Can You Really Budget on an Inconsistent Paycheck? Yes—and Here’s How (Budgeting With Irregular Income, Money Management for Hairstylists, Small Business Finances) | 447

0:00The only money we wasted every year. So he does better when he only sees so much. He thinks I put money in the garage and keep it that way. When we need it, it's all, here it is. Michelle just transfers money over there. He doesn't need to see it all. Cause if he sees it all, he gets, I don't know. He just. Listen, we're, if you're at this system that you got is working, I think it's great. I'm just saying, try to make a budget with all of the money. because every dollar is going to be assigned somewhere. So yes, you guys bring in a lot of money, but then the best part of your budget is that income section.

0:38Then it just goes downhill from there because then you got your debt minimums or you got all of your bills, you have all your spending and all your savings and he can still have his one account where you transfer his money, which is his spending money. I think that's great. But just for your sake, just see what is possible with all of the money together versus trying to make two separate. but see you you would have to make three separate budgets one for your business one for your husband's paycheck and one for yours do you make good money but have nothing to show for it are you tired of living paycheck to paycheck do you have big dreams for your financial future do you want to get debt free but you don't want to live on beans and rice or you don't want to give up those pumpkin spice lattes hey it's okay if you don't already know how to budget or if you're using credit cards to get through the month hey it's okay if you want to seem like you have your finances altogether, or you're not on the same page with your spouse when it comes to finances.

1:30We know what you're doing probably isn't working, but guess what? You're in the right place. We're Shana and Vanessa. We're best friends, business partners, and master financial coaches trained by Dave Ramsey. We've been in business since 2019, helping hundreds of amazing people like you create budgets, get out of debt, stop living paycheck to paycheck, and know exactly what to do with their money. In this podcast, we'll share with you everything we know, plus everything we're working on with our clients so that you have the best chance at reaching your financial goals. We want to help you take the guesswork out of your budget, improve your marriages, and even bring your kids in on the conversation.

2:05We can help you no matter where you're at, whether you're the single mom who's never had$500 in her savings account or the millionaire who's paid off four real estate mortgages. And we're not going to shy away from the tough love. We'll tell you what you need to hear and encourage you at the same time. This is the Financial Coaching for Women podcast. hey michelle thank you so much for coming on our podcast we're so excited to be here to help you out with whatever question you got what you got going on okay so my husband is a police officer he gets any paycheck i'm a hairstylist so like income is not like less yeah yeah so i listen to the podcast And I'm like, okay, I don't know what to do.

2:49I'll do the automatic transfer for my income because it comes in different days and different amounts. So it's the part that I mostly get hung up on. Okay. Do you have a budget for your business and your personal or is everything all mixed together? our personal account that's usaa so that's where we take all the income out that's all where all the bills and stuff come out mine i do i have a budget yes i feel like i do because i have my rent that's taken out i have the money that goes over into the supplies portion anything that i have to do the problem i guess where i'm hung up is i'm doing manual transfers and then i'm not always doing it the way i would like to do it and then so far as taxes being able to pay for these and stuff like that i've never been great at and that's why we had a twelve thousand dollar tax I just, so I'm okay.

4:05No, we get it. So it's already hard enough, honestly, with just personal. And then you add in a business that makes it double next level, at least double as hard. And then you add in something like, is it a hairstylist where things fluctuate? There's different supply costs. Like it's just, you get tips. Like it's just, let's take the most complicated way of financially of a business. So funsies. So that we get it. It's all very complicated. That's why it feels fancy to begin. Yeah. And we've actually had some hair stylists as clients and we are versed in this area. But really, when we hear what you're saying, you're aiming for that automatic life.

4:41We get it. And we want that for you. So what we would say is it doesn't matter how inconsistent your income is, it can still feel consistent and you have the power to do that. You just have to get everything set up just a little bit more organized in your business side. So what we would say is you need to open up an income. So I'm going to encourage you to listen to this podcast when it actually comes out and pause and take notes. But we want you to open up an income checking account where all of your income comes into for your business. And then we want you to have an expense account, which is also a checking account where you're paying all of your bills out of for your business.

