I have taught entire other courses on personal finance so uh this is an enormous topic but let's say you are now at the point where you are able to draw regularly you have been bookkeeping for a while things air fairly stable ah, you know uh where to reinvest uh you know what? Things are working for you in terms of profitability um you've got a really good handle on your business and where it's going even though things will always change and be in flux a little bit you've really got the reins firmly in hand you're starting to pull that money out. You're starting to take that regular owners draw now what? What do you do with that? Um what I would do is first and foremost uh start some online savings accounts. There are lots of free ones and there are links to several free online savings accounts in that resource sheet that's part of the bonus materials um it's typically really easy to open these it takes like five minutes online, whatever. And this is what uh this is where I would put m...
oney you should not be touching what's money. You should not be touching well, that's money that you're going to have to pay in taxes later um so that's fifteen percent right off the top for those self employment taxes the medicare in the social security you know, you're going to have to pay that, and as a small business, you have to pay that quarterly. That's not once a year small business has to pay estimated taxes four times a year in the u s um, it also includes, uh, you could put it in the same or a different account your estimated income taxes, I'd recommend putting at least another fifteen percent for us folks away in income taxes. Um, I would also start building, um, an emergency fund, um, and I'll get to that when I get to number four, so I would open at least two online savings accounts, one for those taxes that you know you're gonna have to pay. You could open a third separate one for those sales tax is that you'll have to send in if you live someplace that has, uh, sales tax that you have to turn in or vet or gsd. Yes question. Yeah, clarification crossed, huh? So are you talking about a personal account or a business bank account for this purpose? It doesn't matter. It really doesn't matter. The only thing that you're using this for is holding money until you need to send it in to some government agency, but, um, it's, just so you don't spend it. Write it so you don't look at the bank account balance and say, well, I've got a ton of money in here of course I can invest in you know, this new piece of awesome equipment when actually maybe you only have a few hundred dollars to play with and the rest of that is all going to have to go to the tax man at the end of the quarter of the end of the year I mean presumably if you're using um your cash flow forecast and you're using your balance sheet in your ledger accurately you'll be able to see these things anyway um but yeah, this is this is a good a good way to set aside that money and know that you'll have it um when you need to pay it and not feel like, oh my god either I don't have enough or um I just took a huge hit you know, when you've got all your money in just one place you're not really thinking about how like thirty plus percent of it isn't actually yours it can feel like such a huge punch in the gut come tax time when you have to write that enormous check and you just watch your bank account like dropped down to here um this way you're not even looking at that number, right? This is off to the side and um when you send in your electronic payment or you you know uh what is it called transferred back into your checking account to write out the cheque um it's already been there you've already been saving it and setting it aside you already know it's not your money you're not even thinking about it as your money so it doesn't feel like you just got ripped off uh and then you never have to worry about having enough you will never spend that money that you're going to need to turn in because it's not technically your money um so yeah number to set aside your taxes first like I said self employment taxes income taxes here in the u s sales tax that gs t if you live somewhere where they askyou to remit those and then you need to look at um what's left and decide out of that extra cash that I have in my bank account do I re invest in the business or do I start taking disbursements for myself and we just talked about ways to evaluate that um if you are taking your cut then it's time to start saving for things for personal goals right we've finally gotten to the point in our business where we can start saving for personal goals first an emergency fund in which I would put six to twelve months of expenses like total expenses um so as much as you can handle saving in that um, I would put it in there and once you have six to twelve months of expenses that's it you don't need to put any more in your emergency fund um and that could be in your personal savings account or whatever. Um I like to use automatic deposits, so if I have a personal checking account, I like to have it automatically send x amount to my savings account per month, and I recommend if you haven't done this before, starting with a really small number that you won't even miss and I speed small like ten dollars a month, twenty bucks a month, and if you don't miss it after a couple of months, if you honestly are not noticing that that money is gone, kick it up right up to thirty five, maybe fifty bucks not noticing that make it a hundred bucks uh, and then by the time you, uh have got that emergency fund full, you'll be used to removing a certain amount from your checking for savings all the time anyway. Um once that emergency fund is full, you can rest easy because even if financial disaster happens now you're covered