Market, Scale, Grow: Facebook Ad Marketing Strategy for Teacherpreneurs

193 | My Secrets to Financial Stability in Business | Business Budget With Me

• Jenzaia • Episode 193

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Effective budgeting is critical for entrepreneurial success!  That why, this week, I share my personal insights on how I manage my business finances using strategies like Profit First and YNAB. By prioritizing savings, taxes, and owner draw, and carefully evaluating expenses, it's possible to have a financially stable solopreneur business!

In this episode, we'll chat about
✨ How I allocate money my business using the Profit First method
✨ What I do with the money once it has been allocated
✨ Why (as a Canadian) I don't like using Paypal
✨ The benefits to paying annual vs. monthly 

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Speaker 1:

Hello, I just got paid $1,500 via client and I am going to walk you through how I budget money that comes into my business. Hey, I'm Jenzea, I'm a Facebook ad strategist and this is a Saturday strategy session where typically I talk about Facebook ads or marketing strategy. But today we're going to do a bit of a businessy episode and I'm going to talk to you about how I business, how I business budget, how I budget for my business. I, a few years ago now, read the book Profit First and I felt like that method really really worked well for my brain, and so that's what I use, and I use a program called YNAB. You need a budget and it is fantastic, absolutely love it Highly, highly recommend it. It allows me to do my own bookkeeping really really easily. I also use YNAB. I started using it for my personal life, so I also still use it in my personal life, and then I use it for my business as well. So when $1,500 or whatever amount of money comes into my business, I put it in and I track it in YNAB and then the first thing I do is I split that money up into four different categories. Number one is savings. Number two is taxes. Number three is owner draw and number four is expenses, and right now I am splitting it equally all four ways.

Speaker 1:

There's been different times in my business where I've split it different ways, where savings or owner draw or taxes have got a little bit more Like. For a while, I was putting 35% towards taxes and only 15% towards savings. There was a little hot minute in there that 50% of it was going to owner's draw, but right now, where I'm at 25%, each works really really well, and so I have a section at the top of the budget where it is the profit first to be budgeted. I don't ever spend out of these categories. I only ever drop money into them and pull money out as well, and I shift the budget around. So I have the $1,500 and then I allot 25% into each of these. So that is what is it? $375. So I currently have $375 available for savings, $375 for taxes, owner's draw and expenses. Then what I do is I pull the money out. So taxes I have a 2025 taxes category. The entire 375 just gets pulled from taxes into my 2025 taxes category. I do have to pay quarterly taxes, and so in March my first tax payment of 2025 will be due. I currently have already a couple thousand dollars sitting there, and by the time that rolls around I should have a sufficient amount to pay my quarterly taxes.

Speaker 1:

Next, owner's draw same thing. I split it four ways. Put it into the profit, first owner's draw category, but then immediately pull it out and put it into the owner's draw category further down, where my money just kind of sits there until I pay myself. I pay myself on the first of every month, usually if I have money in PayPal. I don't like to use PayPal, but if I do have money sitting in PayPal because a client has requested to pay me through PayPal, then I will pull whatever money out of there, and sometimes I'm able to pay myself in full from PayPal. And other times, like in January, I split it into two, and so January 1st I did half of the payment from PayPal and then January 15th I paid myself the second half from my bank account that's linked through Stripe.

Speaker 1:

Paypal's fees are worse than Stripe's. Fees is one of the main reasons that I use it. The conversion rate from American to Canadian is also kind of rough. Paypal's is worse than what my bank gives me. So the fees in general, the conversion is worse, and then the worst piece of the puzzle, the one that the biggest reason why I don't use PayPal for the majority of my transactions that I can avoid Actually there's a couple, there's a couple more as I talk through it PayPal also does not allow me to withdraw US funds from PayPal and put them into a US dollar account.

Speaker 1:

Because I'm Canadian, I am allowed to hold US funds in PayPal, but if I want to withdraw them, I have to withdraw them into a Canadian dollar account. And because my business functions in American, I have American credit cards. I pay for everything in American. My clients pay me in American. I need cash in my bank account sitting in American, and so I don't want to have money in PayPal that I have to pull out and put into my Canadian bank account that I then convert back to American to pay my credit card. That's just too much conversion. You lose way too much money converting back and forth.

