During this episode Catherine and Peter explore how necessary it is to seek financial advice and the reasons why you don’t always need to appoint a Financial Adviser to help you make good financial plans. Money is a tool that gets us from A to B and often we are able to make our own empowered choices just by getting the basics in place around money management.

Find out more about why money is a lousy master, but a great servant.

Why You Don’t Need A Financial Adviser

In this episode:

• How necessary it is to seek financial advice and when it becomes an investment worth paying for
• The difference between financial advice and financial guidance
• What situations dictate that you move from a do-it-yourself option to seeking professional financial advice
• Simple steps that will enable people to do the basics themselves
• Why being intentional with time and money can be so powerful

Resources:

Get my book

Register for my FREE Financial Coaching Masterclass

Join The Money Circle

Join Catherine’s Facebook Page and FREE Facebook Group

My Online Courses – Investing for beginners from £1

Catherine’s YouTube Channel 

Connect with Catherine on Twitter, Instagram and Facebook

Books

Meaningful Money Handbook

The Simple Path To Wealth

Connect with Peter on Website, Meaningful Money Podcast, Facebook and Instagram

The post Why You Don’t Need A Financial Adviser first appeared on The Money Panel.

The post Why You Don’t Need A Financial Adviser appeared first on The Money Panel.

If you’ve followed me for any length of time you will probably know that I am a huge fan of Starling vs Monzo. Starling Bank are what’s known as a ‘challenger’ bank, and challenger banks are changing what banking looks and feels like. What I love about challenger banks is that through the use of their intuitive, easy to use apps, they are more like personal finance assistants than high street banks.

As our lives become increasingly dynamic, fast paced, and mobile-ready, challenger banks like Starling Bank or Monzo are giving us exactly what we need; banking at our fingertips (literally, via apps on your phone!), real time, very clever, easy to understand reporting, and clear habit and spending insights.

We all place different meaning and value towards money because we all have a different relationship with money. More than 90% of the decisions we make about money come from our subconscious mind (ooh, interesting!) We are driven to make decisions about money based on both logic and emotion and interestingly this is why some women prefer managing money by looking at facts and figures and others on intuition and imagination. 

Starling Bank and Monzo’s money pots directly enable their users to do both! The visual money pots allow you to get creative about money goals and the categorisation of your spending habits enables you to see the facts. This is particularly useful right now in 2021 as we are beginning to take steps to recovering financially from lockdown (click the link for our top tips on recovering).

Hi I’m Catherine! My mission is to reduce financial anxiety and increase financial empowerment & resilience for 1 million women all around the world.

I am a self-confessed emotional spender turned savvy saver! From a young age, my relationship with money has always been fraught with difficulties.

Read my story here: Catherine’s Story

Starling Bank V Monzo: They have many similarities

Skip to section:

• Staring VS Monzo features comparison at a glance
• Are challenger banks safe?
• Child accounts
• Opening an account
• Fees
• Paying in and out
• Interest
• Goals and pots
• Travelling
• Borrowing
• Are Starling Bank and Monzo safe?
• Other accounts
• Worth a mention
• Starling VS Monzo: The best bank ever

