Essential Financial Planning for Stylists

Ever felt the sting of a hefty tax bill? I did, and it led me to a revelation that changed how I manage my finances. In this season two opener of the Smart, Wealthy Stylist Podcast, I recount my journey of overcoming a $17,000 tax nightmare with the help of a savvy accountant, highlighting the crucial role of financial planning and regular check-ins. This episode also delves into the delicate dance of balancing work and family life, sharing insights on how I made sure not to miss a single treasured moment with my kids this summer.

Get ready to transform your pricing strategies and money mindset! We unpack how to set and communicate prices that truly reflect your worth as a hairstylist, handle budget-conscious clients with finesse, and build confidence in your pricing. I also introduce a special workbook, available at a discounted rate, designed to make financial planning straightforward and effective. You'll learn to track income and expenses, budget wisely, and plan for retirement, ensuring long-term financial security. This episode is packed with actionable advice to help you achieve joy, time freedom, and wealth freedom in your hairstyling career.

Transcript

Speaker 1: 0:02

Welcome to the Smart, Wealthy Stylist Podcast. I'm your host, Emily Carden, Over here. We're dedicated to helping hairstylists manage their finances, stay organized, healthy and manage their time and mental well-being. We focus on staying healthy in all areas of life and maximizing productivity. If you're a hairstylist looking for these things, then this is the podcast for you. If you're a hairstylist looking for these things, then this is the podcast for you.

Speaker 2: 0:32

Together, we'll avoid burnout and step into being the smartest, wealthiest stylists that we can be. What is up? We are back for season two of Smart, wealthy Stylist. I have had such a great few months off. I've been diving deep into education and just really getting things nailed down in my life to bring me more joy, to bring me more time freedom, to bring me more wealth freedom. There's so many things that have been going on and I just can't wait to talk about them.

Speaker 2: 1:00

I'm structuring this season a little bit different and what I'm going to do is keep my podcast and my social media cohesive, and so this week is finance week, and so I will be posting all of my social media, for this week will be stuff that goes into the exact same thing that I'm talking about on the podcast. So the podcast actually gives you a little sneak peek of what's to come for the week ahead, um, but it's still packed full of valuable information, um, but on my social media is where I'm really going to dive deep into those posts, create carousels and reels that are savable, to give you applicable steps in able to help you go along in your journey as a hairstylist as well. So let's dive into this week, like I said, it's finance podcast. This week I'm going to be recording for YouTube as well as my social medias, that's, tiktok, instagram, all of those. So anyway, let's dive into this. So for today, today's Monday, I just wanted to touch a little bit on what I've been up to during my break and then we'll dive right into the daily posts.

Speaker 2: 2:11

So I took some time off of the podcast and really just refocused and dialed in on what I want in my business and what I want for my life and my personal life, and finding that balance and what I want for my life and my personal life and finding that balance. And you know, it's just so amazing to me that, as a self-employed hairstylist, we have the freedom to do just that. We can do whatever we want to do, as long as we have a clear plan and we can set our mind to it. So one of my biggest things was making sure that I kept up with time freedom. Time freedom is the one thing you can't get back. You can't make more of it unless you sacrifice something else, you know. And so my biggest thing was making sure that I get ample amount of time off with the kids this summer and that you know we have the freedom to do what we need to do as a family. You know, getting being able to not miss a single ball game, being able to take little trips this summer, um, you know, we're still in hardcore debt payoff mode. We're still trudging along getting everything done, you know. So, um, I'm trying to create these experiences without creating more debt. Um, so it's been working so far, so good. So this week I'm working today and then I am off the whole rest of the week for 4th of July, and we're going to spend lots of time with family and I'm just really excited. So, anyway, that's all I've been up to and I'm really excited to be back and I'm amped up.

Speaker 2: 3:36

I've been, you know, filling up my cup so I can pour out to you guys. And so let's dive in to finance week. And I just had, like some a crazy deal. This has basically been the tax season from hell. You know, this is real life and I always want to be very clear with you guys what's going on. And, you know, let you learn from my failures.

Speaker 2: 3:56

So, during this tax season, you know, I paid like some of my quarterlies, but not all of them, and so I figured we'd owe like six to $8,000. Um, I went in to my accountant's office and she was like uh, yeah, I have you owing $17,000. I was like what? I didn't do my quarterly meetings Like I knew I should have been. And, um, I'm profited a whole lot more than I was anticipating because I've been so good about cutting out all of my expenses and doing all those things. Right, that doesn't sound like a smart, wealthy stylist thing, right, because I'm like over here owing 17 grand. But actually, you know, I profited $30,000 more than I did last year. So that's $30,000 more that I had to, you know, put towards our debt payoff. Like, we've paid off over a hundred thousand dollars in debt.