Speaker 1:

So Stripe allows me to get paid in American and deposit that money directly into a Canadian account that is American dollars, and so I don't have to do any conversion. They pay me American, it gets deposited into my US dollar account and then I'm able to pay off my US dollar credit card no conversions and so I do like that, but then the number one biggest reason why I don't like using PayPal is that I don't feel like my money is safe and secure. Stripe deposits the money directly into my bank accounts and those are protected by the FDID. I think it's FDID, I'm going to Google it right now. Fdid that's. It obviously is wrong Canadian Bank Insurance insurance thing. It's CDIC. What does it stand for? Canadian Deposit Insurance Corporation. So deposits held in trust with CDIC members are protected up to $100,000 per beneficiary. So my bank account has protection if anything were to happen, whereas PayPal I've heard way too many horror stories of people's money just like disappearing for whatever reason, so I don't want to hold any more money like disappearing for whatever reason, so I don't want to hold any more money.

Speaker 1:

I usually have a couple hundred dollars there so I can make purchases off of TPT or whatever else that I need to do. That they do accept PayPal and like that's the easiest way for me to do it, but as much as possible, I try to avoid having money in PayPal. So sometimes, though, I do have a client who asked to pay me via PayPal, and so I have that as an option that I can turn on through Dubsado, my invoicing company thing that I use. And so in January I had money. That's why I work here. I had about half of my owner's draw there. But typically I do one owner's draw on the first of the month and that comes out of my owner's draw category and then savings 25% goes into savings and I have a business savings category that I use.

Speaker 1:

One of the things that my business savings is doing right now is helping me with my pension buyback. When I was on maternity leave I was able to buy back a portion of that maternity leave as a child care leave and so I'm using my business savings to do that. Technically it's not an actual savings. This is earnings of mine. When I transfer the money from my business to my personal account and then into payback the pension buyback, I am technically just paying myself. It's part of an owner's draw in the eyes of the government. It's profit in the eyes of the government because I'm a solopreneur.

Speaker 1:

Solopreneur, a sole proprietor sorry, solo a sole proprietor in Ontario, which basically means all of my business revenue is considered personal revenue. Anything that isn't a business expense is part of my personal revenue that I have to claim, and so a pension buyback is not a business expense, and so it is just like as if I'm paying myself a little bit more Business savings. I also use that for, like, I bought a coaching program back in November or December. I was able to pull the $4,000 for that and pay it cash. So just like different pieces of that, like what I want to do, and I just like to have that build up over time.

Speaker 1:

And then the remaining 25%. So the $375 from this client's payment of $1,500 will go to business expenses and I like to keep my expenses under 25%. So some of these things are annual subscriptions, like Dubsado and Flowdesk and Squarespace I all pay annually. Some of them are monthly subscriptions, like ManyChat I pay monthly. And what else do I pay monthly? Oh, chatgbt, I pay monthly, so it goes to those expenses. I have a PO Box that I also have to pay for. So there's tons of different expenses and so it flows through there. If there's a month where I can't pay my expenses with the 25% expenses, then I would go to my savings and I would pull it from my savings.

Speaker 1:

I also like to with that 25% for expenses. I like to build up like a buffer. So under my monthly expenses category or it's like a monthly expenses group, and this is where I group anything that comes out on a monthly basis, I have $250. That is just like extra from months where I didn't have a lot of expenses, where I was able to build up $250, which is about one month worth of expenses if I needed it. I also like to save up about a thousand dollars for professional development. I currently have $92.18 because some of the money for that course that I purchased back in December came from there.

Speaker 1:

I also have an annual payment pool. So those annual payments I was talking about Squarespace, stubsado, flowdesk, loom I pay for annually. Canva I pay for annually. I like to build up, put money there so that when those come due I have money available. A lot, a lot of my subscriptions are November, december, january. So I actually don't have any money saved in my annual expenses right now. But because I've been in business for four years, I know that my annual expenses are approximately $100 a month if it were evened out. So I do put about $100 a month into my annual expenses pool so that I can pull it out there when I need to.

