Money Talk: Understanding How Budgeting, Saving, and Investing Can Improve Your Life

We’re talking all things money with financial coach Kate Grayson.

Money Coach Kate Grayson

What is your background (education, previous jobs and/or experiences that led you to become a financial coach)?

Ironically, my academic and professional background has nothing to do with finances...and I think that's what makes me such an approachable and empathetic money coach! I know what money struggles are like, so I approach my clients with empathy, instead of the traditional financial jargon.

I got into money coaching out of personal necessity. When I was 27, I was diagnosed with chronic Lyme Disease, had to leave my job, and couldn’t work for two years. I went from having a well-paid job to being an unemployed, full-time patient with tons of medical expenses. I saw the degree to which financial stress can eat away at every aspect of well-being and eventually realized I could turn my situation around for myself by re-aligning my budget.

Once I realized how common financial struggles are and that we’re usually silent about our financial anxiety, I knew there was nothing else I wanted to do with my life. It’s amazing to be able to help folks complete turn around their finances - and thereby have more space to be emotionally present in their lives.

What is the value that a financial coach provides?

More than anything, financial coaches provide you with a plan and serve as an accountability partner. Finances are intimidating and emotional, making them really hard to tackle on your own. You can work with a financial coach to figure out where you are actually at financially - and not just where you think you’re at - and set goals for where you want to go. Working with a financial coach helps you bridge the gap between the two, which looks different for everybody. The end goal is the same: to use money as a tool to get you want to go.

Why is financial planning important for small business owners?

Small business owners have much more complex financial lives than an average salaried employee. That can be amazing and powerful: your finances are truly limitless and in your control. But it also comes with drawbacks and things can get out of control if you’re not giving them attention. Business owners and entrepreneurs are often amazing at nurturing their business finances but often neglect their personal finances. It’s important not to forget that our businesses are fundamentally meant to serve us in creating the lives we want.

It’s essential to have a personal financial plan and recognize the challenges of budgeting on an inconsistent income. The missing link is often just choosing to give your personal financial life the same quality of focus that you give your business.

Let’s Talk Finances + Business

What is the difference between a financial plan and budget?

A financial plan is the BIG picture. It lays out where you want to go, what kind of life you want to lead, and what the high-level plan is to get there.

A budget is the monthly nitty-gritty. Identifying how much to put towards debt payoff, monthly grocery budget, how much to save for emergency expenses, etc. Getting your budget right is fundamental if you want to meet your broader goals laid out in your financial plan.

What personal factors do you think someone should consider before making an investment or large purchase (such as branding) for their business?

Ideally, you want your business and personal finances to be separate. You should make business investments from a business analysis/growth perspective, and have the systems in place to ensure that your personal finances won’t be affected.

To better understand what a business investment will mean in your personal life, ask yourself:

• What impact will it have?

• How long is your financial runway if this investment takes a while to yield returns?

• How quickly will the business investment need to yield returns in order to be feasible?

• What will you have to sacrifice in your personal life in order to make this business investment?

• What is your personal financial risk tolerance?

• How much anxiety and stress will this investment cause you?

You want to get really intimate with how your business finances are affecting you personally.

Is there a good rule of thumb for investing in your own business/personal projects?

I don’t believe in boilerplate advice, as everyone has extremely different needs and lives, which need to be honored when making a financial investment or decision. For example, I am single, don’t own a home, and have not dependents… that means I might be able to take on higher risk than somebody with a mortgage and daycare costs.

My only rule of thumb is to make the financial decisions that’ll let you sleep most soundly at night.

What is your #1 tip for saving up for a big purchase or business investment?

Break it down step-by-step!

For example, if you want to save $10,000 for new website, ask yourself how quickly you want to achieve it. If in 5 months, that'd mean saving $2,000/month. If that feels too aggressive, how would you feel about making it a 10 month goal instead? Most decisions are a tradeoff between money, time, and energy, so ask yourself which is most important to you in this specific situation, and then make a plan accordingly. Then break it down even more - saving $250/week feels more accessible than saving a lump sum of $10,000.

What free and paid tools would you recommend to someone looking to improve their financial situation?

Go to Annualcreditreport.com and pull your credit report. You can usually access it for free three times per year (well, once per year for each of the three credit bureaus), but during COVID you can access it for free weekly.

Take a look for errors, and see what you could improve upon. Your credit score isn't a full assessment of your financial picture. But it is an important factor - especially for business owners, who might need to be able to access lines of credit during tough business times.

Walk us through building a simple budget. What should a budget include?

Your budget is fundamentally a reflection of your values and priorities. Your spending and savings allocations should show what's most important to you.

If you highly value travel, but a lot of your money is going towards takeout, then that's a disconnect that needs to be rectified. Everybody's budget line items will be different, but your budget should fundamentally show everything you're spending on and saving towards.

What are the top three things you are asked as a financial coach? And what are your answers to those questions?

1. Are my finances the worst you've ever seen?
   No! Everybody always thinks they're "the worst," but nobody ever is...we all have our own unique struggles and lives.

2. How can I get out of debt?
   The best thing you can do is to create and stick to a plan, as simplistic as that sounds. You want to focus on one debt item at a time, and have your extra money go towards that. 

3. How much money should I be saving? 
   We all have extremely different lives, so our savings needs will be different too. What I need will be different from what you need. This is where it again becomes important to understand your priorities, goals, and risk tolerance.

It’s important to identify what you're saving for. Emergency savings, down payment savings, and vacation savings are all different and should be treated as such. A lot of people just have a generic "savings account," but it'll be a lot easier to motivate yourself to meet your targets if you have more specific goals.

What is a common mistake you see people make regarding their finances?

Not understanding what their true, unfiltered spending is. Our perceptions are almost always different from our realities when it comes to spending.

What is one simple tip that readers can implement today to improve their financial situation? 

Call your service providers and ask for discounts on your rates. This includes insurance providers (and works especially well with auto insurance). You'd be shocked at how willing they often are to negotiate...you just have to pick up the phone and ask!

Find Kate Grayson at:
beyondmoney.co & on Instagram @beyondmoney.co

Want more discussion about money, goals, and making your business dreams a reality? If you are an artist or creative business owner, we invite you to join our Facebook Group: Six-Figure Arts Business.