Manage Your Money Like a Boss
You know that feeling when you’re about to jump off of a diving board and you get so nervous, overwhelmed, and scared to the point that you don’t do it? We’ve all been there.
Quite often we feel the same when it comes to digging into our finances. When you’re irregularly looking at your finances, you don’t always know what you’re going to find. Which makes it an overwhelming experience. But by creating habits to help us better manage our finances, we are able to gain confidence in them and our abilities.
Here are our 3 tips to help you manage your money, like a boss!
Pay Down Your Debt
Paying down your debt is the first thing that you should be doing. It’s important to take interest into consideration too, especially if you have multiple forms of debt to pay. It’s also important to ensure that you’re paying down your debt with the highest interest rate first, this will help to prevent you from owing more!
If you are owing money on credit cards, the interest is very high. Therefore, you want to be fully paying your cards off month to month, not just the minimum spend. By paying down your debt you’ll be able to strengthen your financial health and reach more goals!
Get Intouch with Your Financial Health
If you don’t know your numbers, then you don’t know your business. Just because your revenues are high doesn’t mean your business is healthy. Those top-line revenues are great, but after all of your expenses are deducted, it’s your bottom-line (aka profit) that actually matters. Salons on average have profit margins of 2%. Meaning quite often we’re walking a fine-line between profitable and well losing money.
Financial security is something you need to take seriously. Think about everything you have gone through this last year, how much would things have been better with that extra cash on hand or an emergency fund? It’s not cool to be living the debt lifestyle and just keep racking up charges without being able to pay it off. Being financially secure means that if you have a dip in appointments, or suddenly have to close next week or for a few months, your business will still be okay. For example by creating an emergency fund that will help to cover business expenses for 3 months, means that if you do have to close, your business will still be operational when you’re ready to open again!
Hair color is one of the top expenses your salon will face, by tracking and charging for color used during each session, you’re able to cover all of your color inventory and strengthen that bottom line! We on average use about $80 of hair color during a color session now. When your pricing doesn’t reflect this, your business is losing money. This is where it is crucial to separate your parts (color cost) from labor (hourly rate for stylist) on all your color services to ensure you are profitable. SalonScale breaks down hair color costs in a way so you get the exact breakdown of the cost of your color in your bowl. (Click here to get 30-days free!)
Allocate a Percentage to Everything
As business owners, it comes down to you to ensure that your business stays afloat. By allocating a percentage of your money rather than a fixed amount each month you’re able to make adjustments to your budgeting practice that are more sustainable and attainable. For example, based on your tax bracket you’re able to gauge how much you will be paying in taxes. Now say your taxes go up, because you’ve been following a percentage method you’re able to to adjust your budget based on the percentage of taxes you pay. This way you’re still allocating your money to pay for taxes and no longer have to worry about finding the money come tax time.
This method of budgeting allows you to put yourself into a position to have everything broken down and feel more in control of your money. By designating your money you’re able to ensure that you can cover expenses you incur, create an emergency fund, pay your taxes, pay yourself and still make profit!