Episode Transcript
[00:00:00] Speaker A: Managing that cash flow is really where a lot of business owners struggle because they focus so much on that making money part of the puzzle. But once you've kind of figured that out, that's when you need to take another step and figure out the money management side of things. And so that's less exciting. It's a lot more of creating systems and setting up habits so that the money's always there for you and you don't have to keep your nose on the grindstone and continue that hustle culture.
[00:00:30] Speaker B: Welcome to the Society Gal podcast, where trailblazing female entrepreneurs and creatives come together to spark change and build their dreams. This is where your passion meets purpose. And together we're crafting a future where everyone has the tools to succeed.
Welcome to the society Gal podcast. We are so excited to have Jen with us here today to talk all about thriving on a fluctuating income and paying ourselves as freelancers and entrepreneurs.
Topic that every single entrepreneur needs to hear. So, Jen, let's go ahead and start. How did you get to this place of, of helping other entrepreneurs with this?
[00:01:13] Speaker A: Absolutely. So I have a background in financial advising and economics. And when I was in my financial advising practice, I worked with a lot of business owners and entrepreneurs, and I came across this pattern over and over again of entrepreneurs who were great at their given trade, got results for their clients. They had no problem bringing in new business. And yet, when we looked at their financials, the success didn't mirror what was happening in their business on paper. And usually I would kind of scratch my head and go like, where's this disconnect? Why is their financial success not lining up with their business success? And generally, it came down to managing the day to day cash flow and not understanding the nuances of the difference between making money and managing money. And so that was kind of the kickoff to me, pivoting in my business and working more with entrepreneurs, teaching them the, those really critical skills of how to manage their finances, how to manage their cash flow, how to pay themselves, keep their business afloat, and set up a really strong financial foundation for their business for the long term.
[00:02:18] Speaker B: I love that. And you are, you were already in the financial. What kind of brought you, I guess, to finances and, you know, where the interest come from.
[00:02:27] Speaker A: I've always loved numbers. When I was in school, numbers were safe. I liked that. One plus one always made two, and two plus two always made four. And I understood how numbers worked. And there was no nuance. It was just black and white. Yes or no? You're right or wrong, and that always spoke to me. And so numbers were always really, really comfortable, and that lent itself to learning about finances. And, I mean, I loved learning about how money can make more money. I loved learning about the psychology of money and why we do the things that we do. I remember going to my very first economics class when at university, and my eyes just, like, litanous up, and I loved everything the professor had to say about how humans interact with each other and with the markets and how supply and demand interact with each other. And it was all graphs, and there was not a single essay in the bunch, so I was thrilled. And that was really where my love of money and finance came from.
[00:03:28] Speaker B: I love it. I love it. And I think everyone can find some comfort in numbers with the way that you found it. But we're going to talk a little bit about how a lot of us creatives and entrepreneurs struggle with it. A lot of you are listening, are like, okay, oh, my goodness, what are we talking about right now? And so Jen made a really good point, and she's going to explain a little bit more, if you'd explain a little bit more about making money versus managing money, because you're right, a lot of us are really good at making money and bringing tens of thousands of dollars into our business, but then we don't know where it goes. Like, what happens to that money? So can you explain making money versus managing money?
[00:04:01] Speaker A: Absolutely. So, you know, we all hear the business coaches and the online gurus about having ten k months or six figure businesses, seven figure businesses. And while that's absolutely important, I mean, I don't want to minimize how important making money is, because if you don't make money, you don't have a business. However, managing that cash flow is a whole other skill set. And I think that's really where a lot of business owners struggle, because they focus so much on that making money part of the puzzle, which in the beginning, yes, absolutely. Nose to the grindstone, bring in that revenue, do what you got to do. But once you've kind of figured that out, that's when you need to take another step and figure out the money management side of things. And so that's less sexy, it's less exciting. It's a lot more of creating systems and setting up habits so that the money's always there for you and you don't have to keep your nose on the grindstone and continue that hustle culture throughout your entire business. It does serve you and it does create ease in your business, and it gives you more freedom and flexibility to pursue the things that you actually really want to be pursuing when it comes to making the revenue. So, like I said, it's more things like setting up systems within your cash flow. It's setting up systems with your bookkeeping. It's setting up systems with how you pay yourself and creating really strategic habits around all of those systems so that they continue to function and be that boring but crucial foundation.
