Financially Adjusted
The Financially Adjusted podcast is for all the current and aspiring small business entrepreneurs out there. I'm Leslie Roth - a virtual bookkeeping business owner- and I'm excited to share my knowledge and expertise with you when it comes to handling the money in your business and life. We'll get into all kinds of money topics: financial systems, budgeting, bookkeeping, setting and working toward financial goals, and the overall management of your finances. My goal is to leave you feeling enlightened, inspired, empowered, and confident as an entrepreneur. Settle in and hit follow! You are not on this journey alone!
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Financially Adjusted
#24: HOW TO ALIGN YOUR MONEY WITH YOUR GOALS
In this episode, I’ll break down how aligning your money with your personal and business goals is key to achieving them. As we head into the final quarter of the year, goal setting is on everyone’s mind (or will be soon!), but how do you actually achieve those goals? I’m dishing out tactical advice on creating a plan, mapping out your finances, and setting realistic and achievable goals that align with your financial situation.
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Hello my entrepreneurial friend I am so that you're joining me today for this financially adjusted podcast…Today's topic is one that's relevant to every single person and small business owner out there. It's all about aligning your money with your goals. I'll dive into some tactical ways that you can plan to reach your goals financially whether it's personal, business this or both. So let's get right into it. We are in fourth the fourth quarter of business and fast approaching twenty twenty five So naturally goal setting is going to start popping up in your mind And if you're not thinking about it yet a good chance the world around you will start smacking you in the face with it and reminding you that should be setting goals and planning things out for the next year.
So my question is are you more of a planner or are you more of a fly by the seat of your pants kind of per in If you answer planner then you and I are cut from the same cloth my friend.
I am not a total diehard planner. With everything in my life more so with like finances and fun stuff that I wanna have on my schedule. I used to be that way about meals But since I became an entrepreneur that went right out the window and I'm sure some of you can relate. Most times I'm somewhere between planner and spontaneous. It just depends on what we're talking about.
For instance I like to plan out my vacations in the way that I plan ahead enough to know where I'm going you know where I'm staying, and all the logistics at least like six months to a year in advance because I want to be able to look forward to but I don't like having a bunch of plans when I'm actually on vacation. I like to just go with the flow once I get there and just do whatever I feel like depending on my mood that day How about you Are you totally last minute like you are the one deciding the month before or the before where you're going and then you're surprised that can't find a hotel and you're kind of scrambling to get things together. More power to you if that's you Awesome but that makes me pretty twitchy. Don't know how people like you do it. I need a plan And I feel like if I did that I would be so worried that
you know things weren't gonna come together Something wasn't gonna work out that I might not enjoy myself. So we are definitely different when it comes to that but…you do you. But when it comes to making most things happen that you want to happen in life and in business there does have to be some kind of plan in order to ensure that it actually happens. The goal of this podcast is not going to be to bust on all of you fly by the state of your pants people but I am going to challenge you to open up your mind to be more of a planner and examine maybe how lack of planning has negatively impacted you in the past whether in your life or in your business. The truth is that many of the goals that we wanna achieve in our personal and our business lives require money to make them happen Right?
Money is the common tool that's required to get us to a lot of our goals. Granted there's all kinds of other factors but we're talking about money it is a financial podcast. So we're talking about money. The fact that it takes money to reach goals is definitely not breaking news to any of us You already know that I already know that No surprise here
If we get real with ourselves we will realize that the goals we set that We don't really plan for don't really happen. Or at least they don't happen in the time frame that we want them to. Having a plan for your money that leads you towards and aligns you with your goals is necessary in order to achieve them. Many people make the effort to think about and to create their goals but they don't make it attempt to align their money with their goals. And then they end up feeling bumped out or discouraged when the end result doesn't come to fruition or it doesn't happen in the time frame they imagined it.
