[00:00:00] Linzy: Hello and welcome back to another Feelings and Finances episode of the Money Skills for Therapist Podcast. These are our short and sweet Friday episodes where we answer questions from listeners of the Money Skills for Therapist Podcast. Listeners like you, the therapists and health practitioners and coaches who want to be having these conversations about money.

[00:00:24] Today’s question is from Alice, and here’s her question.

[00:00:27] Alice: Hi, Lindsay, my name is Alice and I’m an LCSW in the DC metro area, Northern Virginia to be specific. I transitioned from a corporate career of about 20 years into the therapy field and was launched into the world of private practice while I was finishing up my supervision hours for my LCSW about a year and a half ago due to a layoff.

[00:00:55] So I was laid off from my corporate job and have really been drinking from a fire hose, navigating all there is in being a business owner, getting licensed. I’m currently in the process of opening my own private pay therapy practice, and figuring out how to leverage the corporate experience and how that’s informing the way I view my business and my finances.

[00:01:22] I made a lot of money in my corporate job. and was a W2 employee and had great benefits, and trying to figure out how to balance the needs of my clients with my own personal needs, and not wanting to participate in systems that I feel are oppressive to therapists, but still making a living and surviving as a single mom, of two teenagers has been a real challenge.

[00:01:51] I grew up with money stuff, like most people. My parents filed for bankruptcy when I was 16, mostly due to issues with my mother’s shopping addiction and mental health related hospitalization bills. And so I think that the scarcity mindset is something that is really impacting me on a day to day basis.

[00:02:14] I’m in therapy. I’m doing all the things to work through it, but I don’t know. I think something a little bit more laser focused on the money piece, and maybe what I need to be doing and what I’m missing, would be amazingly helpful. And again, I think especially as a career transitioner, because I think that.

[00:02:32] It’s a little unique in this field. Somebody who is kind of this mature adult who’s had a life, you know. I’ve owned houses, I’ve done the things, and there is a little bit of a starting over here and a learning curve that is daunting. I really appreciate your podcast. It’s been a wonderful resource for me.

[00:02:50] Thanks so much.

[00:02:51] Linzy: Okay. So there’s a few things in this question. You’ve got a lot of layers here, Alice, as we all do. And so the first piece I’m going to think about is that starting over piece. Yes, you are coming into your therapy career later in life. As you said, you’ve done many, many adult things. You had your corporate career, you’ve owned homes, you have teenagers.

[00:03:10] And so the first thing that I would encourage you to do is make sure that you don’t discount that as you are setting yourself up as a private therapist. I often see folks coming into their, you know, second career or maybe third career, coming into being therapists in their, you know, 40s, 50s, 60s.

[00:03:30] And they have that kind of newbie lack of confidence, right? Of feeling like, well, this is new. Sure, I’ve done other things before, but I’m new at this. and so they consider taking insurances that are really low, or working with online therapy providers who pay them almost nothing, because they have that same scarcity and desperation that many of us have coming into private practice, which is basically the, I call it the, will you be my client feeling?

[00:03:59] Will you be my client? Will you be my client? That’s how I felt when I started my own therapy practice. And they end up making decisions that financially are not sustainable, right? So signing up for systems that are oppressive… I’m not sure if you’re referring to insurance or what specifically you’re referring to there, but end up signing up for, yeah, insurance panels or online providers that would actually never, ever, allow them to have the money that they need to pay for their lives.

[00:04:23] So for you, especially as a single parent to two teenagers, your life is expensive. I have no doubt. And so part of it is stopping to ground, using your corporate skills, Alice in, yeah, how much money do you actually need to make? Right? Like let’s reverse engineer this practice. You are not 25. You’re not living in a cheap apartment, you know, you are an adult with a full adult range of responsibilities and your kiddos might be going to school.

[00:04:50] in the next few years, you know, there’s expenses there. So start by thinking about your own needs of how much do you actually need to make in your household each month to cover all of the needs therein. So starting with that number. And whatever that number is, then you can start to reverse engineer a practice out of that number that will actually work.

[00:05:11] Right? Because so often when we’re new, we start by setting up a practice that will never work, no matter how many clients you see. For instance, if you’re getting reimbursed 50 an hour, from an online therapy provider, and you need to be making nine or 10, 000 a month in your household to cover your bills, that math will never work, right?

[00:05:30] Like you can never work enough sessions to actually make 10, 000 a month after taxes. So, lean into those corporate skills that you have. I don’t know exactly what you did in the corporate space. But think first about what is the amount of money that you need to make? What is your take home paycheck?

[00:05:44] Easy math that can be done is using like a profit first kind of model of, okay, if your take home paycheck is going to be, let’s say about, 50 to 60 percent of the money you make, you’re going to be setting another 20 percent aside for taxes. That’s 20 percent of all the money coming in the door.

[00:06:02] You’re going to be setting aside another 15 to 20 percent for operating expenses, work out those numbers and see: what is the number that needs to be coming in the top then to meet all of those different obligations, right? To meet your household needs, to meet your tax obligations, to cover your business expenses? And you’re going to get a number.