At a glance

Account Fee	Free	Free
Payments	Pay out via bank transfer, Contactless, Chip and Pin, Paypal, Apple Pay, Google Pay, Fitbit Pay, or Garmin Pay	Pay out via bank transfer, Contactless, Chip and Pin, Apple Pay, Google Pay, or send immediately to another Monzo account
UK ATM Withdrawals	Free	Free
Direct Debits	Yes	Yes
Topping Up	Via bank transfer, standing order, have salary paid in, or pay in at any Post Office	Via bank transfer, standing order, or have salary paid in
Freeze Card	Yes, in app	Yes, in app
Interest	0.05% AER up to £85,000	Access to marketplace, up to 1.31% with minimum £500 deposit (fixed term). Rates from 0.10%-0.93% available on instant access savings
Goals and Pots	Create different spending goals and protect money from daily spending. Pay direct debits from any pot you decide, with alerts when a bill is due to be paid from a pot.	Monzo pots let you put money aside, protected from your daily spending. Pick a Pot to pay bills from, so you can’t accidentally spend the rent. When a bill is due, they pay it from the Pot for you.
Travel	No fees or charges	Foreign ATM withdrawals free up to £200pm, 3% thereafter. Free to use your card abroad to pay for goods and services.
Borrowing	Overdrafts and loans up to £5000.	Overdrafts up to £3,000. Loans up to £15,000. Both with a soft credit check.
Safety	FSCS protected up to £85,000	FSCS protected up to £85,000
Business Account Available	Yes: Free – Voted Best Business Banking Provider 2020	Yes. Business Lite: Free Business Pro: £5pm
Joint Account Available	Yes – as long as you both have a Starling account	Yes – as long as you both have a Monzo account
Support	24/7 human customer support team via app, email, and phone.	Existing customers can get help via the app.
Special Mention	Won Best British Bank and Best Current Account 2020	Put your salary into Monzo and we can advance you the cash one day early. No cost, no hassle. Just more time with your money.
Child Accounts	KITE: Age 6-16 Starling Teen: 16-17 account	16+: 16-17 teen account

Are challenger banks safe?

While no bank is completely secure from criminals, challenger banks are normally as well protected as high street banks and building societies.

Because Monzo and Starling are regulated banks in the UK, the money you put in your Monzo or Starling account is protected up to £85,000 by the Financial Services Compensation Scheme (FSCS). The FSCS is an independent fund set up by the government to help protect people’s money.

Starling say: “In the app, Starling has a few key features to keep your card secure. Under ‘Card Controls’, you can allow or ban ATM withdrawals, online or mobile payments, magstripe payments, or gambling transactions.”

Child Accounts

In 2020, Starling launched their Kite account for 6-16 year-olds. It’s like a child bank account, but with more visibility and control for parents and guardians. Set it up in minutes, transfer money onto their Kite card in seconds, keep an eye on their spending and help them build great habits for the future.

As a parent, you will need to hold a Personal Starling account to open a Kite account, and it really couldn’t be easier. Plus Starling have made switching between apps a thing of the past. With Starling Kite, you’ll get the full picture and be able to see what they’re spending, directly from your app.

At just £2 per month, Kite is priced extremely competitively in comparison to other child accounts on the market.

Starling also offer a teen account for those aged 16-17.

Whilst Monzo do not currently offer a child account, their teen account for 16-17 year-olds isn’t a minimalist version of an adult account – it’s the same account they offer over 18’s. The only major difference is they’ve blocked spending for some things which are illegal if you’re under 18, like gambling.

Opening an account

Whether you choose Starling or Monzo, Both Starling Bank and Monzo are completely free to open. They are also both powered by their own apps, and it’s really simple to open an account. All you need to do is open your app store (I’m an Apple girl, but the apps are also available for android devices), download the app and then follow the account opening prompts. Click here for Starling (affiliate link) or here for Monzo.

You will need to take a photo of your ID which will be sent for verification as the final step of opening an account with either Starling Bank or Monzo. You’ll also need to record a short video selfie as part of the process, and the reason for this is that both banks use a type of technology which matches the video footage to your ID. Starling Bank says they aim to complete this process for personal accounts within 10 minutes, and Monzo say they try to verify all accounts within 2 hours but it will often be quicker than that.

Fees

Starling V Monzo: Both Starling and Monzo are completely free to open and use with no ATM withdrawal fees or charges.

Paying in and out

Both accounts offer a free current account switching service and are just like high street banks in that you can have your salary paid into your account. You can also pay in via bank transfer or standing order with both Starling or Monzo. Starling go one step further and allow you to pay in cash at any Post Office.

Remember, both Starling and Monzo are just like high street banks – you can set up Direct Debits, Standing Orders, and complete bank transfers from both apps. Both accounts provide contactless chip and pin cards and allow you to add your card to Apple or Google pay. Starling also supports Fitbit Pay and Garmin Pay.

What’s great about the challenger banks is the level of reporting and insights they offer, which are easy to understand and easily accessible within the apps. Monzo will remind you via notifications on your phone when a Direct Debit is due, allows you to set budgets for spending areas, and will also has the capability to send you warning notifications if it thinks you’re spending too fast.

