The following article is contributed by John Teng, MS, BS, LMT, NCTMB, ACMT and Director at the European Massage Therapy School. John was previously a Data Processing Manager and a VP of Information Technology prior to becoming President of a Credit Union. As a result of his solid financial and business background, John became a successful massage therapist and a massage business owner. John has a lot of valuable advice to contribute to new massage therapists to ensure they start off (financially) on the right foot.
One of the benefits of massage therapy is to de-stress. But where does stress come from? For our early ancestors, stress is mainly caused by hunting or being hunted. But in our modern society, stress can come from all different directions.
One of the main modern day stressors is finance. More couples file for divorce because of money issues than any other reason. Many households are living paycheck to paycheck even when they are making decent money. Empty nesters are worried about their golden years because they did not or could not save enough money towards their retirement.
As a massage therapist, what can you do right now so you can live comfortably and ensure your financial stability in the future? Here are 3 simple steps to take to start managing your finances in a responsible and sustainable manner.
- Know your monthly income and expenses. The journey to financial stability starts with knowing how much you make and how much you spend. I created a very simple spreadsheet that you can use and customize to your needs. Once you have everything in front of you, your fear of the unknown will be gone and you will see that it is quite easy to have control over your finances. If your net is in the black, congratulations! But don’t celebrate yet, because this spreadsheet does not include your annual expenses like license renewal, continuing education classes, etc. It also did not leave anything for entertainment. All work and no play makes a very dull life!
- Increase your net worth so you can start a savings plan and have some fun. There are only 2 ways to increase your net: by increasing your income or by decreasing your expenses. This is where you have control over things. But you need discipline and determination in order to succeed. I suggest you start by cutting your expenses first. That daily $4 coffee would be the first expense to go, especially if you are already in the red. Bring your own coffee to work instead. Make your own lunch in lieu of eating out. Subscribe to Netflix or Hulu instead of paying an arm and a leg for cable. Shop for a more affordable cell phone plan. Get a roommate to share your rent or help pay your mortgage. Raise the temperature on your thermostat one degree in summer and lower it one degree in the winter. Make sure your home is well insulated. Turn off your faucet while you are brushing your teeth. Check for any water leaks. Turn off lights when leaving a room. Change your light bulbs to CFLs or LEDs if you have not done so yet. There are so many things you can do to cut your expenses and help the environment at the same time.
- Add 10% of your net income to your expenses as your savings. Now that you have cut down on your expenses and/or gotten another part time job, aim to put 10% of your net income into a savings account. Financial experts suggest you have at least 6 months of income in savings for unforeseen emergencies. If you save 10% of your net income per month, it will take you 5 years to have 6 months of income in your emergency savings. This is where most people give up because the task seems so daunting. But, if you can do this automatically by opening a savings account and have your bank set up an automatic transfer to this savings account every pay period, you would not even miss this money. Just make sure you add the 10% to your expenses side of the spreadsheet and you are still in the black. If you are in the red, lower the percentage until you are the black.
Once you have your 6 months emergency savings, keep taking the 10% out. You can now use this extra money to invest for your future and plan a well deserved vacation for yourself. Knowing that your financials are in order will make you a happier, less stressed and more confident person.
And believe me, your clients can feel your happiness and confidence through your touch. This in turn will bring you more loyal clients and more income. You have now started your positive cycle to prosperity.