick. If we get sick, we want to make sure that we’re staying home, that we are covering our mouths when we cough, that we’re sneezing into a tissue so that we don’t get other people sick, so that we don’t then start to impact other people’s wellness.
When you don’t take care of your financial health and your financial hygiene, it does have an impact on other people, especially if you’re a business owner, and you have vendors, employees, contractors, coaches, or programs that you’re paying for. If you’re not taking care of your financial health, you can then negatively impact their financial health. As a business owner, financial literacy and well-being are critical.
How I practice self-care and financial wellness.
I live below my means.
Now, over the years, my means have become quite substantial. Me living below my means, I get it, it’s not that much of a sacrifice, but at times it 100% has been in my life. I get it and we still live below our means. I pay my bills on time by setting up automatic payments, I create sinking funds to plan ahead for things.
One of my favorite sinking funds is for the dogs. Everyone knows pets can be pricey. One emergency can be a little dicey. I had a friend share with me that her dog had eaten an entire bottle of Advil or something like that. She had to wrestle them to the vet and do the whole charcoal procedure and it cost like $4,000. Holy crap, right? I remember hearing that going like, “Oh, my gosh, I don’t want to be in a position where I immediately have to manifest $4,000, that would be really stressful for me with everything else that we have going on in our lives.”
So I created a sinking fund for my dogs and my maximum on my sinking fund is $4,000. I haven’t hit it yet. But every so often I toss some money in there. I’ve got a couple of $1,000 in there. Then I also use it for when I buy them a new toy or they go into the groomer and I need to pay for the groomer, or we’re boarding them overnight. That is the sinking fund for my dogs so that it’s never a surprise and then it’s planned for.
I review my statements on at least a monthly basis to create awareness.
This is not me judging how I spent my money. This is not that at all. This is for me to create awareness. First of all, I want to make sure I’m not being ripped off. I’m not being charged for something that I didn’t realize I was being charged for because that happens. But I really look at it and go, “How does what I spent my money on align with my thrive list?” Yes. Awesome. So glad I spent money on this. Doesn’t align with my thrive list? I’m going to think about that before I do that again.
I prioritize creating a solid financial foundation like life insurance, car insurance, health insurance, and emergency fund.
Sometimes this sucks because I have on a number of occasions looked at my husband, especially when we were making way less money and I’m like, “Where is all our money going? Where’s it going?” Because it goes out before it even hits our checking account. It’s going out to life insurance, car insurance, health insurance, the emergency fund, and the 401(k)s before it even gets to our account. I’m like, “Where is it all going? Where is it?” The answer is it went to being a fucking adult. That’s it. It went to being an adult. End of story.
I will tell you that I’m really, really grateful that during our hardest financial times, right before we went bankrupt and we were selling everything we owned to put food on the table, diapers on the kids’ behinds, and attempting to cover the mortgage, which we didn’t do so well, we still paid the life insurance because it could have always been worse. I can’t even imagine what would have happened if something happened to my husband during that time. I was working. I was actually the one making more money at the time. But we had the debts on the business from him and we had other bills and there was no way I would have been able to afford our existing life as moderate as it was just on my salary.
These are the things we do for those moments that we never want to think about. We plan ahead as best we can financially, meaning that we don’t wake up one day and just book a luxury vacation, buy a condo, or decide to pull the ripcord on business. We have a rule that we never upgrade an appliance until we have to because the second we upgrade an appliance, you know what happens, another one will go and then we’ll have to upgrade that one. But planning ahead like that makes a big difference.
I had a client who messaged me about money the other day and I was like, “Oh, you know, I screwed this up this month. I screwed something up this month. It’s all good, we’re all going to just survive.” When I said that she was like, “Tara, I got a little frisky with the credit card and here’s what happened.” This is why you also want sinking funds. I decided that I was going to do three things at once. I was going to buy my daughter Pitbull tickets for her birthday, I was going to book the getaway to the spa with my husband that we’re taking in November, and I was going to embark on a home organization project which yielded quite a large amount of money spent at The Container Store.
