Crack the Financial Code: Insights for Coaches on Managing Finances Effectively

Episode Transcript

Chareen Goodman

Welcome to the Crack The Coaching C.O.D.E.™ podcast, where every Thursday, coaches from all over the world can tune in to get a dose of good info to help them crack the coaching code in their coaching business. On this podcast, you will get what you need to make your coaching business a true dream business. Whether that's a short learn-to-earn knowledge session or a full-length interview conversation with some of the most interesting, influential, and impactful people in the industry, this podcast will give you the inspiration, motivation, but above all, the encouragement you need to get you and keep you building and growing your own coaching practice. Welcome back to another episode of the Crack The Coaching C.O.D.E.™ podcast, the podcast for coaches who want to take their game to the next level. I'm your host. Shereen Goodman, founder of Crack The Coaching C.O.D.E.™. And as always, thanks for tuning in to today's podcast.

Chareen Goodman

In today's episode, which is one of those learn-to-earn episodes, we are going to wrap up our series called What Do I Need to Change in the Second Quarter? For those who are new to this podcast, we are discussing strategies and tips to help coaches achieve their goals and make the most of the second quarter of the year. And today we're going to talk about something that's crucial for coaches at all levels, and that is managing your finances. Money is so important, and knowing how to manage your money and finances better in your coaching business can make a world of difference for the growth and sustainability of your business. Not only that, but these are the last days of Financial Literacy Month, so what better way to wrap up the month than to talk about money and finances and really about some money mistakes that coaches should avoid when it comes to running their business. So we're going to get into it. In this episode, I want to talk about four critical and common financial mistakes and what you can do to avoid them as a coach from overspending in your business to not planning properly for taxes, these mistakes can have serious consequences for your financial stability. I believe this episode can really be a game-changer for many coaches, especially in today's economy. So whether you're a first-time coach or a seasoned veteran, this episode is for you.

Chareen Goodman

By the end of this podcast, you'll have a better understanding of what you can do to manage your finances effectively and avoid the common pitfalls that many coaches face in any given year. So my friends, get that cup of coffee, water, or tea along with a pen and some paper, and let's talk about managing your finances and some key mistakes you want to avoid making in your coaching business. The first mistake that many coaches make when it comes to managing their finances is failing to create a budget for their business expenses. It is so easy to overlook those pesky business expenses that creep up every month or assume that they will be covered by other sources of funding. But this can absolutely lead to overspending and financial instability in your business and that can lead to a whole lot of unnecessary stress for you. As a coach, you likely have a number of business expenses that you need to account for, such as software memberships, internet subscriptions, technical equipment, and perhaps even travel expenses or rent. Without having a clear budget in place, it can be difficult to manage these expenses effectively and ensure that you have enough funds to cover them. You don't want to try to keep track of these numbers in your head every month.

Chareen Goodman

This practice takes up too much mental real estate that should be reserved for your clients. So what can you do to avoid this mistake? One of the most important things is to create a comprehensive budget that includes all of your necessary business expenses. You can kickstart this financial practice by tracking your spending over a period of time, like the next 30 days, and identifying areas where you may be overspending or even overlooking the expenses you incur every month. It's also important to prioritize your expenses and allocate your money accordingly. So say, for example, if you typically launch your group coaching program in the fall, you may have to allocate more funds to marketing Facebook ads and promotional activities during this time in order to get the word out and people enrolled into your program. Having a forward looking budget for things like this can really help you manage your financial position more effectively. You can consider using tools like expense tracking apps or software to help you manage your budget and stay on top of your expenses. There are a to of them out there which you can find with a simple Google search.

Chareen Goodman

By doing this, not only will you be creating a great money management habit, but you'll also be able to identify which is very important by the way areas in your business where you may be overspending on things that are just not necessary. So here's the deal not budgeting for business expenses is a common mistake that many coaches make in their business. However, by creating a comprehensive budget, prioritizing your expenses, and using tools to help you stay on top of your spending, you can avoid this mistake and ensure financial stability for your coaching business. Now just imagine how much peace of mind you can create when you do this. Now, in this segment, let's talk about another common, yet critical mistake that coaches make when managing their finances and that is failing to plan for paying your taxes. This mistakes can lead to large, unexpected tax bills and a lot of stress when it comes to tax season. As a coach, it's important to plan for taxes throughout the year. This means setting aside a portion of your income for taxes and working with a tax professional to minimize your tax liability.

Chareen Goodman

This is not the time nor the area to be a Doityourselfer. One way to plan for taxes is to estimate your tax liability for the year and then divide that amount by twelve. This will give you a rough idea of how much you should be setting aside each month for your taxes. Another important step is to work with a tax professional, perhaps a CPA. They can help you identify deductions and credits that you may be eligible for or that you would ordinarily miss. A tax professional can help you develop a tax planning strategy that minimizes your tax liability. Remember, you are building a business that should sustain the lifestyle you desire. Planning the financial element is also essential.

Chareen Goodman

And here's another thing it's important that you keep detailed records of your income and expenses throughout the year. This includes keeping track of your business expenses as well as any income you receive from coaching services. Don't pawn this off to someone and you don't know what's going on with your money. When you put this practice into place, you will be better prepared come tax season and can avoid any unexpected surprises. Remember, planning for taxes is important for your financial stability as a coach. Failing to plan can lead to unexpected tax bills and a lot of unnecessary stress. By setting aside a portion of your income each month, working with a tax professional, and keeping detailed records, you can avoid this mistake and ensure that your finances are in good shape and that's what you want. Hey coaches.