[00:05:36] Speaker B: Yeah, but once it's set up, I'm.
[00:05:37] Speaker A: Sure, oh, it's wonderful. It's like one of those things that you don't realize you need it until you have it, and then you're like, why was I living like this?
[00:05:47] Speaker B: Yes. I think we work so hard on creating strategies to bring in money, like, so hard on the marketing strategies and the funnels and everything, but to have that on the back end of where you know, what's happening with our money, man, I mean, would you say it makes people more money, right?
[00:06:02] Speaker A: Absolutely. It makes people more money because a lot of times people will take on business out of desperation and need because, you know, this bill's coming up, or, oh, my gosh, it's tax season, and I have to pay my tax bill. And so there's the desperation in what they're doing, and maybe that money doesn't align with them ethically or they don't feel great about that. You know, even as, even if it's not an ethicalist situation, maybe it's just not a good fit. But you take the business on because of that desperation, that need which hinders your ability to go out and find the right business and go out, find the right clients and the right fit. And that's what's going to bring in more revenue in the long run rather than the short term desperation need, because you've got this bill hanging over your head. And so, you know, having these systems set up really does make you more money in the long term. It's just a little bit slower and harder to .1 toward the other.
[00:06:57] Speaker B: Yeah, but I mean, just the amount of money saved. And I like how you said, intentional decisions that are aligning with you are gonna make you the most money where you thrive. Right. And not out of desperate desperation or because that other person did that. So now I should be hiring this team. That doesn't make sense for my business kind of thing. And I feel like we can really caught up in a coach or a guru that's like, this is how I run my business, so you should, too. And it doesn't really work for there.
[00:07:23] Speaker A: Is no one size fits all.
[00:07:24] Speaker B: There is no, like, one all be all right.
[00:07:26] Speaker A: There absolutely is no one size fits all. And I feel that way about managing your finances as well. You can use kind of frameworks or strategies, but you have to take the time and live with it and find those nuances that are really going to work for you in your business, because we're all individuals. The way my brain works isn't the same way that your brain works. And so what works for me may not be identical to what works for you. And so you do have to take that time and do the boring work of figuring out what are the nuances of the systems that's going to help you, the person, help your business, the business, be the best that it can.
[00:08:06] Speaker B: Yeah, I love it when we pay ourselves, which we're going to talk about more in depth, is why and how we should pay ourselves entrepreneurs, because I think most of us are not doing this process. And the way you break it down is really simple. And I love how simple it is, but I think it is really exciting when you're like, oh, here's my paycheck. This is mine, that I get to do with what I want and not, I think we just mesh it all together and it's just like, what's mine? What's that? And it's just a big, big mess. So how can we not make a mess? And why should we be paying ourselves as well?
