Do This One Thing And You’ll Never Worry About Money AGAIN

So here were are again, folks – the holiday season. While everyone else is humming holiday jingles and buying Dirty Santa presents, you’re sitting alone in your office after you had yet another cancellation.

 What is it with the holidays and people not showing up to their therapy appointments? My theory is that people live in denial during the Holidays, crossing their fingers and hoping for the best as they embark upon what is easily the most stressful time of the entire year. After 3 weeks of disappointment, they come to their senses around the first of January, and suddenly I don’t have an opening until March.

So why do we continue to stress out every December, wondering how we’re going to pay our rent, utilities, subscriptions, and still put food on the table? It’s almost like we forget that December tends to be a slow month, and then we get into a panic when we have 3 days straight of no-shows, cancellations, and clients who reschedule due to illness or travel?

Today I’m going to share the system that has literally saved my sanity during the slow months. It’s a simple system that I’ve automated so that it works for my while I sleep. I’ve found that as long as I leave this thing alone, I never worry about money no matter how slow of a month I have. It does take some work on the front end, but remember that you’re in this for the long game, so you need to have a system that works for you whether you see 3 clients a week or 30. You might be able to run around like a rat in a wheel with a small caseload, but in order to thrive in the big leagues you have to be able to set up systems like this so you can spend less time on things that don’t get you paid.

If you don’t already, you must go get your own business checking account. Usually you can open a business checking account as a Doing Business As (“DBA,” for short) if you don’t already have an LLC. If you’re attempting to use your own personal checking account for your business, that can cause a slue of other problems when it comes time to sit down and do your taxes. If you already have your own business account, read on.

Next, most therapists simply have one checking account, and they use that to do everything for their business. There’s usually a decent amount in there, but that’s also where all of your expenses comes out of and it can be really tricky to figure out how much money you actually have in there that isn’t already accounted for somewhere else.

The best decision I ever made was to open up several subshares under my business account name. A subshare is a way to separate your money from one larger account and categorize it, but it doesn’t act as a different account. Think of your business checking account as the main trunk of the tree and each subshare is a different branch.  Any money that comes in or goes out must first pass through your business checking, but then it can be moved into a smaller subshare. I LOVE using subshares because I can see how much money I’ve allotted to each monthly expense that I have. Here’s a screenshot of my online business account:

Opening up multiple subshares is a free service that most banks and credit unions offer – you just have to ask them (Edit: I’ve since learned from a few readers that big monster megabanks like Bank of America actually charge monthly fees to open subshare accounts. This is such bullshit. Why would you bank with a company that steals from you?! Please, go to a credit union and give them your business instead. You’ll thank me later.)

First, determine how many subshares you need based on your unique situation (hint: In most cases, 3-5 is sufficient. If you have too many, it will start to get chaotic. Just focus on your biggest monthly expenses). You can either walk in your branch in person or you can call Customer Service, and you will say:

“I have a business account with you and I would like to open up (X)  subshares under that account.”

Any income that I make, whether it’s from clients, insurance companies, EAPs, etc. goes straight into my checking account first. At the end of each day before I leave the office, I look at whatever new deposits have shown up in my checking account that day and then manually transfer 25% of that into my “Taxes” subshare account, which more than covers my estimated quarterly taxes (I take 25% right off the top instead of waiting to see what my claimed expenses might be). Since my taxes are in their own subshare account, they are protected from being spent accidentally, and I never have to worry about not being able to pay my quarterly estimated taxes.

Next – and this step is important – I break down each major monthly expense by dividing it by 4 (4 weeks in a month). If you have a monthly expense that isn’t always the same amount each month (e.g. billing), you can take an average based on the last 6 months or you can play it safe and base it off of your highest month. Here’s an example using standard prices:

Rent/Utilities: $400/month (divided by 4 = $100/week)

Billing: $300/month (divided by 4 = $75/week)

EHR System: $60/month (divided by 4 = $15/week)

Sum up all of those numbers and you will get your Minimum Weekly Revenue (MWR). Using the example above, my MWR is $190, meaning that the first $190 I make every week is already accounted for. So even if I have a bad week, I know I’m okay as long as I earn at least $190 – which, as a part-time therapist who sees 12-15 clients/week, is easy-peasy lemon squeezy.

