What comes to mind when I say the word ‘budget’?  To many people, budgeting can imply a severe austerity and strictness to living that is more than off-putting.  So what happens?  They simply avoid it.

Although many people get by with no formal budget, I would highly encourage you do one for yourself; mainly because most massage therapists works for themselves and their income and expenses can fluctuate significantly from month to month or even week to week.  An appropriate budget can help you smooth out those bumps and plan for future expenditures as well.

In my e-book, Financial Strategies, I spend a lot of time on budgeting including explaining the differences between fixed and variable expenses as well as how to use your budget to help you set your professional fees.  The most important thing I talk about though is the necessity of doing two budgets, one for your personal life and one for your business.

The reason this is important is because as a solo entrepreneur your business not only needs to make enough money to keep itself going but it also has to make enough money to fund your personal life.  Having a budget helps you keep track of where your money is and where it’s going.

Another benefit of having a sound budget is that it will allow you to better plan your medium and long term goals.  One thing I encourage my clients is to do at the beginning of the year is to figure out what CEU classes they want to take that year.  Once they plan their classes, they can start setting aside money for them.  This allows them to avoid using credit cards and save on all the extra interest.

The great thing about time is that it’s the great equalizer.  Everybody, male or female, rich or poor, prince or pauper, wise or simple, gets the exact same amount of time every single day.  There are no exceptions.  The question then becomes “What is the best use of the time that is given me?”

Conceptually, time is chock full of paradoxes which lend themselves to the human tendency to procrastinate.  Think about where your life was five years ago, and the intervening years seemed to go by so fast.  Yet when you think about where your life might be five years hence, it seems so far away, doesn’t it?

So we put things off because there will be time later on to do it.  But when the time comes, there is a mad flurry of activity trying to get it done at the last moment.  These experiences can be minimized (if not completely eliminated) with a few simple time management techniques.

The first step in any plan to improve yourself is to take stock of your current situation.  You can’t know where you’re heading if you don’t know where you are.  So I recommend starting a time journal for yourself.  It doesn’t have to be anything fancy, maybe just a small notebook that you can keep with you at all times.  It in, record how you spend your time.  You can use any increment you want as long as it’s both convenient & effective.  10 or 15 minute blocks should be a good place to start for the majority of people.

No matter what activity you do, record it.  Don’t fall into the trap of judging it (“This is a waste of time!”, etc.), just record it.  At the end of the day, take a few minutes to review your journal and ask yourself one question, “If I knew this morning that this was how I was going to spend my day, would I do anything different?”  I guarantee you that you will wake up the next day with a different mind set as to how you approach your upcoming day.

The difference may be slight or drastic but it will definitely be temporary, unless you commit to continuing with your journal for this day as well.  Again, the last thing to do before you go to bed is to ask yourself the question.

Over time you will naturally develop the habits necessary to maintaining healthy time management skills.  How you fill your newly found free time will be totally up to you.

Last time I talked a bit about effectively setting goals for yourself.  I’d like to continue with that for a bit if you don’t mind.  With Labor Day now upon us, I was thinking today about how fast the summer has passed and that we are now two thirds of the way through the year.  Before you know it, it’ll be New Year’s Eve and we’ll be making our resolutions for 2009.

Were you able to keep your 2008 New Year’s resolutions?  Do you even remember your 2008 New Year’s resolutions?  If the answer to either of these questions is “No”, then I invite you to explore what happened.  Were the goals too big?  Too nebulous?  Were they a statement of who you are and intend to be or were they merely a pale reflection of what you wanted others to see in you?

There are about 120 days left in 2008.  What goals can you achieve in that time?  Here are a few questions you can ask yourself to help get the creative juices flowing: “How many clients do I want to have going into 2009?”  What tasks do I need to complete to further my long-term goals (build a web-site, get certified in specific modalities, secure a professional office space, hire/trade with a financial planner to trade with, etc.)?  On New Year’s Eve, what accomplishment do I want to look back on with pride?  What will I regret not doing?

