[00:00:00] Linzy: Hello and welcome back to another Feelings and Finances episode of the Money Skills for Therapists podcast. These are our short and sweet Friday episodes where I answer your questions, the therapists and health practitioners and coaches who listened to the Money Skills for Therapists podcast. Today’s question is from our very own marketing coordinator here at Money Nuts and Bolts, Jade Mortar.

[00:00:21] Here’s Jade’s question.

[00:00:22] Jade: Hey, Linzy, it’s Jade with a question for your Feelings and Finances series. Your work has helped me realize that I am very financially avoidant and that’s been already a very transformative experience for me. So thank you for that. And I’m now in the process of facing my real numbers, which has been quite uncomfortable, but definitely necessary.

[00:00:46] And I need to start thinking about what my next steps are, and start making strategic decisions, but I’ve realized that I can’t really make these strategic decisions without consulting some financial experts in some very niche areas. And I find the anticipation to have these conversations to be very overwhelming.

[00:01:14] I feel like they bring up a lot of rejection sensitivity for me. There seems to be a big difference between me looking at the numbers myself, and gathering up the numbers to show somebody else. And so I’ve noticed that there’s a pattern in me avoiding these particular types of tasks. And I’m, I’m getting to the point where I’m like, Jade, you can’t really move forward without having these conversations.

[00:01:43] I really appreciate that you have this emotional approach to talking about money, which I think is what makes this more accessible for me. But I worry about working with financial experts who might not share that same sensitivity. And so I’m wondering if you have any tips for navigating these conversations or tools to help me shift my mindset so that these conversations feel more manageable and safe.

[00:02:06] I really appreciate all of the work that you do, and I really look forward to hearing what you have to say. Thanks, Linzy.

[00:02:14] Linzy: Hi, Jade. thank you. For this question. This is a great question. And definitely one that I can personally relate to when I think about some of my experiences with working with financial professionals who don’t have a lot of emotional literacy or intelligence. and will just, you know, say just dah, dah, dah… And what they’re asking you feels nearly impossible.

[00:02:34] Or what I noticed too, is, we can have this kind of checkout response, too, where we stopped being able to comprehend, and,\ listen to what somebody’s saying to us when, you know, when we’re triggered. So you mentioned this rejection sensitivity as being something that comes up for you, you know, speaking to financial professionals.

[00:02:50] And when I think it’s financial professionals, I don’t know exactly who you’re referring to, but I’m, I’m going to guess it’s like folks at banks, you know, financial planner, accountant, you know, those are usually the folks that we have to interface with on a regular basis when it comes to our finances.

[00:03:02] So the rejection sensitivity. Something that’s really important for us to ground in when we’re speaking to these professionals is that their job is to serve us. Like we are the customer, right? So it’s not about us appeasing them. And what I notice is it’s easy for us to fall into this, either like kind of a teacher student dynamic where we feel like we have to do a good job.

[00:03:27] We have to be good enough. We have to come with like all of our information perfectly prepared. You know, we have to perform in order to deserve to work with them or be able to work with them. And we can feel like failures if we don’t feel like we’re doing what we’re supposed to do. So there’s that dynamic that can come up that kind of teacher, student dynamic where we feel like this, the student.

[00:03:45] but also, of course, there’s the dynamic that comes up where we can feel like, like that child, our vulnerable child self can come up, and feel rejected and not good enough in all of these stories. And, you know, we all carry this kind of vulnerability and baggage because we were all children at some point, and we were all students at some point.

[00:04:02] And you know, whatever other mix is in there for you, Jade. Part of it is centering yourself in the fact that you are an adult coming into these conversations. And this is a person who is actually trying to sell you something. You are the customer, right? And if they are not able to meet your needs, then they are actually losing the sale, right?

[00:04:25] The power in the relationship in terms of the actual container of the relationship, which is a professional relationship where, you know, you are either paying them for a certain amount of their time or paying them for a service, or you’re agreeing to buy something from them. That power is actually yours.

[00:04:38] It’s not theirs, right? So as much as we can have this vulnerability come up, and this fear of failure, not being good enough come up, it is misplaced because you’re actually the one who has the power to walk, and to say, you know what, actually, I’m going to take my taxes elsewhere, or I’m going to go talk to a different bank or a different mortgage broker or whatever kind of professional it is.

[00:05:01] And it’s important to stay connected to that, that you are actually the one who has the money that they get paid, and you can choose whether or not you actually want to have a working relationship with this person. Right? So that’s the first thing is, is really grounding in the fact that you are the customer who gets to decide whether or not this is a relationship that works for you.

[00:05:20] When you meet with somebody, it doesn’t mean that they’re the person you have to stick with. You have the right to shop around and talk to different people. You have the right to come to a conversation and say, these are the kinds of things that I need as a client. You know, I need you to be able to explain things to me a couple of times.

[00:05:35] I need things written down or printed out. You know, I need us to write down my next instructions, or I need you to have resources to share with me. Can you do that? Right. They’re serving you, not the other way around. And because we have so much vulnerability that can come up around math and finances and so much kid stuff, it’s easy to lose track of that.

[00:05:54] But finding a way to really hold that coming into these interactions, whether it’s just reminding yourself that you’re interviewing them. And you can choose to go interview 10 other people if you want. if somebody has a mannerism or way of communicating that’s very triggering to you, then they’re not the right person for you.

[00:06:12] Right? We always have to still temper our expectationsof what we’re going to get from a financial professional. Like I remember when I worked in domestic violence, you know, some of the education work that we would have to do with our clients is like, your lawyer is not a counselor.

[00:06:23] They’re not going to be great at listening. They’re probably not going to be super empathetic. They’re listening for different information when you’re telling them stories. And they’re trying to collect, you know, the legal kind of evidence and pieces to be a successful lawyer. Right? So it’s the same with financial professionals.

[00:06:37] We can’t expect them to be counselors in terms of their level of emotional intelligence. if they had that level of emotional intelligence, they probably would have gone more into the therapy field. But we can set for ourselves our expectations of what is workable? What is the kind of communication that is good enough?

[00:06:55] Or when I walk out of a meeting, what is the feeling that tells me, okay, there’s enough trust here, or there’s enough sense of connection that this is a workable relationship. This is somebody that I’d like to keep moving forward with and learning how to produce information and talk about things that I don’t understand, or not.

[00:07:15] You are allowed to meet with somebody and decide that you don’t want to work with them. The ball is in your court, and the power is in your court, on that. And so staying connected to that as you’re coming to these conversations is very, very important.

[00:07:27] I will also pick up on a second part a second aspect to your question that I think can be important for folks like us as well, which is it is important, too, to put the supports in place for yourself and ask that financial professional for the supports to support you in your executive functioning around these issues, right?

[00:07:45] For folks who are listening, you know, if you have like ADHD or if you find yourself struggling with executive functioning in other ways, or if you just know that money is stressful, so you’re probably going to check out, like your executive functioning is probably going to leave the room, then

[00:08:00] preparing yourself to be as resourced as you can in terms of having a clear list of what they’re looking for from you, going in with your questions written down in advance. This is also helpful for doctors, of course. Making sure you have your actual questions written out and letting yourself refer to those questions and say, okay, I’m looking at my list.

[00:08:19] I have two more questions for you. Or letting yourself take notes in that meeting, or asking them to take notes… Doing those things that are going to also support your executive functioning and keeping that thinking brain online is also an important support for you, but it’s also an important support in that relationship to make sure that you can fulfill the things that they’re asking you, right?

[00:08:38] And you actually remember when you leave the meeting, right, they asked me for this particular document. So that’s another practical piece that can help to navigate these kinds of relationships. Because if we tend to have emotions come up that are going to block our ability to think clearly, giving yourself the resources to kind of expand your brain.

[00:08:55] I did a course with Cal Newport last year where they talked about this idea of writing things down as a way to actually expand your cognitive abilities. It’s kind of like you’re taking some of your thoughts and expanding them outside of your brain, therefore expanding what you can hold at one time. So, taking notes on your phone or a piece of paper, bringing questions in, is also a great way to help to keep that thinking brain online and keep you connected to the information part of the interaction, if you know that you might get some, some activation and some triggers happening there, just around the vulnerability of talking about money with somebody.

[00:09:27] So I hope that those two pieces, Jade, can be helpful resources for you as you go about navigating, digging into the things that you’ve been avoiding. Thank you so much for submitting your question today. If you, like Jade, have a question that you would like me to answer on one of these Feelings and Finances episodes of the podcast, it is super simple.

[00:09:46] You just need to head over to our podcast page. You’ll see a recording link just a little bit down when you scroll down the page. All you need to do is press record, share who you are, a little bit of context if you’d like, and share your question. And I would be happy to answer it on one of these episodes.

[00:10:01] Thank you so much for joining me for a Feelings and Finances episode of the Money Skills for Therapists podcast today.

[00:00:00] TJ: Safe is all relative. It’s all based on your time horizon, right? So you might have money in your checking account. It feels safe. It’s not losing value. It’s not fluctuating, but there is a hidden tax with inflation where it is losing value over time. In the long term, even though stocks or real estate might feel more risky because they are moving up and down, in the long term, they are safer because they keep up with inflation.

[00:00:30] Linzy: Welcome to the Money Skills for Therapists 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 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 

[00:00:49] Therapists. Hello and welcome back to the podcast. Today’s guest is TJ Gerven. TJ is a financial advisor and planner, the founder of Modern Wealth Builders, and he’s also the host of another podcast about Money, Do More With Your Money. Today, TJ and I get into some of the behavioral biases that we tend to have around money as people.

[00:01:10] It’s helpful, I find, to learn these kind of buckets of biases because then we can start to understand, oh, this behavior that I have that feels very specific to me is a certain type of bias, um, that’s out there. So we explore some of the behavioral biases that lead us to act certain ways and make certain mistakes with money.

[00:01:26] We talk about investing and talk about the importance of putting your money somewhere that it will grow, how our scarcity and fear and kind of clutching onto money, keeping it in checking accounts actually can work against us. We talk a little bit about some more kind of financial nerd stuff than I tend to get into here,

[00:01:43] The rule of 72, how long it takes for money to double, and how to understand how long it’ll take your money to double based on where you’re keeping it, which is all really important stuff for building long-term financial stability. So in Money Skills for Therapists and Money Skills for Group Practice Owners, what I am teaching and helping folks to understand are the foundational pieces of money.

[00:02:05] How to understand your money in your business, get clear on it, make tweaks, keep it up, you know, have that really clear grounded relationship with money. Once you build those skills and you have your feet on the ground, the kind of stuff that TJ and I talk about today, this is the next step, right?

[00:02:21] It’s how to be strategic about your money in the long term, so future you, when they go to retire is very grateful for present you for starting to put some of these wheels in motion, putting money in the right places, really thinking through where your money is going to grow and how your money can serve you in your life, too.

[00:02:37] We also talked a little bit today about the book, Die with Zero, which I just read once, and I finished the book and went right back to the beginning to start again. Because I feel like there’s so much, so much good stuff in there about, the actual function of money, how money can serve us in our lives.

[00:02:50] TJ and I talked about that a bit today. We covered a lot of ground. Here is my conversation with TJ Gerven. 

[00:03:12] Linzy: So TJ, welcome to the podcast.

[00:03:15] TJ: Awesome. Thank you for having me on, Linzy. 

[00:03:16] Linzy: I’m happy to have you here. Something that I’m very aware of in my work that I do with therapists is… I see myself as a financial educator. I’m helping them understand the basics, but there are so many dimensions to money, right? And there are so many pieces, and personal finance is a whole other world in itself.

[00:03:35] And that is the world that you occupy, I understand, is helping folks with their, their finances and like their behaviors around money.

[00:03:42] TJ: Yeah. And that’s… My goal is to be a partner for my clients. So really understanding that they’re great at what they do, just like the people that you focus on with therapists and private practices are great at what they do, but we all have a chosen profession for a reason. That’s our area of expertise.

[00:03:58] And so, you know, just because you’re really smart in one domain, it’s smart people hire smart people to delegate and look for blind spots, look for ways to optimize. And so really I’m here as a sounding board for people to quantify tradeoffs for them again, and point out any blind spots. We all have certain kinds of behavioral biases, which I think we’re going to get into today.

[00:04:18] And so really I make the same, you know, mistakes that clients make. And so really we can all use a professional or somebody at least as a sounding board who has our best 

[00:04:27] Linzy: Totally. Yeah, it’s always so much easier for somebody else. First of all, with expertise, of course, but even just having that outside perspective to help reflect, like, what’s happening there? Or I’m noticing this. Because we all get it in our heads and don’t, don’t see our own biases, of course.

[00:04:43] TJ: Absolutely. And I think we can lose sight of the bigger picture. I think a lot of times people want to focus on how to accumulate as much as possible, right, to achieve maybe this arbitrary number for financial independence, or whatever that may be. And so I like to take a step back and say, well, what are we trying to solve for here?

[00:05:01] And what is the fastest path to that? Cause at the end of the day, money is just a tool. You can’t take it with you. There are some cliches around that, but we don’t want, I mean, there’s an interesting book called Die with Zero.

[00:05:11] Linzy: I’m reading it a second time.

[00:05:14] TJ: Yeah, I figured you might have, and I’m sure your audience has. 

[00:05:18] Linzy: No, I don’t think they have. So tell them a little bit about the book before we get into it because it’s new on my radar, and I’ve been telling everybody about it.

[00:05:24] TJ: Just understanding this concept of using your money as a tool intentionally, and basically thinking about ways that you can use it to help people today, right? So for example, if you have kids that you want to pass on inheritance to, they may be better served by giving it to them sooner rather than later, because if they wait until they’re in their fifties, they’re kind of past that time where they could have used that help.

[00:05:48] And so really thinking strategically about, again, not just accumulating as much as possible, but how can I use this money intentionally. 

[00:05:54] Linzy: Absolutely. Yeah. And I want to speak about that a little bit. And then we’ll get into the work that you do. But, I know that reading Die With Zero has got me thinking about health and wealth and the relationship between those things. And as you say, timing, right?

[00:06:07] So I do think that there’s this bias towards we save, we save, we save, we save, we try to accumulate. And in the book he talks about how folks are, are worth the most money when they retire. But that’s the point when your health is also starting to decline. So there are all these great things that you might’ve been able to do with that money in your thirties, forties, and fifties that are not available to you once you get into retirement years.

[00:06:26] And I see this with my parents who are so healthy and so active, but like my dad, one of his hips went. So that slows you down, and even if you want to do all these great things, life is harder, you’re limited in your abilities, and then he got that fixed, and now his second hip is gone. So even though they’re relatively healthy and active, he can’t do certain things now that he would have been able to do and enjoy when he was 50.

[00:06:48] He could have gone on, a mountain climbing trip when he was 45. He actually can’t physically do that at 72. So really think about where can your money serve you now, not kind of always deferring off into the future.

[00:07:03] Cause the future is not usually as good as we think it’s going to be.

[00:07:07] TJ: One hundred percent and that’s hard to strike that balance between living for the present while still thinking about the future. Some people are going to be past focus. Some people are going to be present focus. Some people are going to be future-focused. And so it’s good to have that balance perspective and think of: am I making decisions today using the resources I have, that’s going to solve for lifetime fulfillment…

[00:07:28] Kind of this idea of self-actualization, right? And thinking through what is the best use of my time. Right. And money is the tool that helps us exchange what we’ve earned for time.

[00:07:41] And so that’s where, and we can talk about some of the biases as far as like scarcity mindset and feeling that we have to hold on to this money when it could actually, we could get more value from it today by using it and spending it for things intentionally.

[00:07:54] Linzy: So let’s get into some of those biases. Cause I know that, my understanding is there’s, there’s a certain kind of, archetypes of different money behaviors or biases that we can tend to have. Tell me a little bit more about the behavioral biases that you see in your clients. And even what you see in yourself when it comes to making decisions around money.

[00:08:11] TJ: Yeah, There’s a ton. I try to be honest with myself when I catch my… And you don’t always catch it. That’s the part with biases, right? You can never really catch it unless an outside person is looking at you. But there are a few different ones. I think mental accounting is a big one. So not treating money the same in different realms.

[00:08:26] A lot of times people will take a ton of time to research how to buy an appliance from Costco, but they won’t think about the expense ratios in their investments, right? Which could be expensive over time. Right. And so there’s these things that add a lot of lifetime value.

[00:08:43] Tax planning is another one. They don’t think about all the ways that they could minimize their lifetime tax bill, which is difficult because we don’t know the future, but there’s… So, mental accounting is a big one. You know, overconfidence bias is a big one. So I work with a lot of people with company stock, and so a lot of times they feel very bullish on their company stock because they work there when we know the data shows that most of these companies are going to underperform the stock market. So things like that… 

[00:09:11] Linzy: Just to stop and define for a moment, bullish for folks who are listening and are not into the investment world. What does bullish mean?

[00:09:18] TJ: So if you’re bullish, it just means that you expect the share price of your stock to increase over time, which may or may not be true. I think there’s a heart with individual stocks is very different than the market as a whole. And so, yeah, bullish just means you expect it to go up. 

[00:09:32] Linzy: Yes. And what was that? Was the confidence bias? What was that one called?

[00:09:35] TJ: Overconfidence bias. Yes, you have an exceeding amount of confidence because you have material involved. You work for that company. 

[00:09:42] Linzy: I’ve heard that too with investments. And I see this in my behavior. So I’m, I’m Canadian. And, I’ve heard that in terms of people’s investment holdings, whatever country you live in, you tend to hold a much higher amount of that particular country’s stocks. Right. So like for myself and my investment strategy, we keep, I believe it’s 30 percent Canadian, 30 percent American, and then the rest like 40 percent international.

[00:10:05] But you know, you have to kind of work against that own bias to be like, well, obviously Canada’s great because I’m from Canada. Right. The American stock market, it’s a little different because it is a powerhouse, which is why we have so many Americans, but people who live in the Netherlands do the same thing.

[00:10:18] They’re going to hold like 30 percent, you know, Dutch stock just because they’re Dutch, right? So we have that personal connection to something. So we’re, we’re biased towards it.

[00:10:26] TJ: A hundred percent. That’s a geographical type of bias, and that’s a very common one. Yeah. If you look at Americans in particular, hold a disproportionate amount.

[00:10:34] of the U S stock market. And while it’s performed so great in recent years, if we look at the longer term track history, there are benefits to owning international.

[00:10:43] TJ: And who knows, I mean, there’s, there are very rare examples, not to get again, technical weeds, but if you look at Japan, there was a time when Japan had a major stock market bubble.

[00:10:52] It took them over 20 years. They just recently are… 30 years, even, to get back to an all-time high. So it is possible, for countries to experience stock. 

[00:11:01] Linzy: Sure. Yeah. Of course. Of course. And so, yeah, this is kind of going, going all in on something is what I’m hearing. This is the overconfidence bias going all in on something because it’s familiar to you rather than thinking big picture of if this thing is Fbetter than all these other things just because you have a personal connection to it.

[00:11:18] TJ: 100 percent or… In a certain example, too, is like your domain expertise. Just because you’re great in your domain, doesn’t necessarily mean that you’re going to be great in this other domain. And the hard thing with investing in particular, can talk about financial planning, but with investing is it, it is primarily behavioral.

[00:11:35] And that’s why more effort doesn’t necessarily correlate to better returns. So, that’s a hard thing for really smart people to understand. Cause they always want to try to figure out, what is, the best strategy to maximize returns. 

[00:11:48] Linzy: Yes. Yeah. Yeah. Yeah. I think there’s maybe an efforting bias there. It’s like, if I work hard, it’ll be better rather than being strategic about what you’re doing. 

[00:11:57] TJ: This makes sense because, in every aspect of your life, there is a correlation there typically. Right? When you study harder, you do better on your test. Right. So that’s not necessarily the case investing.

[00:12:06] Linzy: Yeah. And in therapists, I see a bias towards that, the like over efforting with, overworking, right? It’s like, well, if I see more clients, I’ll make more money, but there isn’t necessarily that thinking out of, yeah, but then I don’t have the energy to make dinner.

[00:12:18] So I’m going to be eating out more. I’m going to be doing more convenient stuff. Maybe I’ll be drinking more. What are the costs associated with that effort that might mean you have less money at the end of the day because you have less bandwidth to make intentional decisions?

[00:12:32] TJ: That’s an amazing point because I like to call it return on hassle. So when we’re thinking about your financial planning, right? And this happens a lot with, I would say rental properties. I work with a lot of millennials and, they love the idea of rental properties, but they don’t necessarily think through the numbers and the logistics behind it as far as,

[00:12:50] Yeah, you may be able to generate some level of return, but how much time effort energy are you going to put into this and what is that return on hassle? 

[00:12:58] I’m a big fan of, again, practical, pragmatic, use your money as a tool. Do you want to be a landlord? Do you want to take time to think about those things? 

[00:13:06] Linzy: Yeah. And that’s something that, I’ve talked with folks, before because we have a rental property, and partially we have a rental property just for a greater good purpose. It’s not a great financial investment for me. And it’s funny because when we built it, my partner was a politician, so when people found out that we had built a rental property and we were renting it at market rent, We received a lot of hate on Reddit and other scary places, because there was this idea that we were becoming fat cats, and it was laughable because I was like, if you look at the return we’re going to get from this investment compared to the work that we’re putting in, and the ripple out expenses that came from it.

[00:13:41] We destroyed our whole backyard. Now we have to rebuild a whole backyard. Right? We had to replace our whole sewage system because we discovered there are all these costs, but I think again, there’s this bias towards this idea that, well, that must be a good investment. You must be making a ton of money 

[00:13:55] and it’s quite the contrary. I would have been much better just investing in one of the ETFs that I know is reliable and leaving it alone. And I would have had a lot more time. And so it’s yeah, thinking… There’s that bias, this idea that like, obviously, if you’re doing more, you have this thing, you’ll make more money.

[00:14:10] But that’s not necessarily true. You have to make sure you’re doing something you want to do.

[00:14:15] TJ: Absolutely. And that you bring up some interesting points there, and I don’t want to defend landlords, but that is a common thing where it’s, oh, your landlord’s raising your rent. It’s like, well, it is a function of the market, and what it costs. And if you look at the cost of ownership of these properties, you have personal experience with that.You can see it’s, it’s not always the best investment.

[00:14:36] Linzy: No, it’s not. Yeah. But some folks are biased towards it. And it would be hard to tell them that. Let’s review the behavioral biases so far, cause these are helpful boxes for folks to think about. So we talked first about the,

[00:14:47] TJ: Mental accounting would be the first one.

[00:14:50] TJ: Overconfidence.

[00:14:51] Linzy: Yes, what other biases do you see show up often for folks?

[00:14:56] TJ: Sure. Yeah. I would say like a scarcity mindset

[00:15:00] is one that I and I have this and it’s, it’s good to analyze again. This is a great area for you guys because thinking about childhood experiences and how that impacts you as an adult. And so I consider myself a solo entrepreneur and it’s hard to

[00:15:16] Sometimes reinvest money when I’m… You know, I started my practice with zero clients and grew it over time very slowly, kind of a Profit First mentality. And so it’s hard for me to, even though there is a clear return on investment there, to kind of give up that money and reinvest and spend. And so I tend to attract clients, I think with similar mindsets who are hardworking, but maybe have some of that scarcity mindset.

[00:15:39] And so really just showing them and quantifying for them you know if they’re a high earner and they have the resources, it’s like, hey, you have so much bandwidth here You have so much margin for error and you’re living below your means so much which is fine But if there are ways that you can use your money today to enhance your life, you’re not sacrificing your financial future. This is something you should consider. 

[00:16:00] Linzy: Absolutely. And I see a lot of the scarcity mindset in, in the folks who, take Money Skills for Therapists. and it’s often there’s a story, right? Like these, these biases come from somewhere. And I’m curious for yourself or for your clients, like, where have you seen some of the scarcity mindset come from?

[00:16:19] What kinds of experiences tend to lead to a scarcity mindset?

[00:16:23] TJ: Yeah, I have some Indian clients who grew up in India, and they have certain cultural things that they feel with money there. And also, it’s really, people that tend to not come from money. I’ll just speak for myself.

