SNM270 Penny Saved is a Penny Earned with Gabbie Kelly

Jonathan Green: Penny saved is a penny earned with cash management coach Gabby Kelly on today's episode. Today's episode is brought to you by Canva. When we finally decided to grow our social media presence, canva was the only option. I tried dozens of alternatives, but I had to admit that nothing else comes close. We use canva for social images, print on demand designs, and tons more at Serve Nomaster. Grab a free account today@servgnomaster.com slash Canva. Announcer: Are you tired of dealing with your boss?

Do you feel underpaid and underappreciated? If you want to make it online, fire your boss and start living your retirement dreams now, then you've come to the right place. Welcome to Serve No Master podcast, where you'll learn how to open new revenue streams and make money while you sleep. Presented live from a tropical island in the South Pacific by bestselling author Jonathan Green. Now here's your host.

Jonathan Green: Now, this is a topic that I'm very interested in because so many people focus on making money and they never pay attention to their outs. And I'm certainly guilty of this. So I'd love to know, where did you start? How did you first get interested in the topic of cash management? Because it's usually a topic everyone runs away from. Gabbie Kelly: Totally. Well, my background in accounting certainly helps.

I spent my first ten years of my career doing financial auditing and internal public company accounting. So every day for the past ten years, I've thought about money and worked in spreadsheets and worked with numbers. And it wasn't until I started working with small businesses that I realized the biggest need and the biggest value I could give them was tips on how not to run away from managing their money. Jonathan Green: What do you think is the root cause?

I often think about how high school education has changed so much over the last 50 years. Everyone thinks home economics was learning how to cook, but it was also learning how to do home economics. Like, the name is in the economics is in the name. I remember the first time I saw I went to college and they were offering free credit cards, and I saw commercials saying Apr and APY, and I was like, I don't even know what those mean.

And I feel like they're way more important than learning how to find the area of different shaped triangles. We learn so much non practical math information. That's one of my regrets. And I wonder why we've removed that from education. That's my thought. I think that's where it started for me, is that we're really not taught even what financial terms are. Like, you don't learn what credit card debt is until you're in it.

So is that where it starts, or do you think there's other causes for why people run away from money management? Gabbie Kelly: I think that's a huge piece. I also think that it starts with our parents and our history of money in our families that writes this money story we have in our head and also perpetuates the taboo and shame of money in our culture.

And so because it's so ingrained in our culture to not talk about money with our family, with friends, then I think that has permeated our education system, too. I do think it's incredibly important to bring financial literacy, personal money, and budgeting into high school and grammar school education. And then now bringing that money story with you throughout your entire life and starting a business, you are carrying extra weight into business ownership and entrepreneurship that you don't have to.

It's a skill that can be learned and built upon, for sure. Jonathan Green : You brought up something called your money story. Now, do you think this is I remember a lot of times my parents wouldn't tell me what things cost, and so I had no understanding the difference in the price of a house and a bicycle. And one thing that always frustrated me, so I always tell my kids, because I hate it.

As a kid, I was like, how can I understand anything if you won't give me even that? My kids don't know how much money I make. They're young enough. They have never asked that. But I think I would probably tell them because it's very confusing when you can't even get, like, a baseline. And I didn't know what my dad made until I saw a student loan application, and I saw what was written on it.

So I was 18, heading off to college, and that's the first time I saw it. And I was like, oh, now I know, because I had no concept. Do you make $1,000 a year or 100 million? And I also wonder oftentimes when I'm selling a product to someone or talking to someone, I realize that a lot of people have a self sabotage.

They have these beliefs like, money is the root of all evil, and money changes you, and it causes us to sabotage our lives and sabotage our businesses because we don't want to become evil, right? So there's a part of us that's always stopping us if we have those core beliefs. Is that what you mean by a money story? Gabbie Kelly : Definitely, that's part of it.

I think that that mindset about money, the self sabotaging and the narratives in our culture saying that we don't need money to be happy, but there's definitely a wage gap for a lot of people to make and meet their basic needs. There's a narrative in our culture about being on this entrepreneur startup Grind. You pay yourself last. You're waiting for this unicorn moment where you hit this crazy valuation. You're able to sell your company. That's not normal for everybody else.

