Why Making More Money Still Feels Tight

Making more money doesn’t solve cash flow stress when our spending expands to match every new dollar. We explain Parkinson’s Law, the feast-or-famine cycle, and how Profit First “small plates” can help therapy practice owners pay themselves consistently and scale with clarity.

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Hey Physical Therapists! I'm currently writing the book Profit First for Physical Therapists and I'm looking for advanced readers. Go to www.pf4pt.com to join the waitlist and get early access. 

*Intro/outro song credit:
King Around Here by Alex Grohl

Transcript

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You can't out earn bad money habits. Making more money is not going to solve the problem, and today I'm going to explain why. My name is Craig, and I'm the owner of Daisy Financial Coaching. Our team is on a mission to make your therapy practice permanently profitable. If you own a solo or group practice, we're here to help you build a business that creates more time, makes more money, and serves more people. This is the Therapy Business Podcast. Thank you for joining me in today's episode. Now, before I dig into the good stuff and talking about our money habits and why we can't out-earn them, I have a favor to ask of you. If you have been getting value out of this podcast, it would mean the world to me if you could like, subscribe, leave

Why Income Won’t Fix Habits

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a review, whatever it is. That would help tremendously put this in front of other therapy practice owners who might be looking for the help that that we provide. And so, if nothing else, thank you for being a listener. Thank you for coming back episode after episode. I am so grateful for you. It truly does mean the world to me. Now let's talk about money habits and bad money habits. We keep telling ourselves that more money will fix everything, right? So I meet with so many practice owners. And when we first meet, it's it's this idea that, you know, if I can just make this much, or if I can see this many more patients or clients, then everything will be fine. But when we hit that finish line, suddenly that finish line moves back a little bit further. And then it's like, okay, now I need to hit this number because you know I can't afford to pay myself right now, or money's still tight, it still feels like we're barely making it. So maybe it's this revenue number I need to hit. And then it gets pushed back a little bit further, and it just keeps going. You keep telling yourself more revenue will fix everything, but it won't. There's many reasons why this happens, and it really truthfully boils down to us at our core, our human nature, our behavior. And so I want to talk through some of these and help you kind of identify why this doesn't work, and then go into what does work and how to resolve these things without completely changing who you are, changing all the habits you've built and your own personality. So, you know, I discovered this idea, and not that I came up with the idea that overspending is tied to us, but I discovered it for myself years ago when I first graduated college and got married. And so my wife and I, we were living in an apartment. I had just gotten a teaching job, and man, I thought I was just rolling in it as a teacher, y'all. As a teacher, I thought I was rolling in it. I remember getting that first paycheck and seeing the amount. I was like, holy cow, because to that point I'd only had part-time jobs, and so seeing even just four digits on a paycheck seemed just astronomical. Um, so I had just gotten my teaching job. We were living in an apartment. My wife had just graduated college uh as well. We were in our mid-20s, and so she

A Personal Story Of Lifestyle Creep

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was on the job hunt. She didn't have a job yet, she was looking. Uh so we were on a single income. So we felt like things were tight, to be honest. You know, we had some credit card debt, we had our student loans, we had a car payment, but we were really just barely making it to the next payday. We were able to cover our expenses, eat out uh restaurants here and there, groceries, etc. But we were running on fumes. Our bank account was basically running on fumes by the time the next paycheck were to hit. Then suddenly she got a job and our income pretty much doubled. We were making twice as much as we were making before. And and once again, I was like, jackpot. We are we're rich. We're we can off we've been living on this, and now we've got twice as much. Well, fast forward two, three months later, and we are once again barely making it to the end of the month. And I'm like, how does this happen? How do we make how do we double our income, make twice as much, and yet we still don't have enough to get to the next payday. Well, what I've learned since then is this is all just part of our how we're ingrained, who who we are, and it all boils down to Parkinson's law. Parkinson's law in the easiest terms is just that our spending rises to meet our income. He he speaks more to if you have a resource, we tend to expand to consume that resource. So if you think about back in college, if you were given two weeks to finish an assignment, what would it take two weeks to do if you would start it right away? Many of us did in eight hours the night before, right? So it's that idea that when you have more time, you're gonna take more time. When you have less time, you're gonna take less time. The same is true for our money. We spend to meet our