Speaker 2: 4:47

So, um, anyway, as I was going through that, uh, I decided to go find a different accountant because she was like okay, well, you owe 17 grand, I want you to become a W2 employee, blah, blah, blah, blah, blah, good luck. I was like, and she's like I'm out till the first of the year. I was like uh, well, how do I do that? You know? Like, what am I supposed to do here? And so, anyway, I found someone else, I took him all my stuff, he went through everything and he's like, okay, well, I have you owing six to 8,000. And if you spend some money, um, you know you could very well it be wash. And I'm like, okay, well, I have some things I need in the salon that I'd love to upgrade, you know, he said go ahead and spend the money. And I'm like, okay, so I spent I want to say it was like $8,000.

Speaker 2: 5:32

And, um, we went back in. I still owed $12,000 after I had spent that money. So I probably would have been better off paying the 17,. But I did upgrade some things that needed to be done and you know, it's okay, it's fine. Um, I did end up having to charge that on a credit card because I didn't have $12,000 in my savings account.

Speaker 2: 5:57

Every time we get any sort of money saved up, we pay off debt with other kinds of debt. So I was like, oh my gosh, how is this happening? Well, so then when they went to submit the um, the taxes, e-filing, it got kicked back and said that someone had already filed a, a um, a tax uh, that a tax return under my social security number. So then it got flagged to the fraud department and, um, then, when I was trying to get them to like, take over my bookkeeping and all that stuff. I just want to simplify my life. You know, like I've been doing my bookkeeping and all that stuff for years, but I switched to QuickBooks.

Speaker 2: 6:34

Um, I started, you know, implementing that and taking pictures of all my receipts and doing all those things, and so when I switched to this new accountant, I found another person. She went back and looked at a bunch of stuff that accountant had left off, like the $8,000 thing that he told me to do. He left it off. He didn't even put it on there. So I'm with my third accountant and we are, I, established with them to do my bookkeeping. They're keeping me up to date, I have accurate profit and loss statements. I know exactly how much I should be paying for my quarter lease, like. This is why it's so important to have an accountant who works for you, who has your best interest at hand and who wants to help you, and so it was just so eyeopening to see, like, what that looks like and how different it is from anything else I had ever experienced.

Speaker 2: 7:29

So, that being said, this first, um, little section is about taxes as a hairstylist and how you can improve your taxes as a hairstylist and so, oh, my little guy's waking up, he's, he'll be coming in here soon. So the very first one is tax tax stuff and, like, here's five tips to help you with your taxes. The first thing is to keep detailed records. So, throughout the year, maintain records through your income and expenses, and this will make tax preparation much easier. So utilizing QuickBooks is amazing, and I'm actually going to become an affiliate for QuickBooks, so that'll be super amazing, and I'm actually going to become an affiliate for QuickBooks, so that'll be super awesome. Um, it'll give you a discount as a hairstylist, um for QuickBooks online, um.

Speaker 2: 8:13

The second thing is to separate business and personal finances. So opening a separate business bank account and credit card to simplify tracking um transactions and identify business related expenses is super, super important. You do not want to mingle your business expenses with your personal expenses. You have to have them separated. So the number one thing like if I could tell you anything to keep track of your cashflow and income and outgoing, and like, so you truly know what you're making make sure you have a separate business and personal accounts. The third is to understand deductions. So you know, take a class, watch some YouTube videos, like what all can you deduct as a hairstylist? Make sure that you're educating yourself on those things so that you know exactly what you can and cannot spend and what are tax deductions. So it says familiarize yourself with tax deductions specific to hairstylists, such as continuing education, salon supplies and equipment.

Speaker 2: 9:10

The next one is use accounting software like QuickBooks. It makes it so much easier and I can snap receipts on the go, just making sure that you have that at your fingertips. And it's really nice having an accurate profit and loss statement at any time, like if you need any sort of loan or anything like that and you go to the bank. They want a profit and loss statement, since you're self-employed person. And the last one is to make estimated taxes. So if you expect to owe at least a thousand dollars in taxes, after withholding and credits and everything, you'll need to make sure that your quarterly estimate payments are made throughout the year. That helps so much at the end of the year, not having to do like I did and just chunk $12,000, you know onto a credit card or deplete your savings or whatever. Because if you make those quarterly payments, you know I'm sending back like 450 bucks a week to make sure that I can make my quarterly, so that's gives you like 12 weeks, you know, to make sure that you have everything set back and it's not like a big thing at the end of the year.