Both apps split your spending into categories like ‘bills and services’ or ‘groceries’. This is an amazing feature because it allows you to really understand your spending habits, easily identify areas of overspend, and take steps to plug those leaks.

The round-up feature that both apps offer is a fantastic way to add to your financial resilience pot – when you switch the feature on both apps simply round up all of your spends to the nearest £1 and add the difference to a pot of your choice. You would be amazed at how quickly this adds up!

Interest

One of the advantages of Starling Bank over Monzo is that Starling Bank pays you interest on any balance up to £85,000. This is paid on your entire balance including any money in your main cash pot area and any money stored safely in your pots.

You can access varying interest rates via the Marketplace with Monzo, but these are paid on savings only, not on any of the money in your main Monzo account or pots. This might be a deal breaker for you if you keep large amounts of money in cash, but in reality even if you only have a small amount of money in your account, Starling Bank will pay you interest on it (free money!) and Monzo will not.

Goals and Pots

Both accounts offer pots or spaces to move money away from your everyday spending area, but keeping it in the same account. For me, this is revolutionary because it allows you to bring things like the envelope budgeting system and mental accounting into the modern digital age.

Before the likes of Starling Bank and Monzo, if you wanted to keep money in a  separate area it would usually need to be in an entirely different account like a savings account. Or literally cash in envelopes! When you move money into pots in either Starling Bank or Monzo that money still physically exists in your account, but it is essentially ringfenced. When you use your card to pay, any money that is in a pot – not in your everyday spending area – will not be touched.

What’s great about this is it gives you a super easy way to give every pound coming into your account a purpose, one of the key lessons I teach my Money Circle members.

In 2021 Starling matched Monzo’s pay from a pot function with their very own Bills Manager. In fact, Starling have taken this one step further; while Monzo allow you to pick a pot to pay bills from, Starling Bank Bills Manager allows you to pick a different pot or space to pay individual direct debits from should you need to. This means you can keep the rent seperate from your other household bills or personal expenses. When a bill is due, both Monzo and Starling Bank pay it from that pot for you.

The day before a Direct Debit is due, Starling will send you a notification that a payment is needed the next day. If you don’t have sufficient funds in the Space to make the payment, they’ll let you know, so you have time to add the funds you need.

Monzo also added a scheduled pay to pots feature in 2018, which Starling refer to as PiggyBanking. Within Monzo, simply start a new scheduled payment, choose a start date and pot, set a repeat frequency (and end date if you choose). Monzo say “You can change or cancel the scheduled payment whenever you want. And you can always withdraw the money if you decide you want it back in your main balance.” (Source)

To utilise PiggyBanking within Starling, open the pot you wish to add regular automated funds to. Choose ‘Add Money’, and enter an amount. Click on ‘When’ to change the first payment date (great for planning your income and pots in advance) and choose a frequency. Starling allows you to choose from daily, weekly, monthly, and annually which makes this a super flexible feature!

Travel

If you travel often, then Starling really is a clear winner for you. With Starling bank there are no fees whatsoever for using your card abroad or to withdraw from overseas ATM machines. Monzo do offer fee free spending, but you can only withdraw £200 per month from foreign ATM’s before it starts to charge you.

Borrowing

Starling bank offer overdrafts and loans up to £5000, dependant on your eligibility. They have a great overdraft eligibility tool which tells you the likelihood of being eligible for an overdraft without having to perform a credit check which will leave a ‘footprint’ on your credit score. If you are eligible for a loan you will receive a notification in your app to let you know, and if you choose to take out a loan with Starling, once the application is completed the money is available instantly.

Monzo have a similar eligibility check for overdrafts up to £3000, and offer loans up to £15,000 available on the same day you successfully apply.

Are Starling and Monzo safe?

Both Starling and Monzo are fully regulated banks and protected up to £85,000 by the Financial Services Compensation Scheme (FSCS). The FSCS is an independent fund set up by the government to help protect people’s money. If Monzo or Starling (or any other bank or building society) goes bust, it means you won’t be left out of pocket. The FSCS aims to pay compensation within 7 days of an organisation failing, so your money really is just as safe as it would be with any other high street bank or lender.

