I’ll bet you thought this was a blog about yoga, contained within a website about yoga, written by a yoga teacher. Yes, those things are all correct! But, the reality is, as a independent yoga teacher and one that works full time to run her business, I have to be really savvy about money. I recently went through a 6-month period where money was the tightest it’s even been for me in the three years of running my own business. Due to a number of issues regarding seasonal gigs and unexpected bills, I was really questioning if I could keep things running. I got back on my feet but I will say I learned a ton about how best to manage my day to day finances.
There are so many things to keep in mind when you want to build a solid financial picture. One of course, is how much you save. But, the converse is how much you spend. And, specifically, how much you spend each week in cash. This is the figure we’ll focus on today.
“Cash on hand,” is that amount of money you spend each week on items like breakfast, lunch and/or dinner out, drugstore, dry cleaners, grocery shopping ( maybe this is a separate item in your weekly budget if you have a family), movies, clothes shopping; basically anything that’s not a bill or a planned expense or fixed cost (like rent/mortgage, insurance, etc. Do you have any idea how much you need on a weekly basis just for these expenses?
Now, certainly if times are tough, you won’t be eating out or buying new clothes. But the reality is you WILL need some basic cash on hand to get through a typical week. There are lots of ways to track it if you’re not sure. On the higher end of things are tools you can download to your phone to help you track your weekly spending but honestly, I like to use homegrown tools first. I strongly believe these skills like managing your daily cash flow build into strong business skills you need to grow your business. So, here are few easy ways to track your weekly cash:
Start the week with an envelope with cash in it. Withdraw the amount you think you need to cover you from Monday through Friday. Don’t put this money in your wallet. This envelope will be your “bank” for the week, from which you’ll make withdrawls during the week. If you take $150 out on Monday because your gut told you that’s your number and by Wednesday, it’s all gone, that’s a problem. The actual amount you think you need to live on during the week will vary depending on the person and their expenses but the idea is important to have an idea of what this amount is each week. Weekly cash spending can be a huge black hole and when you’re trying to build a business or live on a limited income, it’s the one aspect of your overall expenses you can control.
Other tips I’ve found that work well:
Keep an envelope for all your weekly ATM (cash) receipts or receipts for items purchased with your debit card. I don’t use a credit card regularly but if you do, include these receipts in this envelope too. At the end of the week, add up your receipts. Write the total down and keep track of it for at least 6 months. Look for trends, notice when it goes up or down and make a note of unexpected expenses. After those 6 months, you’ll have a much more realistic idea of what you need on a weekly basis. I’ve tried to live on $100 a week and can do it but it’s not easy. While that is a lot of money on some level, when you consider even just eating for the week, $100 does not go far. I have also found that when money is tight and/or I’m really watching this figure, it builds so much compassion in my heart for anyone that struggles with money. It really gives you an appreciation of the little things, like buying good shampoo or doing a really big grocery shopping for your house.
The other great aspect of this is that when thing shift and your monthly income increases due to new products and services you’ve created, you will still use this discipline but the extra money you have will go into your savings account. The trick is not to be caught up in the bliss of having more money and spend it. The idea is to maintain the discipline around the amount you need during the week and put the excess in savings.
Along with this, another really important item to have is an overall budget. This will give you a full picture of what you need to run your life. All your fixed costs are listed here and now that you have a much better idea of your weekly cash outlay, you can budget that in and don’t have to worry about it being a black hole.
Let me also say this: As a yoga teacher, you will deal with a number of things that will affect your income. Things like losing a class with no warning, having seasonal work, having clients cancel at the last minute for private sessions and not having enough work. These are ALL things that can be addressed through a diligent business plan and a ton of hard work but in many cases, it’s just part of the reality of working as a yoga teacher. So, for this reason, knowing more about your weekly cash outlay is important.
Building discipline around money is a skill and one to be appreciated regardless of how much money you make and what line of work you’re doing. As a small business owner, it’s critical to have a solid understanding of what’s behind this expense as it’s one of the realities of your day to day life.