And, since the $190 is automatically transferred every Friday from my checking account to each respective subshare account, I never have to think about it and I’m able to cover my monthly bills and still have some leftover in each account (since there are a couple of months in the year that have more than 4 weeks). I pay myself every Monday with what’s left in my checking account (I leave a “safety net” of about $200 just in case) by actually writing myself a check and depositing it into my personal checking account.

Here’s a cool feature about my credit union: they offer “invisible subshare accounts,” so I can still put money in them or take money out, but they’re not visible when I first log on. This allows me to take advantage of “out of sight out of mind” and save money for a rainy day without being tempted to spend it.

When I have a good month, I go ahead and throw some money into my Rainy Day subshare account. I like to keep at least 3-6 months’ worth of expenses in that account, but before you panic over needing to quickly save thousands of dollars, please know that it took me a solid year to build up that amount of reserves (remember, I’m in this for the long game). Since the account is hidden, I’m never tempted to spend it on new office décor or a fancy lunch with my colleagues. But if I ever run into an unexpected expense or a really bad month, I know it’s there and it gives me such peace of mind, especially during the holidays when, not if, I get more cancellations than usual.

If your bank doesn’t offer invisible subshares, you can just add a Rainy Day Fund as one of your major subshares, but you’ll have to practice some real self-discipline so you don’t get into a habit of putting money in and then seeing it as “free money” to take out whenever you want. If savings is a serious goal you have for your business and your bank doesn’t offer an invisible subshare, you can also just set up an online savings account that is completely separate from your business account and set aside money using online Billpay. More on Billpay in a moment.

All too often, we have a few really good months, and our abundance mindset causes us to go a little crazy – maybe we buy a few too many things off Amazon that we didn’t need (think this bodysuit is work-appropriate?), or we take a friend out to lunch and foot the bill. While there’s nothing wrong with enjoying your hard-earned profit (I’m all about working hard and playing hard), it’s so nice to sit back and actually take a break during the slow months knowing that all of your bills will still get paid.

Okay, so let’s recap the steps you need to take to build a system that will keep you from stressing during the slow months:

1. If you haven’t already, open up a checking account that is separate from your personal account.
2. Look at your monthly expenses and break them down into major categories (i.e. Taxes, Rent, Billing, EHR, or even any specific savings goals you’re working towards, like buying a new laptop or investing in a training certification). This number should not be any larger than 4 or 5 or else it can become overwhelming.
3. Call or visit your bank or credit union and tell them that you would like to add the above number of subshares to your account. Confirm that you will have online access to these subshares. 
4. Create a nickname for each subshare so that you can identify what funds each subshare holds online.
5. Figure out your Minimum Weekly Revenue (MWR) by taking all of your major monthly expenses, dividing each one by 4 and then adding those numbers together. This number is the minimum amount you need to make each week in order to pay your expenses.
6. Set up online automatic transfers from your checking account to each subshare.
7. Set up online automatic transfers from each subshare back to your checking account a few days before your bill is due
8. Set up online automatic bill pay for any bills that don’t already get debited from your account (e.g. Psychology Today usually does an ACH transfer, so they take money directly from my account each month – I don’t have to schedule Billpay separately).
9. When you have a good week, throw a little bit at your Rainy Day Fund to prepare for the inevitable slow weeks when you might not make enough to cover your MWR.
10. MAKE SURE TO PAY YOURSELF FOR YOUR HARD WORK! After all of the money has been portioned out, whatever is left in your checking account (minus your “safety net”) is your profit margin – congratulations! Go ahead and disperse this out to yourself by writing yourself a check. Use some to take care of yourself for a job well done!

For the first few weeks, check your system regularly to ensure that it’s running smoothly, and make any tweaks or adjustments as needed. For the first month I tried this, I accidentally overdrafted a few times because the timing of my transfers wasn’t right, so I learned to keep a safety net of about $200 in my checking account at all times just in case. Now, if my checking account has $600 in it, I know that number is only $400.

Make a commitment to yourself and your practice in 2017 to get your finances in order. No more worrying about being able to pay your bills. No more stress over yet another cancellation.