Other accounts

If you run a business, Starling bank once again comes out on top for its business account. A business account with Starling is completely free and offers all the awesome features of the personal account with the addition of some brilliant features such as connecting to accounting software like Xero, Quickbooks, or FreeAgent.

Monzo business accounts do offer these features but only on their paid for account. Monzo has two levels of business account available: Lite and Pro. If you want to use the accounting features you will need to hold a Business Pro account which will cost £5 per month. To balance it out, however, the Monzo Business Pro account is offering 6 months free Xero use until 17th June 2020 (for new Xero customers only) which could save you up to £180. If you are planning to use Xero anyway, this offer is essentially worth 3 years of the fee attached to the Monzo Business Pro account.

Starling bank also offers joint accounts as long as you both have personal accounts, something which Monzo have recently added to their features.

Worth a mention

Starling Bank won Best British Bank and Best Current Account 2020, which really is testament to the amazing work they are doing. Starling bank also give you access to their Marketplace on both personal and business accounts where you can integrate several third party financial products. From mortgage and insurance providers to smart pension tools, the marketplace includes a hand picked a selection of third-party products that work with your Starling app. The reason this is so fantastic is because it gives you the ability to see a full overview of many of your financial products, accounts, and services all within the one Starling app.

Monzo do have some third party features such as energy switching and savings accounts, but their marketplace is certainly not as diverse as Starling bank’s. Monzo’s ‘get paid a day early’ feature is worth a mention: if you have your salary paid into your Monzo account Monzo say that they “can advance you the cash one day early. No cost, no hassle. Just more time with your money”. 

Monzo Vs Starling: the best bank ever?

Both Monzo and Starling bank are great options if you’re looking to open an account with a challenger bank. But is Starling better than Monzo? For me, there’s a few reasons that Starling Bank has the upper hand: if you travel often then it’s clear that Starling is your better option, and for those of you in business or self employed their business account offers some excellent features without having to pay the fee that Monzo charges. Their customer support, should you need it, is available 24/7, and Starling’s offering of investing tools like Wealthify and Wealthsimple through the Marketplace make it easier than ever to get started investing without overwhelm, and from as little as just £1.

Starling pays interest on your whole balance, rather than just on your savings as Monzo offers, and integrates with more payment features than Monzo such as Fitbit Pay and offering pay-in at Post Offices anywhere in the UK.

My preference, for all those reasons, is unwaveringly towards Starling Bank. But with that being said, the ability to utilise pots within one account is absolutely game changing for both personal and business finance, and opening an account with either challenger bank will undoubtedly revolutionise your life! Deciding is Starling better than Monzo absolutely has to come down to personal preference and what you need from your bank.

This post was updated November 2021 to reflect updates to both Starling and Monzo.

Hi I’m Catherine! My mission is to reduce financial anxiety and increase financial empowerment & resilience for 1 million women all around the world.

I am a self-confessed emotional spender turned savvy saver! Having worked in banks since the age of 18, I became very disillusioned with the focus on complicated financial products. I discovered Financial Coaching and by incorporating this into my work as a Financial Planner I have been able to launch a hugely successful standalone financial coaching business in the UK.

Read my story here: Catherine’s Story

Resources:

Get my book

Book in a complimentary call to discuss how financial coaching can help you move from financial overwhelm to confidence and control. 

Join Catherine’s Facebook Page and FREE Facebook Group

My Website 

My Online Courses – Investing for beginners from £1

My YouTube Channel 

Connect with me on Twitter, Instagram and Facebook 

More Info: Recovering Financially from Lockdown

Open a Starling Personal Account

Open a Starling Business Account

Monzo Personal Account

The post Starling vs Monzo: The Best Bank Account Ever? first appeared on The Money Panel.

The post Starling vs Monzo: The Best Bank Account Ever? appeared first on The Money Panel.

What’s the one thing that aggravates you about business banking?

