177: Navigating Economic Instability with Dave Frank
”This is about progress, not perfection. So we don’t have to be doing it perfectly. It’s about increasing awareness and, and moving toward it and you know what, sometimes we do have to make our own mistakes to really learn things, and that’s okay too. You know, like It’s not some big failure. It’s just like, oh, okay, well I didn’t really have an emergency fund and this thing happened, the furnace broke, the roof needs to be replaced, what have you um, and then you know, then, then what happens. Um, So it’s just sort of having, you know, just bringing, bringing in an awareness to it and um, I always just like to say there, there isn’t, getting things perfect. It’s about having things in a range of, of reasonableness.”
~ Dave Frank
Meet Dave Frank
David Frank is the financial planner for therapists.
Through the firm he founded, Turning Point Financial Life Planning, he helps therapists navigate every element of their financial lives: from understanding your practice P&L and building a personal budget to managing student loan debt and investing for retirement… and everything in between.
But don’t let his love of the tax code and spreadsheets scare you off! You’re just as likely to find him with his nose buried in one of Pema Chödrön’s books as reading up on the latest financial planning techniques.
In this Episode...
How can you feel better prepared for the financial curveballs life can throw your way?
In this episode, I’m joined once again by certified financial planner Dave Frank to talk about one of the most fundamental, and often overlooked, aspects of financial wellness: buffers. We dive into the emotional and practical sides of creating buffers in your business and personal life, and why this matters more than ever in a world that’s increasingly uncertain. From navigating economic instability to finding the right balance between saving and living, this conversation is full of practical tips to help you feel more prepared.
Dave and I also unpack the emotional challenges many therapists face when trying to use the resources they’ve set aside, and we share how rethinking your language can shift your relationship with saving. Whether you’re just starting to think about buffers or you’re reassessing your current systems, this episode offers tools and insights to help you build a more resilient financial foundation.
For more from David and Linzy, check out:
140: Balancing Debt Repayment and Real Life with David Frank
104: How Deep Work Can Enhance Your Business with David Frank
83: Embracing Emotions for Financial Wellness with David Frank
Connect with Dave Frank
David Frank has a lot of free resources & webinars on his website, like his training “Retirement Plans Fundamentals for Private Practice Owners”, or his “Finance Quick Start Guide for Therapists”. Check those out here.
You can also find David on LinkedIn: https://www.linkedin.com/in/davidwfrank/
Ready to feel confident with your money?
Are you a Solo Private Practice Owner?
I made this course just for you: Money Skills for Therapists. My signature course has been carefully designed to take therapists from money confusion, shame, and uncertainty – to calm and confidence. In this course I give you everything you need to create financial peace of mind as a therapist in solo private practice.
Want to learn more? Click here to register for my free masterclass, “The 4 Step Framework to Get Your Business Finances Totally in Order.”
This masterclass is your way to get a feel for my approach, learn exactly what I teach inside Money Skills for Therapists, and get your invite to join us in the course.
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Episode Transcript
[00:00:01] Dave: This is about progress, not perfection. So we don’t have to be doing it perfectly. It’s about increasing awareness and moving toward it and sometimes we do have to make our own mistakes to really learn things, and that’s okay too. It’s not some big failure. It’s just oh, okay, I didn’t really have an emergency fund and this thing happened, so it’s just bringing in an awareness to it and having things in a range of reasonableness.
[00:00:30] Linzy: Welcome to the Money Skills for Therapist podcast, where we answer this question: how can therapists and health practitioners go from money, shame and confusion to feeling calm and confident about their finances and get money really working for them in both their private practice and their lives? I’m your host, Linzy Bonham, therapist turned money coach, and creator of the course, Money Skills for Therapists.
[00:00:50] Linzy: Hello, and welcome back to the podcast. Today’s guest is a fave of mine, a returning guest, Dave Frank from Turning Point HQ. Dave is a financial planner who specializes in supporting therapists specifically, and today Dave and I talk about emergency funds, buffers, and stability. How do you think about and manage creating some stability for yourself during strange and uncertain times?
[00:01:19] So Dave and I dig into some practical how-tos of setting up systems. He gives his guidelines on how much you should be setting aside in your business and at home to give you stability. We talk about the idea of an emergency fund and I share about why I don’t like that term and we discuss and dig into some of the ways that the language we use around money can stop us from being able to actually use it when we need to.