[00:16:40] I had a kind of unique upbringing where my mom did come from some generational wealth, but was more of a spendthrift and had some issues there. And then my dad came from poverty. His parents were Dutch immigrants, and he was one of six. His dad died when he was a baby. So it was just his mother.

[00:16:57] And, and so basically he had a very scarcity mindset, which. We’re probably where I got it from where all we talked about growing up was money. And he was very into real estate because, for him, he’s a blue-collar tradesman. He could build a house himself, which is very impressive. 

[00:17:14] Linzy: Yes. Yes, seriously. 

[00:17:15] TJ: But if you factor in, again, your time and return on hassle and all these things, it is a ton of work for necessarily not the best like return.

[00:17:23] And so, you know, for me, I was always trying to figure out what is the best use of your resources, from a practical standpoint, and that’s what I try to help clients 

[00:17:33] Linzy: Yeah. Yeah. Because what I see with that, I think about my own family. And my, my grandmother passed away last year, so it’s kind of like the last remnants of her and my grandfather’s efforts were distributed. And similarly, both came from poverty. My grandmother came from quite, quite extreme poverty.

[00:17:48] Big families, nine to 11 kids in both of their families. My grandmother and my grandfather. My grandfather was a farmer where there’s that unpredictability, you know, like you have a bad season, and you could make no money for a whole year’s worth of work, right? So there was a lot of

[00:18:02] real precarity and scarcity there. You’re at the will of the weather gods. And you could work super, super hard and be like, Well, we’re dipping into our savings from last year. It’s out of your control, right? So if I look at how my grandparents lived their lives, they did manage to move up a class bracket to become middle class.

[00:18:20] But going back to Die With Zero as well, When my grandmother died, she was 98 years old and she had 300, 000 for each of her three daughters. So she died with 900, 000. And that was like at 98, it’s like the way at the end of her life. And when I think about my grandparents’ lives, I wish they had spent that money.

[00:18:42], I wish that they had gone on more trips together. I wish that they had taken more time off. If I just think about the value of that money, and by the time that money was dispersed to their three daughters, their daughters are in their 70s. They don’t, they don’t need it.

[00:18:55] They’re also like as I mentioned earlier, starting to come into poorer health, and their worlds are getting a little bit smaller, as naturally happens as you get older. And so, yeah, if I think about that money. They made such strategic decisions in terms of growing investments, but I don’t think they got the value out of their money that they could have. 

[00:19:14] TJ: And that’s where there is, it’s kind of an interesting concept to think about, but as a retiree, you do want to focus on not just overspending in retirement, but underspending in retirement. Right. So those are the two things to think through. 

[00:19:28] This is not necessarily normal. And there is, I would say a bias in the financial industry, right, to kind of make sure that people do kind of die with more money because maybe they’re incentivized. They get compensated for that, so there is something to consider there.

[00:19:42] Linzy: Can you talk about that a little bit more? Because we have had other financial advisors on the podcast before and I always want to help my clients. The audience understands that there are financial advisors who are just service fees, who are there to just like serve you.

[00:19:55] And then some folks are actually like making money based on the financial decisions that they’re guiding you in making. So can you talk a little bit about that piece that you just referenced?

[00:20:04] TJ: yeah. So, I mean, there’s always going to be conflicts of interest regardless of the fee model. So I want to throw that out there, and I’m not somebody who likes to bash different fee models, but I will say that you know, in my opinion, there’s a couple of different distinctions. The first thing is product-driven sales versus like you said, service fees.

[00:20:20] So. If you’re working with somebody who’s selling primarily financial products, and that’s how they’re compensated, whether it’s an investment product or insurance product, that can tend to lead to suboptimal outcomes because they’re just focused on that product sale, in my experience. With the fee-for-service model,

[00:20:36] That’s a cleaner model. However, there still are some conflicts. The industry is, predominantly, like this AUM model where it’s a percentage off, so I give you a million dollars to invest. I take percentages. So I’m 

[00:20:48] Linzy: And AUM being assets under management. So they make a percentage of what their client holds,

[00:20:54] TJ: Correct. Right. So this could again, lead to some conflicts of interest, where if you’re in retirement and you’re focusing on, I don’t want to overspend or underspend.

[00:21:02] You might be underspending, you know, partly if there is a bias there for the advisor to retain those assets because their compensation 

[00:21:09] Linzy: right? Cause they’re going to make a lot more money if you are holding onto 600, 000 compared to if you’re holding onto 150, 000.

[00:21:17] TJ: Sure. So that is something to consider. And I’m not saying… There are a lot of great advisors who charge AUM, who are all about making sure… I’m just saying that is something to consider. Always think about the incentives of any kind of professional. I mean, for me, the way I think about it your health is the number one.

[00:21:30] And then maybe your money is number two.

[00:21:32] So it’s like when you’re working with professionals in those areas, you should always consider those incentives, right? You don’t want to work with a doctor who necessarily likes the product they’re getting compensated on the product. Right?

[00:21:40] Linzy: Yes. Yes. For sure. Yeah, of those biases, we talked about scarcity, right, which certainly shows up. And I see this sometimes in students where I’ve worked with them for a few months. They’ve come to calls. I feel like I have a sense of them. And then as part of my course, I offer on ones, and then we’ll have a one-on-one conversation and then they’ll let me know that they have, massive generational wealth that they don’t know what to do with, or that they have a bank account with 75, 000 in it that they’re not sure what to do with.

[00:22:06] So I see that show up. And sometimes I talk to folks about like kind of that becomes a hoarding behavior where the money has no job, but you’re scared to let go of it. So you’re just holding onto it just in case, but yeah, it has no function. I’m curious about what would be the bias that leads to kind of the opposite end of that spectrum of folks who are overspending or can’t hold onto money.

[00:22:25] Is there a certain bias that explains those kinds of behaviors? Or how do you understand those?

[00:22:29] TJ: That’s a great question. I don’t tend to attract people like that. So I don’t work with them, but I have personal anecdotal experience with it. I would say it comes with your upbringing and how you view money. If you viewed it as kind of an unlimited source, and you didn’t understand kind of the utility of, of how difficult it can be to earn that as a wage earner, for example, then yeah, you may be inclined to have habits that are going to lead you down that path. It all starts with financial literacy. I would say,

[00:23:02] Linzy: Cause you to know, I see a couple of things, like, thinking about the origins of those behaviors. One is that I see this narrative of I deserve it, right? So sometimes when folks have come from financial struggles and they grew up without a lot, and I’m thinking about people in my own life who come from that situation, there’s this making up for the lost time.

[00:23:19] When you get grown-up money, you’re like, I just want the thing. I want the nice shoes. I want a nice car. Because they had this feeling of going without as a child. But I’ve also seen that behavior with folks who are scared of the money being taken from them. So either they had an experience of having family steal money from them.

[00:23:36] Or yeah, there’s just this sense of the money’s not safe. Yeah. So you spend it so that you can’t lose it. It’s like if I spend it, then it goes to something that I want rather than maybe, a distrust of systems, that the money will disappear from the banks but it is interesting how these different behaviors Can really lead to money and then what I see in my students a lot too is it’s just really anxiety provoking, so they just avoid so they’re just kind of  driving in the dark with no headlights, spending money not realizing, oh, I just spent everything that I have.

[00:24:03] Because there’s just this fear of being in touch with their numbers or just a lack of a kind of literacy there.

[00:24:09] TJ: The first step, to me, is always awareness, so having a basic understanding of your numbers, if you do feel overwhelmed with money like you’re not making money decisions, I wouldn’t even, it’s not even about taking action yet. It’s just about gaining awareness. Right. So, just thinking through your basic numbers, a great tool that I recommend is Monarch Money.

[00:24:27] If you’re looking for cash flow and budgeting. And it’s, it’s just a tool, where you can link all of your financial accounts and just get comfortable with it, it’s not about making any changes. It’s just, Hey, do I know my basic numbers? Do I know over the last six months, what were my average outflows or my average inflows, just these basic things?

[00:24:43] Then you can start to think through what. What changes can I make? How can I automate things? You know, what are some baseline habits I want to maintain? 

[00:24:51] Linzy: Absolutely. Yeah, I’ve got a framework for teaching both of the courses that I teach, which is Commit, Clarify, Adjust, Implement. And that’s the clarifying stage, right? It’s just, what’s even happening here? Where’s my money going? And sometimes what I find with my students is, they’ll look at the money and be like, Oh, this is why it feels like I have no money.

[00:25:07] Because actually, my cost of living is higher than the paycheck I can pull. So that’s why I’m always pulling, and that’s why I never have tax money because I’m always pulling from taxes. After all, I need more money than I’m making, and that in itself is extremely clarifying to understand, oh, it’s not just a feeling that I have no money.

[00:25:25] TJ: Yeah, and that’s a reality that you should confront. And the reality is… And I don’t, I’m not a pessimist; I am a long-term optimist, but the reality is, is that inflation is always going to be around. It has increased relative to historical annualized inflation, but just understand that you have to, unfortunately, figure out a way to generate income that allows you to live below your means, number one, and then with that discretionary income that you have, you have to figure out a way to retain the purchasing power, meaning the value of it, because inflation is eroding that value.

[00:26:01] And so if you’re not transferring your earned wages into wealth, unfortunately, this is where we see this wealth disparity over time because the people that are transferring into wealth via stock, real estate, commodity, whatever, they’re retaining it.

[00:26:15] and then we get this perpetual cycle of inequality over time. 

[00:26:19] Linzy: Yeah, because, and I noticed this goes with the scarcity behavior too, is like people get paralyzed, and they don’t know where to put the money, so it’s just sitting in sometimes a checking account, or a savings account, but, you know, what you’re saying is something that I’ve been talking to my students more about lately is, yeah, you have to put it somewhere that it’s going to grow, because as you’re saying, every year, our money’s worth a little bit less.

[00:26:39] So if you’re not putting your money somewhere where it’s growing, it’s losing, losing power over time sitting in that checking account.

[00:26:47] TJ: And this is kind of, I guess, a bias in some ways where people don’t understand. Like safety is all relative. Okay. It’s all based on your time horizon, right? So you might have money in your checking account. It feels safe. It’s not losing value. It’s not fluctuating, but there is a hidden tax, if you will, with inflation where it is losing value over time And so actually in the long term, even though maybe stocks or even real estate might feel more risky because it is Moving up and down in the long term.

[00:27:17] It’s safer because it’s it’s keeping up with inflation. 

[00:27:20] Linzy: So in the end acting is safer than not acting in terms of putting it somewhere intentionally that it’s going to grow is a safer move than staying frozen.

[00:27:32] TJ: Yes, and that is hard and I think from a financial literacy standpoint If you can get over that mental hump that hey It’s safer. I mean, you should have fundamentals, right? You should have a cash reserve. You should know your numbers. You want to have that margin of safety, but once you do, you have got to get in the mindset of I’m always investing, or else your money is going to lose value over time.

[00:27:53] Linzy: Which is, I’m sure for some folks listening, is a terrifying thing to hear. If they’re not investing, because what I find with my students is, once we do that foundational work of, okay, here’s your numbers, now you’ve got some clarity, now you’ve made some adjustments, maybe you’ve changed the way you’ve set up your practice, maybe you’ve changed your fee maybe you’re going off of insurance panels, maybe you’re seeing just a couple more clients a week because you realize that makes all the difference.

[00:28:14] Once you make those adjustments, then you have to figure out what to do with the extra money. How do you start to save for the future? What I find is a lot of, folks who have not been already immersing themselves in that world, it can feel intimidating to figure out investments where to invest, and, which investment vehicles to use.

[00:28:35] And do I put it in my SEP IRA or do I, you know, put it in my 401k? It’s confusing for people as to where to start. 

[00:28:42] TJ: It is. And, the thing, I think that’s hard if you are a business owner, right? You have your practice. There is this dynamic of, and I struggled with this as well as figuring out my best return on investment, reinvesting in my

[00:28:54] practice or business, or investing elsewhere. Now, the thing is I don’t think most people want to always be tied to their business, and so they must be built outside of that so that they have that ability to retire or

[00:29:05] achieve financial independence and that’s where you have to think and look and have that abundance mindset, if you are more of an entrepreneur, where it’s like, Hey, maybe the best investment is continuing to invest.

[00:29:14] But then if I do have a profit in my, at least every year looking at maxing out my retirement account or something over time. 

[00:29:21] Linzy: Yeah, it’s, it’s investing in yourself. But you need to have the clarity to know if I do A, then B will happen. And that’s going to result in there being more money than, say, the like 7 percent you could get by putting it in the stock market year over year, right? And for all of us, there’s probably going to be some sort of limit where your business is at full cruising altitude.

[00:29:39] And unless you’re going to make major changes, you’re kind of at the max of what you can earn. And at that point, It makes sense. But I remember when I first started thinking about private practice, I was speaking with my boss at the agency that I worked with, and I had been given some money by my grandparents while they were alive because that is something they did well, is they gave their grandchildren, there’s only three of us, money while they were still alive, so they could see us enjoy,

[00:29:59] The inheritance that they gave us. So I had been gifted this money. I was a little bit tortured. What do I do with it? The stock market isn’t ethical. I don’t want to invest in oil and guns, you know, tortured liberal kind of stuff. And, uh, I was talking to my boss and she said start your practice.

[00:30:16] Like you are the most ethical thing that you can invest in. And that is true because money that I thought I could never make when I was working in an agency, making 45, 000 a year now is normal money for me. Right. But that’s a much better return than I would have got just investing that money, starting my practice and getting all the education and all the personal, professional development has been a much bigger return on investment.

[00:30:37] But at a certain point you’ve kind of  hit what is probably going to be your max and then putting, as you say, basically diversifying. Right? Putting your money somewhere else, putting it into the stock market, putting it into real estate. So, you’ve got your money growing in a few different ways.

[00:30:50] It’s not all based on you showing up and performing forevermore.

[00:30:54] TJ: That’s a great point. And I think that you know, understand that the stock market won’t be your best return on investment, but it is the most scalable and practical and lowest return on. So, you may, and I like that you use 7%, right? And it may be we can seven, eight, whatever percent we’re targeting for a benchmark.

[00:31:14] It’s so important to understand compound interest. What does that mean? What does that look like when you compound 7 percent over a long timeframe? Because that some people that doesn’t sound like a lot, but if you put the time in and you understand the power of compound interest, it ends up being quite a lot and understand that,

[00:31:30] Again, it’s repeatable, it’s scalable, it’s diversified outside of your business. And so even though your best return may not be that, it’s still something to consider building. 

[00:31:38] Linzy: Yeah. Yeah. And I just learned the rule of 72. That just came into, my radar, um, because I’ve been chatting with some of my students about this of , okay, you’ve got this money in a checking account. You’re going to need to retire in like 15, 20 years. If it sits in your checking account, it’s going to lose value.

[00:31:53] If you put it in the stock market in a safe, diversified way, it will start to double over time. But like the timeframe of that doubling. So the rule of 72…

[00:32:03] TJ: yeah. Yeah. So basically it’s just, whatever rate of return that you expect. You divide that into 72 and that’s how many years it’ll take for your money to double.

[00:32:13] Linzy: So it’s like the example that I gave where I said 7%. If we’re expecting kind of 7 percent return from an investment, that would be just a little over 10 years. Right? We take 72 to go to 7. So your money will double every 10 years if you have a 7 percent return over that time, which is like pretty crazy to think about.

[00:32:28] Cause as you say, 7 percent sounds like, eh, it’s like little, but if I put 100, 000 in and in 10 years, that’s 200, 000 and 10 years after that, that’s going to be 400, 000. That’s, that is a big impact. Yeah.

[00:32:40] TJ: Well, I think people confuse simple interest with compound interest, right? So a lot of times, in a checking account, it’s simple interest. So if I have a thousand dollars in there, and I’m getting 5 percent interest, let’s just say I’m getting 50, but I’m not getting 5 percent on 1050

[00:32:57] The next time the compound interest, I’m making interest on my interest.

[00:33:03] Right. And so that’s where the power comes in, where it’s like, then the next time it doubles, it’s doubling based on that, that value.

[00:33:08] Linzy: Yes. It’s beautiful. Beautiful math in terms of building long-term stability. Uh, so TJ, thank you so much for coming on the podcast today. This has been really helpful information. I know that the folks who listen to this podcast,  this is kind of the next step for them is starting to understand and think about these things, so it’s so helpful.

[00:33:24] to have you here. If folks are interested in hearing more from you, where can they find you?

[00:33:28] TJ: Awesome. Well, first of all, thank you for having me on. I’m happy it was helpful. modernwealthbuilders. com is my website. You can learn everything you want there. And I have a podcast called Do More with Your Money, or we explore similarly. 

[00:33:39] Linzy: Wonderful. Great. Thank you so much for coming on the podcast today.

[00:33:41] TJ: Thank you. 

[00:33:57] Linzy: Coming out of this conversation with TJ, I’m reflecting on that freeze response that so many of us can have around money, that fear of doing it wrong. So we just hold onto it because we’re scared of making a mistake. And that piece that he talked about where it’s safer to invest your money.

[00:34:15] It’s safer in the long run to put your money in real estate and the stock market. I would add in balance diversified ways, is a great reframe on that behavior. Because the freeze response tells us that the safest thing to do is nothing, right? But when it comes to money, because of the way the economy works and because our money is losing value over time with inflation, it’s not safe to do nothing.

[00:34:42] So that’s helpful to reframe that it’s safer to do something, to put it somewhere that is going to grow, and I would say to put it, yeah, into different places. Invest in real estate if you’re able to. If you haven’t already, certainly start putting that retirement money away.

[00:34:58] Get advice on how to invest in a way that aligns with your risk tolerance, right? Don’t do things that are scary or too risky for you, but you have to do something. You’ve got to put it somewhere that is not just, kind of, in your metaphorical mattress, which would be like a checking account or a low-interest savings account.

[00:35:15] And as we talked about with the rule of 72, that doubling, that is what’s going to help you build real financial stability for your later years. But I would say even in between, depending on the type of investment it is, that’s what’s going to allow you to take that amazing 20th-anniversary trip with your spouse.

[00:35:32] Growing your money is essential for your suitability, but it is also a way to enjoy your life more as you go by making compound interest work for you. So thank you so much to TJ for coming on the podcast today. You can check out the link in the show notes to hear more from him, but I encourage folks who are listening, if you notice you’re in that freeze response, to start to get some support so you can start to make movement 

[00:35:54] with your money. Your future self is going to thank you. You can follow me on Instagram at Money Nuts and Bolts. And if you’re enjoying the podcast, tell a friend about it. Tell your colleague. It is so helpful for you to just spread the word about the podcast. It is the best way for other therapists and health practitioners to be part of these conversations.

[00:36:13] Thanks so much for joining me today.

[00:00:00] Linzy: Hello and welcome back to another Feelings and Finances episode of the Money Skills for Therapists podcast. These are our short and sweet Friday episodes where we answer your questions, the lovely listeners of the podcast. I’d like to think of these as a little financial treat coming into your weekend.

[00:00:17] You may not think of them as a financial treat, but I hope that eventually as you spend more time being with money, and listening to this podcast, and engaging with your relationship with money, these will also feel like a little treat for you. So today’s question is from Liz. Here’s Liz’s question.

[00:00:32] Liz: Hi, Linzy. My name is Liz. Thank you for taking these questions. My question today is about overhead and expenses. So I’m a sole proprietorship private practice. My overhead every month is very low. I’ve been tracking and keeping track of my consistent monthly expenses. And I know there’s also variable costs that aren’t month to month, but I’m still trying to factor that in and have an idea of what I spend each month.

[00:01:10] But my question is, is there a guideline of how much the percentage of your gross should be going towards business expenses? I want to be mindful of keeping my overhead low, but I also want to make sure I’m giving myself room to spend money in order to grow my business. So I would love to hear your input about how can, in private practice, we sort of judge how much we should be spending on all of those expenses, like just all of the technology that we need to use, and marketing, as well as like our, our own professional development.

[00:01:53] So I would love to hear your feedback. Thank you so much.

[00:01:57] Linzy: Thank you so much for your question, Liz. and yes, there are clear numbers that can guide us on this. So I am a fan of Profit First. I’ve been teaching profit first for five years now, and Profit First is a great starting place to give us a sense of what healthy numbers in any kind of business look like.

[00:02:17] So the starting percentages that are suggested by Mike Michalowicz in Profit First, the original book, is that your operating expenses should be around 30%. So, of your revenue, of all the money coming in the door, let’s just say for super easy numbers, if you’re bringing 10, 000 a month into the business, that’s what you’re billing, then your operating expenses should be no more than 3000.

[00:02:39] So that is a starting guideline to give you a sense ofhow do my numbers compare to that 30%? Now I will say, as I’ve been teaching over the last few years, and because of COVID, with more folks going online… You know, before COVID almost nobody was doing virtual therapy and now most people are doing virtual therapy.

[00:02:57] So I have noticed that that has significantly changed what I see as a very typical number in private practice for operating expenses. And now I tend to see more folks who are down around the 15 or 20 percent mark. Depending on their practice size, you know, that especially is going to apply for folks who are either seeing a lot of clients, so they’re bringing in more around the 8, 000, 10, 000 mark, or folks who are out of pocket, maybe charging a higher fee. For them,

[00:03:25] if you don’t have an office that you’re renting, that does significantly reduce your operating expenses, because usually rent is our biggest operating expense by quite a bit. So if you’re just working from home, then probably somewhere more like 15 to 20 percent is a healthy guide for your operating expenses.

[00:03:42] Now, you bring up a great point around, you know, you want to be responsible, you want to make sure that things are in check, but you also want to make sure that you are not, stopping yourself from reinvesting in the practice. So that’s where these percentages can also be helpful. Because sometimes I see when we have more of a scarcity mindset around money, or we’re afraid to take a risk on ourself, then we can actually underspend on OPEX, right?

[00:04:06] So lower is not always better. You know, obviously we want to have our spending in check, but if you notice that you’re sitting more around the 15 percent mark, and there are training opportunities out there, business courses, clinical courses that are calling you, then I would encourage you to think about how much do you want to be spending on reinvesting in the business?

[00:04:29] Maybe it’s through that education. Maybe it’s through getting your website renewed. Maybe it’s through working with a coach one on one, refreshing your office. You know, there’s so many things that we can do to improve the quality of our practice, grow our practice, attract the right people, retain our clients, and I would definitely encourage you to make sure that you have a budget for that so that you’re making sure that you are investing in yourself, right?

[00:04:52] And so often I see the opposite, Liz. I see folks who spend so much on their professional development. The term course junkie has been thrown around a lot, over the years and money skills for therapists, people self describing as course junkies or education junkies, where they’re really overspending

[00:05:09] on that professional development piece. But if you’re underspending on professional development, if you know that there’s opportunities that you’re not taking because you’re trying to keep your operating expenses low, then I would encourage you to set a budget specifically for that, right? Whether that’s professional development, or other kinds of reinvesting you want to do, to make sure that you are putting money back into the business to help you meet your business goals.

[00:05:29] So that might be something like, 3, 000 a year, right? Or 5 percent of the money you earn. Now that’s probably a little high. Let’s say 3 percent of what you earn goes back into reinvesting in the business through one of those ways. That can be helpful to give yourself a guideline for a pot of money that is about reinvesting and taking care of the business to make sure that you are giving the business the care, and attention, and

[00:05:54] personal growth, reinvestment that it needs to continue to be healthy, right? If we get too restrictive sometimes around spending, we’re actually doing our business a disservice because the return that you can get on investing in yourself, investing in your business, if you manage to grow your business revenue by 10 percent a year, you know, sometimes I see people even grow their, their business by

[00:06:15] 20 or 50 percent a year, that’s a way better return on investment than you could get in the stock market, in real estate, in pretty much anywhere else, right? So your business is actually a really great place to invest. So if you know that there’s growth opportunities, I would definitely make sure, Liz, that you are budgeting some money for those, so that you can grow the practice that you want, get more money coming in the door, get more money to spend in your life, save for retirement, those kinds of things.