[00:06:18] Once you get that number, let’s just say that number is. I don’t know, 12, 000, 13, 000 a month, and I’m making it a high number here because I know you have teenagers. Teenagers are expensive. and again, you are a seasoned adult. You are not like a 22 year old coming right out of school. Then you can reverse engineer.

[00:06:36] Okay. How many sessions a month does that have to be, thinking about giving yourself some time off? So, you know, stacking those a little bit more. So for instance, Alice, if you discover upon playing with your numbers that you need to bring in 13, 000 a month, coming into your private practice, and you want to be working, let’s say you want to be working 48 weeks of the year.

[00:06:59] Okay, so I’m going to take 13, 000 a month as the revenue that needs to come in.I’m going to multiply that by 12, so that means your practice needs to be making 156, 000 a year. And then

[00:07:09] I’m going to divide that by 48, because we don’t want you working 52 weeks a year. We want to know, if you’re working 48 weeks a year, you get four weeks off. How much do you need to be earning? So you need to be earning 3, 250 a week, over those 48 weeks that you’re working.

[00:07:24] And then I’m going to either divide that by the fee that you want to charge, but more ideally I’m going to divide that by your ideal number of sessions. So let’s say your ideal number of sessions is 15, then you’d be looking at a fee of 215 per session. If you could work 18 sessions, you’d be looking at 180 a session.

[00:07:42] So this is where you’re just really taking time before you get into the feelings, and the starting over, and the stress. Setting that aside for a moment just to work with the math. Like what does the math tell you? And this math tells me that, for instance, if your fee was 180 a session, you could work 18 sessions a week times 48 weeks in the year.

[00:08:07] And that would give you, in this example, 13, 000 a month coming in. Some of that will go to your taxes. Some of that will go to operating expenses. Some of that will go home to you. So it’s just taking the time, Alice, to zoom out and ground yourself in the numbers, and then using all of this life experience you have and all of this corporate experience to set up a practice that will actually work when it’s working.

[00:08:31] Right? Like, let’s build it to work from the very start. Then, it’s going to be about grounding in your life experience and your wisdom and knowing that you are, no, you know, no spring chicken, maybe. You have life experience, and setting up a practice that markets yourself as such. Right? You might be new to therapy, but you’re not new to life.

[00:08:53] So making sure that you are targeting a niche of people who will be able to pay you the fee that you need to be paid to be financially stable. Speaking directly to those people, owning your expertise, not trying to serve everybody, but you know, zooming in on that niche of people that you know you can absolutely change their lives, and it is without a question worth 180 an hour of their money, or 225, or whatever fee ends up needing to work…

[00:09:17] Really owning your wisdom and your life experience. and that’s really valuable. And then targeting clients who are going to value the fact that, you know, you are somebody who has lived life… Thinking about who those clients are for you and maybe they are folks who work in the corporate space or maybe they are folks who are older and going through life transitions… You know, I don’t know what type of work you do what type of niche. But really owning your expertise as you set your fees so that you are setting up a practice that works for the very, very beginning. So that is my suggestion.

[00:09:49] You know, you are at a beautiful point right now of building a practice where you haven’t yet probably set up a lot of things that you’ll regret later you are building. And even if you have a few clients, and once you do the math, you realize, okay, I’m undercharging these clients. You know, you can still pivot

[00:10:07] At any moment, and make sure that the new clients that you attract are at that higher fee. You can raise your fee when it’s appropriate for, you know, the clients that you already have, so that you’re building a practice that actually works. Own your expertise; own your corporate knowledge; own your business experience. And build something that’s really going to take care of you and your kids.

[00:10:27] And also thinking about, again, the fact that they will be going to school potentially in the next few years. You’re going to need to retire in, you know, 20 years or whatever. Building that all into your practice from very, very beginning. And the fact that, you know, you’re stepping out and you’re already listening to this podcast, and I have no doubt, accessing other business resources,

[00:10:46] is great start. And this is where too, Alice, I will say, this is what we cover in Money Skills for Therapists. So as you’re building your practice, that would also be a support that’s available to you. You could always look into working with me and my team in Money Skills for Therapists to get support with all these pieces of setting up your numbers to really make them work for your practice.

[00:11:05] This is not something you have to figure out on your own. But I’m also hearing that you’re really experienced and competent. And so here’s my suggestions for your starting places to get this practice set up. I am sending you all the good vibes, for a successful 2025 for you, as you build a practice that can really take care of you and your family.

[00:11:26] If you, like Alice, have a question you’d like me to answer on one of these Feelings and Finances episodes, all you have to do is click on the link in the show notes. It will take you over to our podcast page where you can see a little recording app. All you need to do is press record and share your name, a little bit of context, and your question, and I would be happy to answer it on a future episode of Feelings and Finances.

[00:11:48] Thank you so much for joining me today.