[00:01:45] So Dave and I work through today some ideas around buffers, savings, stability. We both talked about some areas where we personally need to and plan to improve in our relationship with putting money aside, those kinds of emergency funds that can be easy to ignore when you are in a stage of life that is expensive, which I personally am right now. I always love talking with Dave. He is so thoughtful and attuned with what I think we need as therapists in terms of financial guidance. Here is my conversation with Dave Frank.
[00:02:26] So Dave, welcome back to the podcast.
[00:02:29] Dave: Thanks. I’m excited to be here.
[00:02:31] Linzy: Yes, I’m excited to have you here. I will say to folks listening that Dave and I just chatted for half an hour before this recording, and then we were like, we should probably record something that we’re saying at some point. It’s always a pleasure to see you, Dave.
[00:02:43] Dave: Likewise.
[00:02:44] Linzy: And today we are planning to talk about building stability. You use the term liquidity. When we were talking about this, I like the term buffers. Because this is something that you’ve been seeing come up a lot with your clients lately as an important topic.
[00:03:00] Dave: Yeah, I think we’re living in interesting times, there’s a lot of instability and not to get overly philosophical about it, but I feel like there’s almost always a lot of instability and uncertainty. That’s an inherent or fundamental part of just being alive in the world, doing what the world does, which is to evolve and change.
[00:03:21] So there’s always a lot of instability and uncertainty, and we are certainly in a period of time where it’s a lot more clear, with especially a lot of the chaos coming out of DC. And that has created ripples all over the place in terms of insurance markets and potentially reimbursements, Medicare, stock markets, tariffs. There’s so much uncertainty. Does that all lead to recession? And so I feel like we’re in this environment where the unknowability of the future and what’s going to happen is in sharper relief, today than it is in general. So it has been a conversation that I’ve been having frequently with my clients lately of thinking through, okay, the world is what the world is.
[00:04:04] We cannot control that, but we can prepare ourselves, our financial circumstances. What can we control? We can’t architect everything, but what small moves can we start making and things we can be thinking about to put ourselves in place for the inevitable ups and downs of business and life and your practice and all those things.
[00:04:27] Linzy: The predictable unpredictability, we know for sure that things will not go the way we want them to, and the way that we plan. And as you say this time of history is really putting that in stark relief but that’s always true about being a human as well. Not to downplay the severity of what’s happening. ‘Cause what’s happening is certainly for our generation, people alive right now, unprecedented but also, a reminder that, generally there’s so many things that are outside of our control in life.
[00:04:53] Dave: Yep, what I always like to say is basically everything is out of your control. The only two things you can control are your attention and your actions. So what are we paying attention to? What are we thinking about? And then what actions are we taking, in relation or as a consequence of what we’re paying attention to.
[00:05:12] Linzy: So what do you find you are talking with your clients about as they’re figuring out how to navigate these times?
[00:05:19] Dave: Yeah, so these are the non-sexy sort of fundamentals. There’s always some exciting things we can do in the world financial planning and investing, but at the end of the day, the solid foundation that we want to have is not necessarily all that exciting. It always starts with an emergency fund, which is having a buffer, having a cushion of cash.
[00:05:40] And when you are in private practice, you have two sets of emergency funds that you need to think about both for your practice, and for your personal life. When you have employees and your practice is bigger, that’s when it becomes more essential to have a really well thought through emergency fund for the practice that’s separate and distinct from your personal emergency fund. For solo practitioners, especially if you are doing primarily or exclusively telehealth, and don’t have a big outside of the home expense, like a rent expense or something like that.
[00:06:13] Oftentimes you can get by with just a personal emergency fund that’s maybe amplified a little bit to give you a bit more cushion for the fact that you are a business owner, that you’re self-employed. That can often work, but just starting there and putting it in a boring old bank account. It can be a high-yield savings account.
[00:06:34] That’s great. It can be a low-yield savings account. I don’t really care. I just want it to be in a bank account. That’s not going to decline in value when the stock market or in the investing markets inevitably have a little bit of a stumble. So always where I want people to be begin. And people always agree in theory, but then there’s all these other things that they want to do.