[00:06:44] So I would encourage you to look at yourself as a good investment. If you trust yourself to follow through and be able to get results with whatever money you spend, you’re probably one of the best investments that you can make. So definitely make sure that some money is going there. So I hope that’s helpful, Liz, a helpful guideline.

[00:06:59] You can sit down now and look at your numbers from those frames, and see how they compare, and decide if you want to be spending a little bit more, a little bit less, but definitely making sure that your money is going to the places that it’s going to have the impact that you want is a very, very good use of your time.

[00:07:14] Thanks so much for your question today, Liz. If you, like Liz, have a question for me, you are welcome to submit it. I would be happy to hear from you. All you need to do is click on the link in the show notes. It’s going to take you to our podcast page on my website where you’re going to see a simple little record button where, just like Liz, you can share your name.

[00:07:31] You can share a little bit of context if you want, and then share your question. I would be happy to answer your question in a future episode of Feelings and Finances. Thanks so much for joining me today.

[00:00:00] Khara: I need to know where my beliefs come from, which ones are mine to hold, and which ones I need to leave behind gently. If this is my grandparent’s belief, this is mom’s belief, this is my first boss’s belief, but it doesn’t have to be mine. But they’re so sneaky that we don’t even realize how many beliefs we have and how they impact our decisions. So for most of us, it’s starting to look at those money beliefs and being like, which ones do I want to hold on to and which ones are my truth versus I got to let that go.

[00:00:30] Linzy: Welcome to the Money Skills for Therapists 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 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] Hello and welcome back to the podcast. Today I had a conversation with Khara Croswaite Brindle. Khara is a therapist, a financial therapist, and a consultant, helping other therapists, specifically helping therapists with money. And today, Khara and I got into a conversation about noble poverty. This is a phrase that is new to me, but as soon as I saw it, I was like, Oh, yep, I know what that is.

[00:01:16] So today, we dig into this idea of noble poverty, where it comes from, the connections to gender and education, and the nonprofit sector. We talk about how to identify noble poverty in yourself, and what to do if you start to see noble poverty playing a big role in your relationship to money. I feel like Khara and I went a few different ways today, kind of almost turning over this idea and looking at it from different angles.

[00:01:42] There’s just so much here to unpack. Here’s my conversation with Khara Croswaite Brindle. 

[00:02:02] Linzy: So Khara, welcome to the podcast.

[00:02:06] Khara: Thank you. So excited to be here.

[00:02:07] Linzy: Yes, I’m so happy to have you here, as someone who is also supporting therapists in multiple ways, in the space. I’ve always been a fan of those who are helping the helpers and that seems to be very much your world.

[00:02:25] Something that I saw on your website, which caught my attention, and a phrase that is new to me that immediately though, I was like, Oh, I understand what that is, is this idea of noble poverty.

[00:02:37] And I’d love to dig into that with you today. Tell me, first of all, how do you define noble poverty? What is that?

[00:02:46] Khara: Yeah. In its simplest form, it’s putting yourself in financial stress to serve others. So it has this feeling of being a martyr. In our space, working with therapists. It’s, I can’t be a good helper and make a good income, which I know is something you talk a lot about. I’m like, well, I can’t wait to do both.

[00:03:03] But so many folks believe that you can’t be a good helper, and still make a good living for yourself.

[00:03:09] Linzy: So it’s putting yourself into a financially How did you put it? Financially difficult position.

[00:03:16] Khara: Yeah. Financial stress, putting yourself in financial stress To serve others.

[00:03:19] Linzy: Yes, and tell me what is noble about that?

[00:03:25] Khara: I think it’s, the noble pieces. You feel like you’re sacrificing in this case, self-sacrificing to serve others, which is why there are certain populations that resonate with this terminology of noble poverty. Specifically, therapists, some nurses, and social workers resonate with this, as teachers, and nonprofits.

[00:03:45] Those are all the people I’ve said this to, and they’re like, oh, that hit me in the heart. Like, that was hard to hear. 

[00:03:49] Linzy: Absolutely. Because. Why do you think that those professions particularly end up with this kind of thinking?

[00:03:57] Khara: Yeah, I mean, I think it’s two-fold. First, it’s the systems that educate us to become that professional, that career choice. So I think of graduate school saying, you’re not worth your salt. You’ve got to put your time in, you’ve got to earn your keep, those kinds of phrases, that like basically imply you have to work for zero money or little money to earn a degree, or credibility, or experience, right?

[00:04:19] So starting at the grad school level, that’s reinforced. And I know that’s not just true of mental health, but as a mental health professional, that’s what was loud in my head. And on the other side of it, a lot of the professions we’ve named have women as the people in this position.

[00:04:33] So in the shortest answer possible, patriarchy is also part of this.

[00:04:39] Linzy: I like it. It’s to the point. It’s good because we’re specifically asking women, mostly women, to do this self-sacrificing. And something that I will say I have observed of male colleagues, that I have if I think of, you know, men that I went to school with, is often they were quicker to go out in private practice in general or set higher fees.

[00:05:03] So they’re in that profession, but they did seem more, immune maybe to that kind of messaging. I think my observation has been many men don’t seem to struggle with that need to sacrifice themselves as much as many women who go through. And these are vast generalizations, but I feel like I can make them.

[00:05:21] Have you had a similar observation? Do you notice that some folks are more immune even though they go through the same education?

[00:05:29] Khara: I think it’s a gender difference, it’s an ethnicity and race difference, it’s all sorts of things here. But yeah, I think men, especially when we think about numbers and money, men historically have been encouraged to be good at numbers, and so they’ll be like, you’re so good at math in elementary school, and then for girls they’ll be like, how about you go towards this other profession, right?

[00:05:47] We think of like 1950s, you were a teacher, a secretary, or a caregiver, right? It’s like common professions. I think it’s just, you know, at this point, decades and decades worth of messaging that women should be caregivers and that you sacrifice your needs to make that happen and you can’t ask for reimbursement while you do it. 

[00:06:05] Linzy: And that’s an interesting point about math. Let’s, let’s talk about math for a minute, math and girls, because something that comes to mind for me when I think about that is, first of all, I think as a girl if we’re going back to like being in school, like being children, Being too smart is not something you want to be, right?

[00:06:25] You don’t want to be like Hermione Granger who’s that smart girl who annoys everybody else. I do think there’s, there’s something in that kind of stereotype and being good at math is something that I think girls don’t get to be proud of if they’re good at math, nor is it rewarded to be good at math as a girl.

[00:06:43] Like other girls are not going to think that’s cool if you’re good at math. I don’t know. What, comes up for you when you think about that? If we go back to the thinning of our education.

[00:06:51] Khara: I have to agree because when we think of Hermione Granger, like, yeah, she was portrayed as annoying. So like, even the audience got the message that being too smart is obnoxious, which is not helpful to girls or boys at this juncture. But yeah, I mean, there was somebody, I can’t remember who it was, but they put out like, how

[00:07:08] teachers reward boys versus girls and the language changes that they’ll say to a girl. You’re so pretty. You’re so nice You’re so kind to a boy. They’ll say you’re so strong. You’re so smart. And so just those examples highlight the difference and how we show up with boys and girls. It’s fascinating.

[00:07:24] Linzy: Absolutely. And then the other thing that I think about as we’re talking about money and gender kind of over the decades, these old narratives, is something that I’ve heard folks talk about is traditionally, in a heterosexual relationship, it was generally men’s job to earn money and to take up financial space and like, you know, bring home the bacon.

[00:07:44] And it was women’s job to manage the money, and be thrifty, and make it go further. So even though we’re talking about the same pot of money, the skills that we were supposed to develop or the relationship we were supposed to develop to money, historically was very much for women more about restriction and control, and for men was more about status and power right and being a caretaker and what’s so interesting to me about that is we are talking about the same pot of money.

[00:08:11] We’re talking about the same money in the household, but the gender role related to that money, historically… And this is in a certain family model. There are lots of exceptions to this, of course, but is around women being small, and controlled and I’ve even heard to this day, I’ll hear, hetero couples who I know the woman is maybe home with the kids or is earning less because they’re in more of that caretaking role, and their partner will give them a hard time for spending too much on groceries, right?

[00:08:38] It’s like, they’re supposed to be controlled. And like, so there is this, real smallness around women and money that I think shows up in, in a few different ways by the time we get to grad school, and get into these, these professions we’re talking about.

[00:08:52] Khara: Oh, yeah. And even as we think back to the childhood experiences of like, okay, now just a little girl in our example, have an internal narrative of I’m bad with money. So she goes into that relationship and says, Oh, I’m bad with money. So of course, I want my spouse, in this case, a man in our, scenario to manage the money.

[00:09:09] So we’ve just reinforced all things of like, who has power, who has control, who’s a spender, who’s a saver, which financial therapists hate that language because it’s so polarizing. And so it causes conflict versus saying, how are we coming together and working as a couple or partners on this issue? 

[00:09:23] Linzy: Yeah. Being, being a team, being in it together. And that’s usually the conversation that I have with couples that I know who are like that. I’m a lot of fun as a friend. You can imagine. It’s like, it’s the same money. You’re managing the same money. Like you’re a team. You know, she’s only buying groceries cause your household needs to buy like eat groceries.

[00:09:39] So you know, um, coming together on that. So yeah, there’s all this gendering then that, we’re talking about here. Then we go into grad school and we’re, we’re given these, As you said, these experiences sometimes of having to work for free. I know that I worked for free as part of my internships…

[00:09:57] There are good things I could say about that in terms of experience, da da da da But it’s exposure, right? You’re working, you’re getting exposure while paying tuition to do that. So there’s this piece of us experiencing sometimes literal poverty, right? Like working 40 hours and getting paid zero dollars, and then you’re paying tuition on top of that.

[00:10:16] And then what do you see happens once we get into the profession? Where do the noble poverty dynamics come in once we’re out of grad school and we step into, in this case, we’ll talk about the therapy world?

[00:10:26] Khara: Yeah. So a couple of things are top of mind. So I’m a provider who takes insurance. So the fact that they want to pay less for an unlicensed candidate or someone new to the field, I think, reinforces noble poverty. Cause it’s like, Oh, you’re green. You’re new. We’re not going to pay you what you’re worth.

[00:10:42] Not anything close to that. So insurance is reinforcing this. Most of us go into community mental health or group practices, more group practices now than ever, which is fun to see for my students. But when I was coming into the field, it was like, community mental health is it, that’s all you had.

[00:10:56] So now you’re being paid 25, 15, 25, 30 tops once you’re licensed to do this work. And they kept saying, you should be grateful because you you have supervision built in. You have all these things you’re learning for free. So it was really kind of toxic in that way of reinforcing I shouldn’t be asking for what I’m worth. I shouldn’t be challenging what I’m paid. I should just go with the flow.

[00:11:18] Linzy: Yeah, and the non-profit space has this whole other level of toxicity around self-sacrifice and, and poverty. And I just observed this actually with, a peer that I know, another parent from the school that I, my son goes to, who just stopped being the director of a non-profit. And so she’s at the very top of the non-profit, and she had to quit, she burnt out, and she was saying, I’m going to go somewhere with a salary and benefits.

[00:11:46] And vacation time. Like, you know, these things were all very like novels. She had a salary before, but to get a salary that would be, you know, meet her family’s needs, It’s kind of baked in at all levels of that sector. And what I see happens in that sector, and, and this shows up whenever we work in any kind of nonprofit mental health, setting is that there’s kind of this idea that as long as other people are suffering,

[00:12:11] Then you should also suffer, right? Like, you’re supposed to like, do it for the cause, do it for the justice, and that like, your suffering, first of all, it would be wrong if you didn’t suffer, because people are suffering, but also that your suffering is like, good, somehow. And this comes into the noble piece.

[00:12:26] What are your thoughts on that sector, the non-profit space? 

[00:12:32] Khara: So many thoughts. When I founded a non-profit several years ago and learned a lot about the dysfunction just from being in the seat of like executive director founder. What does this look like? As I was going through my education to understand the non-profit sector, they said the average person who works in non-profits is a woman with a master’s degree or higher who’s paid about 30, 000 across the board.

[00:12:54] And I was like, wow, that’s painful knowledge to get in this class on non-profits, and then not have anyone question it. Just be like, well, that sucks. And there’s nothing we’re going to do about it. This inertia, this like, we’re not going to change or create any new systems to say, let’s do better.

[00:13:10] Luckily, over the last couple of years, I’ve seen more people saying, let’s make some positive changes to that sector. But it is rampant with, this is how we’ve always done it, and we’re not going to change it. And so, the fact that women feel called to help, and under having the message reinforced that you have to help and not meet your own financial needs, is why I think noble poverty hits that population so hard when they hear this term.

[00:13:31] Oh, that’s me. And it doesn’t feel good. 

[00:13:35] Linzy: Yeah. Because then the other piece that also comes to mind for me in the term noble poverty, which we’re just unpacking in a few different ways here because I feel like it’s rich territory, is the term noble.

[00:13:46] And it does have, to me, almost a religious connotation to that term of kind of this self-sacrificing stoic, like take it on the brow kind of, image that comes to mind for me. I’m curious for you, do you also see religion or certain cultural beliefs tying into this when you’re talking to folks about noble poverty?

[00:14:11] Khara: I think there’s always a cultural component, especially when I think of family systems or different cultures where it’s, Hey, the collective is the focus, right? So I live in the U. S. so it’s like, this is part of being an individualist culture, right? It’s like, first, you focus on yourself.

[00:14:28] But for folks who come from collectivist cultures, where it’s the family first, or the community first, they would also say, like, this is selfish to focus on yourself to ask for something that you think you need or want or deserve. So, from a cultural perspective. As someone who doesn’t identify with religion, I can still hear the flavor of that from what you’ve shared of like, yes, there’s something about this, like, whole…

[00:14:49] You know, to be a martyr is not something people like to have labeled as themselves, right? So we’re not going to say martyr poverty. It also doesn’t roll off the tongue nearly as well. 

[00:14:58] I struggle with the word. But for people to put the word noble to it almost feels a little bit like gaslighting.

[00:15:05] To be like, oh, I’m going to make this sound like it’s a really important champion thing you’re doing, but then make us wonder what’s wrong with us when we actually can’t make ends meet. 

[00:15:12] Linzy: Yeah, because that’s, that’s the phrase I think of with noble as I see this kind of upright, like, it’s fine. It’s fine. I can suffer through, you know, makes you a better person for it. So. With all this, I’m curious, how do you see noble poverty then showing up with the folks that you work with?

[00:15:32] Khara: Absolutely. This is the most common question. Once people know the term, they’re like, okay, and what are the warning signs that I’m in it? So other than professions that we’ve listed off, it’s usually around things like avoidance with money, where it’s like, I’m not going to ask for a raise. I’m not going to confront someone who owes me money.

[00:15:48] I think the private practice clinicians who have a client with a credit card that declines and they’re like, Oh gosh, I’m not going to say anything like this is awkward. It makes me intense and uncomfortable. I’m just going to write it off or not pursue it. It’s the colleagues who have clients with thousands of dollars that they’re owed that they’re just not having a conversation.

[00:16:04] In non-profit spaces, it’s, I’m not going to ever talk about getting a raise or asking for more because I’m worried that if I do, someone’s going to call me greedy or selfish. And so that’s where the emotional tie is, of like, there are so many messages of if you advocate for yourself or play big versus play small,

[00:16:22] You’re now greedy, selfish, or corrupt.

[00:16:24] Linzy: Right, so it’s that smallness and that avoidance. Yeah, because I think that in that mentality, it’s kind of like if you ask for more, then you’re saying you can’t hack it. Mm hmm. Right,  you’re not noble, if you need more or you want more, and it does make me think about, you know, I come from, a farming family background.

[00:16:46] My parents were not farmers, but my grandparents were farmers, and they were such a huge influence on our family, and on our family’s money narratives that came down. And it is really interesting because I can see in my family contradictions around it.

[00:16:59] So, my grandparents were very good with money and ended up with money near the end of their lives, but started their lives with no money. So I do remember noticing, you know, from my grandmother, for instance, like, judgments about kind of how much we had, or it was very strange to her around these things because it was something that she had talked about…

[00:17:17] I recorded my grandmother’s money stories about a year before she died. I interviewed with her. which I haven’t used yet. It’s a little, it’s a little too raw. But I do have this recording of her talking about how her dad kind of taught her that if the Queen of England comes in here, we’re Canadian, so, you know, there’s this kind of royalist tie.

[00:17:35] If the Queen of England comes in here, she’s no better than you and me. Like, we’re all the same. And it was very much this noble kind of thing of, like, we might be dirt poor, but she’s no better than us, which is a really good coping mechanism for being poor to still have pride, but it is that of having your head held high.

[00:17:54] Like you’re almost better than for being poor because you don’t need these trappings or these material things, right? You’re still able to, I don’t know, eke meaning out of life or, or get by. And so I see that if I think about my own family, the way some of those narratives have kind of trickled down of like feeling judged by my grandparents, because I, I wasn’t poor, but at the same time, this contradiction where my grandmother gave us kind of chunks of money at different times And something that I asked her at the end of these money interviews that I did was like why did you give us money?

[00:18:23] If you also had this experience of being able to find dignity within poverty. Why did you give us money when you didn’t have to and she was like, well, I didn’t want you to suffer like I suffered. So it’s this interesting thing where I think we can have pride in our suffering Right,suffering is pure, and that’s where we get into these pseudo-religious narratives, but it also sucks to be poor.

[00:18:45] And my grandmother when she no longer had to be poor, she was happy to make sure that we were also not poor. But yeah, and I’m thinking about that, you know, like this kind of,

[00:18:54] Purity narrative that we can have around suffering and being poor is good. And this is what I see in, in my students, and I’m sure you see this with the folks that you support as well, is like, if being poor is good, then having money is bad. Right? And there’s the flip side to that narrative.

[00:19:13] I’m curious how you see, or if you see, that showing up. This kind of guilt, and mistrust, almost like money is a gluttonous, greedy thing to even think about wanting. What do you notice about that?

[00:19:25] Khara: Absolutely. Well, in focusing on working with therapists, they say that 70 percent of us are avoidant with our money, which means we already have a bunch of negative beliefs about money. So right there with money is evil, corrupt, greedy, and not good, you can’t be trusted if you have money. One that’s come up more often is You’re a changed person when you have money.

[00:19:45] So it changes you and it’s not always a good chance of, hooray, the rags to riches story. Sometimes it’s now you’re corrupt. Now you’re, you don’t belong. And I was having this conversation with the therapist-client today where she’s like, Oh, my family of origin says we are noble and not poverty.

[00:20:01] And this is how we show up and how we survive. And we, you know, pull up our bootstraps and handle it. And then she also wants to make enough money to be generous, and to give back, and to fund different things that she feels have value and she’s like, but if I do that, if I make enough money, I’m going to be ostracized for my family, and I’m going to feel that grief and loss and estrangement because I’ve made too much money.

[00:20:22] So she’s sitting here going, I want this money, but I can’t have it at the risk of losing my family, which is such a common occurrence for a lot of us when we’re kind of going out of a class or going to the next SES. And we have family or friends or people in our lives who are like, Oh, I can’t trust you now, or you’re too good for us. Those kinds of messages. 

[00:20:40] Linzy: And I think whenever we leave behind a story that’s not serving us, we also either endanger relationships that are bound up in that story or sometimes we do lose relationships that are bound up in that story. And I think that’s a very painful part of growing as people, and of owning our needs.

[00:21:00] And especially as therapists, you know, being in this space and culture of self-sacrifice and noble poverty. And I remember experiencing these own things not with my own family, thankfully, but you know with friends you know who you can tell like they think you’ve gotten a little too big for your britches Is probably how my grandfather would say it you know, but there there is this endangerment that can happen, right, because you’re kind of rocking the boat, and some people hold these stories consciously or not very near and dear.

[00:21:27] Khara: The word homeostasis shows up as you said that I’m like, we just want to keep it the same how it always has been. So if someone gets. Some wealth or inherited wealth or we have this whole generation about to get wealth that’s inherited, but it comes at the loss of a family member. And so people are like, Oh, you’re so lucky you have money, but it’s not lucky at the loss of the person I love, that they’re no longer here for that to happen.

[00:21:49] And so financial therapists all over the world are getting ready to like to hold for that and help support people through the grief of my life has forever changed on so many levels. And it’s not all hearts and flowers just because I have money I didn’t have before.

[00:22:01] Linzy: Yeah, and that’s that, boomer-to-millennial transfer that’s coming, which I’m personally not looking forward to as a Millennial. 

[00:22:09] Khara: Most of us are, try not to think about it, but I think most of us also are like, what are we going to do when this happens? 

[00:22:14] Linzy: Yeah, that is a really interesting point about this cultural shift that’s coming where many people in their 30s and 40s who maybe have not had a lot of money might be coming into money as their parent’s generation starts to pass away, or as they lose their parents.

[00:22:29] So as you say, there’s this mixed piece there of your financial situation has changed, but at great, great personal cost. And then, yeah, whenever we have a big change in our life. You know, as I was saying, it does also change our relationships. It breaks that homeostasis, which can be painful, to have those relationships around you rocked or lost, as your life changes.

[00:22:52] So for people who are listening. Who might be thinking, okay, maybe I am living a little bit of the noble poverty life, who, who feels called out right now? What do you say to folks once they start to identify that this is a narrative that they’re living? What can they do now knowing this about one of the money stories that they’re carrying?

[00:23:12] Khara: Just having the language for it is so impactful for people to be like, I didn’t know that there were words that represented what I was experiencing. So I’ve seen that be very empowering just to have a phrase of some language to it. From there, I think it’s about getting curious about their current money story, and what they want to move towards.

[00:23:28] So we think about questions like, what do you want your future relationship with money to look like? Or one of the folks that people follow online says something like, imagine your rich life, right? So, thinking about what are we going towards, and then what are the steps that make that happen for so many of us, it’s, we have to do that healing work first that you named with grandma and like other people to be like, I need to know where my beliefs come from.

[00:23:51] Which ones are mine to hold and which ones do I need to leave behind gently? If this is my grandparents’ belief, this mom’s belief, this is my first boss’s belief, but it doesn’t have to be mine, but they’re so sneaky that we don’t even realize how many beliefs we have and how they’re impacting all of our decisions.

[00:24:07] So for most of us, it’s starting to look at those money beliefs and being like, which ones do I want to hold on to? And which ones are my truth versus I got to let that go? And that’s the work I love to do, honestly. 

[00:24:17] Linzy: They are sneaky, those beliefs. And something that I have started to see or come to more and more over the last few years of doing this work with therapists as well as it’s easy sometimes, too, to blame or have feelings about the stories of, Oh, this is my dad’s stuff. And once we can start to also have compassion for like, was this story true for them though?

[00:24:37] Or was it true for their parents that they were never able to discard their, their parents’ story?  You hear this, with folks, whose families come through holocausts or wars, right? Is there is this immense financial trauma that’s carried down to the next generation and then the next generation, right?

[00:24:53] There’s so much room for compassion for our family members, regardless of what our relationship is to them now, of, the horrible stories that people have carried and how there’s often trauma and loss around the stories that we carry that are not functional and then we can, you know, bless and release the ones that are not serving us.

[00:25:11] But there is, there is depth work to do there, right? Like a lot of the times, these stories are not, light and casual, right? They’re related to real suffering that our families have endured.

[00:25:21] Khara: I think that’s why so many of us like the money genogram, because then we can see those layers, right? Of grandparents to parents to children to grandchildren. And be like, what were the money stories? What were the money behaviors? Was there a debt? 

[00:25:32] Was there wealth? Was there a loss? I remember distinctly having a client who had four women in her family die or their partners died and left them in debt.

[00:25:42] And so she was like, I have to do this on my own, was her money… her money belief is I can’t rely on anyone. I’m going to be put into a financial crisis if I do, which is fascinating because she wanted to be an entrepreneurial therapist and private practice. And she’s like, why am I stuck on this?

[00:25:57] And we looked at her family tree and we’re like, you have no women role models. All of the women in your family had lost or become widows. And told you this is too risky. And once she had that, she was much more compassionate and gentle for her, not her, just herself, but her family members who went through a lot of horrible money stuff and loss. 