We just see that in the media and also social media comparing ourselves to everybody else's best case scenario for their lives, along with all those pieces of information that we're missing or that weren't talked about. Those feelings that we get when we think and talk about money all coincide to create this environment within our mind and within ourselves and our relationships. To not talk about money, not strive to be as wealthy as you can be, to change your family tree.

And that self sabotaging system keeps us in the same place without being able to see all the opportunities and possibilities that we have. Jonathan Green : I like that you brought up money can't buy happiness. I remember my best friend in college one time said to me, money can't buy happiness, but it could buy you a front yard, air conditioning, good medical care. He's like, and those things make me really happy. And I wonder where that phrase came from, because it's so not true.

Like, money can pay for you to have a nice house. It can pay to have people leave you alone. It can pay for you to take care of your family if someone gets sick. It bridges so many gaps. I wonder where that phrase came from. It's almost like maybe rich people made up that phrase so poor people would be convinced to not try and change their lives. Like, it's that powerful and insidious.

And there are all these little phrases that get stuck in our heads, and we really have created a culture where people compare their back of house to everyone else's front of house. Like, what you see on social media is never reality. It's so photoshopped. My friend used to be a photographer for vogue, italian Vogue, the really fancy one, and he would photograph the most beautiful models in the world and then spend 14 hours minimum photoshopping them.

And I was like, I always thought you photoshop people like me. But it's even the most beautiful people in the world have to be more photoshopped so that what you're seeing is never actually a real person. Those people don't even exist. And it's so confusing. Like, you can meet the actual person and be like, oh, you look nothing like your pictures. That's because it's not their picture anymore. And the same thing happens on social media. There's an airplane in los Angeles.

It's like half of a private jet. It's like the front half of it, and you can rent it for 30 minutes to do a photo shoot to make it seem like you're on private jet. And people do it all day long. I wish that was my business idea. Like, I wish I thought of that, had a bunch of half private jets to rent. But people really have an inability to separate fiction from reality. So they say, oh, this is someone on a private jet.

What is my life actually like? And they don't see the person's actual life. And I also think about all these really wealthy people that have, what, admires, like, three divorces, five divorces, their kids hate them so much, they change their last names. I don't want that. I want to be wealthy. But I also don't want my kids to full hate me. I want some balance in the middle.

But we're chasing these dreams because we don't have a sense of what things cost or how much money we need to make or to get what we actually want. So where does education begin? Like, how early can we start teaching our kids the right path to wealth and the right path to understanding money and kind of finding their path in the world? Gabbie Kelly: I have a few points on that one. In order to help our kids, we need to help ourselves first.

I have two small children, four and two and a half. And so we already talk about what things cost. They love to use their piggy banks to save and to spend and to invest. They make those jars that separate it. But truly, I think that we need to spend more time changing that story within ourselves. Because if we cannot be that person, live that life, integrate it within our daily habits, then our children are not going to pick up on that.

The saying, do as I say, not as I do. They're not going to emulate and replicate, mirror what we say as much as what we do and how we do it. The other thing I wanted to point out is your note about money not buying happiness and then about all these wealthy people and being their divorce statistics and about their children. I think what's important here is that our goals should never be based around money.

And what I say a lot to my clients is your business should be serving you. So if we're chasing money, we're never going to be happy. But if we are creating our business and our lives around the personal goals that we want to achieve, like happiness, like time, freedom, like spending time and creating experiences with ourselves, our family and our friends, and the money in our business supports that, then I think money can buy us happiness.

And so I think that there's that nuance there that I think you touched on a little bit. Jonathan Green: How can someone live their money life, like in a daily way you were talking about you have to live it yourself so your kids can emulate it. Maybe we can sort of like what are the most common mistakes people make? I often think about there's a lot of shame with being bad at money. And when I think about shame, it usually starts off same, like depression.

It makes you think I'm the only one who has this problem. And it's like most people in America in debt, just like most people in America are overweight. Most people have these problems, but every single person says I'm the only one. And that when you tell people you're having money problems, everyone who also has money problems will shun you and throw you out of the tribe. And that's why I think it's really hard to admit you have a problem.

Like you want a confidentiality agreement before anyone can find out, right, that you have these secret issues. And it's very challenging. I think of this sometimes when I ask people for help in different areas of my life because I have a reputation in the business. I always think, if this gets out, could it hurt my business?