[00:06:54] Linzy: Yes, yes, totally. As I’m listening to you I’m tapping into two different parts of me. The business owner, part of me is I will say that when I work with therapists around money, I don’t use the term emergency fund because of a myriad of reasons that we could dig into or not, but I talk about buffers and in my Buffers galore, right? This is what I teach my students. This is my own business. Our zero is at least 40,000. I never see my bank accounts go below that amount, right? That’s what I need to have stability. I would love it to be higher. My standards for that in my business are very high, but also based on actual numbers. I know how much I need in those different areas. At home, as somebody who is raising a child and renovating our home, so we can adopt another child, as somebody who’s in almost peak expense territory right now. I totally have parts of me that are like, I could buy a hot tub and enjoy that now.
[00:07:48] Dave: Yeah.
[00:07:48] Linzy: I could put a reno on our house, and we have debt anyways, so why not? So I’m curious, yeah, when you see folks doing this, agreeing in theory… that hesitation, is it this objection that you see folks coming up with? Or what do you see gets in the way for folks?
[00:08:05] Dave: Stuff like that. It’s all over the map or very idiosyncratic in terms of what actually gets in the way. And,a lot of times I say, look, there’s a couple pithy cliches I always like to turn it to, which is, this is about progress, not perfection.
[00:08:21] So we don’t have to be doing it perfectly. It’s about increasing awareness and moving toward it. And you know what, sometimes we do have to make our own mistakes to really learn things, and that’s okay too. It’s not some big failure. It’s okay, I didn’t really have an emergency fund and this thing happened, the furnace broke, the roof needs to be replaced, what have you. And then, you know, then what happens. So it’s bringing in an awareness to it. And I always like to say there isn’t getting things perfect. It’s about having things in a range of reasonableness.
[00:08:57] So if you have a really solid, healthy emergency fund or buffer fund, I’m, I am very curious to hear more about your choice of terminology there. Maybe I’ll learn something here, too. If there are very healthy buffers in your business and thinner buffers in your personal life, that isn’t necessarily bad either, because if push came to shove there is cash, you have to make some trade-offs and make some decisions.
[00:09:24] Linzy: Yeah, there is cash there and that’s something that I’ve noticed as a business owner is that money is mine. I could take it at any time. I’m not going to. Some of it is in my tax account and I know it’s for taxes. Some of it is to insulate us against things that might happen in the future. What if we open the doors to Money Skills for Therapists and everybody’s nah, not right now. And we get no sales.
[00:09:43] Basically, that’s the only thing because the product that we sell is our two courses. So there’s this unpredictability to sales for me, which is a little different than folks in therapy where I think in therapy, when it’s fee for service, there’s generally a more gradual up and down that happens. In my space where I’m selling a product, it can be incredible or it can be like a bomb. So there’s that unpredictability and that’s what that cash is for. So it has a job, but it is interesting to notice again, this duality of my very responsible business owner side who’s yes, we would never spend that on silly things in the business and get down to even 10,000 in the business would be not enough, but at home, noticing all those demands of all the responsibilities that I carry as part of it, trying to give my child a great childhood, trying to support my in-laws, with different needs.
[00:10:29] There’s a lot more demands, a little bit of finding that balance between living now and saving for the future. I certainly find it more conflictual and I am curious about your perspective on the emergency fund using a HELOC or an LOC, having that available for emergencies… What is your take on that versus the value of having literal hard cash on hand?
[00:10:52] Dave: Yep,so both and the way I approach it. Having a HELOC, which stands for a Home Equity Line Of Credit, having a line of credit or LLC that more typically you might see through the business. These are borrowing structures that you can put in place. You can sign up for a line, and what that term line means is that it’s not like mortgage borrowing. When you borrow through a mortgage, you just go to the bank, you get a bunch of cash. You go buy the house or what have you. A line is different in that it’s available there, it’s sitting there, it’s ready and waiting for you to borrow on it, but you don’t actually have to draw down on that loan.
[00:11:27] And so I think it is very helpful to have HELOCs in your personal life, lines of credit in your business life. When we put together what the emergency or buffer target should be, especially for group practice owners, those numbers can be pretty big. And so balancing what the actual cash is and some borrowing capability can work really well together. And also know yourself. If you think you are likely to go and spend those money for non-essential things, or at least things you didn’t really intend to be, using that line of credit on,
[00:12:04] Linzy: Yeah.
[00:12:05] Dave: When you open the thing, have some guardrails in place for yourself.