Julia Cameron once encouraged a man to fulfill his dream of learning to play the piano.  He responded by asking, “Do you know how old I’ll be by the time I learn to play?”  To which she beautifully countered, “Yes!  You’ll be exactly the same age as if you don’t learn to play!”  So stop procrastinating and get busy living the life you want to live.

We set goals all the time; every week, every day and sometimes hourly.  In fact, we set goals so often, they almost don’t even register on our radar as taking place.  As such, what may start out as a legitimate goal may end up in the “Intentions” pile.  They become a passing flight of fancy rather than the manifested reality they were born to be.  I’ve often wondered why this is so.

My best guess is that we, as a society, have relegated the ritual of conscious and meaningful goal-setting to only one night a year.  Often these goals are too big or too complex to sustain.  But I have found that the rift between the articulation of a goal and the achievement of it has much deeper roots.

Over the past few years, I have been facilitating in-person and telephone workshops on the subject of goal-setting and have come to realize that most people fail to achieve their goals because the goals they set are incongruent with who they are.

If the outcome of the goal does not reflect who you are on the deepest levels, namely your values, then you will lack the sufficient motivation to take the necessary actions required to achieve it.  It’s that simple.

If you value independence, spontaneity and creativity you will most likely be more motivated toward establishing your own practice, rather than pursuing employment in a hospital setting that is highly regimented.

The process of identifying & clarifying your values is so crucial to effective goal-setting that in my workshops the first third of the class is devoted to it.  Skip this step and you run the risk of failure or frustration.

Have a Happy Fourth of July everyone.  Be safe.

Knowing all of your major expenses and how they affect your financial health allows you to more intelligently assess your income earning potential.  Let’s say that you charge $80 per session and you want to take a class that costs $400.  Doing some quick math, you realize that you could afford the class by only doing an extra five sessions (5 x $80 = $400).  Now let’s just look at how a few variable expenses can affect your decision.  For the sake of simplicity, let’s assume that your income tax rate is somewhere around 27%.  Let’s also assume that you’re paying 20% of your income in rent.  And if you accept credit cards, you pay an additional 3% to the credit card companies for every transaction.  (All of these assumptions are well within reason.)

So with just those three variable expenses (and there can be many more as well, both fixed and variable), you’re already paying out half of what you take in.  That means that your $400 class, which you originally thought could be paid for in only five sessions will now take at least ten.  You will have to do twice as much work to pay for it.

I hope these examples point out the importance of knowing what your expenses are how they can affect your bottom line.  You need to pay attention to what your cost of doing business is and be on the lookout for ways to reduce it, thus putting more money in your pocket.  Failure to do so will prevent you from reaching your financial goals and keeping you wondering why.

Every business (including yours) cost money to keep it going.  Knowing what your expenses are and how different expenses affect your bottom line are two keys to maintaining success.

The financial health of every business is ultimately governed by this formula: Revenue – Expenses = Income.  So any increase in revenue or decrease in expenses means more money in your pocket.  Today, I’d like to focus on the different types of expenses and how they affect your bottom line.

In general, there are two types of expenses, fixed & variable.  A fixed expense doesn’t change regardless of how much work you do or how much money you earn.  A variable expense, as the name implies, can fluctuate depending on how much work you do or how much money you earn.

Let’s take a look at a few examples.  If you carry professional liability insurance then your premium is a fixed expense.  Whether you work on one client this year or one thousand, the premium is the same.  A variable expense on the other hand can fluctuate and there are two ways it can vary, either by income or number of sessions.

Income tax is a variable expense that varies by income not the number of sessions you do.  So whether you do 100 sessions per month at $20.00 each or 20 sessions at $100.00 each, your total income will be the same and that is what the IRS will base your taxes on.

On the other hand, let’s say you donate a number of sessions to a charity auction.  You won’t earn any direct income from those sessions but you will still have to launder sheets when you’re done.  Here, your expense was tied to the activity itself and not to the income.

One of the fastest ways to get yourself into financial trouble is the frequent use of credit cards.  The interest charged by the credit card companies means that everything you buy with a credit card (assuming you don’t pay off your entire balance every month) ends up costing more.