I had asked someone for advice about a project the other day and it was really hard for me because I was like, oh, I've reputation of being really good at this thing, but for once there's something wrong with it and I can't see it. I'm too close to it, this project, I'm like, I'm too close to it, I can't figure out what I'm doing wrong. And that was really hard for me.

It's even hard for me to talk about it right now, even though I'm not being specific. And so there's so much attached to, especially now. We've gotten really wealth obsessed in our society and there's so much attached like, oh, you're not good at money. Or if you're in massive you have to go into massive debt to make people think you're wealthy even when you're not. It's like this complicated cycle. So how can people maybe what's the starting point? What's step one of this process?

Gabbie Kelly: Step one of the process is giving yourself grace. Just like we've been talking about this whole time, we haven't been given many tools in order to succeed. So step one of the process is saying, I'm doing the best I can, I am good enough and I deserve all that I know my life can give me. And then bringing awareness it's really hard for us to stare face to face at our bank account, the number on debt statements, credit card statements, those sort of things.

Bringing awareness to your habits and your lifestyle and your spending can be really helpful without even making a technical change. I am a big budgeter, but I don't think a budget is a very specific line by line budget is really necessary for everybody. I think the point is you need to create your goals and then backfill the budget in order to make those goals happen and they don't have to be limiting.

Many times when we talk about money and we hear the word budget, it feels restricting. What I think the reframe needs to be is that a budget allows you to spend money and it gives you the guide rails or the guardrails in order to help you stay on the path towards your goals.

And so what I like to do is go through, even for my business clients, a bit of personal budgeting in talking about how much should you be spending on your monthly fixed costs, how much should you be investing, how much should you be saving? And then guess what? The rest should give you some guilt free spending. And we want to take away the guilt as much as possible.

And part of that is giving people a plan so they don't feel as crushed by all these things that we don't talk about, like credit card debt, other business debt. Jonathan Green: And one of the challenges is that as you get older, you have more expenses. As my kids get older, more and more of them have to go to school and have after school activities. And there's a constant as I make more money, there's like, oh, and I have more expenses.

And it gets tricky because I also always want to balance spending as much time with the kids as possible versus making enough money for them to have that good life. And it can be very tricky. I live in a business where it's big ups and downs. You have a big project, massive revenue, then two slow months, then another big month and two slow months. And so I sometimes think about people like a traditional job. I'm like they always know what they're going to make.

Like my best friend from college, he has a really good salary me, so as much money as I make. But it's consistent. And I kind of envy that in a way because there is the complexity when you run your own business, you can have ups and downs as a lot of people have seen over the last few years. Like surprises and shocks to the market can really change things.

You can have a really great month and a really bad month, and another bad month and an amazing month. So how can people adapt to that type of instability? We're fortunate enough that whenever we've had a family emergency, we've had enough to get through it. But sometimes a big medical emergency or something like that can really just be a good kick in the teeth. Like your whole savings disappear in one day. Gabbie Kelly: Yeah.

So I think that what you mentioned, having unpredictable income can hold a lot of people back from this idea of budgeting. Also, I think the statistic out there is something like 32% of Americans can't afford a $400 emergency. So that just gives you the state of where we're all coming from and that this is almost normal and very common as far as the unpredictability and planning. This all comes back to having a good cash management strategy and understanding of what you need from your business.

And so those unpredictable months can be handled as long as you know what you need from your business. There are ways to create more predictability by carrying those amazing months into some hard months and being able to as your business, float you as the owner over hard months. And that's all part of creating a cash management strategy that allows you to achieve your goals and that can be predictability.

Jonathan Green: I think a lot of people's strategy is when the money's coming and you live it up and when it's a tight month, you tighten your belts and it's like small month, big month, small month. When you talk about a cash management strategy, let's talk about that. What's a foundational or beginner's level cash management strategy? Gabbie Kelly: I love what you said. When it's a big month, you live it up. And when it's a hard month, you tighten the belt.

That just our norm, right, is to see those, like living it up in the idea that all these people are having these big months. But the reality is when you make more, our habits are to spend more. And so the key and foundation of what we use to cash management strategy is breaking out your goals for salary, your own owner's compensation, profit, building in profit into your business, taxes, saving for taxes.