Speaker 2: 10:06

And then the next section is money mindset. And you know, I really think that the money mindset part of it is so important too, because I went through such a personal battle with that not understanding, like my worth and understanding that, like raising your prices and making sure that you're doing what you need to do as a business owner, you're not a complimentary service. You're not, um a charitable service, like there's no doctor ever that's going to say, oh well, you've been with me for 10 years, so I'm only going to charge you $50, even though I charge everyone else $200 for their office visit today. No, you're a business owner. Make sure that you're doing what you need to do. So here's a few things um to help you with that. Five tips on money mindset Um, first of all, knowing your worth and consider your experience, your experiences, your expertise, the quality of products you use, the value you bring to your clients.

Speaker 2: 11:11

Um, a price increase reflects your skills and ensures that you can continue providing excellent services. And you know you charge. You should charge the kind of life that you want to live Like. You don't have to cut your life down because it doesn't fit your budget. You can raise your prices to live the life that you want to live Like. You don't have to cut your life down because it doesn't fit your budget. You can raise your prices to live the life that you want to live.

Speaker 2: 11:29

Um, communicate effectively, so being transparent with clients about a price increase. Explain why it's necessary and highlight the value that they'll continue to receive. Um, do not over-explain. Don't be like oh, you know the cost is so expensive and you know blah, blah, blah. Just be like hey, I just want to let you know this is what we're doing. Um, this is what your new price is going to be. If this doesn't work for you, um, here's another menu option that may. Or you know, every other time we'll just do your roots. Or you know, every other time we'll do a full highlight, or you know what I'm saying. So, just communicating effectively.

Speaker 2: 12:03

And if it doesn't fit in their budget, be prepared for people to say you know, this does not fit in my budget. If it doesn't, that's okay. Refer them to someone who's in a cheaper price range or give them another service that could work for them and just explain to them. You know what that would be, what that would look like, and people really appreciate that when you give them other options. Um, you can always offer incentives. You know, do referral programs, like make it a little bit easier for them to um receive a discount or whatever? Um, I don't typically do that. I think that if you discount a lot of services, that you attract a different type of clientele. But I do offer a referral program. If someone refers someone to me, they get $25 off their next service. So it's pretty cut dry.

Speaker 2: 12:52

But with your money mindset, I want you to focus on the benefits of what a price increase could do for you. Making sure that you're not looking at a price increase could do for you, making sure that you're not looking at a price increase negatively and thinking, oh my gosh, no one's going to pay this. You need to think people will pay what I'm asking. This is going to be a good thing. This is going to bring me closer to that debt payoff. This is going to bring me closer to having ample retirement. This is going to bring me closer to taking my kids on that vacation.

Speaker 2: 13:19

Whatever your goals are, just make sure that you're focusing on those, not on the negative side of price increases, because, yes, people are going to leave, yes, there may be some kickback, so what? They don't think about that whenever they go into their boss's office and ask for a raise right. And then the last one is really believing in yourself. Be confident about that whenever they go into their boss's office and ask for a raise, right, um, and then the last one is really believing in yourself. Be confident, understand that you are worth what you're charging, you are worth what you're asking people to pay and that you are giving a service that is amazing, you know. Make sure that you have that confidence. And if you don't have that confidence and you're not really believing in yourself, fake it till you make it. Keep telling yourself I am worthy, I am worth these prices, I am giving a good service, I am going to be successful. This is going to make an impact on my life. Focusing on the good helps you overcome those negative feelings.

Speaker 2: 14:16

The next one is pricing. So, with pricing, I actually um have a whole formula. I created a workbook that helps you go through pricing, but the way that my pricing is broke down is, first, I have you reflect on what you like and what you don't like about your business, what your goals are. If money was no object, what would you be doing? And then, after you focus on that, you break down, you untangle your finances. So you break everything down and make sure that it is all organized. You know exactly how much you're spending, you know how, exactly how much you're making, and I actually walk you through exactly on how to break it down hourly, on what it costs you to run your business per hour. Once you know what it costs you to run your business per hour, you can then charge either an hourly rate or create packages that cover your hourly cost. And that way you can know, like exactly what your profit margin is. Like. I operated a 58% profit margin. That's amazing. Like I'm making great money, my expenses are covered, I am hitting my goals. Um, my goal is to bump it up to 62% profit margin by the first of next year.

Speaker 2: 15:25

So just knowing exactly where you're at financially, where you want to go and how you get there. So I created a workbook for that. It's on all my social media links. You can get it there and, um, it is absolutely a game changer. It takes all the guest workout and it's only $57. But if you're listening to this podcast and you are going to buy the workbook from the podcast, uh, use the code podcast and it you get it for $27. So, anyway, um, pricing is what is going to move you from where you're at now to where you're going. You have to know what it costs you to run your business, so that you know what your profit margin is, so that you can live the life that you want to live, or pay off the debt or whatever it is. You have to know those things and I break it down for you step by step.