One approach to getting out of credit card debt that has worked really well for me is to not only stop using them but to stop even keeping them with me.  For a long time my credit card use was out of control so I needed to take drastic measures (short of cutting them up).  I took all my cards out of my wallet and put them in an envelope in my freezer.  I know it sounds strange but I know where to find them in an emergency.

By doing this, I was forced to make much better financial decisions from day to day.  If I didn’t have enough cash to pay for something then I simply wouldn’t buy it.  This practice really cut down on impulse buys.  Another good idea is to never use a credit card for anything that will be gone before the statement comes in.  In other words, if you go out to dinner with friends and pay for it with plastic, the enjoyment of the dinner is gone long before the statement arrives in your mailbox.  The same holds for buying gas.  (In fact, some stations actually give a discount for paying by cash or debit.)

One other idea that may work for some of you is to make weekly payments instead of monthly ones.  You’ll save a little on the interest as your average monthly balance will be lower.  More importantly though, you’ll be making the equivalent of an extra month’s payment every year (52 ÷ 4 = 13).  So you’ll be paying it off faster with less interest, sounds good to me.

Worth.  An interesting word when you think about.  What is worth?  What is the true worth of something?  Is there even such a thing as the true worth of something? Who gets to decide what something is worth?

For massage therapists, the questions get a bit more personal: What are you worth?  How much are your skills, training, knowledge and time worth?  I think for many massage therapists these can be uncomfortable questions.  And the most uncomfortable question of all, probably because it directly confronts your self-esteem; how good are you?

I think a lot of the discomfort could be avoided if you realize that these questions have, in fact, very little to do with you.  You are not selling your services, you are selling an experience.  Your clients are not buying your skill, they are buying the experience of being relaxed, or the experience of being in less or no pain, or the experience of greater range of motion.

How much they are willing to pay is mainly a function of how much value you create for them, not how much you think you’re worth.  A client who pays you seventy five dollars to help relieve their pain will get more value from your session than if they paid someone else forty dollars and didn’t experience any relief.  So as far as the client is concerned, your session was worth far more.

I’ll talk more about setting and raising rates in the near future, but for now I would encourage you to spend less time pondering your worth from your perspective and instead consider your worth from your client’s point of view.  Keep asking yourself the following two questions; how much value are you creating for your clients?, how are you contributing to their quality of life?

            The necessary first step in shoring up your financial health is taking a long, hard look at all of your underlying beliefs about money.  Your beliefs about money will determine your perspectives about money.  And your perspectives about money will determine your experiences with money.

            A fundamental belief that I think every healthy person shares is that to some degree, deep down they’re a good person.  Another belief that most massage therapists share is that the work they do can be very beneficial to their clients.  So, we can conclude that most massage therapists believe that they are good people doing good work for the benefit of their clients.  This is all well and good unless you also have the belief (and some of us do) that money is the root of all evil.  Now we have a major disconnect.  If you’re a good person doing good work, you’re probably going to have a lot of discomfort around accepting money for the work you do.

            What if instead you were able to alter that last belief?  What if you believed that the money your clients give you is their way of saying “Thank you”?  Does that change anything?  You bet it does.  Change your beliefs, that will change your perspectives and that will change your experience.

            Almost every massage therapist in every discipline has been told about the importance of self care.  Our teachers told us, “You cannot help others unless you take care of yourself first!” and it is absolutely true.  To date though, this has been almost exclusively construed to mean physical or energetic self care.  There is however a third aspect of self care that needs to be considered, especially for the self-employed and that is financial self care.

            In the same way that personal self care will help you maintain a strong and balanced vitality sufficient to take care of many clients, a strong and wholesome financial discipline can help keep your practice running smoothly for years and help you meet your financial goals.

            No one becomes an MT so that they can deal with cash flow challenges but as a future business owner, you will encounter them eventually.  It just makes sense to be prepared.

            Let’s try a quick experiment; what if I were to ask you to spend ten minutes a day just thinking about your financial health?  Would you do it?  Do you think it would make a difference?  What if I were to ask you to spend those ten minutes a day thinking about the possibility of you developing a serious, life-threatening disease?  My guess is you wouldn’t do it, and you’d be right not to.  So why not spend that time dwelling on the possibility of prosperity and abundance?  Take my word for it, it works!