[00:08:37] Speaker A: Well, first of all, if you went to work for somebody else, and at the end of two weeks, they were like, oh, sorry, yeah, it's just not gonna happen. You would not stick around. You would not just hang in there and go, oh, well, that's okay. Oh, maybe next time, like, you would walk out that door and they would never see you again. So why do we do that to ourselves as business owners? You know, I understand the psychology behind it, because our businesses are our babies. We want to see them thrive, but yet we tend to do that to ourselves of putting in the time, putting in the blood, sweat and tears, and not paying ourselves out of that business, which is doing yourself a disservice, because that is why you went into business in the first place, was to make some money. And it's okay to say, I want to make money. There's nothing wrong with that. Every human who lives in our society has to make money somehow, and it's really okay to want to pay yourself. So that's the first sort of step of why we should pay ourselves is because you've put in the work, you deserve to be paid. And second, the process of paying yourself very, very. Making it simple is the only way it's going to happen. Because when we're business owners, we have a thousand things on our plate. We can't create complicated things to run our businesses. It's just not going to happen. We don't have the time and we don't have the brain capacity to make it all work. So you have to create these simple processes in order to make that happen. And when you're paying yourself, I'm trying to think of how we want to go about this. So I think we'll talk about the systems of actually paying yourselves, and then we'll talk about the mechanics of how the system works. So, one of the things that I always recommend to anyone who will listen to me longer than 30 seconds is setting a time in your calendar once a week to spend some time with your money for your business. So an appointment, like a doctor's appointment or a client appointment, something you would never blow off, spend an hour once a week with your finances. And even if you do just that, if you completely tuned me out for the rest of however long we're talking, and you just do that one thing, I guarantee, guarantee you will see change in your finances just simply because of awareness. And we all understand what we focus on grows when you pay attention to your money. And I'm just asking for an hour a week, totally doable, I guarantee you you could find time in your calendar to make that happen. When you pay attention to it, you will just change your habits because you're going to be more aware, you're going to pick up on things that you probably weren't seeing before. Whether it's subscriptions that you bought six months ago or three months ago that you totally forgot about. Guilty. Absolutely. Whether it's being able to pare down on something that you have all the bells and whistles for and realize that you don't actually need all those bells and whistles. These money black holes where things just disappear into because we're not paying attention, will right themselves. Just when you take that time to look at your finances, and once you've got that habit down, then you can start working on paying yourself. And I find with entrepreneurs, they're either in one of two camps, they're either the I'm doing this as a side hustle to hopefully leave my job, paying themselves zero, or they're hustling and hustling and using their business to keep food on their table and the roof over their head and paying themselves 100% and not reinvesting in the business at all. Generally, people fit into one of those two extremes, but I will tell you that the way out of those extremes is identical, whether you're going from zero paycheck or 100% paycheck. And I talk in percentages, because when you're an entrepreneur, revenue is never guaranteed. I don't know what I'm going to be making tomorrow. You probably don't know what you're going to be making tomorrow. You may have a vague idea, but you're not going to know to the exact dollar like a nine to five employee does. So we have to think differently than they do. We have to look at money in a completely different way. And percentages is the way to do that, because whether you make a dollar or $100,000, you're always going to have 100%. And so the way to shift from one of the extremes is start with 1%. So if you are paying yourself everything that you're making out of your business, start paying yourself 99% of what you were paying yourself and put 1% aside in a separate bank account away from everything. Pretend it doesn't exist. Or if you are investing everything and you've never paid yourself, try paying yourself that 1% of your revenue and just pay it. Even if it seems ridiculous, even if it's a dollar, you know, or less than a dollar. I have literally paid myself $0.63 that. There was a time when I literally paid myself $0.63, but I kept paying myself, and let me tell you, $0.63 grew, but the habit was maintained. And so, psychologically, I understood that, yes, being paid was part of it. Did it replace a nine to five paycheck? No, but it was something. And then it got easier to increase that amount. Going from zero to one is hard. Going from one to two is much easier. So that's the first step, is just take 1% of your revenue and allocate it somewhere else, whether it's back into the business or to yourself.
[00:13:40] Speaker B: But I love how simple that is and how you explained it, because, yeah, maybe you are bringing, let's say, a $10,000 package. I mean, that's really hard to be like, okay, now I'm going to pay myself 10% when you haven't been before, or 20%, you're like, oh, my gosh, that's a lot of money. I could be putting it here. Like, I'm the person that's like, I want to put it back into my business, right?
[00:13:58] Speaker A: Your business is your baby. You want it.
[00:14:00] Speaker B: So you're like, oh, I can go here. I can expand here, right? But, I mean, that is just so empowering to be able to look at that other account and be like, oh, I have now $10,000 in there I could put towards retirement. Besides just with, I feel like we all in the confines of our business that don't think about retirement or. Or investment or other savings or even just spending money for our family, however that works with other people. But, you know, having that, you know that there instead of all in one account, just, like, sitting there, like, someday I'll get to that. Someday I'll get to that savings account, or someday I'll get to investing into that thing in my business. But I mean, how empowering just to do even just 1%. I love how you said, that's $0.63. That's all it is.