This is definitely one of the areas that I really struggled with when I first set up my business four and a half years ago, because I felt really quite lost with:

• Where do I bank?
• Do I have a separate account?
• Do I just keep it on my personal accounts?
• Who do I open that account with?

And I actually had quite a poor experience with another bank in the early stages of setting up the business. It’s complicated enough when you’re first starting out! So I really want to hear from you – What’s the one biggest challenge that you have with business banking? I’d love for you to share with the community your experience of your own business finances.

Today I want to introduce you to Starling bank. For those of you that have been listening to the podcast, or followed me, for some time will know that we have partnered with Starling bank recently. They are now sponsoring our podcast, which we are incredibly grateful for. Starling really changed everything I do about managing my personal finances and my business finances. They’ve been really pivotal, not just in the practical ways of managing money, but in my own relationship with money.

Starling Bank were really pivotal in helping me, through the features that they offer, to get out of debt and manage my money very differently. When it comes to business finances in particular, sometimes we don’t pay enough attention to the business finances because we’re more comfortable to look at the personal stuff, or maybe the other way around.

Today I’m talking to the head of business banking at Starling bank, Symmie Swill. She’s going to share with us some information about the journey of Starling bank, the kind of accounts and businesses that they support, and talk you through some of the features that they have available that can support you in your business finance journey.

Jump to:

• What is a challenger bank?
• What kind of businesses can open a Starling account?
• What features do Starling Bank provide for businesses?
• Can a Starling business account save you money in your business?
• Implementing Profit First with a Starling business account
• How does the application process work?
• What if you have an existing business account elsewhere?
• Tips to manage finances in your business
• Open a Starling Business Account

Hi Symmie, thank you so much for being here with us.

Hey, Catherine. It’s a pleasure to be here. I’m a big fan of your podcast.

Thank you so so much. Symmie, tell us a little bit about your journey and working for Starling bank.

I joined Starling about a year ago to head up their small business banking area. Before that I worked in investment banking. So on the other end of the banking spectrum. I also previously spent eight years advising entrepreneurs and medium sized businesses on how to grow their business, raise money, sell businesses, buy businesses, and really think about their overall banking strategy. Then I moved into strategy and operations to say, “Well, actually, how do we use technology?” How do we build the right products in order to support our small business customers.

It’s really a privilege and an honour to work at Starling because now I’m not only helping entrepreneurs and our customer base, but it’s also great to be working in an entrepreneurial fast moving female led banking environment. So I’m getting the best of both worlds there.

I can’t believe about two years ago I read a statistic that said that it wasn’t until the 1960s that women could actually have their own bank account. And now we’ve got CEO of Starling Bank Anne Boden, a woman who has created this incredible online challenger bank, and is now as you described there, leading this space from a female perspective. I just think that’s incredible that less than 60 years ago we couldn’t even open our own bank account.

I think representation really matters. So it’s fantastic to have and not only start a bank, but lead it. And a large number of her management team are female. It’s such a big difference from what I had when I started where I was basically the only woman in a team of 20, and then the only woman in a team of 50. So it’s fantastic. And I think it makes a big difference for female entrepreneurs as well, to see that they’re being supported.

It really does. Our new strapline on our podcast is “Are you ready to be that wealthy woman?” A lot of women don’t feel like they can be role models or leading role models in their businesses. We often hold on to a lot of guilt and shame that we can even run successful businesses. So it’s great to have Starling bank really pioneering some of that change.

Symmie, when I talk about Starling bank, I talk refer to them as an online challenger bank. What does that actually mean? And how does that compare to a typical High Street bank?

We’re trying to position ourselves not just as a challenger bank, we’re trying to position ourselves as a real bank that happens to be just doing everything easier, fairer, and better for you. There’s two main differences:

• The first main difference is what you can see on the outside. So free accounts, no monthly fees, easy, quick setup, we don’t have branches, everything is on your phone or online. Everything we do is to make banking a lot easier and quicker to do, and much more intuitive.
• And then the second thing is what you don’t see. How we organise ourselves and how we think about the customer. So our entire organisation is customer first, and it’s digital first. We’ve built all of our tech and we’re constantly changing things every single day, tweaking things in response to customer feedback. And that means that we can be really innovative, really nimble and move quickly.