Some of my clients that I've worked with have had to put their tax payments on their credit cards and then after a really great year because they haven't been saving for taxes, and then guess what? Now they're ten K in credit card debt, starting a new year from the previous year, which they thought they just hit it out of the park. So salary, your owners comp, profit taxes and then the rest for your business.

And when we talk about these goals, we're talking about them in terms of actual cash. So you're putting aside money from your income, from anything you get paid from customers and clients, and you're separating it. So historically we've had one bank account. Everything comes in, right? Then you have those high months and everything goes out. And then you have some low months, a little trickles in and you're sitting there panicking before payroll or before trying to pay vendors and staff.

And what we like to say is have your goals in percentages or dollar values and put away separate money. So when you do log into your bank account, it doesn't feel like this crazy high month. And now I get to go spend. You're putting aside money and you're feeling, wow, I'm achieving the goals that I've set out to achieve. And that helps us create some more motivation to continue our goals and gives us more information on how to spend money in our business.

Jonathan Green: So as long as I've been in business, every time I go to the bank, I say I wish every time I get a payment because I receive thousands of payments a month, big and small, tons of transactions from clients, vendors, partners, all these different projects I work on. It's the nature of my type of online business. It's very normal. But whenever I go to the bank, I say, hey, can you just, every time a deposit comes in, split it up by percentages.

And they look at me like I'm crazy. And I don't know why it's such a hard feature. It's like, oh, you should just do it, man. I just can't. There's so many transactions coming in because it was automatic it controls me, right? And it's very interesting. Even with a lot of like I have a lot of these cool, newer, online only super cool banks, they still can't do this most basic thing.

And I just wonder why all these simple things that would be so helpful to people are so hard to get your hands on, like these financial products or education. And it sounds like what you're talking about is similar to, I think it's called the envelope method, right? When money comes in, you put into different envelopes based on either an amount of percentage. It's what I've always wanted to do. And they just make it super hard to do. It automated.

It's like almost every bank is no, you're just going to earn a regular salary. So that's how we're going to do everything. So there are some additional challenges, right, for online business. And you have a business like, oh, can I just set up what my salary? Because I can't set up an automatic salary payment to myself because what if I have a slow month, right?

So there's these complexities that it's really hard to get even these super cool modern startup financial institutions to understand they're still like, so far behind. Gabbie Kelly: So the envelope method you mentioned, very helpful. I used a similar process to pay off 60, 90K combined with my husband and I in student loan debt before we had children. So I think it's very powerful. I also think that sometimes it can be.

We used Dave Ramsay, but I think the mindset of scarcity can sometimes work against us when you go too crazy. And then I'm also a certified profit first professional. So that takes a similar envelope method and applies it to your business. Now we use a banking partner that was actually, this is going to sound hilarious developed by accountants, but it's gearing more towards a profit first method.

When our clients have used national banks, I'm sure you can think of many, they get hit with charges because they didn't have minimums in their checking accounts. They get charged for opening more than one checking account. All of these tools that make it easier for you to keep the money in your business, banks are not allowing because they make more money by not offering those tools with all these charges and fees.

And so we found a banking partner, finally, that allows transfers by percentages, will allow our hope for automatic percentage transfers between accounts, free number of checking accounts, I think up to 40 or something like that. So it's hard work to find the right tools, which is why many people don't do it, right. Thinking about changing your bank sends people running to the hills. That's where most people fall down.

And when you think about the value that you can get from having an envelope system, paying yourself more, getting more time, being able to plan for low months, imagine being able to make another 40K in your salary and save ten K in actual cash profit. And then the only thing standing between you and that is changing banks. People still fall down. Jonathan Green: I switched banks a couple of years ago.

So I used to booth a big bank, and every time I would go to the ATM, the ATM charged me $5. And then my bank back home would charge me a $15 convenience fee. And it was brutal. I was paying $3,000 a year in fees. No matter how I would do my bit, there's always something, right? They're always finding some way to get you or this and that. I switched banks and my bank now instead of charging me $15, they refund the file.

I didn't even know it's not even on their website. I didn't even know until I got a weird transaction for like $90.01 month and I figured out what they were doing. I was like, this is amazing. Every time I take money out of the bank, I make $20 just by switching banks. And I now have three different banks I work with.

