Setting Financial Goals and Budgeting for Your Business with Justine Nelson of Debt Free Millennials
Episode 399: Show Notes
Today on the show we welcome Justine Nelson, founder of Debt Free Millennials. Justine is on a mission to advocate for a debt-free lifestyle, and today you will learn how this is relevant for your business and how it can fuel your personal financial goals. By the age of 25, Justine Nelson had paid off $35,000 in student loan debt making an average of $37,000 per year. Grit, discipline and a motivation to kick debt's ass for good helped her achieve this goal within two and a half years.
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In this episode, we talk about leveraging your side hustle to pay off debt or save for that dream vacation, Justine’s go-to worksheets and business books, and a list of things you can do each month to ensure that you stay on track with your goals. We also talk about bookkeeping systems, budgeting, planning for annual subscriptions, and setting measurable goals. Now that 2020 is in full swing, why not tune in to this episode and learn how to get your debt and savings dealt with?
First Moves When Starting Your Business
One of the first things Justine did when she started her business was open a business checking account because keeping your business and personal money separate is key. This will save you from a lot of confusion and it’s also easy to do. You simply head to your local bank, ask to open a business checking account, provide your business EIN, and start filing your stuff separately. Justine also advises listeners to make use of an online bookkeeping system such as QuickBooks or TurboTax. QuickBooks is the most widely accepted software, particularly if you work with a CPA. She also uses a budget spreadsheet for her business, and if you head over to debtfreemillenials.com, Justine has a budget toolkit that will help you to track your monthly income and expenses for your household. Just as you would set up a budget for your personal finances, so you would for your business. She uses a credit card for her business and uses the statements to see what came in and went out. This helps her to keep expenses low.
Get A Grip On Annual Subscriptions
The annual subscriptions that Justine has, include Canva, Teachable, and Calendly, and all of those payments are due around the same time each year. Rather than stressing about having so many big expenses in one month, she sets aside money each month until that subscription is due. If the subscription costs $120, she divides that by 12 and puts $10 in her business savings account to prevent her from spending it. Signing up for annual payments tends to be much cheaper than paying per month – so it’s an effortless way to save. After reading Profit First, Justine also started setting up her business finances in different categories: owner’s comp, income, expenses, taxes, and profit. She also adopted Mike Michalowicz’s idea of taking 1% of your profit each month and putting it into a profit bucket and then paying yourself a bonus each quarter.
In The Meantime, Do A Side Hustle
Back when Debt Free Millennials was not making Justine any money, she was in survival mode and tried to think of ways in which she did not have to solely rely on her partner for support. If you are in the same boat and feel strongly about still contributing to your household, it’s a good idea to find just one project or side hustle to bring in some consistent monthly cash. Even if it’s not your dream job at the time, having that income is going to give you stability so you don’t operate from a place of desperation. Taking on a client for whom you deliver a service is the best and easiest way to go about it. When Justine’s business finally started making money, she used our monthly profit review sheet to track what she earned each month, as well as the obstacles and wins. She categorizes her income into four different streams: freelance gigs, digital products, affiliates and YouTube, and the sheet helps her to see which stream performed best and which ones can be optimized more. Putting your wins up where you can see them every day is a great way to keep yourself motivated. (If you’re interested in those monthly profit review sheets, check out https://creativetemplateshop.com. They’ll be available shortly!)
Celebrate The Goals And Feel The Money
It’s important to celebrate the wins and feel the money you are making! Dave Hollis has talked about identifying what your Hall of Frame goal is — that big, lofty goal — and what your Super Bowl goal is. Your Super Bowl goal is what you aspire to for your business in the current year, and you begin working toward it by breaking it into smaller goals that you have to achieve each month, week, and day to get there. The idea is to establish your Super Bowl goal and then to break it up into measurable steps. Remember we spoke about the scorecard element of a meeting a few episodes ago? This is the same thing: the aim is to stay on track with those things you prioritized and to evaluate how you are faring throughout. If you fail to do this, one of two things could happen: you either work on unimportant things that are not taking you towards your goals or, you give up on things too easily; things that may have worked.