I don't want that for you friend I want all of your goals and your plans to happen the way you want them to happen and in the time frame you want them to happen as much as possible. Thinking about goals and setting goals is one small portion of the equation…
After you determine your goals, You then need to follow through with a plan to meet your goals that include a money allocation plan which is what I coined a map or business map, that leads you directly to where you want to go. The key to the steps that I'm about to teach you today involves having this money allocation plan otherwise known as a budget, set up for your regular monthly business or personal life already. So that you can have a realistic picture of where you stand right now. And how much you have each month left over in cash flow. To get you to your goals So you wanna you wanna know every single month how much margin you have.
How much is left over after cash flows in and cash flows out.
Go back and listen to episode two of my podcast It's all about budgeting or money plan Um I break down for you what that should look like and it'll get the wheels turning for you of how you can set one up in your own business and in your personal life I highly recommend having them for both. I also have a tutorial on my YouTube channel So if you're more of a visual learner I go through, um how to set up a budget…in every dollar which is a free that I love to use It's the Ramsey organization that put that together and they did a fantastic job You can do the free version You can pay for the version that links up your bank accounts but I just use the free version and it's great. Works on um your browser great and it works wonderfully on your an app on your phone I believe they have that for Android and iPhone So um it's just a really nice tool. I'll link both in the show notes the episode and every dollar. If you wanna check those out but the steps I'm gonna go through today kind of assumes that you already know what your margin is each month But don't worry This episode gonna help you no matter what and you there's always time to go back and get started on a budget.
But in order to have clear…
on how to reach your goals. We have to first get as specific and clear as possible about what our goals are. In the process of aligning your money with your goals via your money plan, Those goals might change and get even clearer. But you wanna start with as specific of a goal as you can. You also want to include any other decision makers in this goal setting so you're married you'll want to get on the same page with your spouse because you're sharing a life together.
And you want your your goals to align. And if you have a business partner or that business partner is your spouse you'll want to have goal setting sessions together. It just gets everybody on the same page
it's kind of nice to someone else doing this with you because…
They could think of specifics that you can't and they can bring perspective…that you can't to the table So it's really nice to have that collaboration with, um a spouse partner business partner whoever that is in your life friend, um, even if you are setting your goals and you don't have someone who's running your business with you or you're not married If you're single person, grab like a business bestie grab a friend that you know you're close with and you could hash some of this stuff out with It's it's just nice to have somebody else's perspective that knows you really well and that does life with you to some extent…
This last year my husband and I sat down, and we did a plan for you know our personal life and our business life And We set um, goals and revenue goals were a part of that. I kept decreasing the amount that because I thought you know the goals that we set were too lofty and he was encouraging me to think a little bigger. And kind of put things into perspective that we could think a little bit bigger and…level ourselves up to that So I just really appreciated his encouragement through that and the perspective that he brought because left to my own devices, I'm someone that will air more on like the…super conservative side or I'll set that goal that I know I can reach just so I can like check it off the box as like a you know, Uh to do list kind of thing you know all my to do listters. Can understand me on that I like to be able to accomplish my goals and check them off but…Um the key is to set a goal that's somewhat challenging but also…
that is realistic. But I'll touch on some different types of goals and walk you through some examples…when you're aligning your money with your goals and what that might look like. First I'll talk about the revenue goals in your business. As much as I'm a planner for some reason I've hesitating the past to set any revenue goals. I think I just wanna put a lot of pressure on myself And like I said before I just wanted to be able to set a goal Um if I did set one that was attainable that could just check off that box and say yes I achieved this.
I encourage you though and myself, along with you to not just set a goal that's too low or mediocre. Because of that because you want to check it off the box, um and have that that low bar that you know you can attain because you will…stay there I mean you aren't challenging yourself So you're not like raising that bar up and having something to aspire to And let me just say that it's okay if you're not in growth mode in your business everybody is in growth mode Some of you um may just be in retention mode and you're happy where you're at You've you've hit your revenue goals and you are content. And contentment is great So if you are in that zone of business That's amazing and I'm happy for you and there's nothing wrong with that. Everyone has their own set of circumstances. But it's important with revenue goals, um to create…you know or to think about as you're creating them, realistic circumstances whether you want to grow stay around the same or just focus on retention, or maybe even cut back Maybe you, you bit off more than you could chew and you don't don't necessarily want to grow that much bigger or start hiring.