Speaker 1:

And then the last kind of like oh no, I have two more kind of savings funds. I have an outsourcing fund, so I like to have at least a month worth of wages, if you will. Obviously, if it's a contractor it's not wages the same way, but whatever I'm going to be spending on my contractors, I like to have a month worth of that available in my outsourcing fund so that if I do have to end working with a contractor or a company that I'm working with, then I can give that 30 days notice that most people need and everybody appreciates. And then I also have a slush fund. So I have $500 in my slush fund. That's there for whatever it might be. So lots of business savings.

Speaker 1:

I think when you're a sole proprietor, when you're a solopreneur and working with clients, that kind of can come or go. And I have a lot of one month kind of contracts. I love doing ad sprints and those are four to six weeks of us working together. There's a lot of turnover in those kinds of clients and so some months I'll have two or three ad sprints and then other times I'll have a month that has zero ad sprints. And so just making sure that you have that buffer built up to help even out the ups and downs and the ebbs and flows, I think is super, super important.

Speaker 1:

The other place that I really strongly believe that we need to have as sole proprietors, we really need to have a good buffer of savings, is in our taxes. And so 2024, I paid quarterly taxes for, but I also still have $2,300 sitting there waiting. Now, if my quarterly taxes paid my taxes and I don't owe anything else, I will be very, very happy, obviously, and I'm not 100% sure what I'm going to do with that $2,300, but I have a feeling it's not going to be enough. And so, yeah, because it's never been enough, quarterly taxes has never been enough for me. I've always owed something additional and because I still am teaching, I also have, like, my tax situation is much more complicated because I have the income from the teaching position and then I also have my business income, and so it's really hard to forecast and project and to know, based on, like, what my expenses are and what my income is and what the teaching and they tax me at the appropriate bracket for what I'm making. And so two years ago I was only working one day a week and then. I've increased since then, but at one day a week they weren't taxing me anything, right? And I was like, well, I'm making more income on the side, you have to tax me on this money, right? And so I personally think it is so, so, so, so important to have a buffer and to make sure that your taxes are going to get paid.

Speaker 1:

So this is always a panicky time. Always a panicky time. Even though I have, like I said, $2,300 in my tax savings. I have I don't even know a couple thousand dollars that I can pull from throughout my budget between the slush fund and the outsourcing fund and my education fund, right, like I have money in other places and I have money in my savings, and I also, a while back, bought $2,500 of mutual funds that I could pull the money out of and use that towards my tax bill. There's so many different places that I have money in my business that I could use if I needed to, but I'm still terrified. Still terrified.

Speaker 1:

What if somehow I owe $20,000? What? I don't know what I'm going to do. Well, I know exactly what I'm going to do. I have a lot of credit. It's going to go on my line of credit, right. But I don't want that to happen. Obviously I do not want to go into debt. Taxes terrify me. They terrify me so much. I really, really don't want to owe any taxes and I've always been a firm believer of take my money, earn interest on my money, government of Canada, so that I don't go to jail and rot in a jail cell because I owe you money. Right, and I know that's not how it works. I so know that that's not how it works. But anyway, that is my fear, as I'm sure it is some of other entrepreneurs fears. But anyway, getting back to the topic at hand, that is how I go through Right now.

Speaker 1:

I actually don't have any expenses that I need to cover because I was able to with money I made in January. I was able to fund all of the expenses for February. So let's just chat about some of those. So what are my expenses?

Speaker 1:

I pay about $9 for a mailbox. So a PO box, it box, it's a virtual one. Highly recommend that you look into a virtual po box. So I've never actually been there. I've had mail sent there a couple times. They will open it and scan it for me. Uh, like they kind of take a picture of the box or the envelope and like, what do you want us to do? And so sometimes they'll open it and scan it and then I have just like a digital copy of whatever it is, and then they shred the original. And then there was one time that it was a full on like box of stuff that was sent to me and I paid for them to ship it from their location to me and that was like 25 bucks or something like that. I also had to pay for it was cash on delivery, so I had to pay the fee, like the the cat, the delivery costs and then also the shipping from their facilities to me. I could have gone to pick it up, but it was. It's a little bit far away from me, like in relation to the world it's really close, but it's like a 45, 60 minute drive away, which is just a little bit too far for me to go pick up a box when I can pay 20 bucks and get it shipped to me. So, anyway, so I pay $9 a month for that.