[00:14:41] Speaker A: But that is the honest habit. It's about the habit. And habits are such a big part of who we are as people, and the only reason we can function throughout our day is because of our habits. So if you think about the way you brush your teeth, the way you tie your shoes, the way you get dressed in the morning, you don't think about those things because they're deeply ingrained habits. If we had to focus all of our brain capacity on doing those tasks like we did as we were learning them, we would never get anything done.
It would be too much. And so it's about creating those habits with your finances that are just as deeply ingrained as, like, tying your shoes and being really strategic about those habits that you create. So, you know, when it comes to, like, managing your finances, it's not necessarily the whole power hour, but it's like, what's kicking off your power hour? What are you doing when you very first sit down at your computer that tells your brain, okay, we're going to focus on the money right now. And one of my favorite hacks for that is using scent. So picking a smell that you associate with happiness or joy or abundance or whatever and smelling that smell every time you sit down. So I've had clients use a particular tea or coffee. I have clients that use essential oils. I have clients that use, like, a perfume. Maybe it was their mom's perfume or something like that. Like, it really doesn't matter what the smell is, as long as it's the same one every single time. The one that I use, I love lemon. I love the smell of lemon. It's fresh, and it feels clean and abundant. And so I have a lemon essential oil. I literally had these scattered, like, all over my workspaces because they work in a million different places in my house, but I have them everywhere. And I sit down and I just give it a sniff. And my brain is like money because I've been doing it for so long. And it's almost like I feel this compulsion to reach for my receipts because I do. It's so funny, but it's just naturally how our brains work because I've had it for such an ingrained habit for so long. I open that up, I smell it, and I'm like, where are my receipts? I need them. I need to have them. I need to start working through all of my financials, and I want to open up my bank accounts because that's just the ingrained habit. Scent is very, very powerful, and so you can use that to your advantage.
[00:17:01] Speaker B: Hey, this is Dana from society gal, and I wanted to take a quick break to tell you about the society gal academy. The exclusive membership that helps entrepreneurs like you launch, grow, and scale your business. Join weekly expert led workshops, access to on demand courses, and connect with a supportive network of go getters just like you. Are you ready to elevate your business? Visit society gal Academy today. I love that hack. Yeah, I mean, it's all about the habit. I think it's so much less about the person, which I think we're going to talk a little bit more about how to exactly pay ourselves a little more. But, I mean, it's all about the habit. I mean, you see it in the gym and you see it in other working out health. Whatever it is, it's all about just showing up for yourself and just being there. I mean, just looking at money, I think, is hard for a lot of us. I know it's hard for me just looking at my bank account, I'm like, that's hard thing to do because you have to face a lot of your strengths and weaknesses.
[00:17:55] Speaker A: Let's talk about that, like, icky feeling you get sometimes looking at money and how you can reprogram your body and your brain to be excited to look at your bank accounts and be looking at your bills. And so the way to do that is, again, it's a consistency thing. Consistency is key. And so, you know, what you can do is open up your bank account and look at the numbers and then find a way to celebrate. It can be absolutely ridiculous. And this is not something you have to do in public. Don't worry. You can do it in the privacy of your own bedroom. Don't have to look at yourself in the mirror or anything like that, but find a way to celebrate. Because what we celebrate is what sticks. You think about our phone, it rings, it beeps, it makes fun noises. You think about Las Vegas slot machines, like, they go crazy and make all sorts of lights and sounds and sirens. I think it's dopamine. It's a happy hormone inside our brains, and that's what creates a habit that will stick. It's why our phones are so addictive. People who design them are very smart, and they know that they want to create that happy hormone in us when we look at it. So if you can create the happy hormone when you look at your bank account, you are going to just naturally be more inclined to look at it. So find a way to celebrate. Jump up and down and go, yeah, or sing a happy little song in your head, or, you know, do a little happy jig again, privacy of your own bedroom or, you know, home. You don't have to show this to people. And it can be very. It feels a bit silly when you first start doing it, but it's so effective. You know, it's one of the things that I used to help myself exercise because that was a. A big sticking point after I had my kids, was finding time for exercise. And so I started just creating the habit of getting up out of bed and first thing in the morning and heading downstairs and celebrating the fact that I got downstairs. That was what I celebrated. And now it's very easy for me to actually do that because of those happy little hormones inside my brain doing their job and creating the habit and making it stay.