But if you do want to increase your revenue, you should consider what irons in fire you have going on so to speak And that will realistic…realistically bring fruit to the table in the next year. So what…do you have your sales pipeline Like what do you have on the horizon that's in the works that could realistically…bring you more revenue in the next year Consider all of that And if you're in retention mode you could consider how you're retaining your clients because…
you have to consider in retention mode that you may lose clients So you still have to have that plan of how you're going to gain new clients if you fall out of retention mode because some people leave, you may wanna add those clients back In order to stay at the same level. So…it's important to consider how you're gonna stay in that retention mode by nurturing your clients. If you're in growth mode, you're really looking to push your revenue up You should consider how many new clients you can take on and what is your capacity. You wanna set a goal that challenges you but that isn't unrealistic…
So if you take on too many like are you actually gonna be able to serve them in a timely manner, and in the way that you want to because it can be hard to scale very quickly um it takes time to get the right people in place get the right systems in place um and you have to factor in all of that while you're, you know considering those revenue goals,
Let's use the example of a fitness coach So say you're a fitness coach and you made a hundred thousand dollars this past year But you're at capacity with your time end your bandwidth. You need to consider that. And let's say you've set a goal You wanna make two hundred thousand dollars in the next year but you know you don't have the bandwidth for many clients. That means you'll have three choices.
One, double your prices for those current clients, Two, you will need to look at introducing some new revenue streams in order to get that revenue up to where you want it to be, the two hundred thousand dollar range. And three, you'll need to hire a contractor to do fitness coaching that you're already doing in your business, so that you can new add new clients. Without increasing your workload too much. You do have to pay that person off the top line though so Your margins won't be as great if you are going that route So that's something to consider. For new revenue streams, you could consider doing an online virtual fitness membership or an online course.
Something that could scale you and get you to that revenue goal of two hundred thousand dollars. So…this is just an example to show you how you can kinda walk through this scenario for your business. So if you just kinda set a blind goal of you I wanna increase my revenue by a hundred thousand dollars this year. You have to follow that through with a realistic plan, and…
walk through the motions What does that look like Do you have to hire people What expenses comes with that Do you have the bandwidth to handle that? Can you really grow that quickly Do you have the time to set up a team that you need All those kinds of things are, definitely things to think about when you are setting your revenue goals.
This next step is going to be the more tactical side of things…
When you're setting up your revenue goal and backing out of it to figure out how much you need to make monthly…over the next year to achieve that goal because it's easy to say yes I wanna make hundred thousand dollars more this year. But what a lot of people don't do is tactically approach that with the math. So that can sound awesome And I want that for you I want more than that for you. But you do have to back out of that What does that mean How many clients do you have to take on each week Each month How much do you have bring in each month to make that happen. So let's use the same example of the fitness coach.
Since you are shooting for a hundred thousand dollars in the next year additionally. That would equate…to an additional eight thousand three hundred and thirty three dollars each month. And whatever revenue stream you want to get you there you then look at what that would mean as far as new clients you need to take on or number of courses memberships you need to sell, Let's say you think doing a fitness membership online would be the best option for you and that's the direction you wanna head in. That means you need to break that out in to what you wanna charge and how many clients you need to get you there Let's say you land on forty seven dollars per month as your suite's price point and that feels pretty good to you And that's the vow you you wanna offer in your membership, um
that's aligning with that price. You need to then take that, um eight thousand three hundred and thirty three dollars you need to make each month to reach your goal and divide that by your price of forty seven dollars This will give you how many clients you need to get there which is a hundred and seventy seven clients…that need to join your membership and pay the seven dollars each month to reach that target monthly revenue. If that seems a little unrealistic to you then you can use those figure to create a more realistic goal for your next year. So doing the math on this can really help you. Doing this exercise is going to help you shape your goals To just be more realistic according to your circumstances and what you want to see happen in your business what you're capable of.