[00:26:14] Linzy: One that I’ve had to unpack for myself, speaking of kind of that line of women, is in my family there’s a pattern, and sometimes it was real and sometimes it was a narrative, of like, women have to carry it. So women are carrying it, and they’re the primary earners, and they’re the primary financial managers, but they’re also the primary parents, right?

[00:26:33] They’re kind of doing all of it, and sometimes it’s so interesting, I notice it coming up in my partnership, But even though it’s not true, right? It’s true to a certain extent because my partner also works for my business. Some of his earnings come from my business, but also he could turn around and get an amazing job tomorrow if he wanted to.

[00:26:46] Right. But I have noticed how that story tries to come up in these stubborn, stuck ways that don’t make sense. But I’ve just witnessed that in my family for so long and I’ve heard so many stories of, you know, like my great grandfather who just kind of, you know, became depressed and stopped working his forties, and my great grandma that had to earn and support them for the rest of their lives.

[00:27:08] Right? And so, it is incredible how these things could pop up even when we know about them, they can still stubbornly try to pop up, in all these ways that our brains and bodies, try to keep us safe with outdated information. 

[00:27:20] Khara: That’s right. It’s never boring.

[00:27:24] Linzy: So true, so true. So Khara, thank you so much for coming and, being on the podcast today, chatting about noble poverty. For folks who are interested in learning more about you, and getting further into your world, where can they find you?

[00:27:39] Khara: Yeah. Everything’s on my website. I know you, you and I talked offline. I’m like, there’s a lot there, so just give that disclaimer of lots of projects. But around Noble Poverty, we’re working to create some retreats and online groups for people to just really start to unpack that in safe, communal ways, to be like, I’m not alone.

[00:27:54] I’m not the only one with these thoughts, feelings, and behaviors. So everything about me on financial therapy is on my website.

[00:28:00] Linzy: And we will put the link to your website in the show notes. Thanks so much for coming on the podcast today, Khara.

[00:28:06] Khara: Thank you.

[00:28:22] Linzy: I So enjoyed this conversation with Khara today. It’s got my wheels turning around noble poverty. And if you enjoyed the conversation, if you’re curious about Khara, you should check her out. We had a chat after our conversation about some cool retreats that she’s running around noble poverty.

[00:28:38] She’s also done some leadership fatigue retreats, so she’s got lots of neat offers. So go check out her website to get further into her world. It’s always so nice to see other folks in the therapy space also focusing on finances because we know there’s lots to talk about and lots to unpack when it comes to finances.

[00:28:56] So thank you to Khara for coming on the podcast today. You can follow me on Instagram at MoneyNutsAndBolts, and if you are enjoying the podcast, please tell a colleague about it, even just one. Maybe it’s your office mate next door. Maybe it’s somebody you went to grad school with. Maybe it’s your friend who’s going to school to be a therapist right now.

[00:29:15] The more people who can be listening to these conversations, the more we can start to open up the silence around money, and start to change the way that we as therapists are socialized and conditioned around money. Thanks for joining me today.

[00:00:00] Linzy: Hello and welcome back to another feelings and finances episode of the money skills for therapists podcast. These are the episodes where I answer your questions, the lovely therapists and health practitioners and coaches and perhaps others as well who listen to the Money Skills for Therapists podcast.

[00:00:18] Today’s question is from Suzanne.

[00:00:20] Suzanne: Hi, Linzy. My name is Suzanne. I have a question about saving for taxes. I follow the Profit First program. And when I did my percentages, I set aside enough for taxes, and I have no problem saving. That’s not the issue. and I have no problem paying my taxes because I have the money set aside. The feelings that come into this though, is

[00:00:47] I suspect that I have too much money in my tax account, but I’m actually afraid to dip into it just in case I need it. And because I don’t really know how to do the math, I don’t know how to get the data to make this feeling of anxiety go away. When it comes down to the end of the year, when I can project how much taxes I’m going to pay… Because I don’t pay quarterly; I like to save all my money in a high interest savings account and make the most of it that I can.

[00:01:20] But when it comes time to project, I have a rough idea of how much I’m going to owe. But there’s always money coming in, so it never really gets to zero, so I never really know how much extra I have. And it would be nice to take that extra money and put it into RSPs if I can. But it just feels so overwhelming and confusing because I don’t know how to do the simple math.

[00:01:48] Can you help me figure out how to get past this anxiety of I don’t want to be caught without enough money for my taxes. Thanks.

[00:01:59] Linzy: Okay, Suzanne, this is a great question. I can also tell you’re Canadian because you made reference to RSPs. So you know, you’ve identified that there’s a strong emotional and mindset piece to this. Right? Like you’ve got a great system. It’s working. You know, the money’s there to pay. You know, you clearly have a rhythm around this, but there’s a fear or distrust that there’s enough being saved.

[00:02:20] And there’s a lack of clarity on what money is for this year, what money is for last year. So as you say, you pay your taxes, but then there’s money you’ve already been adding. So what is extra, you know, there’s like a blurriness here and an anxiety and a fear of getting in trouble, which creates quite a fog, I’m sure when it comes to this piece.

[00:02:38] First of all, I would encourage you to spend some time with the part of you, if you want to use parts language or, you know, insert your therapy modality and point of view here… This part of you that is afraid of getting in trouble or not having enough, right? Spending some time and being curious about that.

[00:02:55] Like, is it about getting in trouble for the government? I know I have a fear of getting in trouble, right? So it’s certainly common amongst therapists, but do you know where that comes from for you? Can you spend some time maybe uncoiling that a little bit? What is the fear of what’s going to happen?

[00:03:10] What’s the worst that could happen, right? Because what I’m hearing is based on the fact that you’re already saving so well, consistently, chances are, if there wasn’t enough money there, you’re going to be short by like 2,000 or 3,000, right? And this is something that I talk about a lot in my course, Money Sales for Therapists, is being able to be with the good enough, right?

[00:03:34] Getting to tax time and owing 20, 000 and having 0, that is a big problem, right? That puts us on a payment plan. That is painful. You know, there’s going to be like big feelings of failure and what am I going to do? Panic. But considering you’re already saving, the margin of error is going to be so much smaller for you.

[00:03:52] The possibility of owing a bunch is quite remote, really. So I am curious if first of all, you can get in touch with how well you’re doing and the reality that chances are you might only end up being a thousand or 2000 worst case scenario, three or 4, 000 short because you’ve made a ton more and you’ve crossed a tax bracket,

[00:04:12] but it sounds like you have systems in place that would allow you to make up that money pretty fast. Right? So, the first thing I want to do is encourage you to be with that fear and connect with how well you are actually doing, because you have a great system in place that is working. But that brings us to our second point, which is the lack of clarity on how well is it working, right?

[00:04:33] You’re doing all these great habits, but you don’t know how close you’re getting to the target, and how much money is left over, but it sounds like you do know there’s some money left over. So in order to get clarity on this, you need to spend time looking at what numbers were for this year, and what’s for last year.

[00:04:51] Right? So whenever we go to pay taxes, as you say, we’ve already put in, you know, money, if you’re paying just at tax time, you’re not paying quarterly… which by the way, you probably will have to start paying quarterly, based on your income at a certain point, the government will want their quarterly money from you.

[00:05:04] So this also might be something that changes within the next year or two. But when you go to pay taxes, you’ve already got, let’s say your taxes set aside for the first four months of the year. It’s April; it’s tax time. You’re paying, let’s say your 2023 taxes, but you’ve already got four months of 2024.

[00:05:21] So the way to clarify what is for this year and what it’s for last year would be stopping at that point in time, Suzanne, and calculating, okay. I know I’ve put my tax money from January to April. Take a look at a tax calculator online. I actually have a tax workshop that we can link in the show notes, which helps you figure out based on your projected revenue for the year, what is your income tax amount going to be?

[00:05:46] But then as self-employed people, we also have those additional taxes. So in Canada, we have to pay matching CPP, Canada pension plan. If you’ve opted into EI, you also have to pay matching CPP. You know, the employee EI and employer EI, chances are you’ve not opted into EI. Most folks don’t. So we do know that there’s that matching element as well.

[00:06:04] You have to pay your income tax, but you also have to pay double CPP. Those numbers are knowable. So I’m going to put a link in the show notes for my tax workshop, How to Save Enough for Taxes, which gives you, I think we have a workshop, and we have a booklet. So we’ll put both. If you’re more of a video person,

[00:06:19] you can check out the workshop. If you’re more of a reading person, we have a PDF that you can go through that helps you determine how much you should have actually set aside for this year. Because once you know how much you should set aside for this year, then you can see what’s extra, right? And you could do this right now for this point in time. You can look at from January to now, how much money have I earned? Based on my income tax rate and that double CPP, how much money needs to have been set aside for this year

[00:06:46] so far? What is the target that I should be hitting? And then how much extra is there? Cause I am hearing that you know that this money could do better jobs for you than sitting in this tax bank account. And I absolutely agree. Right? And so this is something that you can actually do right now. Take a look at your numbers. Grab one of the resources from the show notes for this episode so that you can look at what is your income tax percentage based on what you’re expecting to make this year?

[00:07:12] And considering at the time of this recording, we’re coming close to the end of the year, you’re going to have an idea of what you’ve made so far, and you can project forward how much more you would be expecting to make. So let’s say you see that you are going to make 70, 000 this year. After you pay your operating expenses, there’s going to be 70, 000 left in the business that’s for you.

[00:07:30] Then you can look at, using my tool or even just looking at an online calculator, what is the tax bracket for 70, 000? What are your federal taxes? What are your provincial taxes? They’re going to give you a number, and what you’re looking for is your effective tax rate. That’s the average between all the different tax brackets.

[00:07:46] There’s going to be a number which is your effective tax rate, and it’s probably going to be something like 18%. Right? Then you can look up CPP. This is all in my calculator. Look at CPP. You’re going to double that number. So there’s another couple of percentages you’ll add there, and then you’ll get a real number.

[00:08:01] Let’s say you end up with 22%. You look at what you’ve made so far this year, maybe it’s 50, 000. You take 50, 000 multiplied by 22%. That’s what should be in your tax account for this year. Anything above that is extra. Find a better job for it, right? It sounds like you know your RSPs need some money. So send it towards your RSPs. For our American listeners,

[00:08:22] that is a retirement saving plan. It’s a retirement vehicle in Canada, similar to a 401k or a SEP IRA in the United States. Send that money there, so it’s doing that higher job for you. It’s like going into investments. It’s compounding, it’s saving for your future. And then if the scarcity part of you is still scared, you can also choose to leave a couple extra thousand,

[00:08:42] but I would say get in touch with that part of you that knows that bigger picture. This money has a higher job, that you can trust yourself to make up for a little shortfall if there happens to be one, if you do the math wrong, and get to the point where you are clear. This money is for this year; the money that was left from last year has gone somewhere else. And then next year when it gets to tax time, you can do the same thing, see how much money is for that year, so that you know that anything else that’s left after taxes is extra, right?

[00:09:10] So I think that’s going to go a long way to giving you the clarity that you are looking for in your tax savings. So congratulations for the great system that you have. These two steps of getting more in touch with where that fear is coming from and getting this extra level of clarity, I think is really going to lock in your system, Suzanne.

[00:09:27] So great work. If you, like Suzanne, have a question for me, just click on the link in the show notes… The other link, not the taxes workshop link and the taxes PDF guide link. You can also check those out. But if you want to leave me a question, just click on the link for submitting a question.

[00:09:44] It’ll take you to the podcast page. Super simple, just press record, share your name, share some context if you want, and share your question. I would be happy to answer your question in a future episode of Feelings and Finances. Thanks so much for joining me today.

[00:00:00] Joanna: Make that commitment. I still track my numbers in the spreadsheet. I chose the spreadsheet from our course, and I still track it every day. It’s part of my biggest takeaway that’s most helpful for me. I’m dedicated and devoted to that. Now it’s being dedicated and devoted to a stable paycheck and lowering some of the operational expenses. 

[00:00:29] Linzy: Welcome to the Money Skills for Therapists 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 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 

[00:00:48] Therapists. Hello, and welcome back to the podcast today. I have a coaching episode with Joanna Barrett. Joanna is a therapist in private practice. She is a graduate of Money Skills for Therapists. And today we dig into something that I know many of us know very well in the private practice space, which is how you manage and tolerate these highs and lows, right?

[00:01:12] Like you have that high month in your practice where you feel like I have so much money. I can buy whatever I want. I’m rich. And then you have a low month where there isn’t enough money. And Joanna shares how she’s really kind of riding this roller coaster emotionally, and also financially. So today we dig into how to create evenness.

[00:01:32] In this case, Joanna and I talk about implementing some of the things from the end of Money Skills for Therapists. She took Money Skills for Therapists when her practice was just brand, brand new and there wasn’t a lot of money. So we talk about how she’s implemented certain parts of her systems and put certain foundations in place, but this budgeting piece is what we get into today.

[00:01:49] How to identify the numbers that her business can already give her and pay her… Getting her tax numbers set up well, looking at what’s possible in her practice now. I’m a big fan of looking at your numbers today and zooming out, like getting out of those ups and downs and understanding what can your private practice do for you now?

[00:02:09] Now, what numbers are possible with the way that things are now, and Joanna and I get into that today, as well as some of the practicalities of how to start to create that evenness and start to look at places where she can be spending less so that more money goes home to her. So this episode today is all about evenness.

[00:02:27] If you feel like you’re on an emotional roller coaster, and a financial rollercoaster, with your business, the things that we dig into today are going to help you start to think about how to create more stability. And I will say today, too, our podcast is on YouTube. And if you are a podcast listener, this would actually be a great podcast to watch on YouTube because we are going to pull up a spreadsheet.

[00:02:50] We’re going to look at a Profit First calculator together, look at Joanna’s numbers together, on that spreadsheet You’re still going to be able to get everything you need from listening, but sometimes it might not be as clear as if you had it in front of you. So, you know, if you’re cooking dinner right now and you’re listening on your phone, if you pull up and watch this on your computer, instead of on YouTube, you’ll also be able to see the numbers that Joanna and I are talking about.

[00:03:11] Here is my coaching conversation with Joanna Barrett.

[00:03:30] Linzy: So Joanna, welcome to the podcast.

[00:03:33] Joanna: Thank you, Linzy. I’m excited to be here.

[00:03:35] Linzy: I’m excited to have you here. So we were just saying off the mic before we started that it’s been about a year since you were in Money Skills for Therapists, which doesn’t feel like that long for some reason. I don’t know why, but it is lovely to see you again and to dig into what has come up recently.

[00:03:51] So Joanna, what did you want to get into today in our time together?

[00:03:56] Joanna: What comes up for me… yes, it’s been a year since I completed Money Skills for Therapists, and I’ve stayed connected with you and your work and your offerings. And so maybe that’s why it doesn’t feel as long. The challenges still in some ways are the fluctuating income that I have in my private practice and how to navigate, you know, when we have slower months, or I have busier months.

[00:04:26] And, you know, I still have the same expenses or additional expenses and spending. So that’s still something that I’m grappling with and I would love some help. 

[00:04:37] Linzy: Absolutely. Okay. So, tell me about what is challenging about that. What do you notice is happening during those high months and those low months? 

[00:04:46] Joanna: During the high months, I definitely get excited and I am thrilled that the revenue, the income is, is high, is good. And I might be spending more during those months. And then on the low months, I still have the same amount of expenses or I might have something that comes up that’s unexpected in my personal life, like getting my car fixed that was unexpected. So it’s how to navigate that when I still don’t have much of a safety net.

[00:05:21] Linzy: Yes, when you say how to navigate it, do you mean kind of like how to navigate the actual money, like how to manage the money or is it the emotional piece, too?

[00:05:31] Joanna: Oh, definitely both. Aren’t they tied together?

[00:05:35] Linzy: They are. Always, always, always. Okay. So let’s start by talking about the practical piece first, like managing the money.

[00:05:42] So partially what I’m hearing is what happens during those high months is there’s like this excitement, this like, I don’t know what the story is for you. The kind of joking story that I have is like, I’m rich, like, ah, and then there’s probably more spending that’s happening. Is it spending that’s happening in your business or spending that’s happening at home? 

[00:05:59] Joanna: Both. 

[00:06:00] Linzy: Okay. Yeah. And I am curious, Joanna, like, what do you find you end up spending on during those high months?

[00:06:07] Joanna: Oh, it might be office supplies that maybe I need, maybe I don’t, but I want. It might be training or something to advance my education. That I’m like, oh, I now have the money. I can spend on a particular course, or in my personal life, it might be shopping, just buying a new clothing item or a purse, or saying, yes, we can go on a vacation.

[00:06:37] Linzy: Okay. And so I’m curious, like, how are you paying yourself right now? Like what is your system for taking money out of the business? Yes.

[00:06:52] Joanna: I love the theory of profit first. And I learned that through the course last year and I have been putting everything into the percentages, into the, you know, the formulas, I’m not actually doing. 

[00:07:09] Linzy: You’re not doing it. Okay. 

[00:07:12] Joanna: So I pay myself, in terms of, okay, let’s pay off the credit card so that there’s no debt on my business credit card.

[00:07:21] Make sure that’s all taken care of. And then whatever is kind of left at that time, I can pay myself and I write myself a check and put it into my personal account.

[00:07:33] Linzy: Okay. You’re hurting my heart just a little bit…

[00:07:36] Joanna: I know. That’s why I’m here. 

[00:07:40] Linzy: Yes. Yes. Because, as you mentioned, like Profit First. So you’ve got profit first buckets set up then, like you have the different accounts set up. Okay. And that credit card you’re paying from your operating expense account.

[00:07:52] Okay. But then I’m hearing the money that’s left, you’re taking it. So then are you taking it out of all the different buckets to pay yourself? Tell me what that looks like.

[00:08:00] Joanna: Yeah. Because I’m not actually saving for retirement. I’m not actually saving for my business. Mostly I think because. I just don’t have money coming in and also to cover the personal expenses.

[00:08:22] Linzy: That’s it. Yeah, like when there is this, it’s almost like home can become… It’s like a bit of a vortex where there’s like, like so much need for money at home. That what I’m hearing is though, even though you’ve set up systems and you probably know what you’re supposed to be doing with those systems and you’ve had a plan, you’re not sticking to that plan because the need for money at home is so great that you’re just pulling the money out and sending it all home.

[00:08:45] So that makes me curious, too, is there tax money that you’re setting aside?

[00:08:49] Joanna: Yes,

[00:08:50] Linzy: Okay. So tell me, tell me about your tax system.

[00:08:54] Joanna: So I am definitely setting my estimated taxes aside. I am paying them. I make sure I have money for that.

[00:09:00]  Linzy: Beautiful, so I’m curious, what allows you to do that? Why are you able to save for taxes?

Joanna: I think it’s because it’s a value of mine that is important. It’s something I have to do. I don’t want a penalty. I don’t want to not be able to pay or to have to pay more at the end of the year. I’d rather do it in smaller increments.

[00:09:24] Linzy: Okay. Yes. And what is that value?

[00:09:28] Joanna: Doing the right thing, or the moral code of society.

[00:09:32] Linzy: Okay. Okay. So because there’s this larger, you know, societal force there of like paying your taxes as the right thing, you’re able to uphold that part of your system.

[00:09:44] Joanna: Yes.

[00:09:45] Linzy: Okay. So thinking then about the other parts of your system, I mean, there’s a couple of things that are coming to mind for me.

[00:09:53] One is, I am curious. about those highs and lows, and what the average is, right? Because I’m hearing emotionally what you’re experiencing is that high, the big month, the like, Oh, I get to buy all the stuff that I’ve wanted that I can’t get. But then there’s like the low month, the next month. And I am curious, Joanna, do you know, let’s say from a six-month perspective, looking back on the last six months, what is the average between those numbers?

[00:10:19] Like what is your average revenue and your practice?

[00:10:22] Joanna: Average, I mean, the basic average month is probably, I’m bringing in from private pay clients maybe 8,000s.

[00:10:32] Linzy: Okay. That’s the average. So some months then might be like 10 and some might be six just to give easy numbers, but like it settles out at eight. Okay. And at 8, 000, how much are you setting aside for operating expenses? What’s your operating expenses percentage?

[00:10:48] Joanna: It varies. It has varied a lot in the last year. And, I try to keep it around 30%, but you know, if I purchase training, or an extra course, I’m way above that.

[00:11:10] Linzy: Okay. Okay. I want to pull up a Profit First calculator and look at it with you. Do you have a profit first calculator, Joanna?

[00:11:19] Joanna: Yes. I have the spreadsheet from the course that I use.

[00:11:24] Linzy: Do you have that set up with the numbers as you use them or should we do a fresh one?

[00:11:29] Joanna: Could we do a fresh One? 

[00:11:30] Linzy: I think a fresh one is a good idea. So, To zoom out on your numbers then, Joanna, let’s take a look at them from the zoomed-out perspective because part of what I’m hearing is it’s like, you’re really riding this roller coaster emotionally, right? It’s like the high months are high. You feel all the good feelings, and like feel like you have all the extra money.

[00:11:49] The low months are low where there isn’t enough, right? Let’s zoom out with this, this average number that you’ve identified to see on average what your numbers can do for you. Right. Cause this is, I think the first thing that we want to look at is like, what is your practice able to do for you in your life right now?

[00:12:07] So the tool here, we’ve got like just the standard average percentages with profit first, the starter percentages, and I’ve put your 8, 000 in the top. Operating expenses, Joanna. What do you need to see in this line? This is the operating expense. What number do you need to see to pay for just your normal monthly operating expenses?

[00:12:29] Joanna: Usually around 3, 000. So close to the, yeah, close to the 30%, but a little bit higher

[00:12:35] Linzy: Okay, so I’m just gonna play that a little bit 38%? 3, 040? 3, 040? Yeah. Okay. Okay. Now looking at our other numbers here, then your taxes, how much are you needing to set aside for those quarterly estimates that you’re making?

[00:12:54] Joanna: So in my Profit First for taxes, I’m setting aside 24%.

[00:12:59] Linzy: Okay. 

[00:13:00] Joanna: Which is through one of the calculators that I saw for state and federal for my tax bracket. So 24 percent is your tax percentage. Have you lowered that number yet to fit it into profit first? I have kept it at 24 percent Profit.

[00:13:18] Linzy: First, Tell me about that. Is that a choice that you’ve made to make it higher?

[00:13:22] Joanna: I’m not really sure. I thought it was just, that was the number I was supposed to be doing. 

[00:13:27] Linzy: I have good news for you. That number is too high.so the, 24 percent like this is in module five of the course. So you can, you can go back and spend some time with these videos, you know, after our conversation today. But the 24%, like if that’s the average tax rate that you have to pay, does that also include your self-employment tax portion, Joanna?

[00:13:49] Joanna: Yes, believe so.

[00:13:51] Linzy: Yeah. And there’s also the calculator in the course that like shows you your, helps you look at, your tax rate and your self-employment tax. But let’s say 24 percent is the total number for you that you need to be setting aside. You only need to set aside income tax on your income and your income is what’s left after your expenses, right? So you don’t have to set aside 24 percent of everything. You only need to set aside 24 percent of what’s left after operating expenses. 

[00:14:18]   Joanna: Mind blown. You know, I had heard that I think I knew that, and it didn’t really click.

[00:14:23] Linzy: Yes. Yes. Okay. So we are tuning up your system right now, right? You’ve got a system in place, but what I’m hearing now and what I’m understanding is you’re prioritizing taxes too much, which is good. You have this strong, moral sense of paying taxes. So this part of your system has really been working.

[00:14:40] But right now the way that your numbers are set up is you’re putting too much towards taxes, which means there’s not enough for you. So to get your tax number, I’m just going to take the number 100. I’ve just got it on my calculator here. I’m going to subtract 38, which is what you’re spending on operating expenses, which leaves me the number 62 because 62 percent of what comes in the door, Joanna, is what actually goes to you.

[00:15:01] Not a hundred percent goes to you, that’d be nice, but it’s actually 62%. So I’m going to take the number 62 and I’m gonna multiply that by 0.24. 24%, which brings your tax percentage here down to 15%. So now we have another 8% here to play with right away.