So it’s not just the features you see today that make us different from the high street, but also what you’re going to continue to see and how we can continually evolve and make things better for you to run your business.

Yeah, I love that innovation piece. There’s a lot of businesses out there that will be reading this wanting to create more innovative ideas and concepts themselves. Then to actually have that available through the way that we’re managing money, I think is really clever.

Technology, whilst it has its challenges sometimes, definitely enables us to have more readily available access to things. To be able to speak to somebody for example – the number of times I’ve gone into my Starling app and just spoken to somebody within a couple of minutes. I was having a conversation with a traditional high street bank over in Jersey the other day which I won’t name, but it took me three days to get through to this particular department to get any assistance.

So I love how Starling are embracing using that technology to be able to help to support customers in their businesses.

That’s been a really important part of how we’ve thought about it. We have UK based 24/7 customer service and we think that’s a really important part of convincing people to take that leap.

For a lot of people it is scary to get rid of their traditional bank. So it’s not only the customer service we have in the app, but if you do have any questions there is someone real at the end of the phone, or the chat, or the message in the app. So yes, it’s a big part of what we offer.

Yeah, amazing. And they’re super friendly too! What type of businesses do you specifically support at Starling Bank?

We support sole traders as well as supporting limited companies and limited liability partnerships. We can support charities that are registered as limited companies, community interest companies.

But in terms of types of businesses, we have everything from pharmacists, to lawyers, real estate agents, electricians, hairdressers, I think we have carbon neutral paints, business, some vegan snacks, and of course technology businesses, consultants, and anyone in between!

People sometimes think that we’re really just for tech enabled customers, but we have people from kids to people in their 90s, and anyone in between!

How do the older generation respond to managing their finances using an app?

I think a lot of the older generation have learned, particularly over the last year, how to work technology. WhatsApp and FaceTime to see their grandchildren. When you’ve been shut away, or shielding, it’s been really helpful to be able to do things on your app.

A couple of weeks into lockdown last year we actually released a connected card, which meant that anyone that was shielding could order additional cards for free and load money onto them. So people could go and help them with their shopping, whether it’s neighbours or friends or volunteers. 

Those are the sorts of features that people who were older said encouraged them to get the app.

Yeah, that’s great. Are there any specific features that you provide within the app within Starling Bank that perhaps differ from the traditional High Street banks?

It’s a lot more intuitive and easy to use. We have the spaces feature, which I know you love, which makes it really easy to divide your money up. Pay your profit first, keep money aside for investments, or VAT and tax.

On online banking, we also have the business toolkit, which allows you to take care of all of your financial admin outside from and around your business banking. So you can set up an invoice within the bank account, send it out by connecting in your email, and then when people pay you, it automatically matches up as well.

You can do your VAT, and you can do your tax there as well, and keep a list of all of your bookkeeping, attach digital receipts, and basically organise your financial affairs all within your bank account, which I think is really different and really special.

Does that save business owners then from using software like Xero, or software that they’re maybe paying additional money for?

I think for some businesses using our toolkit is probably cheaper and does all the same things that they need from those from the applications.

There will be businesses that as they grow, it makes more sense for them to use something like Xero or QuickBooks. And for them we have automatic, instant real time integrations with those accounting platforms, which is actually really valuable. And probably one of the most valuable features of the accounts.

That means that while you’re doing everything that’s running your business, your financial transactions are automatically updated into your accounting software, so there’s no need for reconciliations, you don’t need shoe boxes of receipts, etc. We’re really thinking about how do we make your business account part of enabling you to grow your business, rather than it being a task in and of itself.

Yeah, that’s a really interesting point.

I must admit, I haven’t really explored the business toolkit yet myself. We do integrate though our Starling account into Xero, so everything just automatically feeds through which is fabulous. It saves my accountant a whole bunch of work!

And to touch on the pots facilities – within the app itself, we have these spaces which I call money pots. You can put pictures behind them, you can give them specific names, you can put goal target amounts on them. You can automate them so that money goes into them automatically each month, or you can do it manually. And I just think it’s such a revolutionary way of managing money in your business.