Parkinson’s Law And The Shampoo Test

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income. So if we're not careful, we will spend more when we make more. You know, in the book Prophet First, Mike talks about a tube of toothpaste, but I like to think of uh because I was just went through this the other day uh where I'm in the shower and I go to get some shampoo and I knew we were running out of shampoo, but the bottle was like, you know, to the point where I was struggling to get anything out of it. So it's this idea that when you start with a fresh, full bottle of shampoo and it has a pump on top, or maybe you turn it over and squeeze it, you might put a huge glob into your hand and rub it into your hair. Then as the bottle gets more and more empty and you reach this point where there's you you hit the pump and maybe it's a little bit squirts out. Um, so you just make do with what came out. Then nothing comes out when you're pumping. So you have to take the cap off and turn the bottle upside down and shake it to get a little bit into your palm, and you use whatever comes out to make it work. And finally, you're trying to get whatever's sitting in the straw of the pump, or you're rubbing your fingers on the inside of the of the bottle, just trying to get any amount of shampoo to wash your hair. When we have a full bottle, we tend to just use more. We we pour it all into our hands and we use it. When we have less, we tend to use less. And that's just our human nature. So when money is good, you this is where the feast or famine cycle comes from. When money is good, we spend. When money is tight, we cut back, we get innovative, we find different ways to make ends meet. This is why we can't out-earn our money, bad money habits. If we don't have a plan, if we don't have a system in place, it doesn't matter how much we make, you're gonna keep finding that you feel like you don't have any money. It's just more zeros on the back end. You know, you you could be a hundred thousand dollar business who can't afford to pay yourself uh more than thirty thousand dollars a year, then all of a sudden you're a million-dollar business who can't afford to pay yourself more than thirty thousand dollars a year, right? Because as we grow, as you've reach those other next tiers of business, you run into this thing where where you have more expenses. So you're growing, you hit these new tiers, and more expenses come in. You need to hire

Profit First And Small Plates

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people, you need a bigger uh clinic, you need whatever it is, fill in the blank. And without a plan, we just expand to start doing those things, and we justify it by saying, you know, we're growing, it's for growth, we're reinvesting in the business. So the key here is to focus on us, to focus on our behavior. And this is where the system of profit first comes into play. And you know, I'm currently in the process of writing profit first for physical therapists. There's already a profit first for therapist book out there uh by Julie Harris. It's it's fantastic. I recommend it. Uh, my book for PTs, all you PTs out there, or speech pathologists or occupational therapists, uh, this one's gonna be coming out uh soon. And so we outline this idea of utilizing profit first, but in your specific industry. And what that looks like is leveraging that behavior. When we have more money, we tend to spend more money, right? So if you open up your bank account and you look and there's a bunch of money in it, you might start to feel like you can spend it. You might feel like you have more than you really do. That one bank account is holding all your money, and some of it's earmarked for payroll, some of it's earmarked for uh rent, some of it is earmarked for your paycheck, some for taxes, some for profit. But if we don't have it organized in a way to where when we look at it, it's still just all in one lump. We don't have a way of knowing. So it's easy for us to get trapped in this idea of not knowing how much we can spend and then spending. So if we know we spend more when we have more money, what if we were to use that behavior in a different way? And so, in the idea, the first principle of profit first is this idea of small plates. And so, you know, we are ingrained in us growing up, if you're like me, kid from the 80s and 90s, I was always told, you know, you've you finish what's on your plate, there's starving kids somewhere. That if you don't eat everything, then then they're not gonna get to eat somehow, right? Uh and what I don't want to get into the psychology of all that because I'm sure that probably was not good for for us, but ultimately it's this idea that if we are wired to eat everything on our plate and we're also wired to fill up our plates, if we're wanting to consume less food, then instead of trying to change that habit, what if we just changed the size of the plate? We changed the resource to so then we could fill it up and we could eat everything on the plate, but we're consuming less. And so, what if we take that idea and we put it into your business finances? So instead of having one bank account with all of the money, what if we were to break that up into smaller plates or other bank accounts? And so you have a bank account for your profit and you have a bank account for your owner's pay, and one for your payroll, and one for your operating expenses, and one for your taxes. And so when you open up your phone or your bank account and you look to see how much money do we have, it's no longer these financial gymnastics you're doing in your head trying to figure out how much did rent get pulled? Do I um do I have enough for payroll? What about taxes? When are the dues, quarterly dues? So you're not trying to figure out how much of that money is for each. You just get a very instant, clear picture of where you stand in your operating expenses. So if you're trying to pay an invoice and you want to see if there's enough in the account, look at your operating expense account. And then if you want to run payroll and pay yourself a paycheck or take a distribution, look in the owner's pay account. They're gonna give you a clear direction on where you stand in each category. And the beauty of it is instead of thinking you have so much money, when you look at operating expenses, and it's only a percentage of all the money you really have, it's gonna feel like less. It's gonna feel like you have less because what you actually have is what is earmarked for the operating expenses. This is how you can intentionally make sure that you are taken care of. This is how you can break those bad money habits uh without just trying to make more sales. Actually, this is gonna make sure that when you make more sales, that you are more profitable and more money is going home to you, the business owner, or more money is uh being used to invest in building up your cash reserves or pay down debt or pay bonuses out to your team, however, you want to utilize those excess funds, that's not gonna happen by accident. It's breaking from this reactive mindset. That's how we are with money. It's uh things are good, we react