[00:15:20] Joanna: That’s great because I could really use that money in my personal life.

[00:15:23] Linzy: I think you could. Okay. So looking at this, we’ve got our OPEX at 38 percent and folks who are listening to the podcast, this is a great time to check out the podcast on YouTube because it’s definitely easier if you can see it.

[00:15:34] So we’ve got 38 percent then going towards your operating expenses, 15 percent towards taxes. Now that we’ve adjusted your tax number. And so now we have this extra…we’re at one Oh eight. So let me just bring this down a little. The profit number, Joanna, does the concept of profit resonate with you? Like, do you like having that extra money, or right now I think you’re just taking everything, right?

[00:15:54] Joanna: I’m getting close to everything. I like to keep a little bit in case there is something, but typically my profit is. It’s close to very little.

[00:16:07] Linzy: Do you want to make it like one percent?

[00:16:09] Joanna: Yeah.

[00:16:10] Linzy: One percent. Okay. So then we, unfortunately, we’re still over. So I’m going to show you what the numbers look like right now. And the numbers right now, if I bring us back down to a hundred, is 3, 680 is available to go home to you as your cash paycheck on average.

[00:16:27] How does that number land with you?

[00:16:30] Joanna: That, I wish, I mean, I wish it was higher, however, that would cover the expenses like my rent, utilities, and the basics.

[00:16:43] Linzy: Because this is helpful for you to see now. So there are a couple of pieces here that we’re doing that have come up at the same time. One is when we put in your average number, your average of 8, 000, you know, between the highs and lows, does actually give you enough money right now to pay for your basic life.

[00:17:00] Right. But what it would be doing is like, and what I’m going to really encourage you to do is implement that paycheck system that we teach in the course to give you that evenness. Thanks. Right? So it’s like, so you’re not going to have the highs of like, I have so much money. I can buy whatever I want, but you’re also not going to have the lows of like My business is failing, right?

[00:17:19] I’m not where I need to be. And that number right now that the business could give you with your percentages as they are would be about 3, 680, let’s say 3, 600 a month. You could pay yourself that every month on the months when you make more in the business. You would still only take 3, 600 total as your cash paycheck, and on the months where you make less, you’re going to be able to pull from that little bit of a buffer that is starting to build from your higher months to still pay yourself like 3, 600.

[00:17:47] How does that sit with you?

[00:17:49] Joanna: I like the idea of it and the practicality is that I might not do it, right? That there might be times when I need more money in my personal life.

[00:18:04] Linzy: Okay. So one curiosity that I have here, too, looking at these numbers is this operating expense number, right at 38%. I’m curious, what is going into this, this number, this 3, 000.

[00:18:18] Joanna: So I’m spending I think I have some money leaks that I need to clean up I’ve been thinking about that over the last couple of months about what is not serving me that I’m spending Monthly on

[00:18:33] Linzy: Great. I’m glad you’re thinking about that. And what have you identified so far or what do you suspect might be able to go?

[00:18:41] Joanna: So I have an online fax that I subscribe to so that I have a fax number, but I never receive faxes. I never send faxes. I don’t accept insurance and therefore they, never send anything. I really don’t think I it. That would be like 14 dollars.

[00:19:00] Linzy: Okay. There are 14 dollars there. Yeah. What else have you identified or are you contemplating that you might not need?

[00:19:07] Joanna: I am on four directory sites. So, the therapist directory sites are online, and there are a couple of them that I haven’t received referrals from. 

[00:19:22] Linzy: Okay. Okay. You’re not at all seeing a return on your investment?

[00:19:26] Joanna: Correct

[00:19:26] Linzy: Yeah. Okay. And how much would those sites be if you took, like, just walked away from those two directories? Okay.

[00:19:33] Joanna: So one is thirty dollars and the other one, I think it’s more expensive, I think is close to sixty dollars.

[00:19:46] Linzy: And anything else that you’ve identified? What are your big things? Because these are, these are things that will add up, but they are smaller. What are the big things you’re spending money on?

[00:19:57] Joanna: am spending money on things or, so I have an obsession with office supplies Okay. Yes. Things for my office. 

[00:20:09] Linzy: Okay. 

[00:20:10] Joanna: So things that I purchase, online or at the store that I could use in my office space and that cost varies month to month and then also spending on training or courses.

[00:20:27] Linzy: Yes. And how much are you spending on courses?

[00:20:31] Joanna: Well, I just several months ago signed up for something that really matters to me and will really advance my career. 

[00:20:40] Linzy: Okay. 

[00:20:41] Joanna: But that being said, it’s pretty expensive. In my eyes, the actual training for a week-long is, I think, two, 3, 000 plus flight and a hotel for one night cause, and you know, it… So it’s turned into like 5,000… 

[00:21:04] Linzy: Okay. So there’s that like 5, 000 investment. Has that money gone out yet? Some of it? Or is some of it still coming?

[00:21:11] Joanna: Some of it has gone out. I’m doing a payment plan. So, you know, some of it has come out, the plane tickets have been purchased. The hotel has not been charged.

[00:21:22] Linzy: Okay. Okay. So, how much is that payment plan for a month?

[00:21:26] Joanna: I think it’s 850, around there. 

[00:21:28] Linzy: Okay. So that’s a big portion then of this 3,000 would be like, you know, a monthly investment like that. And like this course is an example, but just continuing education, right? Like 850 a month. Just to give us some perspective here, Joanna, as we’re thinking about what you want expenses to look like in the future, these things like between what you just listed off and this training, this is just under 1,000.

[00:21:54] of stuff per month, right? That is going into the business. Now, I’m definitely not saying that you shouldn’t do professional education. As somebody who teaches business courses, I think they’re very valuable. But it’s thinking about what is your… We can use different words here, what is your budget?

[00:22:11] What is your pacing? Even like what is your capacity to actually take in the benefits of these trainings and actually implement what you are being taught, right? So that it is benefiting your business. I think a limit around this could be really important because this is a big portion. That itself is almost a third of your monthly operating expenses. How does that land with you?

[00:22:37] Joanna: It makes a lot of sense, and some things that I haven’t thought about is really, what is my budget for training or courses? Because I love, I love all that and so, when I started my private practice, I told myself I would take one training a year,  one retreat a year, more, you know, so maybe it doesn’t have like the CEU component.

[00:23:05] Maybe it’s more for self-care… And one vacation in my personal life a year, but I never said how much I would be spending max.

[00:23:16] Linzy: And those numbers could vary wildly, right? Because like training could be anywhere from 100 bucks to 10,000 bucks, right? 

[00:23:24] Joanna: Exactly. 

[00:23:25] Linzy: That’s something for us to think about as we’re thinking about this, because just to start to give you a sense of what’s possible with your numbers as they are right now, even if you didn’t get more clients, which I think you’re going to do, but with this 8,000 average.

[00:23:38] Let’s just say you could bring down your expenses to like 2, 500 a month, right? That would bring our expenses down to more of the 30 percent operating expenses. It brings up your taxes a little bit, right? Because now that means more money is going home to you. Which is good. Which is a good problem.

[00:23:55] So if I do 70, your tax rate, I think it was 24%. We would bring up your taxes just a little bit to meet that. But it still means that there’s this extra 6 percent to go into your salary. Again, folks listening to the podcast, it’s a great time to check us out on YouTube. We’re just playing with numbers to see where we land.

[00:24:13] So if I add another 6 percent here. Now, it’s 4, 000 a month that you can pay yourself by bringing down your operating expenses. How does 4, 160 land with you as a monthly paycheck?

[00:24:27] Joanna: That excites me more.

[00:24:29] Linzy: Okay. Yeah. What do you notice? Like, tell me about that excitement.

[00:24:33] Joanna: Well, that I could use that money in my personal life more, for things that are requirements and needs, and everything has gotten more expensive in recent time, from groceries to gas to, really everything.  I would like to have more of a cushion and be able to… I have some personal debt on a credit card.

[00:25:03] I’d be able to pay more towards that too and pay that off.

[00:25:06] Linzy: Like what I’m hearing is right now in your business and your personal life, there’s still this kind of feast and famine roller coaster that you are riding, right? Which emotionally has its impacts, but also financially has its impacts, right? So it’s like if the money is gone each month, then it’s like the next month you’re basically starting over with trying to make enough money to cover your needs.

[00:25:30] Right. And that might happen. You might have a great busy month where all your clients are around and everybody wants to do weekly sessions, or you might have a month where like a bunch of your clients are on vacation or a bunch of folks graduate at the same time or drop off and then suddenly it’s like, you’re poor that month.

[00:25:46] Right, when you were wealthy the month before. What these numbers are showing us is that we’ve had 8, 000 average, you know, between those highs and lows, that 8, 000 revenue that is the middle, your business can pay you, let’s say for a very simple, easy number, 4, 000 a month, right? And you can have those operating expenses.

[00:26:06] These are a little bit lower. So this would be you starting to think about: what is my budget for training in the year? Right? Like, what are my base expenses? What are the fun extra things? But having some boundaries around those things, like the word boundaries because that’s a word therapists understand.

[00:26:23] But like this, what I’m seeing here is your business, even as it is right now, would be able to give you a number that excites you on a monthly basis.

[00:26:35] Joanna: Yes. It would. 

[00:26:36] Linzy: Yeah, and the other piece here, Joanna, that you might also have a little bit of breathing room that you can now dig into is your taxes. 

[00:26:44] So what you can do now is now knowing that that 24%, which it’s funny, like sometimes we have to hear something a few times before it’s like, Oh, okay.

[00:26:52] And this is, I think what just happened today with us with taxes. It’s like now that it’s clicked that that 24 percent is only on what you make, right? So the money you’ve spent in the business, you don’t have to pay 24 percent taxes on that. That money’s gone. I encourage you to take a look at what you’ve made this year, right?

[00:27:08] Like what has been left for you? Income, revenue coming into the business minus expenses, what has been left? And then apply the 24 percent to that number and see, have you overpaid taxes? Have you over-saved taxes? Is there some extra money there? Could you take a breath on taxes and make your next installment?

[00:27:26] lower? It also is possible that there is money there that really should have been going home to you that instead was going to taxes. But what I’m hearing is you need it at home.

[00:27:37] Joanna: Yeah, personal life and, just because of, you know, you got to live and

[00:27:44] Linzy: Yeah, of course. Yes. The next piece about this, Joanna, is implementation. Because you have a Profit First system set up. Right? In the course, I also teach about making, and paying yourself that regular paycheck, right? So it’s like not just having the salary bucket, but also you pay yourself that same amount every month.

[00:28:04] So as we talked about a little bit earlier, those buffers build up, the high months there’ll be money left, but then the next month you can still pay yourself that exact same amount, right? Something has been in the way of you implementing that system. So I’m curious, what was in the way? Is it still in the way?

[00:28:22] of being able to actually stick to Profit First and stick to paying yourself the same amount every month?

[00:28:28] Joanna: I think what was in the way was the fluctuations and the uncertainty of how to deal with that. And for a few things that got more expensive in my personal life, and I needed more money. So I took more money. However, now I think it’s a little clearer to me about what I actually need to do to implement that. 

[00:28:52] Joanna: And not fluctuate all the time. I need that stability. The structure and the stability work really well for me. 

[00:29:01] Linzy: Yes, and it does for most people. Most of us, even if we might love the highs, we don’t love the lows, right? The price that we pay for like one month feeling like you’re, you know, a millionaire. The price you pay the next month for feeling like, Oh shit, I shouldn’t have done that.

[00:29:17] Where am I going to get this money from? How am I going to pay this bill? That’s not worth it, right? Like the cost is too high. So like this evenness piece from a systems perspective, you know, I’m going to encourage you to go back to module five. Cause the other thing is you work through the course, at the very, very beginning of your practice, right?

[00:29:36] And like, for folks who take money skills for a therapist at the very beginning of their practice, sometimes it’s like you’re kind of making a plan, but it’s not real yet because you don’t really have the money coming in yet to go to different buckets, right? And so you now do, right? You’ve kind of gotten to that place where now you can really implement.

[00:29:53] And so I’m going to encourage you to go back to module five and look at it with that like, okay, the money is there now. It’s not totally even yet, but it almost never is in private practice. We’re always going to have some fluctuation, but recommitting to some of these systems and strategies. What will allow you to put these things in place, like to give yourself this stability? What do you need to do this?

[00:30:18] Joanna: I think definitely going back to module five, to refresh everything. Yeah. Yeah. And. Make that commitment. I still track my numbers in the spreadsheet. I chose the spreadsheet from our course, and I still track it every day. It’s, it’s part of my, you know, biggest takeaway that’s most helpful for me.

[00:30:41] And so I think, you know, I’m dedicated and devoted to that. Now it’s being dedicated and devoted to a stable paycheck and lowering some of the op-ex. 

[00:30:52] Linzy: Yes. You’ve built that foundation. And when I think about financial skills, first, I think about that emotional piece of committing, starting to get to know your stories, being able to be with what’s happening with you. Next, like the practical piece is tracking, just keeping some order around things and you’ve got that, right?

[00:31:11] So this is the next level. You’re just, you’re adding the next level on your, Private practice building, we’ll see, pyramid, which is budgeting. You’re at the budgeting phase, right, which before you didn’t really have money to budget. Now you do, right, and now kind of some of these theory things that we’ve chatted about in the course of these highs and lows, you actually get to now implement this.

[00:31:31] System, right? And like, I’m going to encourage you to take some time to think about that professional development budget, like what, for your operating expenses, how can you bring them down? Like, what do you really need to operate each month? What are those extra things? And then like, if we again, spell that out over the whole year, it’s like, okay, if you want to do 3, 000 in training.

[00:31:53] In the year, right? Let’s say that’s your budget. Or should it be higher than that? Because you like to do fun stuff. What should your training budget be? What is a number that would feel good?

[00:32:03] Joanna: Oh, that would be endless. I mean, my ideal would just be to do training and course retreats. And not work. Like a professional student. If I won the lottery, that’s what I would do.

[00:32:18] Linzy: Okay, in this version of your life, what is a number that would give you what you want and need in terms of those professional development experiences, but still leave money for your life?

[00:32:30] Joanna: I mean, ideally I would have more money to spend on it, but realistically, definitely scaling back and also doing things that are either online or local, because I realized the travel expenses. For, the program I’m doing later in the year is very expensive. And that was actually something I didn’t think about when I initially purchased something across the country.

[00:33:01] Linzy: Yeah. Yeah. So just to play with the number. 4, 000? 5, 000? For the 

[00:33:09] Joanna: I would like 5,000.

[00:33:11] Linzy: Well, let’s just use five as an example because I’m going to just get you thinking about how to engineer this into your Profit First system. So for 5, 000 a year of professional development, which would include flights and hotels, by the way, it would be 416 a month.

[00:33:26] Let’s say 417. So it’s like every month when you think about your base operating expenses, whatever that number is, let’s say that’s like 1, 500, you would add another 417. Let’s say 420. We’re just gonna make it super simple. 420 a month also gets added to the number that you want to get into your operating expenses each month so that when you have these training opportunities come along, you’ve already been building this professional development buffer, right?

[00:33:48] Like the money is building up and it’s there. So yeah, it’s like that 420 a month gets you to the 5,000 a year of training. But that’s how we kind of, again, make that just an even regular part of how you’re thinking about your money each month.

[00:34:04] Joanna: Yeah, I like that because it is much more predictable and stable, and then I don’t have the emotional piece of highs and lows and also worrying so much about where the money is coming from. Do I have it? And do I have enough this month? What do I need to do? Shuffling money between accounts to make it work.It takes up so much time and energy in my life.

[00:34:28] Linzy: It does. Yeah. And like, I mean, from a business growth perspective, that is time and energy you could be using doing like a couple of key networking meetings that are going to like, get you a bunch more clients or like, yeah, arranging a group somewhere that’s going to like to get your name known and get you some more clients.

[00:34:43] So yeah, that energy is much better served actually taking care of your business. So

[00:34:49] Joanna: Absolutely.

[00:34:50] Linzy: Joanna, coming to the end of our conversation today, what are your next steps?

[00:34:57] Joanna: The next steps are definitely to look at my Profit First spreadsheet and adjust some of those percentages. Also, go through my spreadsheet from the course that I’ve been, you know, really tracking expenses and look to see where the money leaks are and actually take care of those and see where else, maybe even see how much I’m really spending on things like office supplies.

[00:35:27] Linzy: Yeah. Yes. That’s another spot where boundaries probably come into play.

[00:35:31] Joanna: Yes.

[00:35:32] Linzy: Okay. Okay. So yes, spending some time spending with, and I find it like doing a simple somatic check of going through and looking at each thing that you’ve spent and noticing. Does that feel like, Oh, I love that thing? Or does it feel like, Oh, yeah, that wasn’t really worth it?

[00:35:45] Or like, Oh, I actually realized when I got back to my office that I had 10 more of those already. You know, that kind of simple somatic check can be a way to start to see where there are opportunities to set more boundaries. But yeah, what I’m hearing right now is like, your business has really been prioritizing taxes.

[00:36:01] You’ve been prioritizing office supplies, but it’s time to prioritize your household needs and your own life.

[00:36:09] Joanna: Yes, and one thing that I have really been thinking about is I am the CEO of my business and my personal life, and I wear all the hats and I love it. I love taking on those roles and learning about them. So this has been really helpful because the educational piece is very, very important. Much valued, and it’s important.

[00:36:36] Linzy: Joanna, can you tell me a little bit about your experience in the course, in Money Skills?

[00:36:41] Joanna: Yeah. So I did it at the start of my private practice, and I really learned so much. I learned everything I needed to know to be successful in this realm. I had done other courses, not necessarily financial ones, but other types of courses for my private practice, and Money Skills for Therapists was the most impactful.

[00:37:05] The takeaways, the, how the course is set up, the support, the accountability partner, and the community. Everything about it really resonated with me, and it had the greatest impact on my business. And still like a year later, since I finished the course. This is the one that I recommend to people the most.

[00:37:29] Linzy: Oh, I’m like, so glad to hear that, Joanna. And like what I’m so excited about now is now that we’ve had this conversation again today… Now you’re getting to apply those last pieces of the course, that highest level stuff to create that evenness and like have money going where you really want it to go.

[00:37:45] Joanna: Now you’re at that level. So I’m hearing like already, the earlier stuff has been so impactful, what you’ve implemented. And now you’re going to get even more, which makes me so, so, so excited for you to feel that final level of like, ah… That stability that you’re about to create in the business. Yeah. I’m so grateful. I mean, this course has set me up for success, and continued success even after the six months had been completed, the initial six months. So it, it’s the course that, you know, has really, really changed my life. So thank

[00:38:22] Linzy: Yeah, you are so welcome. Thank you so much, Joanna. And thank you, too, for coming on the podcast today, and letting us have this next-level conversation.

[00:38:29] Joanna: Yes. Thanks so much. 

[00:38:46] Linzy: In my conversation with Joanna, something that sticks out to me is how we can come so far and make so many gains. And she talked about all the great things that she’s already put in place, right? And like the tracking that she’s already doing., we were chatting a little bit after this recording, too, but how she has kept up the idea of money time and an accountability buddy, which I also, she also got from Money Skills for Therapists, of just having that regular time with her money.

[00:39:10] But there’s this next level now of creating that stability, that evenness, this paycheck system and really actually adhering to a Profit First system that is going to give her that much more clarity and relief. Right. So it’s kind of like we solve problems, and then there’s a new one that presents itself.

[00:39:26] So before where maybe she would have felt completely overwhelmed because she had no idea what was happening with her numbers, now she knows what’s happening with her numbers, but she hadn’t created boundaries yet to create any evenness. Now she’s going to go back, take a look at her numbers, see where she can tweak them to make them go where they need to go and create that evenness, like using her Profit First system as she’s already set it up, just using the system that she’s created and also starting to take that regular paycheck to give her that stability, and she’s going to have that much more.

[00:39:53] Relief. So it just makes me think, too, about how, like as humans, there are many, many levels to our struggling and suffering and pain and like we resolve something, and then we have like the next thing that we get to solve and improve. And Joanna’s very much at that place. She’s now going to be able to create that evenness for herself that she hadn’t put in place yet, but she’s actually got all the lessons and tools and money skills for therapists.

[00:40:13] So she’s going to be diving back into those things and implementing them now that they make sense. And now that it is, the most pressing problem on her plate. So I’m very excited for Joanna to create this evenness in her life. I think we all, we all benefit from that. You can follow me on Instagram at money, nuts, and bolts.

[00:40:33] And if you’re enjoying this podcast, I would so appreciate it if you could tell your colleagues, tell your friends, tell your officemate down the hall about the podcast. We’re having conversations here that are pretty specific. We have a very specific niche of humans that we are talking to here. And it’s so nice to have people who live in this space, being helpers and healers and therapists who are sensitive humans who want to take care of everybody else…

[00:41:00] Having these conversations about money and what it means and how we create evenness in systems that are aligned with our values. This is a very specific little world we’ve created. So if you know somebody else who would enjoy listening to these conversations, and being part of this world, I would so appreciate it if you would let them know about them, and give them a chance to check out the podcast.

[00:41:17] Thank you so much for joining me today.

[00:00:00] Linzy: Hello and welcome back to another Feelings and Finances episode of the Money Skills for Therapists podcast. These are our short and sweet episodes that come out on Fridays where I answer your questions, the listeners of the Money Skills for Therapists podcast. And today’s question is from Sabra.

[00:00:17] Sabra: Hi Linzy, I have not taken your Money Skills for Therapists course.However, I have done a brief phone consultation with you, and I appreciated your feedback to me, which was that maybe it’s not the course for me right now, or at that time. It was about six months to twelve months ago, but I have been listening to your podcast since then, and I really enjoy them.

[00:00:40] So thank you so much for providing that content. I’ve also shared it with a lot of therapists that I see in my practice who struggle with money with their practice. So huge resource for our community here in Hawaii, and I appreciate it. My question today…

[00:00:54] What I’m noticing here is a lot of people are trending towards simple practice as their EHR management system, as well as billing system. I currently use a different EHR. It’s called Tebra. Not super stoked on it at all. It’s also very pricey. But I also use a medical biller. She does my credentialing and revenue cycle management as well, which is really helpful to know my numbers.

[00:01:17] And I don’t actually have to put them together. She does and sends me a report of everything that’s happened with myself and my four providers in the practice. So that’s lovely.But I pay her separately for billing. So she offers sort of like two different billable services, and they’re billed differently.

[00:01:33] I guess one of my questions is like, as people tell me how great Simple Practice is, and it’s so cheap, and that’s really the route I should go. And I mean, like all my colleagues… How do I know how much I should be spending for a group practice on something like EHR and billing? Like, I don’t know if that’s like a generalized question that can be answered, like per, you know, how many clients we see as a practice or per how many providers there are in the practice.

[00:01:58] So for example, I have four providers, but all of them really have like a a 10 to 15 person a week panel, so they’re not full time, but I’m really wondering, like, am I paying too much? How do I know if I’m paying too much for billing services and or credentialing services and or EHR and the combination thereof, and then second to that is, as folks look for billers… Here in Hawaii, they’re very limited, medical billers.

[00:02:23] And, I’m just wondering how maybe other folks in their communities have found medical billing services that are within their price range and that operate within the EHR that is also within their price range. So again, pretty specific yet general question. but appreciate all of your support to us as therapists in the community.

[00:02:41] And I’m so happy to share your information all the time with people, incredibly helpful. Thank you.

[00:02:48] Linzy: Okay. thank you for your question, Sabra. And I do remember our conversation. So it’s nice to hear that you’ve stayed connected, and thank you so much for sharing the podcast with other therapists as well in Hawaii. I really appreciate that. So yes, it is a specific question, but it does fall within broader questions of what do healthy numbers look like

[00:03:06] in group practice, and what is worth outsourcing versus what is worth doing in house, right? Because when you are paying a biller, you are outsourcing all the problem solving associated with billing, right? And so you’re not just outsourcing, you know, the software, the submission, um, of your claims for insurance, but you’re also outsourcing the problems, right?