Thoughts On Business Debt
Some business owners take out loans or put their business expenses on credit cards and end up racking up a lot of debt. They’re not making any money on their business, and yet all this debt is piling up. What Justine has learned through her own entrepreneurship journey is that if you don’t cash-flow the business and end up going into debt, it only adds to the anxiety and overwhelm that you already feel as a business owner. Entrepreneurs tend to be high-achievers who are always pushing for the next thing, but you cannot allow your expenses to pile up or for the business to go into debt. One of the best decisions Justine made was to cash flow the business and not go into debt. Whether that money comes from your personal account or your previous business or another source of income, put some cash into your business account so that you can avoid debt. We keep saying it and we’ll say it again: you can fund your dream business by doing some service work — something that you already know — right now. Even if you no longer serve those clients six months down the line and pivot to what you want to do, it doesn’t matter! Do what you need to do to get paid, even if it’s not always fun and amazing. Getting those dollars in will give you peace of mind and will allow you to put some fuel on your big dreams.
Start Your Business Even If You Don’t Have Everything Figured Out Yet
You don’t have to have everything perfect before starting a business. Plenty of people we know have started earning a full-time income even when they did not know exactly how it would go. What we recommend is not that people simply quit their day-job and start their business but rather they use their current work to fund the business they dream of having and paying off debt — and starting that on the side. Nights and weekends are great for doing the groundwork for your business before officially quitting. Justine talks about the various ways you can make money from home, leveraging your interests and passions to bring in some extra cash. If you have a passion for something or have a skill set you already use in your regular job, then you can get paid by somebody else to do those same things. Examples of these side hustles include freelance writing, marketing, photography or graphic design. If you do decide to go the freelance writing route, it’s a good idea to start a blog and write about the kind of topics you like to write about. You can use these blog posts as a type of online portfolio to pitch to paying clients, and in this way, they can see the quality of your writing.
Designate Money to Specific Things
When those dollars come in, be sure to assign them to something specific and give them some direction, otherwise, it’ll just be absorbed into everyday expenses. Justine has a budget coaching program with high-income earners — people who bring in $20,000 in cash — and they would come to her and not know where that extra money has gone. But whether you make an additional $200 or $20,000, you need to designate all of it to clearly-defined areas. At the end of the month, when you have calculated what additional money you have made, be intentional about what you spend it on or put it toward.
Quote This
There are so many things that money touches in our lives. And if you really want to jumpstart your biz, we have to do that in a financially savvy way.
—Justine Nelson
Highlights
First Moves When Starting Your Business. [0:05:22]
Get A Grip On Annual Subscriptions. [0:10:50.1]
In The Meantime, Do A Side Hustle. [0:15:31.1]
Celebrate The Goals And Feel The Money. [0:22:54.1]
Thoughts On Making Business Debt. [0:28:05.1]
Start Your Business Even If You Don’t Have Everything Figured Out Yet. [0:38:44.1]
Designate Money to Specific Things. [0:47:40.1]
#TalkStrategyToMe [0:54:52.1]
Separate business and personal money.
Create a business budget.
Read Profit First.
Create a monthly reporting habit.
ON TODAY’S SHOW
Justine Nelson
By the age of 25, Justine Nelson had paid off $35,000 in student loan debt making an average of $37,000 per year. Grit, discipline and a motivation to kick debt's ass for good helped her achieve this goal within two and a half years. Now, she's sharing her strategies and tips with fellow millennials on how to get out of debt, budget without the bitching, and ultimately change your financial future. She believes millennials work too damn hard to be broke all the time and that credit card companies and banks are feeding lies about the way millennials should live. A Kansas City native, this Midwest millennial broke out of debt's chains and now resides in San Diego, California with her husband living the DINK life (Dual Income, No Kids).
KEY TOPICS
Online Education, Development, Challenges, Profit, Retrospection