Multiple Accounts For Real Clarity

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and spend. When things are tight, we react and we we stop spending or we cut everything or we panic. What if we became proactive? And that's what this system does. It's creating a plan of I'm going to put this much money every time a dollar comes in, I'm gonna put this much into operating expenses and this much into profit. We are now intentionally profitable, we're now intentionally setting aside money, and it's just like the age-old envelope system, you know, back when our grandparents were out shopping, or you know, even even uh my parents used envelopes. So you go grocery shopping, they'd have a paper envelope with the word groceries written on it and cash sitting inside. That's exactly what this is. If you were to get to the checkout counter and you open that envelope and there's not enough money in there, you can't accidentally overspend. You have to decide am I gonna put some things back? Am I going to pull some cash out of a different envelope? What am I gonna do? Versus if it was all lumped into that one envelope, you get to the checkout line and the total comes up and you pay them. Even though you were had already overspent on groceries that month, you won't know because you'll have all the cash lumped together. And maybe you just pulled from uh the rent payment or the utility payment or clothing fund, whatever it is. So moving this into the business side, this is going to completely change how you view money. It's gonna make sure that as you scale, you're gonna scale in the best possible way. This shift, stop trying to change yourself, stop trying to change your habits and behavior and leverage them and use them to get better and stronger with your finances. If you need help with this, like I said, there's there's books out there. So uh in the show notes, I will link to both uh Julie's book for therapists and then uh a landing page for my book where you can join the waiting list. We're gonna have some some freebies on there, uh, uh some working on putting a quiz up there so that'll give you some results that are really catered to you and your business and telling you exactly what uh what you should be setting aside for each category. So keep an eye out for that. But you can join the wait list to be the first one to know about the book, and then we're gonna be looking for advanced readers uh soon. So uh you can snag a spot on there so that you can get a copy of the book before it ever releases. Um, if you want help sooner than that, or you know yourself and you're

Proactive Money Systems And Next Steps

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like, I need the accountability, I need someone walking with me through this. That's what our team does. So we have a team of coaches who are ready to help you put this into place so that you are uh you're not trying to out earn the bad money habits anymore. You are focused on creating the systems, leveraging your behavior, and becoming more profitable than ever, paying yourself what you deserve, taking home bonuses from the profit account, paying your team better and feeling confident in what you're paying them without worrying that you're paying them too much and it's hurting the business, or you're not paying them enough and they're gonna leave you and go somewhere else. All of this can happen with just a little tweak to your money system. So in the show notes, you can connect with one of our coaches for a free consultation. They'll just get to know you, answer some of your questions, and share how our coaching program works. All right, here's two not out earning our money habits anymore. Go out there. Yes, make more money, but let's start getting organized with the money that you already have. Thanks for joining us on the Therapy Business Podcast. Be sure to subscribe, leave a review, and share it with a practice owner that you may know. If your practice needs help getting organized with the finances or just growing your practice, head to therapybusinesspod.com to learn how we can help you.