Speaker 2: 16:19

The next one is going to be budgeting, and you know, I know it's like such a little dirty word. You know like budgeting does not sound fun, that does not sound like a good time, right? So, with budgeting, it basically goes hand in hand with knowing your numbers. If you're using QuickBooks, it makes it so much easier because you can see in real time exactly what's going on. But the first is to track income and expenses. So monitor your income from haircuts, styling and product sales. Track all business expenses like rent, booth fees, product feeds, and this will help you understand your profit margin and identify areas where you need to save.

Speaker 2: 16:59

Set a budget, so allocate your funds and fixed expenses like rent and utilities, and then variable expenses, like continuing education, personal savings goals, whatever those are, and then you'll know like what's a hard thing Like, okay, I have to pay my, my rent or I can't do my business and then variable expenses is, like, you know, education. I would really like to take this class but I can't, you know, get it this month, you can do it next month or, you know, you just set it to where you can eventually take that class. You just have to work it into the budget and then make sure you factor in taxes. I hold 30% back of all my income, my take home, because I want to make sure that my taxes are covered. Um, and then once again, separate those personal and business expenses. Those are absolutely imperative that you do that so you can keep really clean books and if you ever get audited, there's no question about it because you have everything cut dry, clear, clear as day.

Speaker 2: 17:53

So, um, and then the next one is going. He had to go to work with the Kia. Yeah, my husband and my dad um, fixed a work, a car for Adam's work, so daddy drove the Kia to work, didn't he? So, anyway, hey, this is real life and I'm just, you know, out here living the dream, and my little man's going to stay home with me today while I work. Are you going to be good while I work? You are Good, I'm so glad. Okay, so you were looking for me. I saw you looking for me, okay, so where were we? Okay, um, yeah, separate your personal and business accounts, okay, yeah, yeah, all right.

Speaker 2: 18:43

So the next thing is going to be retirement and savings. So, as a self-employed person, this is extremely important. If you don't set back savings and retirement for yourself, no one's going to do it for you. And you know they always say, oh, there's not going to be any social security left by the time we retire, right, well, there may not be. I don't really know. So I'm not the person that dictates that. Right? So we have to plan for ourselves and make sure that our butts are covered.

Speaker 2: 19:16

I have been investing in a Roth IRA since I was 19 years old. Time is your best friend, so if you're in your forties, that's okay. Just start something, anything like just get going. So, um, a few things for investing is, once again, making sure your accounts are separated, um, and I also love high yield savings accounts. Making sure that you have a high yield savings account If you're holding any kind of money back. Um, our goal is to have six months worth of living expenses in a high yield savings account. Just pretend it's not there. And if you have money sitting in savings, it might as well be in a high yield savings account, because you're going to make money off your money and, like my Edward Jones high yield savings account is at 5% right now. Like you can't beat that, I'm making 5% off my money just sitting there. So if you have any type of money just sitting around, put it in a high yield savings account and at least let it pay you something.

Speaker 2: 20:13

Second, is open a solo 401k. Um, this is a retirement account that allows self-employed individuals to contribute a significant a significant portion of their income towards retirement and enjoy tax benefits. Invest consistently. So even small amounts invested regularly can grow significantly over time thanks to compound interest, and that's why I said time is your best friend, so making sure that you are giving it as much time as possible is very important, even if you're just doing 50 bucks a month, a hundred bucks a month. I do $300 a month. Eventually, once we're done with our debt payoff stuff, I can contribute the full amount and max out my IRA every year.

Speaker 2: 20:55

Um, and then consider a Roth IRA. That's my favorite. That's what I've been investing in since I was 19 and I got 17% return this year. So a Roth IRA is a great option. And having a um, a uh account, not an accountant I guess he's my financial advisor. I go through Kellen Ryan at Edward Jones here in Joplin. He has been amazing. The guy I had before him. I mean, my accounts did nothing, but even though I'm a small account, he still treats me as if I have a million dollars with him. So I greatly appreciate that and he's really awesome. So finding a financial advisor who wants to work for you and with you to help you reach your goals is absolutely imperative. But you know there was a time where we had some medical expenses come up and you know I needed to pull some of that money out and he helped me do that and was totally understanding like he gets it, you know. So having someone work for you is an amazing tool also.