[00:12:09] Linzy: There’s that relationship-to-debt piece where I think about it like a seatbelt. It’s like you might get it and almost never have to use it, but it’s good to have. But if you do have that tendency to spend, if debt feels like free money, you have a tendency to max out a credit card because it has a max that you can hit at some point, then certainly HELOC or a line of credit could be really dangerous.
[00:12:30] Because like right now, for instance, I have $75,000 of space on my HELOC. So theoretically, I could go buy a Tesla right now. Not that I would, it’s not really the moment politically to do that, but we are thinking about buying a vehicle. We could theoretically actually buy a $60,000 vehicle in cash. That’s not a great use of our money. That’s not very strategic.
[00:12:49] Dave: Get a Lucid.
[00:12:49] Linzy: Yeah, get a Lucid. Okay, talk about Lucid’s after.
[00:12:52] Dave: A Lucid. Oh yeah, yeah. It’s a competitor to Tesla. They’re beautiful and probably too expensive.
[00:12:57] Linzy: Probably. For some reason Teslas are cheap right now. Did you know that?
[00:13:01] Dave: That’s weird. I can’t imagine why.
[00:13:02] Linzy: I know they’re flooding the market. But yes, so I can see absolutely. and this is, you know what I talk with folks about too sometimes when they think about the zero interest credit cards to move debt around if it’s or to buy something that they don’t have the cash right now. It’s yeah, what is your relationship to that thing? ‘Cause that is a big difference between cash and debt that could be there if you need it. You don’t have to incur an expense to spend your own cash, but you do incur an expense when you spend off of a HELOC or a line of credit.
[00:13:26] Dave: Yeah, so I think a really important piece too is to kinda keep in mind and notice your own relationship to these things. debt is not inherently good, bad, evil, et cetera. It’s a tool. Like any tool, it can be used in ways that are super beneficial, and it can be used in ways that you can end up injuring yourself a little bit.And I’ve definitely had folks that I’ve talked to in the past who, for one reason or another, something happens, they need to have some borrowing. Maybe they’ve run up a little bit of money on a credit card for whatever reason. And again, progress not perfection, like life happens.
[00:14:01] And so when you’re sitting there, and I often find that sometimes folks are really upset that this has happened. And really don’t like debt in credit cards and have excellent credit ratings. And I’m like, why don’t we just go and get a 0% APR balance transfer offer? And it’s oh, those are bad. And I’m like, okay, they can be problematic. And if you’ve always used debt responsibly, why would we not take advantage of a 0% offer?
[00:14:30] Linzy: Yes.
[00:14:31] Dave: So keep your mind open, staying balanced and, yeah.
[00:14:35] Linzy: And I like that tool metaphor, that’s one that you and I both use a lot. And for some reason specifically I’m thinking about scissors. It’s like scissors you can use thoughtfully to cut a beautiful, I’m picturing those snowflakes that kids make at Christmas. You fold it up very thoughtfully, beautifully, or you can cut your hand, right? And both of those things are possible at any time with scissors, depending on how you use them, right? And a debt tool like that is the same. A curiosity that I have thinking about buffers and stability is: do you see a risk of thinking about, like a line of credit, let’s say, as your safety belt compared to cash? Because you said a little bit of both, right? Something that I wonder sometimes about, having a line of credit if you need it, is it conceivable that it wouldn’t actually be available at some point? That could go away? Yeah, tell me more about that.
[00:15:24] Dave: I was going to say that. Yeah, the line of credit can be withdrawn. Every contract is a little bit different but you look at the loan agreement that you would enter into with your financial institution and you will see the circumstances under which they can rescind it. And oftentimes that’s going to be pretty easy for them to rescind. So in the beginning of the pandemic, we did see that, we saw these lines of credits being withdrawn. And so there is a risk that it could go away. With all things, is there going to be another pandemic tomorrow? I hope not. We don’t necessarily need to get super concerned about a line of credit being withdrawn, and it’s good to have a healthy amount of cash to balance it out just so we know that okay if it were to disappear, we have other options.
[00:16:08] Diversification is so often something that we talk about in the world of investing, but diversification in general is always a good risk management tool and risk means the future is uncertain. We don’t know what’s going to happen and so having different strategies to manage things and not putting all of our proverbial eggs in one basket.