If you haven’t listened to my previous episode talking about the profit first model, we’ve interviewed Mike Michaelowicz who is the owner of Profit First. The Profit First model for me is a game changer because it forces us to forward think about how much am I going to have to pay for VAT this month or this quarter? How much of it is going to be taken away for tax? And how much of it do I want to safeguard for profit?

It gets you forward thinking. So rather than budgeting, which is all very much about looking back into the past, looking at what have we spent and then quite frankly just beating ourselves up for the fact that we’ve overspent, it forces you to be forward thinking in your business.

I think for a business owner, cashflow forecasting and predicting what might be ahead is something that a lot of people get really scared about. In my pots, for example, anytime money comes in (and I do this daily which is a bit excessive, I know) straight away I put 10% into my tax pot, 20% into my VAT pot, and the rest goes into my profit pot. Then I leave a floating balance in my main account to cover all my direct debits, etc.

That forces me to think about paying myself first, and also moving money aside for tax and VAT, so you don’t get that scary notice at the end of the tax year when you’ve got this huge big tax bill to pay which forces business owners to then feel in a struggle mindset.

So I just love how you pioneered this. I really do consider you guys to be complete pioneers in the whole way of mental accounting, and the psychological side of money and actually making it so easily accessible to your business owners.

It’s really nice to hear, I think the spaces are my favourite feature as well, they’re so easy to use. And I think it really transforms how people feel about their accounts in that you feel it’s an easy way to feel very much in control. We also have spending analytics to categorise your expenses. So when people flip through the app and see those in combination with being able to plan ahead with the pots, it’s a really easy way to feel that you understand your finances, and you can make good decisions about your business without fancy spreadsheets or really worrying about it too much.

Yeah, I mean I do have one spreadsheet in my business, but that’s literally because my ops manager was almost like, you have to have this Catherine! And I was like, “Okay, I will embrace the spreadsheets!” But other than that I can go into my spending, and I can go back to last month, and I can see exactly under each category: Marketing, VAT, Staff, Admin, Workplace, Food & Drink, Travel, Equipment. I can literally see what I’ve spent every single month in those categories.

It’s really useful to know where you’re leaking money in your business categories. So I know for example marketing was my highest spend last month. That’s fine, because we’re investing a lot in marketing right now. But if I’m looking at those categories and thinking there are a few coffees that have gone through there that maybe I could have saved and that could have gone into my profit pot and be put towards a specific purpose, then it’s really empowering to just have that information at your fingertips.

So how does the application process work? If somebody wanted to apply for a business account, how would they go about that?

So everything’s in-app. There’ll be two parts to that process; we will ask you as an individual to upload your ID and do a short video, and then we will ask you questions about your business.

We’ve put a lot of time into trying to make that process feel like you’re talking to a person. So you’ll be asked to please describe your business. And we’ll ask for a little bit of evidence, that may be your experience, what you’ve done previously, or your trading activities and contracts. If you’re a startup, we’ll ask you to give us as much as you possibly can. For example a business plan or evidence that you’ve done something similar before.

And then you will have a person review this. You might be asked a few questions, and then hopefully very quickly, you will get your account.

Yeah, it’s so easy. I love how you just very quickly said “a little video of yourself”. Some people will be thinking “What? You have to queue up in a bank for like 16 hours to get an account!” It’s so different, isn’t it?

It is. For a lot of people that’s the moment where they realise how different their experience is going to be, because a lot of people just assume that the way they’ve always done things is the way they’re always going to have to do things. Like I said before, a lot of our time is spent challenging things. Why does this process happen? Why do we have to have you speak to a person for this? Why do you have to go through all of these hoops and paperwork? Actually is there a smarter, faster way to do it, that actually gets the same customer result?

And in that application process, what happens if somebody has an existing business bank account elsewhere, and they want to move everything across to it to Starling?

If they have an existing bank account elsewhere, they’ll still have to go through the process of setting an account up with us. So we are a bank, and there are certain requirements we have to do to make sure we understand who you are and what you do.