[00:03:27] You’re outsourcing disputes with insurance, or the need to follow up, or to resubmit. Assumedly your biller is doing all of those things, which is valuable in terms of bandwidth, right? And so Simple Practice does offer the platform where you can submit yourself. But if there’s an issue, it’s going to have to be somebody from your practice who gets on the phone, whether that’s you, whether that’s another administrative staff that you have, there is going to be a certain cost to your practice in terms of time and energy

[00:03:56] if you bring the billing part in house.Many group practice owners decide that that is worth it, but I never suggest that group practice owners, especially once you have, you know, four folks on board, I’m hearing they’re all part time. So maybe you would think of it as like two full time equivalents.

[00:04:11] You’re getting to the point where you doing billing would probably not be a good use of your time. You know, you’re going to have a higher purpose for your own time in terms of marketing and supervising your team and maybe recruiting more folks. You know, there’s things that only you can do in the business, but billing is not one of those,

[00:04:28] right? So there is a value that is beyond monetary to outsourcing your billing. If they’re doing a great job, you know, one of my, my inclinations is to say, you know, if it’s not broken, don’t fix it. But there is this question, that you’re asking about how much should you be paying? So generally speaking in a group practice, there are guidelines that you can look at.

[00:04:49] And I really like the Profit First guidelines that Julie Herres lays out in Profit First for Group Practice Owners around how much to pay for administration and operating expenses. So she actually has very clear guidelines and I’m going to direct you towards, you know, her resource, Sabra, in terms of looking at your own numbers on

[00:05:06] the ratio that you should be spending that tend to reflect healthy numbers, right? There’s always exceptions. There’s always variables, but she has some very clear suggestions on what to spend on administration at different levels of practice revenue, as well as what to spend on operating expenses, and I will say, generally speaking, the guideline for operating expenses as you get into

[00:05:26] a larger company, you’re getting into the hundreds of thousands of revenue, is you’re usually looking at operating expenses somewhere in like kind of the 20 percent range, like 15 to 30%, somewhere in there. So because you’re paying for that current software, Tebra, which I hear you’re not thrilled with, that would fall under your operating expenses.

[00:05:45] But then also thinking about your administration, there are guidelines that you can think about of what to pay an administrative staff, and I’m fairly sure, you know, on a small size practice, it’s about 5%, that Julie suggests, like, somewhere in that range. So I would sit down with your numbers and just think about, compared to the revenue that comes in the door, what percentage are you paying for this billing service every month, right?

[00:06:08] Does it end up being 5 percent of what comes in the door. I mean, you’re also probably paying per submission. So looking at the way that you’re charged, how much do you end up spending compared to your group’s total revenue on that billing service? How much are you spending on your current EHR, right, which I hear you’re not in love with,

[00:06:25] so there might be other reasons to make a change there. And then how much would you be spending on simple practice? And look at that as a ratio to your total numbers, in the context of the other numbers that are going on, Sabra. So, you know, Simple Practice, as you start to add clinicians, there is an expense that comes with that.

[00:06:40] It’s not cheap, but if it’s doing what you need it to do, that can be a good investment, but you’re going to want to see, you know, what is that going to do to your operating expenses? Is that going to start to tip you kind of out of that 20, 30 percent range? Does that start to put you into numbers that are much higher?

[00:06:55] Generally speaking, once our operating expenses get beyond 30%, usually it starts to be unsustainable. Right? There’s just too much money required to run the business. And then when you think about your clinician splits and what they’re taking from their fees, and then having money left over for you to get paid, usually over 30 percent for operating expenses is, is too much.

[00:07:12] It’s not sustainable. Right. So if you think about switching to Simple Practice and cost that out, look at that in relationship to your other operating expenses you currently have, does that start to put it too high? But then you’d also be getting rid of that billing expense. Is the billing expense now kind of beyond 5 percent of your revenue?

[00:07:29] Just sitting and looking comparatively of where are you now? Are you within those ranges? Grab Julie’s book, Profit First for Group Practice Owners, because that will give you some more numbers to put into context based on the revenue size of your practice. Cause I don’t know your revenue size, but Julie has great charts there that let you see, okay, for solo practice, small group practice, medium group practice, large group practice, here are some guidelines of what your numbers can look like.

[00:07:53] And then you can run your numbers based on where you’re at now. Are you within healthy ranges for what tends to work for group practices for the size you are now? And if you made this switch where you no longer work with billers, but you move over to simple practice, what does that do to your numbers?

[00:08:08] But I would also really, really think about your bandwidth, Sabra. So if you do not work with billers, is there somebody on your team who’s going to take that over? Is there an existing administrator who would be great at that? And you can pay them a lower fee than you’re paying the billers, and they’ll be happy to get on the phone chasing insurance claims?

[00:08:24] Or would that be coming to your plate? Because if it’s coming to your plate, I’m going to say, based on my experience with group practice, and again, the value of your time and your impact on the practice, you doing the billing is probably not a good use of your own time. So would it be going to somebody else?

[00:08:39] Do you have another admin staff? How many more hours would you end up paying them to do the billing? Or would you maybe bring on another admin staff to be doing some of your billing? Because maybe you have some other administrative tasks that they could also take on, right? So take some time to really ground in your numbers, look at them in context, run these scenarios, and that’ll help you start to see what makes sense for your practice.

[00:09:00] Not just in terms of money, but thinking in terms of bandwidth and time. Who would take over this billing task if you were not working with your billers? So definitely some numbers for you to dig into, Sabra, there, but I do remember from our conversation that you were actually pretty confident and clear with numbers.

[00:09:15] So I think that this might be well within your comfort zone. And you can see what information comes back, and that’ll help you make a strategic decision here. Thanks so much for your question, Sabra. If you also have a question that you’d like answered on one of our feelings and finances episodes, you can just click on the link in the show notes.

[00:09:32] It’ll take you to our podcast page. It’s super simple. Just like Sabra, just press record, introduce yourself, share some context, if you’d like, and share your question. And I would love to answer your question on an upcoming feelings and finances episode. Thanks for joining me today.

[00:00:00] Carla: As a business owner, there are things we do because we need to have a viable long-term business that we think about strategically managing to performance goals. And then we have a business where we also can, you know, take care of our people and afford to do so because now we have the profit to do it.

[00:00:30] Linzy: Welcome to the Money Skills for Therapists 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 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] Hello and welcome back to the podcast. Today’s guest is Carla Titus. Carla is from Wealth and Worth Within. She is a fractional CFO, so she brings her chief financial officer knowledge and skills to folks in the health field, including group practice owners. And today, Carla and I dig into the financial complexities of group practice.

[00:01:16] Questions like how you compensate your team well, while also being profitable. How do you get your team on board with being responsible for the results of the business while also making sure that they are feeling taken care of and equipped, you know, to help with the project of making the business work? You can feel Carla’s financial background and expertise coming through in this conversation. And even if you’re not a group practice owner, I would encourage you to check out this episode to get an understanding of the different things that we need to be thinking about in terms of having a financially sustainable and healthy business. And one of those things that Carla talks about in this episode quite a bit is margins.

[00:01:56] She uses the term margins, referring to profit margins, like what is the extra money that’s there? And I know as therapists, that’s something that sometimes we shy away from, we don’t want to think about, especially when it comes to group practice. I see group practice owners… you don’t want to think that you’re profiting from others.

[00:02:11] And so I do want to remind everyone who’s listening that the profit in a business, like that extra, that is the oxygen, that is the stability. Carla and I talked today about the change in healthcare cyber-attacks a little bit, and what happens when money stops coming into a business. And you’re a group practice owner who has a bunch of folks to pay, the reality of that kind of financial disaster really, and it is by having extra money in the business that you actually can build a buffer to ride out those kinds of times, right?

[00:02:42] To make sure that everybody’s okay, even when things don’t go as planned. So, there’s lots of discussion on how to make numbers work. We talk about if you realize that your numbers aren’t working in your practice, where do you start? How do you start to create some of that profitability? So, you have that oxygen.

[00:02:59] In your business. Here’s my conversation with Carla Titus. 

[00:03:18] Linzy: So Carla, welcome to the podcast.

[00:03:20] Carla: Thanks so much for having me. So excited for our conversation today. We’re going to hit some big topics.

[00:03:26] Linzy: Yes, we are. I’m excited to have you as well because I think that you and I support, I think, the same kinds of humans. I’m getting that impression as we’ve been chatting off-mic. But you are coming to it from a bit of a different grounding than I am. So, I’m super excited to hear. How you work with group practice owners.

[00:03:44] So I will say for folks who are listening, we are going to be digging into group practice today, but I think all the same principles that make a group practice healthy and successful also apply to solo practice. So solo practitioners do know there’s going to be a lot here in this conversation for you as well because good financial strategy and balance apply in all situations.

[00:04:03] But yeah, I want to start with this piece, Carla. So. I was just saying to you off mic that I teach a course as well for group practice owners and the people that I like to attract to my course are the people who really, really care about other humans and probably what is not working for them is they’re giving so much to their team that the business is not working.

[00:04:24] Right? I want to work with those folks who tend to be too nice to other people, not not nice enough. And then we start from there. And then we look at getting them into a more sustainable place. So, I’m curious, from your perspective, how can practice owners navigate that emotional piece of being competitive, giving people what they need and what they want, and giving their team the benefits that they want to give them, but also making sure that they’re not doing that at their own financial expense.

[00:04:55] Carla: Yeah, it’s such a great question because what I see often is this business owners who are therapists. You folks are just so compassionate and giving and generous to your team. And that’s where I sometimes have a problem with it because I think as a business owner, you are taking the risk. You could be working a day job and making a lot of money and creating a lot of wealth for yourself and your family.

[00:05:18] But you’re giving that up because you’re trying to accommodate everyone in your team, which is such a noble thing to do, but it will get you out of business really quickly because you will be resentful. You will be. Like this is just not worth it and why am I working so hard for everyone else to get paid, that’s where we lose that momentum you had around helping more people than just you could yourself alone because you decided to bring in other clinicians to create a group practice so you could help more people have a bigger impact.

[00:05:47] That doesn’t happen if you don’t have the money to do it. And so, where we want to refocus our conversation and intention is if we were for a second, just to remove the names of the people we have in the compensation strategy we’re trying to create. Okay. And this is a really easy exercise you can do because it helps you remove the emotion, and it gets you to an objective place first.

[00:06:11] Then we take into consideration the people, the emotions, and all the things that go with setting a compensation structure that works for both the business and the individuals working in the practice. And what I say is changing the compensation model is not an easy thing. First, we do not encourage you to just suddenly say, here’s a new way, and good luck, because you will probably lose everybody.

[00:06:32] So we don’t encourage that, but we encourage you to go through that exercise and I start to understand what a competitive rate for that type of position in my area is. Because you might find you’re overpaying some people. You might find that maybe the roles and responsibilities are larger than the compensation you’re giving them.

[00:06:50] So you might be in the opposite way, which then is a different problem to solve. And we will talk about profitability as well. But you need to start to go through that exercise without the people’s names because then you’re trying to accommodate well, I like this person that they’re good at their job.

[00:07:06] They’re an over-performer. And then you’re trying to add more money to it. But maybe money is not what they’re looking for. And this is another piece of it is maybe time off that they want. Maybe it’s setting their schedule. Maybe it’s deciding how many clinical hours they want to have, and then we set a compensation that aligns with those needs for the practice, with an affordability target in mind, which is why we care about margins and start to talk about more in-depth on that, you know, what is the calculation after they generate revenue, and you pay for them, and their total compensation costs?

[00:07:41] What is left behind? And that is your margin. Managing for that going forward is going to set you up on a path of sustainable success, long-term, where you do have enough profit, not only to pay yourself but also put profit left behind to potentially bonus some of the people in your team to maybe you do something meaningful. 

[00:07:59] For them in the way that they find, you know, it’s meaningful. And then also have profit left behind to grow the business to continue to support the business needs and have the cash flow necessary to be in business long term. So, this kind of all comes together in this way, which is why it’s so complicated, and why it’s so emotionally charged.

[00:08:18] Linzy: yeah. So, taking the names out of it… Because I see this with group practice owners, especially when you’re earlier in practice and you have your original people. And often when we’re in group practice, too, like some of the first people we have, it’s like, it’s our friend that we worked with in community mental health, and they came to work for us, and it’s our friend that we did our master’s with.

[00:08:33] And so sometimes there’s also other kind of dual relationships happening here, where it’s not just your first employee, but you also have some sort of other relationship with them. So, it’s very hard to think about their position. Instead, you’re thinking about, like, Jessica, or you’re thinking about, like, LaShawn.

[00:08:46] You’re not thinking about this is my full-time therapist position, and this is my part-time therapist position. So, I’m hearing that kind of personal piece out of it, and think about it as a position, because then you can start to compare it to what else is out there. And see are you offering more or maybe less than the other choices that they would have,

[00:09:03] Their other options are out there.

[00:09:06] Carla: Yeah. And the other element to this is, can you afford to pay at that rate? And that’s the thing that we have to come to, you know, consensus on as a practice owner, like, can we afford these roles? And if not, what can we afford? Answering that question, it’s hard because you might still want to keep all these people you started with but

[00:09:25] You might not be able to afford to go forward if the revenue they’re bringing in is not superseding their costs, right?

[00:09:31] And it’s, it’s hard to go there because you’re like, well, but I like them. I want to keep them. But then it’s a conversation. It’s a, hey, for us to compensate you and give you a raise, we need to see this kind of metrics come through for you. And then you agree that that is the right metric for them, that it’s working for them as well, and that they will

[00:09:52] do everything they can to meet those metrics. And then you work on progress together, and then you coach them, and then you get them to a point where everybody’s happy. They’re getting compensated for what they want and need, and you are getting the performance you need out of them to be able to stay in business long-term and continue to hire and grow.

[00:10:07] So it doesn’t have to be a win-lose battle. It could be a win-win. We just need to be okay with having that conversation, holding that accountability, and looking at the metrics together to figure out a way that we can make it work.

[00:10:19] Linzy: Mm Yes. Yeah. I think you are kind of speaking to my own business right now and some things on my mind in terms of team because it’s like when you bring folks on board, especially when you’re a very relationally focused person, which I am, and which the folks who are listening are as well…

[00:10:32] Yeah, we love the people who work for us, right? And like, we want to take care of them, and we know their story, and we know their partner, and but yeah, that, that other piece of the equation I’m hearing is, their position is sustainable if they’re performing. If they’re making the revenue come in that you need to have from their role, then it can be sustainable, right?

[00:10:52] But they’re responsible, too. You’re not the only one who’s responsible for the business being successful. So, there’s an accountability piece there, I’m hearing. And I’m curious when you’re trying to build that accountability in your team, like, to be like, hey, I want to give you a raise, I agree, but you’re going to have to see 18 clients a week to do that…

[00:11:11] How do you start to shift to have your folks in your team take responsibility and accountability, if maybe that’s something that they haven’t been doing before? Maybe they haven’t been tracking their numbers or thinking that they’re responsible for their numbers. How do you work through that with team members to get them, basically get them on board with the project, basically of making the business work?

[00:11:30] Carla: Totally. You want buy-in from your team. You want to help them understand why this is necessary and why this is important. For you to be able to keep the roles for a long time and be able to provide for your team in that way, I always say like, it’s hard to explain to an employee what it’s like to be a business owner.

[00:11:47] So don’t attempt to do that, but just attempt to show them the data and say, we’re going to start by looking at the data, not judging, just looking because we want to understand where we are at, what’s our starting point, what is our baseline. And then we are going to track progress towards hitting those goals that we’re trying to achieve.

[00:12:04] And we’re going to come together and define what that reasonable timeline is to get to those goals. You can’t tell your people, well, you’re not meeting performance and you’re not hitting your goals if you’re not giving them new patients as leads. So that also falls on you as a business owner to produce the necessary patients and clients to be able to meet the goals that you’re asking the team to meet.

[00:12:24] So it goes both ways because then they’re going to come back to you and say, well, I don’t have enough clients. So when you give me enough patience, then I’ll be able to meet the goals. So, we have to be realistic too. We have that side of accountability. Assuming that that’s handled, and you got that under control,

[00:12:39] Then you can go to your team and say, hey, in the next three months, I would like to see some progress towards achieving these goals. We’re going to work together. We’re going to share what’s working, and not working well. How do we help, you know, with retention and making sure that everybody has what they need to be successful in the role?

[00:12:55] Do you all agree that these are the right metrics? Are we all bought into this and the why behind, you know, being able to hit these metrics is going to help us to stay in business long term? And if the team rallies, you know, on that, then suddenly you have all this buy-in and this positive energy that you’re working with the team on.

[00:13:14] I’ll be honest. A lot of times accountability does bring up the people that are not bought into this, and they might choose to leave. They might choose like; this is not the right place. You’re focused on metrics. I can’t talk about numbers. I’m out. So I do want to prepare owners that, if they push too hard too soon, this might backfire.

[00:13:34] So be incredibly careful in your approach by starting with, let’s look at the data together. What are you all noticing? Are these the right goals? Maybe people want to adjust their goals, and they never had a chance to talk to you about it because they were afraid, or they were not sure that they could. So right now, you’re opening a door to have those conversations that maybe better suit their lifestyle or their needs and now they feel heard.

[00:13:56] So now this could be another opportunity for you to establish an even closer relationship with your employees and clinicians by meeting their needs through this, you know, looking at the data together. So, it can bring up a lot of things but just be prepared that some people might not like it.

[00:14:12] And as a business owner, there are things we do because we need to have a viable long-term business that we’re thinking about strategically managing to performance goals. And then we have a business where we also can, you know, take care of our people and afford to do so because now we have the profit to do it.

[00:14:30] Linzy: Right. Yes. Something that I have found working with group practice owners… one way that I think about it is there’s going to be the number of clients that folks see each week that kind of covers the running of the business, right? Like there’s a certain amount of money that must go out the door just because the business exists, right?

[00:14:47] And there’s going to be like the rent, there’s those fixed expenses, then there’s like the next little layer of variable expenses that are, you know, higher because somebody’s there. And it’s only the money that they bring in and leave in the business after that, that is that profit margin, right?

[00:14:59] That is the oxygen for business. But that’s also where I think folks tend to like a flag and whereas, business owners, we sometimes have a hard time like pushing somebody to be like, “Hey, you’re supposed to do 14 and you’re only doing 11,” because like that last three, that’s the difference between there being extra money in the business, some like profit, some oxygen.

[00:15:17] Or not, right? But I think that that can be a tricky conversation for people to have with their employees. Because you’re asking them to work a little bit harder, and as you say, they don’t have that perspective of being a business owner, right? They’re in it to see clients.

[00:15:30] So this, this piece about buy-in, I think is really important. And I see it as sometimes a tricky line for folks to walk is helping your therapists understand this is what needs to happen for the health of the business, but also helping them feel supported. Like you’re creating the container where they just have to show up and do clinical sessions, but also, we’re all responsible for this thing thriving.

[00:15:51] There’s like kind of like a balance point that has to be reached there.

[00:15:55] Carla: Yeah. And what I find often when we even start up those conversations is therapists will bring up what are some of the issues or barriers on why they’re not able to achieve their goals. And suddenly it becomes a great opportunity for you as an owner to coach them or give them some support or advice or ways that they can overcome some of those barriers where before maybe that conversation wasn’t even happening.

[00:16:17] And so it’s not always all bad. Sometimes it does reveal, oh, well, they are struggling with retention. I have 10 ways that you can work with clients to help with retention. Let’s talk about them and share and make them a better clinician because now they’re able to start and complete a treatment plan that before maybe wasn’t being completed because clients thought it wasn’t important and they just like forgot, or whatever 

[00:16:40] happened. They’re able to emphasize the importance and to finish that treatment plan for the patient, which leaves them better off, which then the clinician feels more satisfied with their job and they’re not struggling in silence and feeling like, Oh my God, I’m never going to be able to hit that metric.

[00:16:56] Now we’re talking about it and helping them achieve the goal.

[00:16:59] Linzy: Yeah. And that coaching piece I think is so important, and I’ve noticed that as having a company now, most of my energy goes towards helping my employees rather than serving clients in the intensive way I used to do before is like, yeah, you have the opportunity as a leader to coach folks, but there needs to be a container where these conversations are happening.

[00:17:19] Right. And it’s easy to not have these conversations and it’s easy for issues to be kind of festering under the surface like you’re talking about. Somebody’s struggling with something, but there’s no way for them to come and tell you about it. So they’re just kind of carrying it by themselves. And they’re not feeling happy or satisfied.

[00:17:32] Their clients are not feeling happy or satisfied. You’re not feeling happy or satisfied. But nobody’s talking about it. So, like I’m hearing that, you know, actually bringing your team on board with metrics and being like, hey, this is what we need to hit. This is our plan to hit it is an opportunity to improve their work experience and improve the work that they’re doing.

[00:17:49] Carla: And. Yeah. One thing I’ll add is that there are expectations we set whether intentional or unintentional in our practice today as it is. And so, if you’re intending to change your people that you already had and have let them get away with whatever, or, or had this behavior or tone, and all of a sudden you’re changing it, this could be rough, right?

[00:18:08] So maybe you encourage new folks to set new expectations as you’re bringing in new hires. You set these new expectations that are clear, that are kind, that you expect of them. So, it becomes a bit of a shift in culture over time rather than a shock to the system. So just kind of the approach you want to take here is not suddenly:

[00:18:27] Now we’re numbers focused. Everybody must hit their goals like good luck or you’re out or you know, not really, but gently be like, hey, let’s start looking at the data together. What questions do you have? You know, should we hit your goals? What’s getting in the way of it? And then with every new hire, you set a new expectation and the new expectation is that we will provide enough patients to hit your goals.

[00:18:46] You let us know when you need help. Otherwise, we’ll assume you’re performing to those metrics, and we’ve aligned on compensation for those metrics. And then we don’t need to have this discussion. We were just going to keep measuring and be okay with that. But I always caution like being gentle in the approach of bringing this up because a lot of people just feel.

[00:19:05] Like that is not what they want to be talking about or like they don’t want to be held accountable and that’s okay because that is probably the culture you said in the first place, so it won’t be easy to change. Because it was unintentional, right? As business owners, we unintentionally do things and forget to emphasize the need for this profitability aspect of the business so that we can all win.

[00:19:27] Yeah, because that culture changes piece, like it takes a long time to change culture, right? And so I think that’s a really helpful way to name it. There are expectations that you’ve set. There’s a culture there. This is a decision I see sometimes folks making in Money Skills for Group Practice Owners,

[00:19:42] My course, is when they have identified like, oh my gosh, the expectations that I’ve set with my first three employees don’t work, they’re not working for the business. Yeah. Then they must decide, okay, how rapidly do I change these expectations? Do I leave these relationships the way that they are?

[00:19:59] Do I hire new people? And what I have observed is often once folks identify what they do need to make the practice sustainable, make it work, make it profitable enough, it’s a relief when you hire those new people and you’re setting the expectations right from the beginning. Because you’re like, okay, I’m not going to make the same mistake this time.

[00:20:15] So I’m going to say that, too, to folks listening. I think sometimes when group practice owners, especially if they’ve started more casually. Like, again, you hire your friend because they’re looking for a position, and you have more clients than you can handle. Suddenly you have an accidental group practice.

[00:20:28] And then you realize, like, oh my god, I’ve set this up to fail. Like, these numbers do not work, and they will not work. Sometimes what folks do I think they have to do is throw the baby out with the bathwater, and just shut it down and give up. But yeah, you can set these new expectations with new folks, and it is… Once you know what you need to do, it’s easy to make new hires and be clear with them about, exactly.

[00:20:49] As you said, like, this is how many folks you need to see. This is what I’m going to do. This is what you’re going to do. This is how we’re going to communicate around this. It’s a relief once you are clear with expectations because your folks will be happy to meet them if they understand what they are, right?

[00:21:03] But it’s, it can be hard to change them with the folks you already have.

[00:21:07] Well, for this audience, you know, clear is kind, like Brené says, so we are going to go with that. And with the existing team, we’re almost kind of rewarding that loyalty long-term. They’ve been with us since we opened or started, and that’s okay to have exceptions. I always say they must be made intentionally, though.