Speaker 2: 21:51

Um, and then building an emergency fund. Like I said earlier, a thousand dollars is zero for us in our emergency fund, but eventually I would absolutely love to have six months worth of living expenses in that emergency fund. Um, it's just, you know, that way you don't have to go back into debt when you do have an emergency. So that's really important. And, um, I think a lot of people overlook that part. Um, let's see, let me find the next one. Um, so the last day is I have on there it says don't settle so if you feel like you're in an environment that you can't grow. So if you're in a toxic salon or toxic salon culture, if you're surrounded by people who do not believe in you or believe in your dream or whatever. It is making sure that you don't settle into that spot and just say well, you know, I can't raise my prices because no one supports me. Well, here we go.

Speaker 2: 22:47

You need to know your worth, recognize your skills, your experience, the value you bring to your clients. Confidence in your expertise empowers you to set fair prices. Number two invest in yourself. Continuously develop your skills through courses and workshops, um, taking classes. This allows you to offer premium services and command higher prices, as well as anytime I take a class, I'm pouring into myself so I can pour out to others. Anytime I've ever taken a class, I come back like fired up, ready to roll, and it gives you the confidence to push those boundaries and to push past your fear and really invest in yourself and take yourself seriously. And, you know, hit those goals. So, um, and then curate your clientele. Focus on attracting clienteles who appreciate your work and are willing to pay your worth. This can involve offering consultations specializing in certain services.

Speaker 2: 23:41

My niche is hair restoration. So most of my clientele are hair extension clients to pay, clients that have lost their hair due to medical stuff, genetic stuff, whatever it is. I specialize in giving them hair extensions. I do invisible bead extensions. It's super healthy method of a hand hand sewn weft. Um, that I hand tie into the hair. I do microwaves too, but that that's that's in the details. Um, and then I also do the glue on toupees for men, because who says men can't have hair right? So those are what I love to do. I love restoring people's confidence through semi-permanent hair restoration.

Speaker 2: 24:22

That's my niche. That's who I speak to in my social media. That's my target market, my target clientele. Like really curating everything you do in your business to that focused person. You need to figure out who your target client is and everything that you create on your social media or in your business you need to be speaking directly to that person and then they will come Um, so and then market yourself effectively, showcasing your talent and expertise through social media, networking, collaborating with other professionals. Strong marketing build your reputation and attracts clients who value your services. So you know anytime that you are on social media, making sure that you're speaking to your target market. And then you know I really love um taking on models every once in a while, people who I know who are really good on social media, to just sing my praises. Right, you're going to expand your audience, bring the right people in Um. It's really, really a cool thing when you see it working. So, yeah, those are a few tips for finance week, just to kind of help you move from stagnant to getting things flowing.

Speaker 2: 25:34

And something I also love is planning out my content batch, creating for social media. So what I do is on the first Monday of the month, I get into everything and I create all my stuff Like this is this is what I'm doing here. So I write. I have a paper I guess the podcast can't see this. If you go to my YouTube you can see what I'm doing, but it's a little content planner. You can print them off from anywhere and I write down like this is finance week, this is social media expertise, this is time freedom, mental health and physical health. So, as you go through this, each week is a different category and I have ideas for each day for the social media content. So then, whenever I go to post my social media, I'm not fishing for ideas and trying to think of stuff and like, I have my idea and then I just create my content from that. And when I do the batch creating, um, I just get into a quiet spot. It usually takes me about two hours to do the full month's worth of social media content and I just go with it.

Speaker 2: 26:35

So, um, I hope that this episode was helpful and next week we'll be going over social media and I'm going to actually conduct an experiment with my social media as well as yours.

Speaker 2: 26:47

You know I've taken all of these classes.

Speaker 2: 26:48

I'm enrolled in the digital profit Queens with Randa Karaba right now and, um, there's so many options and, um, specific ways to kind of tweak what you're doing with your social media to bring that dream client right to you. And I'm really excited because I'm going to do a social media to bring that dream client right to you. And I'm really excited because I'm going to do a social media experiment, even with my own social media, and I would love it if you guys joined me. Um, I'll put that in my stories and see if you maybe want to join me on this experiment as well, to see if we can get our social media accounts to grow and get those dream clients in our chairs. So I will talk to you next week. Feel free to reach out to me on social media at smart wealthy stylist on Instagram, as well as smart wealthy stylist on Tik TOK. Um, I am just so excited to be back into this and rocking and rolling. So I hope you guys have a awesome day and I will talk to you soon.

Speaker 1: 27:43

Thank you for listening in today. If you have a burning question or a topic you want me to cover, leave a review and ask the question in the review. This is the best way to get your questions answered. Just remember you are a smart, wealthy stylist and you are capable of anything you set your mind to. I'll catch you later, don't be a stranger.