You hear me, right? I know those of you with rainbow-colored bookshelves, you know what I’m talking about. That Container Store, whoo! Also though, I thought I was buying two of something and I wound up buying two eight-packs of something. Listen, your girl is not perfect. I did those three things in the same month, which was probably a little over $4,000 that I did not expect to spend. I didn’t have a sinking fund set up. Then I was like, “Hot damn, I have to get this paid for within this billing cycle, or else I’m going to get charged interest.”
I was like, “Oh gosh, I need to pay this off.” It was like a marathon the other month of me pulling money out of stashed places, taking a little profit earlier than I expected, not putting money into my investment accounts the way I had hoped to make up for this amount of money that I spent.
It happens to all of us. There was nothing wrong with me doing all three of those things. I just couldn’t do them all in the same month. I needed to have a little more planning around it and not be so impatient, not be so impulsive with my money. We need to delay gratification.
Some of the other things that I do with my money are things like delaying gratification and opting out of as much consumerism as possible by aligning my spending with my values.
Listen, this country runs on consumerism, they want you to buy and buy and buy. As a matter of fact, with the advent of technology, they’re getting really smart about it. They are gamifying your shopping experience. They’re making it easier and easier for you to hit that button buy now. Buy now, pay later, all this, they just live on our debt. This country survives. 70% probably of our GDP comes from consumerism, and our debt and us not being intentional with our money. So I opt the hell out of that nonsense. It is a radical act. That is my protest. That’s my activism, folks.
I make a point to make sure my beneficiary information on things is up to date. I practice having open and difficult conversations with my husband about money. Those are my hygiene practices.
Now, it’s important to be taking care of your personal financial health. But it’s even more important when you’re a business owner. If you are following personal financial advice on the internet, on an eight-second TikTok, god help us, but if that’s where you’re getting your personal finance advice from, first, well, make sure they’re not 20 but also make sure that it’s coming from another small-business owner because it’s different.
Your personal finances will impact your business finances and vice versa.
Spend too much at home and it will throw you into panic selling and you taking on way too much work in your business. By the way, if you don’t know what you’re spending at home, you have no fucking idea how much money you need to make in your business. If you haven’t downloaded my Revenue Goal Calculator for whatever your issue is, I would suggest you get on it. If you are not talking to your partner at home, if you don’t have a clear plan for what is happening in the home, I suggest you get on it. Have a real conversation and understand exactly how much each of you needs to contribute and how much your responsibility is and then set your revenue goal around that.
Spend too much in your business and you may impact how much you’re able to pay yourself.
This is how most people, most small-business owners wind up living paycheck-to-paycheck. It’s not wrong. I have sacrificed my own pay at times throughout the last eight years in business, but I did it intentionally and with a plan, intentionally and with a plan. Not through avoidance, not through hoarding, not through overspending. Intentionally with a plan. This is why my team and I have created a Revenue Goal Calculator for you. We have programmed the spreadsheet to do all of the math for you. All you need to do is plug in some of your personal expenses and the calculator will tell you how much revenue you need to pay yourself to meet your expenses.
I love this calculator. I’m obsessed with it. I use it multiple times a year. It’s how I know exactly how I can pivot my business when I need to. It tells me where I’m able to step back and when I need to step it up.
I look at it with three things in mind. Ever heard of good, better, best goals? This is how we look at it. I put in the bare minimum. What is the bare minimum, and that informs my good goal? Then I add in some upgrades in my personal life and that gives me my better goal. Then I add in my luxury items and that is my outrageous goal or my best goal. Don’t worry if you don’t have all your expenses neat and tidy somewhere, most people do not.
The first time you use the calculator, just go by a guesstimate, just get a handle on how the calculator actually works without making it hard, without intentionally putting blocks in your way. There is no reason for you not to use this calculator. I’d totally understand it if this calculator wasn’t available to you for free, but it’s for free.
The difference between personal finance and business finance.