[00:21:24] So we’re going to choose the first two, three people. You know, we did what we did. We didn’t know it was fine, whatever. It works. We don’t want to change it. We don’t want to break it. We don’t want to, you know, separate from anyone who has helped us build this far, but going forward, we have an option to change it and set a new intention with profit in mind and purpose still, so we can have the impact we want to have for the long term.

[00:21:49] And that doesn’t happen if you don’t have a profitable practice. And that’s paying you as well.

[00:21:54] Linzy: Yes. Yeah, because another point that I see folks struggle with, Carla, is like the insurance versus out-of-pocket piece, right? So, there’s another piece where it’s about like we want to take care of folks, right? How do you suggest people navigate this question of whether to take insurance in the group practice, whether to take private pay, you know, like how those fit with the numbers?

[00:22:19] How do you suggest that people think and work through this question?

[00:22:24] Carla: Yeah. So, I mean, we all know private pay. You know, margins are higher. Room for errors is higher, is what we always say, because you can get away with a lot of things that when you have panel insurance, you cannot. Insurance dictates rates, insurance can lower your rates unexpectedly. And if you have a large carrier, they get to control whatever they want to pay.

[00:22:45] And you don’t get to change that just because you don’t like it and whatever cost structures you set, don’t change just because the insurance rate changes. So be careful with how much room you have in your reimbursement rates, understanding what are your reimbursement rates, month over month, year over year, and how are they changing.

[00:23:03] How dependent are you on one carrier versus two or three, what are the top carriers that you have? And make sure that you’re paneling your clinicians based on the type of carriers you want to continue to work with, and, you know, that pay you fairly and that you feel like you can compensate your clinicians accordingly because of that insurance rate.

[00:23:22] It’s going to be a key aspect of what we evaluate when looking at growing through insurance. The process is long. The process is tedious, and once you get credentialed, then you’re good because you know, you’re going to get reimbursed a certain rate per session and it’s really all about the insurance billing follow-up and making sure you get that cash in the door because what changes is you used to collect upon service.

[00:23:48] Now you’re waiting 30, 60, sometimes even 90 days for insurance to pay you. So, if you haven’t factored that into your cash flow, meaning the cash you have in the bank to cover your bills today… Because guess what? Payroll doesn’t stop just because you’re waiting for insurance payments. So now you must factor that into your timing of cash going out the door versus coming in.

[00:24:09] And that sometimes throws practices off for a loop because they’re just like not prepared financially to make that change. And they’re just out of desperation, because their private page dried up, decided to take on insurance, and had no idea the time it takes to recoup. Also, you’re adding billing costs because now you need to have a biller who knows what they’re doing and following up.

[00:24:28] Okay. And making sure that, you know, the denied claims or rejected claims are followed with, and that insurance does not sit on your money for longer than they need to. And if you’re not aware of that process or familiar with it, it could hinder your practice. And now you’re going to see yourself in need of a line of credit or something to hover you over till the time that those checks get deposited.

[00:24:48] Once it gets going, it’s a little bit easier because now you have a recurring stream of income from insurance Payments, sometimes some lump sums, which is kind of nice, but sometimes insurance also has its cycles. They decide, you know what? We want to make our numbers look better by the end of the year.

[00:25:02] So we’re just going to pause payments until the beginning of the year. And then people are not prepared for that. But then we see that in the seasonality of their business, where we know that this is a trend, and we prepare for that downed, you know, number of payments that we were not going to get just.

[00:25:17] right after the first of the year because it happens, and that’s how insurance works. And so being aware of those variables is going to be key in managing not only your profitability and margins but also your overall cash flow needed in the business.

[00:25:30] Linzy: Hmm. Yeah, because, you know, I think that it’s easy to take on insurance panels, and this conversation is about American therapists… Canadian therapists will recognize that this is a different system than ours, but I think that folks take it on because it seems like it’s going to be easier.

[00:25:45] It’s the easier way to get clients, but what I’m hearing from you is financially, it’s much more complex, working with insurance. Right? And like that delay you’re talking about I’ve seen play out in people’s numbers, as I’m sure you have many times, where it’s like, yeah, you saw $10,000 of clients this month and payroll has to come out, but that $10,000 isn’t going to show up for three weeks or four weeks, which is a huge delay.

[00:26:09] So yeah, that all must be taken into consideration as you’re planning the way that the money works in your practice. 

[00:26:15] Carla: Yeah, it’s a shift in business model and I think people don’t recognize that. And they again, out of desperation or need, or even just out of diversification, which we’re all about, by the way… Diversify the type of clients, the price point, the type of insurance, like where you get your clients from, all the things…

[00:26:33] They just don’t factor in the impact they can have on the overall financial health of the business. And they don’t properly prepare ahead of making this decision to ensure that they can live through it and switch to the side where now you’re seeing recurring payments coming, and it’s a little bit easier to weather.

[00:26:49] Linzy: Yes. Because then the other thing that just happened, recently, you know, was the, the change healthcare crisis. We also know and I think that was a massive shock, for everybody to realize how much dependency there is in that system, right? Like something can happen that has nothing to do with you, nothing to do with the quality of your sessions, nothing to do with like, anything to hazard you.

[00:27:12] And yet your group practice, or this happened for solo practitioners, too, your solo practice is a hundred percent impacted, right? Like I, I know some folks where it’s basically like almost all their money stopped for this long period while people went and worked away on things, maybe not as quickly as they could.

[00:27:30] Who knows? Um, yeah. You really kind of are at the will of this really large system.

[00:27:36] Carla: Yeah, that’s why again diversification of ways that you get paid, who you get paid from, and all that, is super important but that is a very unexpected one-time event that can throw your business and put you under, like completely out of business. And what I tell folks is like we always want to have just enough room between something happening, and we having to panic. Because we want to buy that luxury of time to think and react. Because it’s not about fixing the problem. We can’t fix what happened to change health care, right?

[00:28:05] And then they got attacked again, and it’s just like been like a series of issues from there on, and the fact that some of the You know clearing houses or EHR systems didn’t have a backup tells me a whole different issue, you know. And the system is broken and they should have come to the rescue much sooner than they did to avoid businesses going out. But you know, in any case, we don’t have control over that. What we have control of is creating a cash runway to allow us to have not that panic button sit in, but have that time to react, and decide: What are we going to do about this?

[00:28:36] Okay. And it should, we should have had a line of credit or something available to us where, if something happened, we had a way to cover that cost, either the cash profits you saved in the business or a, you borrow debt in some way, temporarily short term. And I know there were some loans given out for that, too, to kind of help.

[00:28:52] It took a minute. By the time you did that, you probably had one or two payrolls that you had to run at that point. So just again, we want to always be prepared for the unexpected. We don’t want to wish upon the unexpected, but we need to be financially prepared for what could happen. It could be just, you know, a bunch of people just don’t pay us on time.

[00:29:10] Like it could be as simple as that. It could derail. Because I find a lot of business owners are living in this paycheck-to-paycheck cycle of business ownership. And it’s like, they’re just one paycheck away from going out of business. And it’s such a dangerous place to live in when you not only are taking care of yourself, but you’re also taking care of others.

[00:29:27] Other clinicians rely upon you to pay them on time to pay their bills and make a living. So as a business owner, I think we have a responsibility to, over time… and I’m saying like, this is good financial habits to start to work towards. So, if you’re not there today, do not judge yourself.

[00:29:43] This is not the point of this. This is a point of like where you get to learn what’s needed, and you start to implement that action in your business. So put aside a percentage of your profit every month. And if you’re not profitable today, craft a plan towards profitability with all the things we talked about today and start to map out when can you start to see positive results so you can afford to have a cash runway, you can put a little money aside every month that will save you from that unexpected.

[00:30:09] And that unexpected could be maybe you being sick. It could be anything. Right? And you want to have that luxury of time the cash in the bank buys you. So, you can have a moment to think, a moment to reassess, and then decide what’s the next best course of action. And when you have that in business, you sleep better at night and then your people know that you’re taking care of them because they don’t have to worry about, oh, am I going to get payroll next month or not?

[00:30:34] Like, should I be worried? Should I be looking for another job? Like you do not want that on yourself, or that stress on your clinicians.

[00:30:40] Linzy: No, yeah. And I mean, that’s such a good point because I was thinking, where do people start, right? If they’re listening, and they’re like, I have none of this, you know, like, oh my gosh, I have all these hard conversations to maybe have with my team, and I need to figure out what I even am.

[00:30:53] And I’m hearing the starting point is like, first, find a way to become profitable, right? If your numbers are not working now, figure out what that way is. And like, thinking about what we’ve talked about, it could be setting clear expectations for how many clients, you know. Probably just folks filling in the contracts they already have with you and seeing the amount that they need.

[00:31:11] Carla: That’s a great starting point.

[00:31:12] Linzy: And it is one though where I do see lots of folks not work to, you know, have their, their clinicians uphold because they’re like, well, they’re pretty close or like, Oh… They blame themselves or, you know, whatever. So, I’m hearing that. Where else do you tend to see spots where there’s an opportunity for folks to create profitability,

[00:31:30] Have that extra money, that oxygen in the practice? Where should they be poking around if they know that this is a problem for them?

[00:31:37] Carla: They should be researching their pricing across the marketplace. You’ll be surprised how much inflation has driven costs up and that you maybe haven’t been keeping up. And if you haven’t increased your rate in the last one or two years, you should be looking at that. And even requesting increases from insurance, even if they deny it, you keep 

[00:31:53] asking. Because I find that sometimes they will say yes, or they were like, oh yeah, we forgot, and it’s been three years, and we should have given you one, but you just never asked, so we never gave it to you. So, we’re always asking for an increase, or we’re always planning some kind of yearly increase in our prices. Because more revenue doesn’t fix the problem.

[00:32:10] If you have a margin, it’s just going to magnify the problem and get you further into the whole. And people think, oh, I’ll just make more money, do more sessions, and then everything will be fine. No, you’re just compounding the issue you already have. So, until you fix the structure and the underlying problem, you’re going to continue to have that problem.

[00:32:27] And then the next piece is looking at, how many clinical billable sessions the practice needs to have and are close to meeting that or not. So that’s talking to your folks inside. And then next you need to look at your cost. Maybe you’re just spending too much in some areas and get where can you be more efficient, save some time, maybe you pay for a tool that saves you time or not having to do that, you know, task the clinicians are tasked with, or something that saves you time, or you’re paying money for something, maybe you’re not getting the benefit from it anymore.

[00:32:56] Like it was benefiting you in the past, but it no longer serves going forward. Reassess that. Maybe it’s combining 10 tools, and buying one that actually does all 10 things, and then costs you less. It could be… you know, whatever those changes are small, could add up over time. And then sometimes you maybe just need to invest more in marketing.

[00:33:14] You know if you are profitable, but not too profitable, but you have the right margins and you have the right profits about scaling and growing and doing more billable sessions, bringing in more clinicians. Again, that is if you’re already having some sort of profit and success there. If not, we have to get you to profit first by lowering costs, increasing margins, or increasing a price point and bringing in more revenue without adding additional time costs to your team.

[00:33:38] And those are the levers we can pull to be able to shift the narrative on profitability.

[00:33:44] Linzy: Yeah. And you know, as you’re talking about that, it’s making me think about my analogy for group practice when I talk to folks is group practice is like a machine, and it’s a complicated machine, right? And often group practice owners build that machine kind of haphazardly where they’re like, oh, I’ll just set the rate that I charge.

[00:33:59] I guess that’s what you charge. And we’ll work with this insurance because I already know them. And like we end up kind of accidentally making these decisions that have large financial consequences. Yeah. And as you say as your business grows, the consequences also grow, right?

[00:34:11] So like if it’s not working and you have more clinicians on their model that’s not working, it’s going to not work even more rather than fix it. So yeah, it’s really, bringing home to me this piece of this is a complicated machine group practice, but there’s also a lot of spots for opportunity to make improvements.

[00:34:28] Carla: Another one that came to mind was this office space discussion, right? There’s been a lot of push for hybrid and telehealth. People are used to it at this point with COVID. Maybe you love it, or you hate it. Whatever it is, it’s based on demand. If your people want to be seen in person, then they might be driving you to have more office space, and you just must do that to satisfy your clientele.

[00:34:49] But maybe some clients are more flexible and allow you to do telehealth and hybrid. Yeah. Then maybe you don’t need so much office space. So just kind of considering those models and making the decisions that are right for you and your practice and your patients that you’re serving is going to be key.

[00:35:03] But sometimes I think we’re afraid to ask the question and what we say, explore all the options. You do not have to decide today. Just talk about them; analyze the options. See which one sounds best for both the business and what feels right for you. And also from the profitability standpoint, you know, we might make some recommendations that are a little bit different than what you thought the direction would be and be open-minded about considering it.

[00:35:28] We’re not saying you must do it. We’re just saying, let’s talk about it. Is there a middle ground we can get to where we can make the changes necessary without too much impact? And then you still feel good about your practice because, at the end of the day, it is your business. You get to decide, and you get to do what’s right for you and your employees and your patients.

[00:35:43] Linzy: Yes. Great. So, Carla, thank you so much for joining me today and bringing this CFO expertise into this conversation about group practice. For folks who are interested in hearing more from you, can you tell us a little bit more about what you do and where people can find you?

[00:35:58] Carla: Yeah. We have joined your leadership staff team at the executive level to run and lead the finance function of the company. So, if you today have maybe a bookkeeping staff or accountant, but they’re not answering your money questions, and you’re like, what about all the scenarios and all this accountability and all these clinical metrics I need to hit, and how do I get profitable,

[00:36:19] and you’re not sure who to turn to, that’s where you need the help of a fractional CFO. And we come in and again, lead that function to make sure that it’s handled, monitored, and controlled, and giving you those opportunities and options to assess as you’re making the decisions that are right for your practice.

[00:36:36] So if you need that kind of help, and you’re ready to work with a fractional CFO, you can book a call on our website at wealthworthwithin. com. We would love to have a conversation about your needs and how we might be able to support you and meet them. If not, you can follow us on our newsletter on our website as well.

[00:36:51] We share a lot of information about what we are working on with clients. Like how are we helping them drive profitable businesses? And we’ll put a lot of educational content out on social media on Facebook, LinkedIn, and Instagram, at Wealth Worth Within.

[00:37:06] Linzy: Wonderful. Thank you so much for joining me today, Carla.

[00:37:09] Carla: Thanks for having me. 

[00:37:25] Linzy: I know in this conversation with Carla today, there were a lot of technical pieces, lots of financial language that might be new to folks who are listening. And I want to encourage you if you were listening and you know that there are things to look at, the biggest part of starting to understand your numbers is just to be with them.

[00:37:46] Right. So just that starting point of starting to look at, okay, you know, if you have a group practice, how much money is coming in from this certain clinician? How much money are they getting paid? How much money does it cost me to run the practice every month? And when you look at all these things together, how much money is being left behind, right?

[00:38:03] Is this position profitable for you? I know I have tools that help folks figure that out in Money Skills for Group Practice Owners, because there is a complexity there, but also just sitting down and being with your numbers is a starting point. Getting curious, and starting to poke around with the numbers in your business, whether it’s solo practice or group practice can help you start to see what is not working.

[00:38:24] Linzy: Right? And that’s where we can make change. But if we fall into that mentality that Carla mentioned of just like, just seeing more clients, or just hiring more clinicians, you can just end up doing more of what is not already working. So, if you feel like the numbers are not working in your practice before you use that knee-jerk reflex and just start trying to get more

[00:38:46] clients, just look at your numbers and just be curious to see what your numbers need to look like to make them work. And then you have an actual goal to work towards rather than maybe actually just amplifying something that already is not working in the practice that more is not going to fix.

[00:39:01] So a helpful distinction that Carla made here today. You can follow me on Instagram at money nuts and bolts. And if you are enjoying the podcast, please do tell a friend about it. Maybe a group practice owning a friend. Maybe they want to check out Carla at, wealth worth within. Com, wealth, and worth

[00:39:22] Within is her business. Or maybe they want to learn more about Money Skills for Group Practice Owners, which we’ll be opening again in the fall. They can always come over to my website, moneynutsandbolts. com, and click over to our page for Money Skills for Group Practice Owners, or maybe you are a group practice owner who wants to get your numbers working.

[00:39:39] You can check out Money Skills for Group Practice Owners. We’ll put a link in the show notes for the wait list for that course. Group practice… We need folks who love humans in that work. I’ve said this before in the podcast, and I will say it again. So, if you know someone or if you are someone who loves to lead others and wants to create great work environments for therapists, folks like Carla and I are here to support you in being able to do that.

[00:40:03] Thank you so much for listening to the podcast today.

[00:00:00] Linzy: Hello and welcome back to another feelings and finances episode of the money skills for therapists podcast. These are our short and sweet Friday episodes where I answer your questions, the listeners of the Money Skills for Therapists podcast, the wonderful therapists and health practitioners and coaches that make up our wonderful community.

[00:00:21] Linzy: Here is a question today from Madeleine.

[00:00:24] Madeleine: Hi, my name is Madeleine, and I’m a therapist, and I’m also a yoga teacher and an educator, somatic educator. And my question is about branding because having two separate businesses… So I loved your episode about money tips for having two separate businesses. And my question is about branding, 

[00:00:52] and if I can brand and have a website under my name that links people both to my clinical therapy practice, and then links people to my work as a somatic educator. And I’m trying to build up the somatic educator component, and I’m trying to be really mindful about ethics of branding for the different businesses, and how to best do that.

[00:01:15] And I was going to have a website just with my name, and then link it to those two things. I know it’s, um, you’re doing more with money, but, maybe you have an insight on that, because branding and marketing is an expense and how to streamline it.

[00:01:29] Thank you.

[00:01:30] Linzy: Thank you for your question, Madeleine. And it’s true. It’s getting more into the branding side, but branding and money do very much connect in how we set up the structures of our business and how we even think about different businesses. Like, are they with the same branch of one business? Are they different businesses and different distinct hats that we have to wear?

[00:01:50] So the first thing that I would think about always when it comes to having those two distinct businesses is thinking about your license, and checking in with your licensing body to see if the somatic educator work needs to be completely separate. Now, different licensing bodies in different states and provinces have different rules; they see things differently. And the somatic educator work… you might be able to practice that work under your therapy license, and you also might not, or might choose not to because of certain rules associated with that.

[00:02:25] So for instance, for me as a social worker in Ontario, social workers cannot use testimonials in their advertising. My understanding, I believe, is that we can’t sell packages. I haven’t looked into that too closely, but I certainly don’t see folks selling packages. And so, I’ve had to make it very, very clear, very distinct that the work that I was doing over here as a therapist is not

[00:02:47] me over here teaching money to other therapists, right? Because if I was to blur those at all, I could be seen as in violation of the code of ethics of, in my case, the college, the Ontario College of Social Workers. So that’s the first thing that I would want to make sure about is even before you get into thinking about the strategy, make sure that you’ve got your legal ducks in a row and that you’re not conflating the work that you’re doing in such a way that it might jeopardize your license.

[00:03:15] If it turns out that you can practice as a somatic educator with your therapy license, and there’s nothing about that that’s going to potentially jeopardize your license, or undermine your code of ethics, then I think having them on the same website makes a lot of sense. Basically, you’re building a personal brand.

[00:03:33] As my friend, Maegan Megginson, who teaches branding, would talk about, you know, you are the expert, You’ve got your personality, you’ve got your vibe, and folks who are drawn to you and like what you do have different doors that they can take in their work with you. They could work with you as a client, and get therapy from you, or they might invite you in as a somatic educator, you know, to do a workshop.

[00:03:56] So, I have seen folks set up websites like that where it’s like the main page of their website is kind of like, here I am. And then it’s almost like you set up two different doors: go through this door for therapy, go through this door for, in your case, somatic education. And I do see the value of that if you’re looking to build a strong personal brand.

[00:04:14] Like if Madeleine is the brand, then it does make sense to have those folks that land on your website because they’re looking for you, because maybe they saw you on Instagram, or they heard you on a podcast, or they heard about you in their community… They can see these different types of work that you do.

[00:04:30] More commonly though, I do see folks brand separately and people brand separately when your brands are different enough that they would conflict if you put them side by side. So for instance,If I’m a therapist and I work with folks who experienced childhood abuse and trauma, which was my specialty when I was a therapist; I did complex trauma, dissociation.

[00:04:51] So if that’s my branch of therapy, but then I have a second business where I sell, I don’t know, punk rock mugs that have sassy punk rock sayings on them. Those two businesses from a brand perspective aren’t very complementary, right? And somebody who comes to me to check out my therapy page, if they also see front and center that I have this sassy mug business, they might be like, That’s like not really the vibe I’m going for.

[00:05:17] So those are kind of two distinct parts of my personality. There are two projects that are separate enough that I wouldn’t actually want folks who are looking for one to find the other super easily. It’s not to say people wouldn’t, if they’re doing an exhaustive Google search, but those are two brands that I would want to live separately.

[00:05:31] In your case, it sounds like there’s a lot more overlap probably between those two things, but I would just want you to think about:is there any reason that you wouldn’t want somebody who’s seeking you out for therapy to also see your somatic educator work? I can’t think of a reason offhand why those things would be in conflict, but just to double check to make sure that your one brand isn’t kind of undermining the other brand.

[00:05:52] If your brands really are truly complementary, and this is a suite of offerings that all kind of live in the same wheelhouse, then I think that building them together can make a lot of sense. But if there’s any potential for conflict, either with your licensing body, or with your potential client slash customer experience, of them landing on the website and one brand kind of putting them off the other brand, then I would encourage you to to have two distinct websites with two distinct brands.

[00:06:20] Both of them, you know, will have an about page that gets to you where they see, oh, Madeleine is the person who delivers this, but that allows you two distinct spaces to give very different messaging, without the risk of one message conflicting with the other message and putting off a potential client for either of those businesses.

[00:06:38] So those are my thoughts. Definitely more branding than we usually talk about, but it’s fun to use a different part of my brain. I’m excited for you, Madeleine, as you build out these businesses, and I hope that you can get good, clear answers from your licensing body and take the path that makes the most sense for you as you’re building out your two businesses.

[00:06:53] Thank you so much for your question. If you, like Madeleine, have a question for me that you’d like answered on one of these Feelings in Finances episodes. Super, super simple. Just scroll down to the show notes of this episode, and you will see a link where you can jump over to our podcast page. There’s a little record button, just like Madeleine did.

[00:07:10] Introduce yourself, give a little bit of context and share your question. I would be happy to answer your question on one of these episodes. Thank you so much for joining me on the podcast today.

[00:00:00] Aviva: You need to speak to a specialist because Google gives some good basic information, but it doesn’t tell you what to be aware of, what to watch out for, what the actual situation is when you’re dealing with daily. When speaking with a specialist dealing with this, they always know what to set you up with. They know which policy to recommend.

[00:00:30] Linzy: Welcome to the Money Skills for Therapists 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 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.

[00:00:49] Hello and welcome back to the podcast. Today’s guest is Aviva Abraham. Aviva is an insurance specialist. She focuses on helping self-employed people with health insurance and life insurance and she is Canadian, but so much of what we talk about today is about insurance in general, and how insurance fits into our larger financial picture.

[00:01:12] So today Aviva and I talk about the best time to get insurance. We talk about the greatest risks to our financial stability and how insurance can help with those. She also gives some advice on how to make sure that you have the right insurance for you, who to get insurance from, and how to assess the insurance coverage that you have. It is not a sexy topic, as we talk about on this podcast, but it is such an important topic, and thinking today about the connection between insurance and finances certainly has me ready to go reassess my insurance situation. You might find yourself in the same place in about half an hour. Here is my conversation with Aviva Abraham. 

[00:02:05] Linzy: So Aviva, welcome to the podcast.

[00:02:09] Aviva: Great to be here. 

[00:02:11] Linzy: Wonderful to have you here. So, Aviva, I’m going to say that insurance is a world that I know is important. It’s very important to finances, but it’s also a world that I don’t know a ton about. So I think probably a lot of our listeners are on that same page. So just to get us grounded in where you’re coming from, can you tell us about the work that you do as we move into talking about insurance today?