5:18Now I'm talking strictly business right now. So you're consistently transferring the exact same amount into that expense account. So you know what is going to get paid. And it's again, consistent amount of money that's going in there. And then I know you have supplies. So we actually recommend that be separate because it is inconsistent. We want you to be saving. If you think of how much does it cost me to run my business in a year, as far as supplies and how much do I spend on shampoo and clippers and things like that. Take that number, divide it by 12 and consistently be putting money in a supplies savings bucket for yourself.

5:58So that way, when the time comes and you need the money, it's there, but you've been putting the same amount every month. Does that make sense? Then at this point, you can automatically put the same amount of money in your expense account, automatically put the same amount of money in that supplies savings bucket, and then automatically be paying yourself consistently whatever you want or whatever you need to your personal budget. Yeah. So the other thing there, Michelle, is when you said about taxes, you're also going to do that. Oh yeah. Sorry. What you really want to do is you have to set up a basic budget for your business.

6:30It doesn't have to be super complicated, but we want to know what does your business need from your business revenue before we can give it any of it to your personal. That way everything's covered there. So generally you want, you could have some basic numbers monthly. We know that they might fluctuate. Some of that might fluctuate, but if you have a general amount for bills, a general amount for spending, which might be some of the supplies or whatever that you need to do each month, a general amount that you're saving, right? This is for taxes, for annual certifications, bills, all the supplies.

6:58Packs, like CPA fees too. You want to know all of that. And that will inform an amount that you can pay yourself monthly. After you've taken care of all of that, you can pay yourself regularly once you know that. It's the not knowing in the back and forth, I get a lot of income, I don't get a lot of income. And so you can do that and see what you, what sort of, for example, I have a client that owns a spot and she pays herself 600 bucks a week. And she has a lot of her expenses are tied in her business right now. So that's as much as she can do to pay herself. And so you could do that. You can actually make it regular to know, to be able to pay yourself a paycheck.

7:36On the other side, when it comes to your personal budget, you want to do the same there too, because what you can do is you see, you have your husband's income, you have all of your bills you have what you guys want to set up for different spending categories restaurants gas and groceries personal spending kids whatever you need to see what you want to pay as far as savings but you might see i only need five hundred dollars to make this budget untrue from your business so then i'm actually making more of my business than i truly need in personal and that that's exciting that's a good number that's a good information to know then you can always decide if i'm making more in my business do i want to reinvest that in the business or do I want to put that to something specific in the personal, but really getting a clear picture of what each version of you costs, right?

8:21Your personal life and your business life. That's a really good first step. And another thing here is your business. Yes. It's inconsistent based on the number of clients that show up and book and everything. But on the low months, you know that you have money in that income account because you've kept it in there. Okay. And the high months, we don't want to just take extra money out. We want to just consistently pay ourselves the exact same amount, whatever your personal budget says that you need to pay yourself. And Shana said, you're going to, you're going to, you can reinvest extra money back in your business, but for you, because it's inconsistent, you're going to need to get a couple of months in to say, okay, am I good to be able to leave this money in?

9:00Or can I reinvest it based on business? I know I had a client who you're busier during the holidays, but not as busy in January, right? Because people are trying to get their hair did for Christmas parties and everything. And then probably same right now, people are getting ready for summer. So I would look at your income, previous income to go, when are my slow months? What are my high months? And to make sure that your high months are funding your low months in your business. And the other thing is, if you can get as much of your budget covered with just your husband's pay, and then you know what you're able to pull over from your business every month, like that can go to something bigger or whatever, that also can be an exciting way to live that if you're able to live on what he makes, you're truly living under your means.