For example, there is a lot of personal finance advice about how fees are bad, and debt is the Antichrist, but in business, fees are part of doing business, and at some point, your business might have to take on debt to grow. Now you might be wondering where my knowledge on this is coming from, and I’m going to share with you two stories.
Picture this, it’s 1986, you’re in a suburban split-level home with brown shag carpet and a leopard-print couch, and woven-wood blinds. I’m not kidding. The carpet colors were brown shag, with options, brown shag, orange shag, green shag, except for my room, which was mauve. Picture this. You’re in this home. Actually, maybe it was a little later, maybe it was the early 90s and it was still decorated like it was in the 80s and 70s. That was the issue probably. My mom wanted to move into this other neighborhood in town.
This neighborhood was a wealthy neighborhood. They had a lot more property and you could have fit two of our bedrooms in one of their bedrooms in these houses. They were gorgeous. I have friends that live there. This is where the doctors lived, the coked-up stockbrokers from the 80s, and yeah, they really were coked-up, and the doctors, the dentists, and all these folks, and I came from a very, very working-class background.
My dad started as a forest sweeper and worked his way up to management and then bought the business. But my dad and my mom would get into these heated arguments. He was not moving. She was not going to get that house that she wanted. We were all disappointed because I wanted to live where the rich kids lived in town. But he said—I will never forget this ever, ever, day in my life. I’ll never forget this—He said, “We are not moving because I know that no matter what happens, I can afford this house.” That’s it. As a business owner, he knew his revenue that no matter what happened, the house that he was living in right now, he could afford.
A flip side to this is my husband. After we close our first business, he goes back to work. He was to work for somebody else and works for another small-business owner who needed to have the $3.5 million house, needed each of his kids to drive a Mercedes, and his wife to charge up $30,000 on the company Amex every month. Every month my husband, who was in charge of operations and CFO-type activities, would go to him and say, “We have no money for operations. We can’t pay people. We can’t run the machines. We are not sure we’re going to have electricity and we have a problem.”
My husband had gotten into squirreling away money in separate accounts, knowing that this was going to happen every month. Even still, no matter how much he squirreled away, it was never enough to support this business. Because of this business owner’s lifestyle, it harmed other people along the way. It harmed the vendors that he couldn’t pay on time. It harmed the customers who couldn’t get their product on time because they didn’t have the operational money to pay to have it produced. It harmed employees who had to get laid off because he couldn’t make the payroll.
Not having your financial shit in order does harm to other people, especially when you are in business.
I want to be really clear about that. Because if you can’t get your stuff figured out, I want you to go get a job and go work for somebody else. Not a disparagement, not a judgment. But if you’re at a place where you are struggling with financial well-being, the things that I mentioned above, looking at bank statements, looking at credit card statements, moving money around, if you’re feeling heavy, heavy, heavy crushing resistance, if it’s causing you mental stress and anguish, I want you to go to therapy.
I want you to work it through. I want you to consider going and getting a job and I don’t want you to impact other small-business owners with this type of stuff. Because you’re going to, in some way, impact somebody else’s livelihood and make them work harder because you’re not taking responsibility for what’s happening in your relationship with money. I said that a lot calmer than I thought I was going to say it, y’all. You’re welcome. You’re very, very welcome.
I want you to focus on regular and consistent action to work toward financial wellness because knowledge isn’t enough.
You might have trauma here. You might have stuff that is not easily moved through. Go to therapy. Before you work on your money mindset, I’m going to add this in here because we know we’re online, before you work on your money mindset, I want you to work on your money know-how. Money know-how and money mindset are going to go together. But if you work on your money mindset without taking the actions you need to take to understand how money works, you’re just going to be thinking yourself in circles. Mental masturbation is not going to help you here.
I want you to use the Revenue Goal Calculator to help you do that. It’s free. I should charge for it, it’s epic and legendary, but it’s my service to women small-business owners, and the men who listen to this episode.
Do not listen to the muggles in your life who tell you that fees are a sin and debt is the Antichrist. As a business owner, your perspective needs to be different.