This could be very possible that you could have those hundred and seventy seven clients but everyone's situations and desires are different. Maybe you think that through, and you don't want to manage a membership that's big to start out So that's not something that sounds appealing to you. Maybe decide to change your goals because really you only want those clients and you're okay with making um
just an additional fifty thousand dollars in the year so that your whole gross revenue would be a hundred and fifty thousand dollars. Or maybe you go the other way and you're like, Yeah I a hundred and seventy seven is not much I could even get three hundred people in my new membership. When we do the math and we link it to what that looks like for us each week each month, each year it starts to take shape in a more realistic way. You don't know if your goal is realistic or if your math is mathing until you done this exercise. Something to also consider in revenue goal setting…is if we're introducing new revenue streams we also have to look at what costs are associated with that.
With the fitness coach example if there's a membership does that membership include expensive software that you're using as form, did you factor in payment processing fees on marketing and ad advertising costs, um anybody who need to help you a VA possibly…
The key is to map out the entire picture and project that with the numbers in your budget so that you can get a feel for what margins you'll have in that situation. This is how you truly align your goals with your money. By getting real with the numbers and not just picking a revenue goal because it sounds good and then just hoping for the best. Mapping out your money tells you…what it takes to get you to the goal and then formulating an action plan to make that happen It tells you what direction you need to go in to get there. Next I'll talk setting a business goal when you wanna purchase something in your business like a piece of equipment.
I'll use a landscaping company for this example. So let's say you have a lawn mower that's been on the fritz and you know you'll have to replace that in the next six months most likely. To plan for that and not get into debt to do it, which is what I highly recommend doing is going to take a little bit of planning…So the first step is pricing out the equipment you wanna buy so that you have an idea of what will be needed when the time comes. And you can make that plan to have that money at that time. If you're a business owner that's in a lot of debt or you still need to fund your emergency fund I'd recommend not shooting for the latest and greatest equipment…
I'd say go for the quality used equipment the used mower that will work just fine for the time being. It should be a priority to get your finances stabilize first. You wanna wipe out debt and have a decent emergency fund…
But I realized that's hard to do all the things at you know all at the same time we kinda feel like as a business owners we're always trying to do all the things and we'd feel like we can't gain traction on anything. But at the same time you know you still might need that piece of equipment You need the things in your to run it properly. This is why planning is the absolute key here. You have to think things through and project out your needs and your business and how your line your money with those needs…
And in the situation where you might have debt, buying that latest and greatest piece of equipment is definitely…not gonna be a top priority You don't need that right now You could that down the road when you're out of debt and your finances are more stabilized But for right now…
You can get by with the…the okay used piece of equipment that will get you there.
If you're in this type of situation with your business, For a short period of time. If you need to save for something like this you can stop paying those extra debt payments and the extra that you're putting in savings. For that period of time you know maybe six months or less, to save up for the piece of equipment or whatever it is that you need If you're debt free and you're in savings mode but you haven't quite met your target with your savings, you can pause that for a period of time as well. Which I highly recommend doing this because What's gonna happen is if you don't
You're gonna get to the place where your equipment possibly breaks down on you you haven't made a plan what are you going to do You're going to go get the loan You're going to get the financing and If you can stay away from that you will be doing yourself a huge service. You won't have those interest rates eating away at your profit. And that's what I want for you. The step will be to price that equipment and time out when you think you'll absolutely have to purchase it and back out the math from there So let's say you can squeeze maybe another six months out of your current lawnmower…And then you need to project out six months of a money plan from from your current situation to save what you need for those funds. Let's say your used mower will cost you around two thousand dollars.
If you need it in six months then you have to come up with three hundred and thirty three dollars each month. Over the next six months to have the money you need. What does that look like for you when you insert that into your money plan? You know if you can think of something that you need in your business what's the time frame on that And when you back the math out on that, what does that mean you have to save right now? And do have enough margin to cover that…
Can you insert that into your budget? Um if that's not giving you um the money that you need in the time frame you need it you need to reconfigure some things. So if you do have enough margin to cover that Amazing could you get the equipment even sooner? And save up for that or pay for that this month. If you don't, um you definitely might have to get creative.