9:42Okay. So we've said a lot of things. You have to have questions and we'll keep talking and that's not nice because it was so much already. Okay. So for us, he takes care of all the bills. The only thing I pay for is anything for my business and my cardinal so that part it's just for me I have all these accounts of USAA is like our meat and potatoes that's all his salary and all the different accounts over in maybe federal is where I have all my business stuff so I'm just I have my spending account I have my bills account I have the salon supplies account. So what you were saying is that I need a bills account and a supplies account.

10:38You need an income. So with business, there's one extra checking, which is an income account, because we want the money to pool there, especially with businesses that have inconsistent income, because you may have high months and low months. We need to be able to pool that money in your income account, which is going to fund your expense account and fund that a supplies account and then any savings that you have okay so that's you were saying that i need an income account a supplies account and a bills account yes and you're also going to need savings account for taxes and then maybe any other savings products you need but why do you have a bills account in navy is that a personal bills account it's my personal bills account okay so what are your parties so we're paying for more than just Yeah, but these are, yeah.

11:28Okay. My little personal pity. So lashes are not a bill. These are must have. Oh girl. Yes. I'm, I get it, but that's not a bill. That's a spending category. So what you need is a glam up fund. You need a glam up fund. Yeah. Okay. And then you need a bill. So your car note is a bill, your Pilates. That's a consistent charge. I'm sure every month that's a bill, but things that you go spend, money on like their nails, hair, lashes, massages, Starbucks runs, target runs, all that is personal fun money, which is it's a must. We love it. Not discounting it, but we, it's not a bill. We want to separate that because you need to be able to see how much you're spending on bills and how much you're spending on yourself separately.

12:13And that comes out of my spending. Your personal spending account, my personal spending. The way it would work. it's a it's slightly different because you and your husband have your finances separate but you're you have your personal your business income account okay that is funding you have your business bills i have to get paid you have your business savings all of that you're going to give yourself a paycheck to your personal bills either every other week once a month however often you decide that personal paycheck goes into your personal bills and you keep as much in there for the bills as you need.

12:50And then you're going to transfer out as much as you need for different spending categories because who's paying for the groceries? I do. Okay. So we've got, you really need a personal budget. You've got it. You're going to have to do your own personal budget because it's not as simple as I have to pay the car note. We have the car note now. We have the Pilates. That is now changed. Things are evolving. We probably have gas. So we want you to write all of that down so that you know what you need to be bringing over from the business and so that you can afford all of the things that you want in your budget.

13:27My bills account. So I have that in the budget for those things that come out of the bill. And then I have like groceries. Yeah. The groceries, the Pilates, wait, no, it was coming out of my account. Okay. This is how I want you to think of it. If you're getting invoiced for it or you're getting billed for it, it's a bill. If you're paying for it, if you're swiping for it, if you're clicking buy now, add to cart and you're tapping for it, that's spending. So gas, groceries, that's all spending. That's spending. Okay. I want you to think of wants and needs. Like we're going to erase that from your brain.

14:07Okay. Wants and needs are not a thing. We are, we have bills and we have spending. Okay. Okay. So yes, groceries is a need. And I know some people do try to put it in bills, but it's not a bill. You don't get invoice for it. You pay for it like with cash or a debit card. Yeah. And what we want, Michelle, is for you to have your grocery account and know, I have this much money for groceries. And I know my bills are getting paid separate of that. I don't have to do math in the moment to make sure I have enough to go get groceries as long as the Cardinals going to get paid. And the same for your glam up stuff, right?

14:40Like you want that in a separate spending. I'm clearly can look at one glance. I have enough money in there for the bills. That's good. I have enough money over there for groceries. I know exactly how much I have. And I have this money to spend and they're all separate. Easy to understand.

14:56All right, budget besties, it's time for some real talk. You don't need another budget. You need a budget system. Our simplified budget system is what you've been looking for. It's going to allow you to be bougie on a budget. You'll be able to easily set up a system that runs automatically and shows you exactly where your money is going. And it's going to give you permission to spend. Everybody loves that. Yeah. It's straightforward, pretty, and packed with walkthrough videos that break down the exact methods we use with our clients to get out of debt, set up a bills account, separate spending, build savings buckets, and end the paycheck to paycheck feel.