even if god forbid you get injured or have a horrible illness or somebody loses their job or god knows what, um you're covered for six months to a year at least thank goodness the next place I would start putting money away it's for retirement nobody ever thinks about their retirement when they're younger um maybe if you have an employer, you've got some sort of four oh one k that they contribute to maybe you match or maybe you contribute and they match and that's about the extent of it you don't know anything about it you don't know how much is in it you don't really care you're in your twenties or thirties or forties whatever retirement is such a long way off you don't think about it. Um but one day you're either going to not want to work anymore at least not for money uh or you won't be able tio and you still need to be able to pay your bills so you need to start saving for that stuff now. Um, estimates are that for I think like the average income now in the u s um you'll need to have about a million dollars saved by the time you retire in order to continue living in the style to which you've become accustomed until the day that you die. Um, which sounds like a lot of money to save, right? Um but there's this fabulous thing called compound interest that they haven't banks where if you okay, interest rates are really low right now um so for retirements probably better to do you know, some sort of investment vehicle instead and not just like leave it in a money market or a savings account where it's you know, inflation is outpacing it by like twenty times so compound interest builds on itself and makes you exponentially more money every year that you have your money in an account with compound interest you have in account where you have five percent interest I don't think those exist right now but let's say, um and you've invested a thousand dollars in it um the first year you'll make fifty dollars, in interest right? That's five percent um the next year they don't you'll make another five percent but not just on that original thousand that you put in you'll make five percent interest on the thousand plus the fifty that's now in there, right? So now instead of making fifty dollars this month you've made fifty plus what's five percent of fifty um another two and a half dollars. So now you've made fifty two and a half dollars in interest this month and next month you'll make even more than that and next month you'll make even more than that and it just keeps going up and up and up and up and up enough so the sooner you start saving for that the sooner you start taking advantage of compound interest the better you'll dio um if you start saving you know at age twenty versus age forty you won't end up with twice as much money at age sixty you'll end up with like five times as much money at age sixty because of this fabulous principle of mathematics um so start saving for retirement sooner rather than later it's much more important when you start saving for retirement than how much I'd much rather see somebody start saving one hundred dollars a month for their retirement now than a thousand dollars a month for their retirement ten years from now um after you've started putting away for your retirement I would start paying off debt I would start with the highest interest rate stuff first that's usually credit cards maybe auto loans after that uh maybe a mortgage after that maybe student loans after that um and then once you've uh started reducing your debt I would start saving to achieve those dream goals what is your dream goal do you want to buy house do you want to go on a trip around the world do you want to have a fabulous wedding? Do you want to start having kids? Um whatever that is you can start setting money aside for that too and these are not uh meant to be except for the emergency fund which has to happen first um none of these air meant to be like in a particular order you can start saving for all of these things at the same time that's perfectly fun I've put these sort of in order of importance to me I think the emergency fund is first and foremost important um retirement after that debt after that and then dream goals after that but you can absolutely start putting aside you know, fifty bucks towards each of them um so any questions about that stuff? No well I'm surprised um I usually find people have a lot of questions about the personal finance stuff okay um I have a question actually is just coming from sparrow and five people voted on this if you're not get taking an owner's draw do you still have to play pai employment taxes if you are not yet taking an owner's drowned you need to still pay employment taxes um well your employment taxes air based on your on the profit of your business so it doesn't matter how much you've taken and this is in the us of course um it doesn't matter how much you've taken out or put in it's how profitable your business was and it's always fifteen percent so if your business uh made ten thousand dollars in profit, you will owe fifteen hundred dollars in self employment taxes whether you've taken any money out for yourself or not thank you for that we just got a question about online savings against bank accounts, et cetera I have to remind your lawyer's not here to give financial advice that's not something that we can answer we are looking at questions were relating to bookkeeping so you have any related to those please let us know yeah um okay so I would like to ask our in studio audience and also our um broader audience what kinds of goals they have what kinds of goals do you have for your business after having sat through some or all of this class um what kinds of financial goals do you have what sort of things do you uh do you want to achieve with your business um and I'd