Speaker 1:

I have $78.40 in monthly software subscriptions. Oh, my goodness, what is happening? Okay, chat, gpt I have two Google domains. Oh, one of my, my, one of my domains is up for renewal, so that's technically an annual expense, but it's popping up under monthly expenses. But whatever, my Buzzsprout, which is my podcast hosting, and then ManyChat, which, yeah, love ManyChat. And then what else, what else, what else, what else? I am part of a membership. It costs me $26.99 a month, so that'll come out Dubsod no, that was last month. Descript I use and Zoom will both charge me their annual fees in February. And then, oh, my bank credit card has a $35 fee to it, but I don't use this credit card anymore. I'm still going to pay that fee at least one more year.

Speaker 1:

I change banks with my personal bank. If you're in Ontario, if you're in Canada, maybe. I'm definitely in Ontario. There's five major banks, so I was banking like my personal bank is with the red one, my personal bank is with the red one, and my business was also originally with the red bank. But things were getting a little bit complicated and confusing and I had some Canadian clients who wanted to e-transfer me money and that money was going directly into our personal account, which was great and fine. But it again made things a little bit complicated and so I wanted to separate my business bank to a different one. So our personal banks are still with the red bank, but my business bank is now with the green one. Again, if you're not in Ontario, or maybe even Canada, you're probably like what in the world is this woman talking to? But if you're in Ontario, though, you know exactly which two banks I'm talking about. So all of my business banks are now with the green bank, and I um like love having that separation between church and state, if you will. And I have an American account and a Canadian account with the green bank and I but I still have my American and Canadian accounts with the red bank as well, um, but I'm not. And I have my American credit card with the red bank, but I don't use it for really anything anymore, but I just I'm not ready to give it up.

Speaker 1:

It has a $35 annual fee. It's a business expense, it's fine. That's what we say, right? Anything that's a business expense, it's fine. I don't have any contractor fees. I pay all my contractors right now on a quarterly basis. I kind of really like that. So, february I actually have no contracting fees coming up. Stripe and PayPal is telling me in February I'm going to owe $110 for those fees and then TPT. It always says the same amount, which is $18.35. It's never that low. I always owe more than $18.35 to TPT in fees, but I just when TPT pays me, I just update it and whatever it's just to remind me that like that's happening. Okay.

Speaker 1:

So that's kind of a look at all of my expenses for February. I have trimmed back on a lot of expenses and I also have gone annual on as much as I possibly can, and so it makes it seem like monthly I don't pay as much, but I pay larger amounts less frequently. Same with, like the contractors I work with, that I pay quarterly instead of paying monthly. So there's a month, like February, where I pay nothing and then next month I'm going to owe like 25 grand. 25 grand, that's way too much. 2,500, 3,000 for the contractors, right.

Speaker 1:

And so I have found that for a lot of services, a lot of contractors, I'm able to actually save money by paying them in larger chunks. My clients is the same thing. My top tier package is two thousand dollars a month, but if you pay it quarterly then it's fifty five hundred. So you save $500 by paying quarterly instead of paying monthly. So that is something that many service providers offer something many companies offer. You'll find that it's like $10 a month or something like that, which would be $120 a year, but if you pay annually then it's only $100. So you save two months worth of fees. I find that that is the most common kind of like quote unquote arrangement that you can get is that if you pay annually, then you save the two months of fees. They just times it by 10 instead of times it by 12. So for me, I do really like being able to save money and paying annually. I also love the months when I don't have expenses and I can just like pad my savings accounts and not my savings accounts, but like pad my savings and it feels like a no spend or low spend month. So, anyway, that's just how I deal with finances.

Speaker 1:

If you haven't read Profit First, I highly highly recommend you do, because it's a really great way to look at your money.

Speaker 1:

It really pushed me to make sure that I was paying myself first and making sure that I was taking an owner's draw and not just funneling every single penny back into my business. I was putting a lot of money into getting the services and the software and the training that I really needed, and so a lot of the money was going back into my business and going back into my business, going back into my business. But my family also needed to eat and I needed to be able to pay myself and have a sustainable way to look at money. So I hope that you found this helpful and that you will go out and grab Profit First and read it. I will be back in your ear next Saturday with a brand new Saturday strategy session and until then, reach out on Instagram I'm at heyitschenzea and send me a DM. Let me know if this was a really great episode and you loved hearing about something not marketing, or if you're like that's terrible, horribly hated it. No-transcript.