[00:19:55] Speaker B: I love how we talked a little bit about enjoying the money, looking at the money, because I know a lot of people are. That concerns popping up in their head right now as we're talking about, like, paying ourselves. They're like, okay, I can't even look at my bank account right now. So let's see. Let's start with that. So I would love for you, we have the 1%. We got that habit. So I'd love for you to expand a little bit more of the next steps after you start doing that 1%, getting that first step, looking at your bank account right now, what's the next step? To really setting ourselves up for success when it comes to paying ourselves.
[00:20:22] Speaker A: All right, so once you've got that habit ingrained and you're no longer terrified to look at your bank account and everything's flowing, really nicely. Now it's time to set up that, like nine to five paycheck, because that's what we're all, not honestly all striving for, but I know a lot of us strive for that regularity, for that consistency, for something that's going to be reliable for you, even when you maybe aren't hustling or you're in an off season or whatever, when your business. And so the way to do that is to think of your paycheck sitting in a well. So we all understand a well, you know, it's the big hole in the ground. When it rains, the well fills, and then when you have a dry spell, you draw from the well so you still have water, and you can treat a bank account very much the same way. So when I'm working with clients, I always recommend a bank account architecture. You have separate bank accounts that are all compartmentalized and each have a very specific job to do. And when you want to create that nine to five paycheck, you have to have a separate bank account that is just to hold your paycheck. And you allocate a certain percentage of your income. And that's going to vary wildly depending on the type of business you're in, how long you've been in business for where you started out. I mean, I've had people allocate 50% of their revenue towards their paycheck, and I've had people allocate 90%, and I've had people allocate as low as 10%. And it varies wildly depending on the nature of your business. So you allocate a percentage into that paycheck, and then the next step is taking a pay cut. So instead of when you sit down to pay yourself once a week or every other week, or however often you do it, you don't clear out that bank account. You take 80% to 90% of it, or 70% to 80% of it, depending on how aggressively you want to save every week. When you do that, if you're only taking out 70% to 80% of what you've put in there, you're going to build up a nest egg that's going to serve as a paycheck well. So that when you're at your busy season, or you do a launch or whatever else that brings in a lot of money, the wealth fails. And then if you take time off or you go on holiday, or you get sick, or you're in your off season, or any of the other myriad of reasons why we're not bringing in revenue, then you still have that nest egg, that paycheck. Well, that you can draw on out the constant flow of revenue. And it is, it's a very simple concept, but it takes time. I would say anywhere from, if you're being really aggressive, six months to about a year, 18 months to really have a paycheck. Well, that's going to weather whatever storms come in. But it really is the way to create that steady paycheck is to have that buffer, that nest egg that's going to be there for you regardless of what's coming in revenue wise.
[00:23:08] Speaker B: I think a lot of us are just, for example, I just had someone cancel their contract for the rest of their payment. That was probably like $1,900. You know, it's out of my control that it happened, but that was a project. We have our projected income. Like, I'm projecting I'm gonna get this income this month, but without that $1900, that kind of sucks. Thankfully, you know, my bank account's fine, but it does kind of, kind of sucks that it's just, okay, well, those go $1,900 I didn't have next month. Right. And so, I mean, just having that nesting would just feel so reassuring, like, oh, I'm still paying myself, I'm still fine. Like, we're still good.
[00:23:40] Speaker A: Exactly. You know, what that creates for you is that mental clarity, that relaxation of, okay, this person canceled their contract that, you know, I'm sure they had x, y, z reasons. Whether that's stuff going on in their life, it doesn't make it about you anymore. You can kind of remove yourself and go, okay, that's fine. How am I going to reallocate the time that I had to that other client, to whatever other projects I want to do? Like, you don't have to go, oh, gosh, panic, I'm not going to be able to make my mortgage payment, or, oh, my gosh, I've got to do this. And it removes that panic and it creates that freedom to be really intentional about your next steps. Whether it's, okay, I'm going to double down on my social media presence or I'm going to do another launch, or, hey, I'm just going to take this as a sign from the universe to chill out for a couple of weeks and just maybe take some time off. It just gives you that ness rather than crunch time.