like to start over here with amanda okay um I think that probably one of my goals would be teo be able to be my own boss so quit that day job duty oh yeah yeah it's not meant to happen overnight right right yeah, yeah. What about you, jackie? I think for me from this, like I know I have someone who does like a lot of my bookkeeping in accounting and I meet with her quarterly and for an hour that's all I could get her although she wants me to meet more and like you shall go over like numbers and things with me and like my eyes glaze over and I just don't want to deal with it and like she tells me all right I mean and she does actually have a worksheet that she has been sent or each month one supposed to like fill in things and so actually not grill me but oh, like I see you like to go to dinner a lot like nixon, my personal and my business I mean they're separate, but I mean she's so like my whole financial picture um and he's a little bit of an advisor yes, yes where my emergency find retirement debt like all that stuff we talked about in that session's almost like a therapy session which I avoid going to and so for me getting like more comfortable that and she does like, oh, you're spending way too much money going out to eat like so you're having fun like have lots of receipts from bars here like like you might want to reign that end and so just being outfitted like have control over that and form or comfortable and empowered as opposed to that being a very like painful experience because it does in the end effect like my whole life goals. My business school is my personal wells professional, so I think for me that is like very important supposed to bury my head in the sand and just send it off to someone else who is like, all right, I'll meet with you every like three, four months and like scold me and tell me what I need to get in but actually owning the power for myself that's great. Yeah and I mean that was something that we brought up earlier about why people do bookkeeping and what happened once they started doing their bookkeeping was they started really having to look at what they spend, how much and in what areas and it makes you much more conscious spender um and if you if you need help um budgeting those things out beyond just looking at a spreadsheet one technique that, uh a few people I know have used that, um it's a little bit fussy but it seems to work really well for them is the envelope technique you could do this either you know what I'm talking about? Yeah. Um you can either, uh do this for your business or your personal life. Ah, you take a category and let's say your projected expenses for um craft supplies are fifty dollars this month you take fifty dollars cash out of your bank account and you put it in an envelope marked craft supplies and that's what you used to pay for craft supplies that month and when you've run out that's it you're out you could do the same thing in your personal life if you have a budget of, you know, two hundred dollars a month for dinners out um, you can take that money out of your bank account, put it in an envelope, and when the money in that envelope is gone, it's gone for the month, um, and that's a really good way to sort of train yourself to work within those limits. And then once you're comfortable, sort of spending the amount that you want to spend in those categories, uh, on a monthly basis or whatever, then you don't need to use the envelope system anymore. Um, because you sort of have internalized like, oh, this feels like I'm spending too much right now. Um, and you'll be ableto sort of roll that back a little bit. Um and I'd actually like to take a look at did you bring anything that you make with the thing with the shoes I have on, um, I make with the women's cooperative in guatemala that's so exciting. Yeah. And how since we just talked about pricing, how do you price those? S o I prize thes at, like, three hundred, and I'm why what's the basis for that? Because one like there's a story behind it, like andi, I think because, like, when I first started my business, it was more like, um like trunk shows with my friends and I would sit around like from my travels and say like either hey, I got this or this fabric and I made into this and so it was like a whole like story like around that it was not it wasn't just the product I was selling, but it was also like this experience and absolutely getting to take that experience away from witham and so for me, all my products are like their artwork, their experience, their experiences they're like social responsibility because like the women that I work with and the work that I do in the mean I feel like these shoes on my feet are like one hundred yearsworth of guatemalan history yeah and you have to pay for that yeah that's, right pricing his marketing radio you need to pay for that craftsmanship pay for that history pay for the story that's wrapped up in there. Absolutely. And I do things like I do like short videos like when I spent last summer in guatemala. So I stayed and I say that this woman's cooperative and work with them and learned more like weaving I weave myself but not to the level that some of these women you did and so like I did like short videos we interview the women and then people who are really like, come my best customers I would like skyped them and like they get the like have conversations with the women which I would translate so it really is like an experience okay so you really do actually build in the experience it's not just the notion of experience they do actually get to take part in the experience of these women and their lives in the craftsmanship of these shoes yes that's so exciting and so great. Okay, well um obviously I don't know without having done the calculations if that price