[00:16:27] Linzy: Yeah. Balance, it’s that balance. I love that, and we were also chatting a little bit before about this question of a recession. I feel like the word recession has been on people’s lips for a few years now. It’s been a minute that we’ve been hearing like we might be going into a recession. Tell me your thoughts on recession and kind of recession proofing yourself, or how do you deal with the fact that might happen as a financial advisor? What do you think about that?
[00:16:52] Dave: Yeah, I think it’s probably been for the last several years, I occasionally will see these articles and online various publications talking about the certainty, or lack of certainty around the impending recession. And I always want to say, yeah, I’m a hundred percent a recession is absolutely, definitely coming. It’s going to happen. I have absolutely no idea when it could be starting right now. It could be not happening for another decade or more, really uncertain. But the one thing that I am pretty certain of is that we will have another one in the coming decades because this is just part of the cycle that the economy goes through and the stock market will go through as a result.
[00:17:32] So when we think about building resiliency for both our practices, for our businesses, and for our personal selves, it is thinking through these different things and, I feel like I sound like a broken record, but having that buffer of cash built up is really how you protect yourself. And to put some numbers around it so folks know a bit more what we’re talking about, on the personal side.
[00:17:56] I typically think of a good kind of buffer fund or emergency fund as being somewhere between three and six months worth of non-discretionary living expenses. Closer to three months if you’re in a dual income household ’cause the chances of both of you losing your income at the same time are, less, not zero, but less,closer to six months if you’re, sole income household.
[00:18:18] So that’s on the personal side. And then on the business side, it does depend a lot, but my general kind of guidance is to think about one to two months worth of operating expenses, so things like rent and marketing and stuff like that. And then, ideally about a month’s worth of payroll expenses if you have employees. That’s a good baseline. And then beyond that, for anyone who’s self-employed or runs their own business, a therapist or not, that base level of cushion is a great place to start. And I also like to see money beyond that. So sometimes not to do is not to think, okay, I’m starting to earn money now I’m starting to save, so I need to max out all of my retirement plan contributions.
[00:19:03] Retirement plans are great. I do encourage folks in most cases to consider them. And because of all their tax advantages, they have restrictions, which is namely, you can’t really get at that money without paying a whole lot of fees and penalties. So yes, let’s use retirement plans. But also we might want to be invested, you know… What I like to say, productively invested, meaning invested to a certain degree in the stock market in what’s known as an ordinary or taxable brokerage account,
[00:19:35] Dave: Beyond the emergency fund. So this is just a way to have access to some additional money if and when we need it.
[00:19:43] Linzy: Yeah, and you saying that brought up thoughts again about emergency funds. What I have found with the term emergency fund a lot of therapists, certainly not everybody, but I found it to be a stumbling block, often enough that I started to change my use of that language, what I found is folks talked about having an emergency fund in their business, then they had a really hard time accepting that they were actually in an emergency, right? So for instance, a friend of mine had a high-risk pregnancy, and it was really scary, right? And it was really touch and go and the odds were not amazing and everything turned out fine in the end. But I remember saying to her, you can work less, you can dip into your fund. And she’s like, but that’s an emergency fund and I was like yeah, this is an emergency. This is really serious, but I do find that there can be a tendency to be so kinda hard on ourselves and expecting so much, that it can be hard for folks to access those funds. And I actually find the same thing, even with paid time off funds, when folks, if they organize their, say, profit first, so there’s a specific paid time off fund, then they don’t want to use it.
[00:20:46] And they’re like, I worked a little bit extra ’cause I didn’t want to take it out of my PTO fund. But it’s but you went on vacation. That was the time to use it, but there’s this, self-denying part that I think many therapists and caregivers tend to have that can stop us from acknowledging that we need help or support. That the support that we’ve built needs to be used, which is why I call it buffers. Because if you call it a buffer, it doesn’t have any meaning. It’s just some extra money. It’s just a buffer. And if you keep it in the same bank account, if I’ve built up a couple months OPEX Buffer, which I have the same guidelines that you do when I teach. This is two months of operating expenses, one to two months of your own payroll.
[00:21:26] If you have a team, also two months at least, of your non-revenue generating team members income. So whether you pay people out after you get paid much less risk, but for your admin team, or if you pay out your team before you get paid, you’re a huge amount of liability and risk. Anyways, all of that being said, if you have a buffer that you’ve left in your account, you don’t even notice when you’ve dipped into it in a month, right? It’s oh, my buffer’s down to 17 instead of 20,000. I’ll build it back up, but there isn’t that emotional decision that you have to make to use the $3,000. ‘Cause it’s like failure for people.