[00:02:35] Aviva: So I have to admit that before I got into the insurance industry, I didn’t know a lot about insurance either. 

[00:02:43] So it’s really funny and if you would have asked me 20 years ago, and told me that I’d be an insurance advisor, I would have laughed at you. Because I started my career as an accountant in New York City.

[00:02:55] I’m good with numbers. I like numbers. I feel more comfortable with numbers, but I did get married, moved to Toronto, and took some time off to raise my family. And then when my youngest went to school, I decided to go back to work and was looking for something to do because I did not want to go back into accounting.

[00:03:16] But I wanted something in the financial services field. So I ended up finding a position with somebody in the same office that I am now who did insurance and investment. And I originally thought I would go into the investment field.

[00:03:30] But then 2008 happened, and I said I never want to be responsible for people’s money. To have to tell them the market tanked, we lost their money. And insurance was more like a better fit for me. in terms of planning, guarantees, and stability. So I gravitated towards that and started my new career in that field. So that’s when I learned all about that and the advantages of that. But yeah, it’s not something people wake up to in the morning and say, I want to learn about it or I want to get it.

[00:04:09] That’s one of the challenges of being an advisor. 

[00:04:13] Linzy: Absolutely. It’s funny, you mentioned that you like planning and stability. So insurance is a natural fit. It’s something I haven’t thought about before, but I do remember years ago now, probably like 15 years ago, when I got kind of my first real job that had benefits, I remember reading my benefits booklet to my partner at the time and being like, Hey, look at this.

[00:04:33] If I die overseas, they’ll ship my body home. And he was like, stop it. What is wrong with you? But I also get overly excited about stability and security. So it makes a lot of sense to me that with those traits, you would get excited about helping folks to create that in their own life. 

[00:04:49] Aviva: Yeah, but that’s funny.

[00:04:51] Linzy: Yeah, I do get excited about stability for sure. So for folks listening, what’s the starting point? Like what would you tell them is the most important thing that you want them to know about insurance and getting insurance 

[00:05:08] Aviva: I know that you talk to your therapist about feeling calm and confident about their finances, and that’s what insurance does for you, because while they’re building their practice, along the way they’re going to get a handle on their finances, they’re going to start creating their wealth, but along the way, they need to protect that wealth and that’s what insurance does for you.

[00:05:31] It gives you that financial foundation and protection so that if something were to happen, whether it’s someone getting sick or even if you’ve got a family and somebody passes away, then you want to know your family is taken care of. So, the big thing that people should be aware of today is that

[00:05:53] if you are healthy now, and if it’s something you haven’t dealt with yet, for whatever reason, you’re busy in your business, life’s busy, you just never wanted to deal with it before… But if you’re healthy now, now is the time to apply, and to get that insurance, because the insurers are stricter these days, in terms of who they are approving, and what their health status is.

[00:06:19] So if somebody started a new medication, if somebody has gone for testing, they could be postponed or declined coverage because of these things. I know a lot of people say, I’m healthy, I’m fine, I don’t need to get it yet, but that’s exactly the right time to get it.

[00:06:39] Linzy: What I’m hearing is once you start having health issues or once they start to identify risks for you, you may not get insurance because now you’re a liability, or I’m assuming your insurance gets more expensive as you get older.

[00:06:52] Aviva: So both can happen. I’ve had clients in the last few years who started a new medication. They went for testing because they went to their doctor for a concern. After all, that hasn’t been deemed stable yet… so the insurance company is looking at it; they said, Oh, you just started a medication.

[00:07:12] We don’t know how that’s going to affect you or if you took a test; we don’t have the full diagnosis yet. So they either postpone and they say come back to us in a year, or they decline. So, in those cases, there are some specialty insurers where you could get a more limited amount of coverage, and you would pay more because you’re considered more at risk, but yeah, so it could be either or.

[00:07:38] Linzy: Yes, what I’m hearing is to get it before you think you need it. Right, which is when we’re not thinking about it. When you feel young and invincible, then is the time to get that. What is so interesting, and it must be such a challenge for you because that’s so contrary to human nature, right? We tend to think about things once they’re a problem, 

[00:08:00] Aviva: I get a lot of those calls. Oh, you know, I just went to the doctor and so I realized I never got my insurance and yeah, it’s too late once there is an issue.

[00:08:12] Linzy: Right. right. Yeah, because what I’m hearing is As you said, I help folks to feel calm and confident about their finances, right? Like, get clear on your numbers, get money going where you want it to go. What I’m hearing from you is insurance is an important part of the financial stability picture. Am I understanding that clearly?

[00:08:28] Aviva: Yes.

[00:08:28] Linzy: Tell me a little bit more about how these things fit together. Like, what are some of the risks that can come up, and ruin the financial work that we’ve done?

[00:08:38] Aviva: So first there’s if somebody gets sick. So, there’s a much higher chance of somebody under the age of 65 getting sick and living with that. These days because of medical advancements people who got cancer 20 years ago didn’t live all that long but today, about 50 percent of people who get cancer or another critical illness are actually living with it between two to five years, and sometimes more than five years.

[00:09:08] But they can’t work the way they used to work. They have higher medical expenses and are as different as the U. S.– because I know you have U. S. and Canadian listeners on here– as different as the healthcare systems are, what we’re talking about today affects both Canadian and U. S. and are similar in certain ways.

[00:09:29] So, if somebody is having a health issue, there are ways to keep working, but they’ll still have more medical expenses. People think Canadian health care is free, but it’s not. People with cancer must pay for their medical drugs. That’s how it’s like the U. S. That way your medical expenses will increase.

[00:09:51] So you need more money. You may not be able to work as much and earn as much. And the risk of getting sick before age 65 is like three times higher than somebody dying, but then there’s the case of somebody dying and then their family needs money. So, there’s a lot to consider there. 

[00:10:13] Linzy: Yeah, this conversation, not surprisingly, is illuminating my gaps in maybe the insurance coverage that I have, because my partner and I have life insurance, and we’ve had that for a long time, ever since we bought our home together. We were like, if I die, I don’t want you to be stuck with this mortgage.

[00:10:28] And so that’s when we got insurance in our lives, and that was about five years before we had my son, but what I’m hearing is you’re talking about is the risk of getting sick and then our expenses go up because we have increased medical expenses. And it’s true in Canada, I know a lot of cancer medications now you have to pay for.

[00:10:46] The treatment is no longer chemo in the hospital, it’s medication you take at home. And when you take medication at home, you must pay for it. So, although these drugs are more effective, they’re also expensive, and you can’t earn as much because you’re not working. So that kind of insurance coverage… what is that? Is that critical illness coverage? What type of coverage is that, Aviva?

[00:11:05] Aviva: Two types of coverage get affected by that. One is healthcare coverage. Who will pay for the drugs? What kind of health plan do you have? And so, if you’re self-employed, it costs a lot more, like you’re the one paying for it as opposed to you being an employee in a company that has a group benefits plan.

[00:11:29] Then there’s also the critical illness. So critical illness coverage is a lump sum of money that’s paid out to you if diagnosed with a covered condition. So there are situations where you might need a very high-cost drug. Like, in the last 5 to 10 years, the cost of specialty drugs have 

[00:11:50] more than quadrupled. Whether it’s for high cholesterol or chronic pain, it could be tens of thousands of dollars a month, and if somebody needs that, then that devastates. Like, that’s the biggest risk to somebody’s finances these days. It’s the cost of specialty drugs. The cost of medical care is significant these days if someone is diagnosed with a serious health issue. 

[00:12:17] So that’s just something that’s developed. It didn’t used to be like that 20 years ago, but these days, like a cancer drug, it can be over 100, 000.

[00:12:27] So that’s where the critical illness policy also comes in. If you have drug coverage, that’s great. But in addition to that, there might be other expenses that you need to cover. And so critical illness insurance gives you a lump sum of money that you could spend in whatever way you want. You could pay down debt.

[00:12:47] So if somebody has a mortgage and they decide, you know what, I want to use this to pay down my debt. They can do that. They can use it for a trip. They can use it for whatever they want. It’s just a lump sum of money if someone is diagnosed. So those two things together really help. Disability coverage can help as well, but that would be only if you’re disabled for an extended period because of an illness.

[00:13:11] So, there are a few different ways to cover that risk. 

[00:13:17] Linzy: Cause as you’re talking about that, I have disability insurance, which I’ve had for a long time. I have no idea what it is, Aviva. I have no idea how much coverage is there. I have no idea of the conditions around it like what allows me to qualify for it. And so that’s a curiosity that I have, you know, for folks who are listening because also you mentioning medical insurance, as I know probably most therapists in Canada and the United States, we either get coverage through your partner, or you have to pay an arm and a leg.

[00:13:46] Americans already pay an arm or leg. We know that. But this is something I’ve noticed in my own company is like going to look at insurance for our business. It’s so expensive, or it’s so difficult to find someone who will cover a company with four people in it, that every time I just give up.

[00:14:04] Right. But what I’m hearing is not having that. In my case, I have coverage, but if somebody doesn’t have that kind of coverage, that’s important to get. And then there’s this critical illness, which could be that lump-sum disability. So for people who are listening who, like me, are starting to have words swirling around their head of like, Oh, do I have that?

[00:14:22] I think I have that. Wait, how do I get that? Where do you suggest people start with starting to assess their insurance coverage and think about their options of what they need given their situation and what they’re able or willing to pay every month? I’m sure we could all pay thousands per month in insurance if we wanted to.

[00:14:42] Aviva: It’s great that you bring that up because I just did a post on that, where I said, Google is great. And these days I find people come to me and they have Googled; they have checked out some basic information. But I always say it’s so important, especially when you’re dealing with money matters, but anything that is an important thing that you’re checking out,

[00:15:04] You need to speak to a specialist because Google gives some good basic information, but it doesn’t tell you what to be aware of, what to watch out for, what the actual situation is when you’re dealing day to day, whether it’s dealing with a health issue or dealing with the insurers, speaking with a specialist that deals with this all the time, they know what to set you up with.

[00:15:31] They know which policy to recommend. They can assess where your gaps are like you were saying, oh, you’re thinking about, Oh, where your gaps are. So, speaking with a specialist and whether you get a recommendation from a friend or a family member, just speak to somebody that deals with this day to day.

[00:15:51] And I always say as well, speak to an independent advisor, not someone that’s tied to, let’s say, just one company. Whether it’s Sun Life, which here in Canada is. One of the biggest providers, right? So they can only offer Sunlight’s products, but other companies may have different coverage or different options.

[00:16:13] So speak to an independent advisor that can check things out for you in the, in the best way and give you the best advice. But don’t try to do it by yourself. Like I know some people who have approached me that did it by themselves and there are things to be aware of. It’s just good to speak to a specialist.

[00:16:33] Linzy: And that’s helpful information because that’s a question that was arising for me as we were talking is, yeah, are there fully independent advisors? That’s something that we’ve talked about in this podcast before and something I talk to whenever my students are to talk about personal finance, which is just outside of my lane,

[00:16:46] it’s not what I do, is to talk to an independent advisor, a financial advisor who’s only getting paid for their time with you, where it’s transparent as to how they’re getting paid. In the insurance industry then, I’m hearing there’s a parallel, like there’s folks who are basically working for a company, where they can only sell you their products, and then there’s independent folks.

[00:17:09] Can you tell us about the setup of this industry? 

[00:17:14] Aviva: There are those advisors that are set up with, and here in Canada, it’s more, Sun Life, Desjardins, that will only deal with those insurance companies. And that’s what we call captive agents because they can only deal with those companies. Then, there are also the banks here in Canada that will also sell insurance.

[00:17:34] And that’s also been a challenge for us as independent advisors, because, again, they’ve got… It’s been in the news, so I’m not saying any secrets here, but they’ve got their sales quotas 

[00:17:47] that they need to meet and they push certain agendas. And that’s why I was saying, get a recommendation from either a family or friends on an independent advisor.

[00:17:57] Cause you want someone trustworthy. You want someone that’s going to look out for your best interests. Like I know. I work with five, or six companies, and then some other smaller niche companies when it’s people that are harder to insure and need a special type of coverage. But my loyalty is not to the insurance company, it’s to my clients.

[00:18:20] And that’s also important because you want to know that you’re looked after. You want to make them feel that it’s something that you have, confidence in your advisor, and that they’re looking out for you. And like you were saying before, Oh, I have a disability, but I don’t know what it is. So the thought that ran in my head was: where’s the advisor that sold you the policy? 

[00:18:45] Linzy: It’s a great question. 

[00:18:46] Aviva: Why aren’t you doing annual reviews or even every two to three years so that you know what you have. If your situation changes you can then reassess. Either reduce the coverage, increase the coverage, or change the coverage, but it’s important, because life changes so quickly these days, to review your coverage every, at least every two to three years. 

[00:19:10] Linzy: Yes, that’s an interesting point as you said this. I think the term, did you say it’s captive agents, is hilariously tragic. It makes me think about pirates for some reason. But yeah, being captive, even if they’re trying to do the best they can for you, they have very limited things that they can offer you.

[00:19:28] So for independent insurance agents then, how are you paid? If I went to see you, would I pay you a fee for your time? Do you still get certain amounts from certain products, but you just have a much wider array of products that you can offer? How does that work?

[00:19:43] Aviva: So I’d say about 80 percent of the time, I get paid by the insurance company. So again, we’re paid the same amount. Doesn’t matter which company we’re going to. But again, the reason I work with these top six companies that I do work with is because they’re well established, they’ve got a great reputation, they’ve got good pricing, and it does change year over year. A lot of what I do is based on getting the best pricing for my clients. But that’s why I work with those top companies. They pay me, but it’s not like I get paid more by one company than another.

[00:20:21] So I get paid by commission. The other 20 percent of the time I’m brought in as a consultant. So, if somebody has multiple policies, if somebody wants an independent review where they know somebody is going to be impartial, then I do charge a fee, and then I just get the information about their insurance, and then offer my opinion on how it’s set up.

[00:20:47] I also tell them, you know, what the situation is in terms of who the beneficiaries are, what value there is, if they can get a better policy at this point. But mostly if you’ve got a pretty old policy, you don’t cancel it. You hold onto it. So most of my business is based on commission, not fee-based.

[00:21:11] That’s how we’re different than the investment advisors. But then I do have a small portion that’s consulting. 

[00:21:17] Linzy: Okay, but you also don’t have a quota. You’re not trying to sell a certain amount of XYZ, and don’t have pressure on you for that. Yeah, and it’s such a helpful thing to mention, and it’s an unfortunate part of the financial services industry, especially for folks in my audience, like folks in the therapy space, where it’s like this is already an area where we’re not loving having to engage.

[00:21:40] This is not our happy place. Then to have to navigate like who is trustworthy and who’s offering me a full range of options versus who’s telling me that they’re offering me full range, but there’s like three things they can sell me and they’re going to get more money if they sell me this one opposed to this one.

[00:21:55] It’s, an unfortunate is maybe like a nice soft way to put it. Part of this world, right? And I think for many therapists and health practitioners, It’s a great reason to avoid it, right? The fact that it’s like, I don’t know who to talk to. I don’t know who I can trust. I don’t know. This person’s saying things, do they have my best interest at heart?

[00:22:14] Are they just trying to make a sales quota? It does make it, uh, intimidating space to step into. In addition to the fact that there’s a whole bunch of jargon and terms that we don’t know or understand. It’s a scary world to navigate, Aviva.

[00:22:27] Aviva: Yes, yes. And that is one of my biggest challenges because insurance is not fun. It’s not sexy. So how do you motivate people? How do you help people? How do you get them to trust you? So, a lot of it is a personality match as well. And the fact that there aren’t a lot of female financial advisors.

[00:22:48] I’ve been focusing the last few years on helping women in business. And I don’t know how many of your networks are female, but a lot of the females that I speak with don’t connect well with male advisors. They are just coming at it from a different standpoint. Like the fact that I’ve got kids, that I’m working, and built my own business as well,

[00:23:12] I can relate to women in business, in a unique way than a male advisor. And it’s like 80 percent male advisors, 20 percent female advisors. And we just handle things differently. So just connecting, it doesn’t mean that none of the female therapists have a male advisor that they like.

[00:23:33] But if somebody is questioning or struggling or not matching up personality-wise, better to find somebody that you do, feel comfortable with. And that’s a big part of it. If you have that conversation and you feel comfortable, you start building that trust and it might take time.

[00:23:50] Like I’ve had people that will put through business with me within a few weeks, and then a few months, and then a few years. So, it’s just being patient and, and making it work. 

[00:24:02] Linzy: Yes. And it’s the same thing in the therapy world, and we’re used to being on the receiving end of this, which is that it’s all about fit. Right? Like, as you’re talking, I’m thinking about my world too, and, people who join Money Skills for Therapists, like my course that I teach, we just had somebody join today, we were like taking a look at his behavior, and he’s been on my list for three years, right?

[00:24:19] So it took three years for him to decide, yep, this is somebody that I like, that I want to learn from, this is the right time, I’m ready to do this work. And it’s the same for therapists, like when clients come to us, right? Like, they’re assessing us for fit so we’re very familiar with the concept of fit.

[00:24:31] And it’s nice to hear you say that this can also be part of your relationship with your insurance advisor, right? Fit is important, you need to trust them. You need to feel like they get you in your life circumstances. And I do still feel and see in the financial sector, And I count the insurance sector as part of this.

[00:24:49] Some of that, like, oh, don’t you worry, little lady, kind of attitude towards women. And it’s so infuriating, and it can stop us in our tracks when we encounter somebody like that. And so, for folks listening, you know, what I’m hearing is, Aviva is saying what we would also say to clients, find a good fit for you.

[00:25:05] Find somebody who you can trust enough to have these conversations, to get insurance set up, and as you said earlier, do it before you need it. Do it before it’s really on your mind, right? It’s one of these things to do in advance. So for folks listening today, Aviva, what is some advice that you can give for them to walk away with from our conversation?

[00:25:29] Aviva: So, sometimes people think insurance, like one of the other challenges that I come across or questions that people say is insurance. It’s just too expensive for me. I don’t know if I can afford it. First, there are options that can be less expensive, whether it’s getting insurance for a shorter term as opposed to a longer term.

[00:25:50] I always say to cover off at least part of the risk. So if you can’t afford all of the coverage that you do need based on the assessment that you’ve done. gotten, then at least cover off part of the risk. If you can’t do it for an extended for a 20-year term, do it for a 10-year term. Like, at least cover off a portion of your risk, because the truth is none of us have a crystal ball.

[00:26:18] We never know what’s going to happen. But at least if you cover off the risk of the next 10 years if you cover off 250,000 instead of a million dollars of coverage. It’s something for yourself, for your family. So that would be one thing. Another thing is to be aware that AI today is playing a really big role in insurance.

[00:26:42] And so things have gotten easier. You were saying people are overwhelmed. They really don’t know what to do. But the truth is, it’s gotten simpler to do insurance. For certain levels of coverage, you don’t have to do blood work. And you can get coverage without meeting with a nurse. You just have to answer a bunch of questions.

[00:27:02] And so it’s gotten easier to get insurance these days. So that’s a plus, something positive that came out of COVID. And the third thing is setting up your insurance policy is important. But as we were just talking about. It’s just as important to have an advisor that you know you can rely on and that will be there for you and that you get the right type of coverage. I did have a case years back where this lady was the sister of a client and she came to me and she said well, I got this critical illness coverage. Can you take a look at it?

[00:27:40] And it was called… It was weird. I’ve never seen it before… women’s critical illness, and basically it only covered women’s conditions, and it only gave you a certain payout if you went into hospital. It was very restrictive, so that’s where I showed her that she could get a much better policy for almost the same price that would cover her a lot better. So, covering off to getting the right kind of policy that will pay out.

[00:28:10] It’s not just getting coverage. It’s getting the right coverage. Make sure that you’ll be able to claim that it’s a good company and that you have an advisor who will support you. So, getting the coverage, and taking that next step, like you’re saying, is so important to do is great, but do it in the right way and, and get the right coverage so that when there is a claim, or if there is a claim, you can benefit from it.

[00:28:35] Linzy: I love that first point, which I would distill down to something is better than nothing. I do think that it can be intimidating, and lots of folks in my world are perfectionists, right, and we want to be able to do it perfectly, and if we can’t do it perfectly, then sometimes we don’t want to do it at all.

[00:28:54] But what I’m hearing is, yeah, if you can’t afford that million dollars, that’d be really nice, still 200, 000 is going to be helpful if a situation arises, you know, where that payout needs to happen. So that’s very helpful because I think that, yeah, it’s easy to go into that black and white.

[00:29:09] But this is just to make life easier, if the worst should happen, so that, you know, yeah, just more ease is what I’m hearing. It’s not going to solve the problem, but you’re definitely going to be happy to have 200,000 if something happens rather than zero.

[00:29:24] Aviva: As opposed to nothing, yeah. And I sometimes call that, doing it the salami way. So, you can’t necessarily eat the whole salami, but you can take a few slices, get some of it, and then in a year or two, once you’re used to paying those payments, okay, maybe your income has grown, you can take on a bit more. So do it more comfortably.

[00:29:47] Linzy: I have never heard do the salami way. It makes no sense to me, but I like it. I appreciate it. So, Aviva, thank you so much for coming and talking to us about this very not sexy, very not fun, but stability is great. We love it. And especially for folks listening, I know sometimes talk with folks about motivating themselves around money and part of it is connecting what’s not working. The what if. And what I’m hearing here is it’s being real about the fact that something can happen, and life doesn’t always go as planned, right? And like, you might be healthy now, but we don’t know what’ll happen in a year or two. Part of what I, I think, want folks to think about today is like, just think about taking care of their future self, even if everything seems fine now.

[00:30:34] It’s a huge favor that you can do to your future self by getting insurance lined up today and making sure you have the right insurance coverage is what I’m hearing as well today, rather than wishing you had done it 10 years from now. So, to that end, Aviva, where can folks find you to learn more from you?

[00:30:50] Aviva: Ah, so, I am more on LinkedIn than on Facebook, but I’m on Facebook as well. I do have a website, insuranceinvolved. ca, and yeah. You can find me there.

[00:31:06] Linzy: Great, perfect. So it’s 

[00:31:07] Insuranceevolved. ca and we’ll put that link in the show notes for folks to poke around. Get excited about insurance. Let’s all get coverage. It’ll be a group project. So thank you, thank you so much, Aviva, for coming on the podcast today.

[00:31:20] Aviva: Thank you so much for having me, Linzy. 

[00:31:36] Linzy: My conversation with Aviva has been reflecting on my insurance situation and how easy it is, of course, for us to avoid the things that are not fun, that we don’t understand, where we’re not sure who to get help from. You know, I think about my insurance, and although my partner and I are amply insured, I wonder if we’re overinsured, and do I have the right kind of coverage in case I get ill.

[00:32:02] So for me, it’s opened a lot of questions today. I have some investigating to do. Probably need to contact a new insurance agent, like we were talking about, an independent insurance agent. And so, if you’re listening today and noticing the same thing, that this is an area of your life that you have not spent very much time and energy on, especially if, as Aviva mentioned, you are healthy now.

[00:32:26] Now is a really enjoyable time to either get insurance for the first time or to look into the coverage that you have. It’s not exciting. Sometimes it has to get us thinking about things that are scary to think about, like us getting sick or dying or a partner getting sick or dying. But it’s one of these things that our future selves will be extremely grateful,

[00:32:45] should it ever happen that we’re going to have to use these insurance policies. So maybe we can make this a team project, a group project, Money Skills for Therapists Listers, that we can all go away now and look at our insurance and make sure that we have the coverage that we need to take care of ourselves and our families into the future.

[00:33:02] I think it is a very, very worthwhile project. So thank you to Aviva for coming on the podcast today. You can follow me on Instagram at moneynutsandbolts and if you are enjoying the podcast, please share it with your colleagues and your friends. Tell them about the podcast. We’re having conversations here about finances and money and therapy that are not happening in other spaces.

[00:33:24] I’m really happy about that. I’m really proud of that. And so if you have someone in your life who would benefit from being part of these conversations, please tell them about the podcast. Thank you so much for joining me today.