is profitable or not um so it's put it finally seems in line with your marketing yeah so like purr like shoe it's probably like about fifty dollars in materials like and materials and like to get them to the u s o okay so production labor materials and getting them to the us okay, so your cost of goods sold is uh pretty reasonable for that your gross profit there is two hundred fifty dollars, right? So then you just have to factor in those other broader business expenses and make sure that your shoes along with all of the other things are coming out to the right profit point yes um so there's probably not a ton of your own labor involved in these right thes aaron inventory purchase out right? Yeah, ok great. I do sometimes draw some of the design so but so you would factor that in certainly um but yeah, okay great so it sounds like you're generally um where you need to be a ce faras pricing for this product anyway yeah that's more like my gut I need to actually put it and actually like a spread like that's what I need to get a habit like something's it's just kind of like a bill from my gut like oh like I feel like women working in like cooperatives should actually make this much money a day so like how much like and so I have those numbers in my head but I definitely need to actually like institutionalized our process is supposed to like this is just how I feel yeah that's great I think so many of us do gut pricing and sometimes it's right on right good pricing doesn't mean it's the wrong price it could absolutely be right on um but it's really nice to either confirm or correct that one way or the other with those hard numbers so that's great that you're actually doing that that's fantastic um did you bring something into show as well? Yes because I'm really interested in seeing a also so um so I d'oh hand lettered would signs these air is it under your name or is it under thunder heart crafted co so that heart grounded right now I can't crack to see an instagram yeah yeah like handcrafted right so um these air both priced at thirty two dollars each and I kind of came to that race I've only been doing this for eight months so I kind of came to that price um just with like trial on air like well, if I haven't priced at this I'm selling way too many to keep up with so I could probably race the price a little of it then you know, if I make it a little higher than I'm not selling any so I mean but you mentioned I think that some of these air used in the wedding industry, right? Yeah so if you raise your prices you might nine there e think about that yeah so yeah, I definitely there are a lot of takeaways that I have to reevaluate some of my pricing I think from what I've calculated I have like maybe like a three dollar profit on these so I could probably re evaluate a little ok, so a slim margin toe with free now, okay, all right and you said people confined you on etc and instagram really yeah under heart crafted co and where can people find your fabulous uh, metal worked lamps and furniture and accessories at electra steel dot com and electricity like a like a tiara and you have more than one business and line don't you, jackie? Are there multiple places that people confined what you do? So the best place of miami is on instagram um and that's the jackie o life jackie spelled j a c k I eat okay. All right awesome thanks guys do you have um do we have anybody from the audience at large? We do if they want to share some gold yes, I have been wanting all so an m is saying I want to be more organized for future tax returns and then she goes on to say it's too late for this year so lots of people come and said it's never too late only in january yeah yeah mission means the year ending in april perhaps or maybe she's not in the u s I don't know what I should I think on them maybe a scotland actually so that would make it so yeah yeah uh here in the us most people have until april fifteenth to turn their taxes but um I know that it's a much shorter turnaround in a lot of other countries a lot of folks have their taxes due at the end of this month um if not sooner um I spoke keeping say they want to double their income artist sandra saying goals to generate income to live and save for retirement on dh then sparrow fly says I want to be able to help in the support of my family in a flexible way that's great. So a lot of goals not just financial but also lifestyle and time based and wonder lopez design says I really want to be up to sustain all of my household and personal expenses, have an emergency fund be able to contract employees and bless others with jobs I want to be in q vc I want to travel all over with my girls and husband and inspire other women to be entrepreneurs that's a lot of goals but I think that's great absolutely I mean they're never going to come to pass if you don't state them first and foremost right if you have these goals um the first step is just putting them out there making them known even if it's just to yourself even it's just writing it down somewhere in your own space that's fine um but I think it's even more helpful to make yourself sort of accountable to them by putting them out there a little farther into the world I'm not saying you have to like tweet your goals for the year to everyone in the world um but telling your friends and your family like these are my goals um and then the next time you see them for dinner or you know you're hanging out with your relatives they might ask you so how's that coming that other thing and they sort of help keep you on track a little bit um they help you remind you what you decided was important um and either that helps you come back to it. Or you re evaluated. Maybe there's. Something else that you feel is a little more important. Um, and that's. Great, too.