[00:22:01] Dave: Yeah, totally, boy, I really, really like that. And I’ve experienced that as my practice is of course dedicated and focused on serving therapists. I do have, I think, two non-therapist clients at the moment and I’ve noticed it with them, too, actually. I think this is a very human element and I definitely have had this conversation where they’ve built up this emergency fund. They feel really good about it, and something happens. Do we call it an emergency or not? Great question. Yeah who really knows, but your furnace broke.
[00:22:33] Linzy: That’s what this is for.
[00:22:36] Dave: Yeah, take the emergency fund, get rid of that debt that the HVAC installer sold you, just pay that off. That is literally what the fund is for and I get that. It doesn’t feel good, but I like the idea of calling it a buffer a lot. I’m going to have to rethink this ’cause I’ve always said, I like that emergency fund in a separate account to be dedicated and clear and there, and I really see your point about having it when it’s buffer in an account, there’s much less resistance and worry around the reality of running a business or a practice is like you’re going to dip down every now and then.
[00:23:14] Linzy: You will have months where you are in the negative, right? Where you’ve paid for a big conference, and you also had a week off, and your clients are away. And I think often easy for us therapists and otherwise to think about that as a failure when we have a negative month, but if it’s built in, if there’s this extra buffer there that again, barely notice, you’re still keeping your eyes on your buffers and noticing, okay, I’m going to build out my buffer again in the next couple months, but it makes it a much more emotionally neutral experience. Now I will say I do think at home folks do have much more of a risk though, of just spending it on dumb shit.
[00:23:48] And I say dumb shit really generously cause I buy dumb shit all the time. in terms of we just decided not to buy a hot tub. We had a chance to buy a hot tub at a really great deal from a friend of mine who’s closing his hot tub business and we decided not to do it. But there’s still a part of us that’s like, we really should just do it, right? And so it’s I think we have a lot more emotionality that can happen at home, especially if you’re managing your money with another person, you have their money stuff, you have your money stuff, you have the demands of kids if you’re taking your kids or other family members, if you’re helping other family members.
[00:24:18] So I do find it at home. That’s where I think an emergency fund, maybe still calling it that is helpful, just to make sure you actually have one when you go to need it. ‘Cause at home there’s just so much opportunity and so much more conflict and complexity around financial decisions that in our businesses I find often it’s much easier for us to be disciplined in our businesses than it is to be disciplined at home.
[00:24:42] Dave: Yeah, yeah, I’ve heard people think of, too, sometimes just saying, the money in the business, that really isn’t money. The money at home is. And I think within reason that can be a pretty healthy and productive way to think about it.
[00:24:54] Linzy: And that’s what I teach actually, that was a phrase that I remember coining back when I started teaching Money Skills for Therapists in 2018 is in module two we talk about how your business money is not your money, and it feels really harsh to say it. I remember when I first started saying that to people, I felt like such a jerk. It was bad news, you think you’re rich, but you’re not ’cause that’s mostly taxes, and that’s your rent for next month. But yeah, I do think that once folks overcome that hurdle, we can have a lot more discipline and clarity in our business finances. But at home, yeah, I still see the usefulness of having, if we don’t even call it an emergency fund, having that separateness,because otherwise it can disappear on a trip to Disney, like that.
[00:25:32] Dave: A hundred percent. Yeah, very easy. I think what’s interesting too, is hearing you talk through that stuff. So much of this can be an experiment and finding out what works for you and not seeing the need to implement a solution slightly different than the person down the street.
[00:25:49] Not seeing that as a failure and just being willing to experiment and be creative. You mentioned Profit First. A concept that I think I stumbled upon in the original Profit First book was the idea of setting up a separate account, whether it’s for the business, or whether it’s for your personal life,and I’ve used this idea with clients a lot, which is sometimes we might find ourselves wanting to borrow from an account that we maybe shouldn’t be borrowing from, and then it’s what if we were to open that account or move that account to a different bank that it’s a little bit more difficult to get access to the money?
[00:26:27] So it’s not an instant transfer between accounts. You have to set up an external transfer. It’s going to take a couple days to clear. It’s this very simple thing, right? But it can slow us down enough where we might even initiate the transfer, but then we sleep on it. Literally sleep, and think probably, maybe I don’t want to do that.