Maybe you can get rid of some other expenses in your budget that aren't necessary…to free up the money you need for this equipment that you need in six months. The bottom line is that doing these exercises and having a budget will guide you with your decision making in a proactive way and help you avoid that debt while you're able to still meet your business needs. This is such a win win in my opinion…
I think a lot of people shy away from a money plan because they feel like it's tedious or limiting, that couldn't be further from the truth. I think that it actually gives people freedom and peace and it reduces anxiety around money. Many times the anxiety we have around money occurs because of the unknowns. If you can get clear on your money you'll get clear on your action plan And when you're putting a plan in motion, anxiety tends to decrease. When you don't have a plan you're just left wondering if you're meeting your goals or if you're you're going to meet your goals.
And when you map out your money with goals in mind, there will be no doubt in your mind what it going to take you to get there. That clear vision of how your money needs to work for you is what will take you to your goals. These same exercises can be used for any goal you have in your business life in your personal life, Let's say you wanna buy a house. If you know how much you wanna spend on each each month on your mortgage you can start there. No I recommend no more than thirty percent of your monthly take home pay.
Goes towards your mortgage. You can find a whole bunch of mortgage calculators out there and they'll help you figure out how much house you can afford and buy…
I always recommend putting at least twenty percent down so that you can avoid the PMI, which is private mortgage insurance…
Um anyways, plug in your numbers to a mortgage calculator…and figure out what you can afford. Um is it a house that's three hundred thousand dollars then you know you need a down payment of sixty thousand dollars. Now you have something to start steering you in the right direction. If you originally…set a goal to buy a house in the next year and you work out your numbers in your budget to see if you can save that six thousand dollars in one year. You'll know if that's realistic or if you're just kind of grabbing at numbers without really knowing…So the idea behind all of these scenarios is to show you you know how to link that money plan up with your goals in order to have the realistic picture as well as the direction you need to reach your goals.
Sometimes exercise can be a little bit disappointing, and sometimes it can be a little bit exciting. Depending on how it works out, you are gonna what your reality is and that's way better than than going at it in the dark. You need to have realistic goals and a realistic plan to get you there. I know I preach a lot about being debt free and budgeting and…
You know being debt free I know that's not everybody's scenario. I'm not here to shame you if you're not debt free. I have been there I understand. Many of us have been there.
My husband and I had to crawl out of over a hundred thousand dollars in debt So I know how that trap can get you. I feel you my friend but you can absolutely get yourself out of that…
many people set their goals with their timeline in mind and say to heck with reaching in with a money plan and savings and they just go into debt. And only consider affording the monthly payment. If this is you I urge you to approach money planning and goals differently from now on. Look at the big picture, have a budget. Think realistically about your goals and how you're going to reach them If you think you hate budgets, what's it gonna hurt to give it a try You really don't have anything to lose And if you hate the word but use the word money plan but you owe it to yourself.
To give it a try and to stay open minded about that because does make a huge difference in your personal life and in your business. If you're currently in debt and trying to get out of it I am rooting for you a hundred percent. I have been on that struggle bus and it's not easy but you've got this. If you haven't yet mapped out your debt plan you can use the exercises we use today…
for your goals, for your debt free goals. Take your debt and the time that you wanna look back or the time that you want it to take to get you out of debt and back out of it from there. If you have fifty thousand in debt for example. And you wanna gone in two years You need to throw at least two thousand to twenty five hundred dollars at that each month depending on your interest rate. That's fifty thousand dollars divided by twenty four months So two thousand eighty three of that covers principal but interest needs to be in there as well and that may be a couple hundred dollars.
Doing this paints a picture for you which will give you a different perspective of your goals. Maybe the timeline makes you mad and gets you to the point where you say that's not good enough. And it lates a fire under you to do it quicker
At the end of the day reaching your goals doesn't happen the way you want to, unless you set the right wheels in motion with your finances. Staying on top of your money and having a personal and a business money plan is at absolutely the way to do this. Otherwise you're just meandering your way through life hoping to hit the big goals you've set for yourself. You need to set the bar a little bit higher. You owe it to yourself and you owe it to your business.
And remember, as always, Action brings clarity and imperfect action is better than no action
Have a great day friends.