15:32If you're new to budgeting, this is the perfect way to jump in. And if you're already a budget nerd like us, you're about to meet your new obsession. This is the upgrade to your finances that you need right now. Yeah. So head on over to budgetbesties.com forward slash budget and grab yours. Now back to today's show. I think that I think maybe as a woman, you're always thinking, especially if you have, if you're, if you have your own business and then your spouse has the regular income. I don't know. I don't really count my money as, I don't count my money the same. Does that make sense? Yeah. I give his, his is very, like I have that account very structured.

16:19Mine, I try to structure it, but I'm like, it's just hard to get the automation portion, like where, what goes. So that's because you have to get the, that's just because your business budget isn't done yet. Once you get your business organized with the accounts that you need, and we would recommend if you like to read or you want to listen to an audio book, download Mike Michalowicz's Profit First. And that'll kind of, and it can go super in-depth and super advanced, but the level that we're talking for you is the intermediate, right? It's the bill, it's the income account, the expense account.

16:54So once you get that organized, you being able to make your personal budget automated is going to be easier. but it's messy because the business isn't automated. I also think it's messy because you're doing them separately. You have his stuff and your stuff. Yes. And totally understand. He's the provider. His paycheck is what you guys are counting on and is steady. But also, once you get this figured out, Michelle, you don't know what your business could make possible for you guys. Right. What it could do once you got it systemized, you've got it organized, And maybe you make a lot more than you think, or maybe you can do more with this and you can add to you guys' personal budget or your savings or your retirement or for vacation.

17:42I think it, especially like in the beginning when you're like, I hope this thing gets off the ground, you know what I'm doing? And I hope it gets steady, but it could really be a big thing. And then you want to actually be using that income on purpose, just like you do his, instead of just keeping it in this, people call it a side hustle or my small business or this little thing or whatever. We want to speak life over it. It could be doing a lot for your life and it is important and awesome. And it deserves a spot at the budget table. Yeah. And what if you combine your finances and see like the whole picture of what you and your husband's money can do together, not separate?

18:16Because that's a problem only because you can't see all the money. If you see us all the money, then, oh, babe, we should get that. We're terrible. We're not real good. window shoppers like if we said we like it we get it and if he sees the money there he's oh babe don't you want we used to get a car every single year the only money we wasted every year so he does better when he only sees so much he thinks i put money in the garage and keep it that way when we need it it's all here it is michelle just transfers money over there he doesn't need to see at all because if he sees it all, he gets, I don't know.

19:00Listen, if you're at this system that you got is working, I think it's great. I'm just saying, try to make a budget with all of the money because every dollar is going to be assigned somewhere. So yes, you guys bring in a lot of money, but then the best part of your budget is that income section. Then it just goes downhill from there because then you got your, your debt minimums or you got your, all of your bills, you have all your spending and all your savings and he can still have his one account where you transfer his money, which is his spending money. I think that's great. But just for your sake, just see what is possible with all of the money together versus trying to make two separate, but see you're, you would have to make three separate budgets, one for your business, one for your husband's paycheck and one for yours.

19:44See, and I, the way I was doing it was I had his stuff or our stuff over there. He was dry cleaning, the gas and stuff like that. Mine, I just kept it separate. I don't know why I keep it separate. I just, he makes me nervous when he sees too much money. He just makes me nervous. That's when things start happening when he sees all the money. So what Vanessa is saying is maybe just at least look at it all on one paper and see what it looks like. I do. So when I, when I follow your thing to create the budget, I put all every, everything that comes out of the house. So that's all on the budget. It's just not coming out of one account.