[00:26:46] Linzy: Yes, yeah, and I think that he calls it, does he call it a vault? Is that the phrase that he uses for a removed account? You have your tax account in your main bank, but then you have your tax vault where you send the money away so you can’t steal from yourself. That is a really helpful physical boundary to put in place ’cause as you say, it gives you time to slow down, And that’s a budgeting strategy, is have a reason to not make the decision right now, put some sort of natural barrier, whether it’s a rule you make with yourself of okay, purchase over X amount of dollars, I’m going to think about it for X amount of time.
[00:27:20] Or you have to actually go through the transfer process and really see yourself doing that thing too. It’s not casual. You’re going to have to see yourself going into your special tax bank account at a different bank and taking that money out to rent a cottage instead of paying your taxes, and you’re going to have to really think about what you’re doing.
[00:27:38] Dave: Yeah, exactly. And the funny thing too there’s a part of me that’s listening to us having this conversation. I’m like, wow, we are talking about all these different systems and ways to approach it and that sometimes can sound intimidating. And I also want folks to know that we go through different seasons and we put these systems in place and they kinda work for a period of time. And then things start to fall apart because if I’m going to be brutally honest, I’m hearing some of these things and just recognizing that man, I got married a couple years ago and so that blew up all of my personal financial systems.
[00:28:14] Linzy: Oh, totally, totally.
[00:28:16] Dave: And there are so many things that I talk about with clients that we’ve even talked about in this conversation that I’m like, man, Nate and I really need to start doing that. And it doesn’t feel that good to me.
[00:28:30] It’s, oh, I’m so busy. I have so many things to do and I find myself in the same struggle point that a lot of clients of mine and other folks that I talk to have, which is, when you relegate your own personal financial work to 7:00 PM at the end of a workday, I’m setting myself up for failure a little bit, because I’m exhausted. I still have to take the dog for a walk or what have you. And then it’s easy to kick the can down the road. And honestly, it’s all okay, this is the messy process of being alive and just noticing this doesn’t feel great. I know things are more or less okay, but I’d like to have better systems, more visibility for my husband and I to be more on the same page about all of our money decisions, and okay. Yeah, that’s the work for me right now.
[00:29:17] Linzy: Yeah, yeah, and it’s the humanness of all of this, right? We’re talking about strategies ’cause we also like those things, and as you say, systems come and go. I think about things that I used and did to manage my money through my twenties. That worked well when I was a single student in my twenties thinking about, okay, how much did I eat out this month that now would absolutely not be adequate for what I’m managing, a parent who owns a house and has a mortgage and has a business and has a second business. so there is this evolution that naturally happens and things fall away, but mostly I think it’s as you said at the beginning, it’s about where we give our attention, right? Giving our attention to these things, right?
[00:29:54] Giving our attention and taking action. That’s what we can control, right? And those actions will change, but by paying attention, we can also notice when something’s not working. Oh, I made this system of making all my money separate, and now I feel like it doesn’t belong to me and I’m not allowed to touch it. Interesting, how can I change that? How can I soften that? How can I play with that? Or I’m saving absolutely nothing and that’s not working for me. As you and I are talking now, I will say a very direct action that I’m thinking about is I’m going to set up a separate bank account, or use a bank account I already have, that I’m not using for a home emergency fund. Because in my YNAB, Dave, I have an emergency fund line. This is a confession, everybody. It has an adorable little lifesaving boy icon. I put icons next to him on YNAB to make it adorable. Guess how much is in that line?
[00:30:39] Dave: I hesitate to guess.
[00:30:40] Linzy: It’s $0. It’s zero because again, I have this emotional and financial security of the business, but those dollars really have other jobs. Yes, I could pull it out of the business, but I’d rather have income stability for Rodrigo and I for the next six months and for Diane, our team member, and for all the bills that we have to pay. That money really does have another job. And I am recognizing myself right now as we’re having this conversation. I’m like, okay, it’s time for us to evolve into a new system where I do send money away and it’s out of sight, out of mind. And in the same way that I send money to my investments every month, which I do also by sending a chunk of cash away.
[00:31:13] So I basically forgot and it’s gone. But every month, 500 bucks will get added to that account, and over a few years, that’s going to be $12,000, right? And then $24,000. Finding a new system to meet me where I am now and the way that things have changed and that feels great. I’m like, okay, we’re going to try it and we’re going to try and see what happens.
