A few weeks ago I had the opportunity to attend a free 3-day workshop called
The Millionaire Mind Intensive. These workshops are the brainchild of T. Harv Ecker, author of
Secrets of the Millionaire Mind. Ecker’s basic thesis is that your attitudes about money are formed in childhood and that your financial status as an adult is based on the financial blueprint you acquired from your family. If your parents told you that “money is the root of all evil, money can’t buy happiness, you shouldn’t have more money than you need to live on” and so forth, you’re likely to become very good at not having much money. And your success in business will certainly be affected, whether you’re a voice actor, a web designer, a consultant – in short, anything that involves income! The good news is that you can change.
I had read Ecker’s book and came away from it with a better understanding of my attitudes about money and how they might be holding me back, but I still didn’t have much idea about what to do about them. The workshop offered an avenue to acquire more information, as well as the chance to visit with my brother and sister-in-law who were also attending. The way the workshop was conducted was rather off-putting for me and I bailed after the first (11-hour) day, so I can only pass along a portion of the information offered. What I did glean from that one day, however, was very valuable and has certainly changed my approach to financial management.
One of the points that made a big impression on me was put in the form of a question to business owners: If you need something for your business, do you look at your bank balance, see how much money you have, decide if you can afford the expenditure and then make your purchase? In other words, do you basically have no budget in place to organize your business expenditures? The point was made that you should take that disorganized bank account and pay yourself a salary. That salary goes into your domestic budget (see below). The rest of your business income can then be divided into categories that parallel the organization of your domestic funds.
Recommended domestic budget categories are the following:
Necessities: 55% Rent or mortgage, food, clothing, medical, utilities, taxes are examples.
Investments: 10% Retirement falls into this category. This is also called the Financial Freedom Account – your “Golden Goose”. You never spend this money (i.e., you don’t kill the goose that lays the golden eggs); rather, your goal is eventually to be able to live off the income the investments generate.
Long-term Savings:
10% Car, home improvements & c.
Education:
10% This is for your own education, to keep skills up to date and learn new ones.
Play: 10% Entertainment, massage, whatever you want. It’s recommended that you spend this regularly – at least quarterly. It keeps you balanced and keeps you from feeling deprived and then going berserk and blowing your budget.
Give: 5% Donations to charity or other favorite causes.
Business owners will have their own ideas that make sense for them as to how they would translate these recommendations into a business budget. My voice-over business budget might look like this after my paycheck comes out of it:
Necessities: Telephone/ISDN, web hosting, newsletter mailing service, postcards & printing, postage, business cards. These might also be called marketing expenses. See my
earlier post on setting rates for more ideas about this.
Investments: doesn’t apply, since that’s part of the domestic budget.
Long-term savings: this could be for a major purchase or for studio renovation.
Short-term savings: basic equipment purchases (but if anybody hears me say I need a new microphone – it’s really a cry for help)
Education: voice-over coaching and workshops, acting classes, German and Spanish classes to keep improving
Give: my business can make donations too!
Having a budget of this kind is important on several levels. Obviously, it will help ensure that there are funds to run the business. Once you’ve decided on the dollar figures or percentages that should go into each category, and have decided on what your monthly salary is going to be, you can set financial goals for the business. If you have not been paying yourself a salary up to now, you’ll probably find that starting that practice will really transform your experience of being a business owner. It’s greatly motivating to see that you actually receive a paycheck every month, and you will work even harder to make sure you get it and that it grows.
A few words about the domestic budget, since it’s a part of getting your business finances in order. It can be quite a daunting task to get started on it, because you need to figure out what you’re spending your money on. All of it, down to the coffee and Snickers bars. I cannot emphasize enough the importance of tracking expenses. This includes the regular fixed monthly expenses like housing and music lessons, the utility expenses that vary seasonally, the quarterly expenses like real estate taxes and life insurance, and the not-always predictable expenses like car repairs and trips to the vet. For us it happened to be easy because I was already keeping track of all of it on a spread sheet, aided by a set of 12 envelopes in which I keep receipts for each month so I can make sure I don’t miss anything. However, I was not paying myself a salary, so when our expenses exceeded what was in the basic domestic account, I would have to siphon some from somewhere else and it felt like we were not living within our means, despite not having debt (besides the mortgage). Now, I get a paycheck. Now, our financial goals are clear, and plans that seemed hazy and possibly hopeless actually seem attainable.
I don’t claim to be 100% accurately representing the views of Harv Ecker or the organizers of the workshop I attended, and I'm skipping a lot of the details. I’m just passing along the way I used some of the information to change the way I think about and handle the budget for my voice-over business, and as a consequence, my home. It has made a big difference there AND in the way I feel about my work. I hope others will find some of it helpful.
Labels: financial planning, success in business, voice-over business