Chareen Goodman

Welcome back to another segment of the Crack the Coaching Coach podcast. In this segment, I want to touch on the crucial mistake that many coaches make and that is neglecting to plan for their retirement from their coaching business. Let's face it, you're not going to work forever, are you? If you're like no, I'm not. Then you can't ignore retirement planning. Yes, retirement may seem far away, but it's important to start planning for it right now while you are building and growing your coaching business. Ignoring retirement planning can lead to a lack of financial security in your later years, which can be stressful in and of itself. So one way to start planning for retirement is by setting up retirement savings accounts such as an IRA. Whether it's Traditional or Roth, or a Solo Four Hundred and One K plan, these accounts allow you to save for retirement on a tax-advantaged basis, which means you can potentially save more money than you would in a regular savings account.

Chareen Goodman

Put this on your list of things that you need to change for the second quarter if you don't already have this in place. Now, this is not financial advice, but it is something that you should be talking over with either your tax accountant or a financial planner. Remember, running your coaching business means you are a business owner. It's also important to invest wisely for the future. This means diversifying your portfolio and choosing investments that align with your goals and risk tolerance. Again, it can be helpful to work with a financial advisor who can provide guidance and help you make informed investment decisions. If you're just starting out as a coach, it may seem difficult to save for retirement. Heck, I get it.

Chareen Goodman

However, even small contributions can add up to big money over time. Consider setting aside a percentage of your income for retirement and increase that percentage as your income grows. It's so important that you keep this in mind. Don't ignore retirement planning. Yes, this is a common mistake that many coaches make, but it's never too late to start planning for your future. By setting up a retirement savings account, investing wisely, and taking advantage of the resources available to you, you can assure you'll have the financial security you want in your later years. And I guarantee you, your future self will thank you for it. This week, I wrote a blog post that covers seven common mistakes that coaches should avoid when it comes to their finances, which you can find at chareengoodman.com.

Chareen Goodman

However, this segment is only on this podcast. In this segment, we're going to talk about a mistake that can be particularly stressful, and that is taking on debt to operate your coach business. I'm a big proponent of not going into debt to build a service-based business like coaching or consulting, and I typically advise my clients to do the same. Why? Because there are too many ways, with the right plan and strategy in place to build a profitable coaching business without taking on debt and by making wise investments. I'm also a strong proponent that you can't expect to build a profitable coaching business. By doing everything to build your business for free. You must make wise investments. Now, don't get me wrong.

Chareen Goodman

Coaches, just like any other small business owner, may need to take on some debt to invest in their business. However, taking on debt without assessing alternatives, or without a clear understanding of the ROI, your return on investment can lead to financial stress and instability. It's important to manage debt effectively and avoid taking on more debt than you can handle. This includes not taking on the debt of a client or client who can't afford your coaching services. Now, here's the straight with no chaser coach in me. You are not a bank. And funding your clients who can't afford to pay you when services are rendered are perhaps not your ideal clients. If you are challenged in this area, schedule a call with me so we can get that sorted out and handled for you.

Chareen Goodman

Again, you are not a bank, and when clients are not paying you, you are taking on, believe it or not, debt. Now, one way to manage debt effectively is by creating that budget I talked about earlier and sticking to it. Know your financial limits. By budgeting carefully, you can ensure that you're not taking on more debt than you can afford to pay back, or taking on debt that is really doing your business a disservice. If you have an overabundance of debt in your business, including unpaid and outstanding payments from clients, I encourage you to sit down and do the math and then put a plan in place to collect. Finally, if you're considering taking on more debt, first, think carefully. Before you do so, consider whether the debt is necessary and whether you can afford to repay it on time. If you're unsure, it's always better to err on the side of caution and avoid taking on more debt than you can handle.

Chareen Goodman

Remember, taking on debt is a common mistake that many coaches make, but it's one that can truly be avoided simply by thinking carefully before taking on debt. Even when it comes to funding your clients, you are the master of your financial ship. Don't sink it with debt. And that's a wrap, my coaching friends. We've covered a lot of ground today discussing four of the most common financial mistakes coaches make and how to avoid them. So let's quickly recap the key takeaways from today's episode. Firstly, it's important to budget for all your business expenses to avoid overspending and creating financial instability. Secondly, plan for taxes throughout the year to avoid any unexpected tax bills.

Chareen Goodman

Thirdly, don't ignore your retirement planning, as it can lead to a lack of financial security in your later years. And finally, manage your debt effectively to avoid financial stress and instability, especially when the debt is unnecessary. Remember, coaches, managing your finances effectively is crucial for long-term success and stability. It can help you achieve your financial goals and ensure that your business is sustainable over the long haul, and it'll help you have the lifestyle of your dreams. Thanks for tuning in to the Crack The Coaching C.O.D.E.™ podcast. We hope you found this episode helpful and informative. Now, don't forget to subscribe to our podcast and leave us a review. Two if you have any questions or feedback, please feel free to contact us via our website charinegutman.com, or on our social media channels.

Chareen Goodman

I look forward to seeing you on our next episode when I'll have more tips and strategies to help you succeed in your coaching business. Have a blessed day.