[00:31:29] Dave: Exactly. Yeah, and I think it’s the noticing, it’s the process, and that highlights for me the importance of this is your relationship to money and your relationship to your money systems is going to be a lifelong relationship, whether you like it or not. So any other relationship you get out of it what you put into it. So really setting aside time and energy, usually at least on a weekly basis, to engage with this stuff. It’s part of being a practice owner, it’s part of being a human in general. And so we really do need to protect a space for that, to happen. Yeah.
[00:32:06] Linzy: Absolutely, so Dave, any final thoughts for folks about buffers creating stability? Anything that we haven’t touched on that you would really love folks to hear?
[00:32:16] Dave: I think we’ve covered a lot of good stuff, but I think what’s coming up for me right now is the importance of progress rather than perfection, and just noting that even if you can’t do anything to start building up a buffer fund or an emergency fund right now, even the act of awareness and knowing that is a step in the right direction. So give yourself credit, celebrate the tiny wins, and meet yourself where you are. Those are to success in my view.
[00:32:43] Linzy: Beautiful. Dave, for folks who want to get further into your world, where can they find you?
[00:32:48] Dave: The best place to find me is my company’s website. So that’s turningpointhq.com. So Turning Point is the name of the firm, and HQ, like the abbreviation for headquarters. That’s my website. I have a ton of free resources, and other freebies, and webinars and stuff on my website. So all kinds of stuff to help therapists navigate this big, sometimes scary world of money and finance.
[00:33:11] Linzy: Wonderful. Thank you so much for coming back on the podcast today, Dave.
[00:33:14] Dave: Absolutely. It was a pleasure.
[00:33:25] Linzy: I always enjoy talking with Dave so much, and we have been chatting today about needing to actually meet in person. This is one of the amazing things about the internet, is we do get to meet and forge connections with folks who live on the other side of the continent, the other side of the world, who are really and truly our people, and that is how I feel about Dave.
[00:33:45] So I’m always so happy when he comes on the podcast to share his wisdom with us what I’m taking away from the conversation with Dave or something that sticks out to me from the conversation with Dave, is this progress over perfection piece, which as he says, can get tired, that phrase, but I think as perfectionist kind of types we do need to be reminded of that over and over again. And there are some guidelines, like he mentioned. As an individual, it’s great to have three to six months of your basic living expenses, those non-negotiables set aside in your business. It’s great to have two months of that operating expense fund, two months of straight payroll for money that you’re going to have to pay out no matter what to your team.
[00:34:28] Those are great guidelines and also just moving towards those numbers or paying attention to those numbers or thinking about what you would do in the case of an emergency coming up puts you closer to that place, right? So it’s not about rigidity. It’s not like when you get there, everything is guaranteed and everything is in control, right?
[00:34:47] There’s so much in the world that we can’t control, but being cognizant of what makes sense for your situation and starting to work towards those goals little by little and be curious about and play with systems and see, does a separate bank account really work for you? Is calling it emergency fund important so you don’t spend it on a car instead, or in your business, do you need to have it in your basic bank accounts and call it buffers like I suggested I often tell my students to do, so that there isn’t that emotional charge around using the money, right? Noticing being curious will allow you to start to move towards creating this financial stability for yourself that is useful always in the best of times, and certainly that much more useful during strange and uncertain times.
[00:35:27] So appreciate Dave joining us today. You can follow me on Instagram at Money Nuts and Bolts, and if you’re interested in working with me, there are two ways to do that. I have two courses. There’s Money Skills for Therapists, for solo practitioners and Money Skills for Group Practice Owners. You can read about both of those going through the links in the show notes.
[00:35:45] There is a masterclass to watch to get into Money Skills For Therapists solo practitioner course, which will give you a sense of me and what I teach and all about the course to help you understand if Money Skills for Therapist is what you need to get calm and clear about your business finances, and for Money Skills for Group Practice Owners, we have a wait list that is a course that we run only once or twice a year. So there’s a link in the show notes to get on that waitlist. So you’ll hear about Money Skills for Group Practice Owners when it comes out. That course is all about helping you be the confident financial leader of your group practice. Thanks so much for joining me today.
Hi, I'm Linzy
I’m a therapist in private practice turned money coach, and the creator of Money Skills for Therapists. I help therapists and health practitioners in private practice feel calm and in control of their finances.
Latest Episodes
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