[00:24:34] Speaker B: And that's how I felt. I'm like, oh, okay, it's fine.
We're prepared enough that we can deal with that. I mean, that wasn't that big of a deal for us, but it would just feel like before we're, oh, my gosh, they're not paying the rest of their envoy. That just felt so devastating before, and now it's way better. And that freedom and that, like, okay, because I feel like when we start to strategize out of, like, desperation is when nothing good happened. And so I feel like when we.
[00:25:04] Speaker A: Have nothing good ever came from a place of desperation. Exactly.
[00:25:07] Speaker B: And when we have a nest egg, we feel we act in a way that's empowered and with a clear mind instead, which I love. I love that different feeling from having both. So I would love to hear kind of a client highlight a client that you worked with that has experienced this, that was struggling like before, and then work through this, set this up for themselves and how they are now. And what happened with that?
[00:25:29] Speaker A: Well, I have a client that I just, when I worked with her, she was one of my favorite people. It was one of those clients that you showed up on the call and you're just excited to be there. I remember showing up to a call and she said, you know, when we first started working together, she was newly divorced, never had to kind of manage money, you know, was very unaware of what was happening and felt like she was just grasping at things. Like she really didn't feel like she had a handle on what was going on with her finances. And we worked through this and we set up these systems. And I remember her sitting down on this one call, and she was excited. She towels. She had excitement in her voice. I said, all right, what's going on? She goes, I got a huge bill from the government for taxes. And I was like, okay, it's a weird thing to be excited about, but sure, let's go with that. And I said, well, tell me more about that. What's happening? And she said, I got this bill. I just pay it. The money's already there. I've already saved the money for this bill, and it's going to take me 30 seconds to deal with this rather than the panic and then hustling to figure out how they're going to earn the income to pay the big scary bill from the government. And then, you know, having that time leg as well of with the bill hanging over them until they brought in enough cash to deal with it. She said, I'm so excited and happy because this would have derailed me before. Now it's less than a minute and it's done. It was the perfect example what handling your finances can do for you. It was just so much less on her emotionally and so much less on her mentally. It was a non issue.
[00:27:06] Speaker B: I love that example. Shows how much it does cost us more than just money when we don't face our money and build that security for ourselves is, you know, all the stress, all the drop balls, all of the lack of income because we're so stressed or in that certain mode. But I love how, again, like, how simply broke this down and how simply we can do this with 1%. So thank you so much for coming on here and sharing all about how we can really, you know, all of us entrepreneurs with this fluctuating income in and out, that we can really have some stability. So it's really reassuring. And I'm sure people are listening to this. I'm like, yeah. They're like, yes, let's go to our bank account. Let's space our bank account. Let's do this meet. Let's get our lemon sent. Let's make it exciting. So thank you so much for sharing. Where can everyone connect with you?
[00:27:53] Speaker A: Absolutely. You can find me on Instagram at Jenpatterson dot biz, or you can check out my website, dollardivas.org dot.
[00:27:58] Speaker B: Awesome. And then do you have any ways that you support any programs or anything? Courses that you support?
[00:28:03] Speaker A: Absolutely. So I've got my one on one coaching practice, which is for people who are just like, let's do this. Let's dive in. Head for. I want to fast track, you know, getting my finances in order, the simple money roadmap. And then I've also got my group coaching program, the doll Divas Collective, which is a community of women who are all going through the same things that you are. And we teach the exact same material that I teach in my one to one program, but with just a wonderful community to connect with as well. So you can check out all the details for both of those on my website.
[00:28:33] Speaker B: I love that. That's so awesome. Join the community. Awesome. Well, thank you so much for being on Jen.
[00:28:38] Speaker A: Thank you so much for having me. It.