I always have backups and backups, but each time it is a challenge to switch banks because you have to change every single payment that comes in. I actually found some payments a few weeks ago that were going to my old bank. I was like, I haven't changed these in years. That's where that money isn't. It is a challenge, but there are certain things in business that they make them really hard to change, like changing your website host or changing your email provider.

All these services, they make their money off you being stuck changing banks. They make it really hard. And banks, like, sometimes when I try and open a banking, how they ask all these really wonky questions like, oh, you have to proven seven pieces of ID and all these different recent bills. You're asking why I do paperless billing? Well, then we can't help you. It's like, what am I supposed to do? I've definitely been turned down.

I feel it was one bank did turn me down about something. Like, I didn't have one of the pieces of paperwork they wanted or they didn't like my address. I was like, what am I supposed to do? I have all my credit cards. Go, there this address. I have all ten years of history there. But they always find something, so it's really hard. I think they agree with each other and make it hard to switch. Like a little agreement they've made.

I wonder if that's what's going on. A little backroom, wink wink. Let's make it hard to switch. Gabbie Kelly: I wouldn't be surprised. I can't confirm. But I do think that there's been enough outcry and people leaving go to online banks that are feeling the need for all of these tools that whenever I talk to my partner at our bank, I ask him, is everybody else this excited to talk to you?

Because they literally have never been so excited to talk to a real person at a bank. Somebody who I know as a human to human connection that cares about me and my clients and helps us achieve our goals and answers the questions that we have and does it with us customers being first. And so I think that's truly it sounds crazy. Like, what other business can you go around, charge people, like, ridiculous fees, make it super hard for them to change and still be in business.

Here we are, finally getting some solutions for them. Jonathan Green: Yeah, it's nice to know that more options are coming out there and just so strange how many people are stuck with really bad banks or just tough situations beyond that. Sometimes you don't even realize, oh my gosh, the bank is not like, for some reason we're taught to believe the bank is on your side. It's kind of like when I went to get a car loan many years ago. Twelve years ago.

Last time I bought a car when I was living in America. They can try and convince you, oh, we have the best loan at the car dealership. Right. And then you go to your bank. But then when you kind of fish around, that's when you can get a better option. We'll do that for mortgages or car loans. Maybe we should do it for banks, too.

What's also tricky is the first bank I had in college, they got bought by another bank, they got bought by another bank, they got bought by another bank, and now they just got bought again. I don't use that banking. We haven't used it a long time. You keep getting a different color debit card and you get switched to a wholly new system and it's like, really the rules change and you don't even realize it because it's so many acquisitions.

Like, banks are always buying each other, which makes me very nervous. Gabbie Kelly: Totally. Shopping around for your bank at the business seminar is very important. I think it's way more important than any of us realize going into opening our own business. Jonathan Green: This is very interesting to me. I think we've had a really good time. We've gone a little over how long I planned, but I've had such a good time.

And I know that people are really interested and want to learn more about what you do. So where can people go online to find more about what you do and start to learn more about profit? First thinking, having a strategy of where your business works for you instead of you work for your business and kind of help people to get a little closer to that financial freedom that we're all looking for. Gabbie Kelly: Yeah, totally. We're on Instagram. It's at Webfinancial.

The same with Facebook, LinkedIn, you can find me. Gabrielle Kelly CPA. And I love talking to people about this because, like we talked about, it's really hard to. Talk about and I feel like creating a safe environment that allows for vulnerability is so valuable in our day and age. Great. Jonathan Green: So, everyone, her main website is Wem.co Definitely worth checking out. I was looking out earlier today. And Gabby, thank you so much for being here. It's been really amazing. Gabbie Kelly: Thank you.

Jonathan Green: Thank you for listening to the servenomaster podcast. Get a free copy of my bestseller Fire Your Boss right now on Amazon. Go to servermaster.com getfire or just search fireyourboss on Amazon. Announcer: Thank you for listening to this week's episode of the Servenomaster podcast. Make sure you subscribe so you never miss another episode. We'll be back next week with more tips and tactics on how to escape the rat race. Please take a moment to leave a review@servknowmaster.com. Itunes.

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