20:29Yeah. Cause I was going to say, when you decide all of this extra, you can move it where people can't see it. Like accounts that are for a designated purpose and you're making sure that they're funded. That's great. but so it sounds like really your step is if you can get your business organized you'll know you'll have a month yes that's the part that that i've been struggling with i'm like okay i'm putting money for supplies for the business that's about it everything else is either um try to think of it in a year's view so like our accountant tells us how much to set aside for taxes a month now obviously it might go up or down depending on how the actual income year but it's nice to know a certain amount.

21:11You can, like I said, look at your supplies. Again, it doesn't have to be a perfect number, but if you know you spend$10 ,000 a year, let's set aside a certain amount each month. So that is covered. And it doesn't have to be this wonky thing every month that you're dealing with. And the same with any bills that you need to set that aside in the business. And then the rest of it that you can, you can, like Vanessa said, you can either pull it in there for the low months, or you can assign a specific job with your income, which all those things are covered. Yeah. But you got to get everything else.

21:38You have to know your bills, know how much your business costs in a year. That is the big ticket. I think that's the kicker. Yeah. Yeah. Fun. Yeah. No, it's not a lie. We're not going to have fun writing all this down, figuring out, but it will feel so much better once it's done. Yes. It'll feel so freeing knowing exactly how much you need to set aside every month to make all that work. So in your tax account, you open an account, you call the taxes. So you're doing really good. You're in charge of all these finances. This is the next step for you not be behind on that or to start feeling like you're in control over that so just set open it up and make sure you're putting a certain amount into it each month so that you can be ahead this year on that okay yes is it common to get overwhelmed because i feel like by the time i get through putting everything away for taxes and for coverage i'm like we can't spend any money right now i think that's the gut check moment so like when you see when you say your husband gets excited when he sells the money, when he sees all the money, like it's, yeah, but okay, great.

22:36But look at all these other lines. Like the money is we're in the red, right? Where it's all deleting from your budget. So yes, it is common to be overwhelmed at the beginning, but once you get everything on auto pay and you know exactly what's coming in, it is nice to know that you have this amount for gas and groceries, this amount for spending, this amount for family fund, whatever. And also know that all your bills are taken care of and your spending accounts are growing. I also want to say it's overwhelming to think you have the money and then not actually have the money, but be spending the money.

23:08Also overwhelming. So what at least this can do, Michelle, is give you a number that you need to hit. If I know that all of this is being spent because I need to set for taxes, my supplies, the bills, then I know, okay, my new goal instead of the 3000 is that I make 4000 a month. That way I know I have a thousand extra I can play around and have fun with. Right. But what I'm saying is The math didn't change just because you wrote it all down. Right. Yeah. It's like you're actually seeing, oh, I've been spending more than I probably should have. And pick your heart, right? So yes, it's going to be overwhelming at first to go, oh my gosh, I cannot believe I cost this much.

23:39One time. You're going to say that one time. And then from there, you're going to create a system that works. Or, Shana said, you can just continuously be in the unknown, in that void of not, you don't know what your money can do for you because you're just confused. And that's also stressful. So you just got to pick one. Yeah. Okay. Okay. We threw a lot at you, Michelle. Hopefully that makes you a place to start. And we really appreciate you coming on and chatting with us. Thank you. And we're also banked. We have all the same bank. Yeah. I was listening to one of your podcasts this morning and I was like, oh yeah.

24:12We love Navy Fed and USAA. Yes, we do. Yes. You have a wonderful day, Michelle. Thank you. Bye. Thank you too. Okay. Bye-bye. Bye-bye. If you're tired of feeling like your finances are all over the place and you're ready for a simple set it and forget it way to budget, we have something special for you. Watch our automate your budget masterclass at budgetbesties.com forward slash automate. We'll show you step by step how to finally organize your money, how to set up your accounts and put your budget on autopilot. So your bills saving and spending run like clockwork. Imagine less stress, more savings and the freedom to spend money without having to track every dollar or babysit your bank account.

24:50Go to budgetbesties.com forward slash automate to start today. Okay.