But we’re also a member of the current account switching scheme, which means it’s very simple once you’ve got an account open with us to switch everything from that previous bank across. Direct Debits, Standing Orders and that takes around seven days. There’s a guarantee that everything has to switch.

The switching scheme is really helpful in terms of getting people comfortable to change accounts, because a lot of people have been with their account provider for years. It’s quite a big thing to decide to open a new account, so the easy onboarding process helps you get over that hurdle. And then the fact that you’ve got that ability to switch everything really quickly takes away those obstacles, and takes away that admin.

I’m so glad you mentioned the current account switch service, because a lot of people think about switching their bank account, and then just think it’s going to be an absolute headache and a nightmare, and then it stops them from making that decision. With that switch service, you’ve got that seven day guarantee, so it’s just so easy then to consider moving your account from one bank to another.

I mentored and coached a lady about two years ago who had this big fear of switching bank accounts because her relationship with money was very much influenced by her mum and her grandmother. Her grandmother actually set up her first bank account, so she felt this real allegiance and loyalty to the particular bank that this account had been set up under.

It was really interesting to explore that with her, what was limiting her or stopping her from moving her account, even though logically she knew it made more sense to move it.

Then we talked about the fact that Starling was founded by a woman, and all of a sudden she was like, “Wow, it’s safe for me to move my bank account!”

So it’s interesting, we can sometimes have an emotional connection to where we store our money. Sometimes we have to challenge those beliefs. Is it true that we have to keep our bank at the same place for the whole of our life? Or is this an opportunity for you to think about the features and benefits you get with your bank?

Make a list of all the things the benefits you’re getting from your current bank, and question if they are valuable to you. Is it valuable for me now at the stage I’m at in my business?

I know that one of the other features of Starling is the Starling marketplace. And I think this is fabulous. Could you just tell us a little bit about what the Starling marketplace looks like.

The marketplace just allows you to integrate the account with other products and services that you may be using to run your business successfully. The main ones are obviously the accounting integrations: QuickBooks, Xero, FreeAgent, and some other popular ones are point of sale payments like Zettle and Sum Up. If you’re running a retail business, it means that you’re instantly getting that transaction information through the app.

We also have things like integrations with Slack. So if you have a finance team, you can get notifications into the Slack channel. We have integrations with insurance companies and legal firms.

We are really trying to think about what our business customers need from a more holistic perspective, and how can we be smarter around using your current account to integrate with some of those other products and services.

I did not know about the slack integration.

It’s quite cool. So it will just put notifications into a Slack channel. So if you need other people to be aware of those payments, they’ll find out when you find out. The integration will give them a notification of that information without them having access to the bank account. They’ll just see that the payments happen, they won’t have access to the account.

Currently only directors can currently have access to the business account, which is something we’re working on. Because we know as our customers grow, that they do need teams to be able to access the business account in a secure way.

That’s great to know about what might be coming.

Finally, then Symmie, if anyone’s reading this and they’re interested to hear from the head of business banking, with your experience and expertise, what tips would you leave our readers with today that would help small business owners in terms of managing their finances?

The main one is probably one you wouldn’t expect from a business bank! Just be really clear about what the purpose and objectives of your business are beyond the financial.

For us, the bank account is really there to enable you and your finances. To enable you to achieve your objectives and your goals as a business. If you take the time to think about what you’re trying to achieve as a business, it’s a lot easier to make those decisions about priorities. What pots do you set up in your account?

Know what you’re trying to achieve beyond the financial.

Some more conventional tips would be around being organised.

Putting some good habits in place. Invoice immediately, check your account regularly.

The bookkeeping feature in the toolkit makes it easy for you to upload your receipts, and manage your finances as a habit rather than whenever you happen to look at the account.

And the final one is to try to find a network of other people to learn from. Whether that’s people that you’ve worked with, or met, or whether it’s things like listening to podcasts.

We have a blog where we have some of our customers talking about how they use the account, what tips and tricks they have. And also some various features and articles around how to manage your finances better. We’re really trying to provide a bit more of a network around our customer base on our website, so we do encourage people to check that out.

Oh, that’s fabulous. We write a blog ourselves as well, and have a fab article on The 15 Minute Exercise to Change the Way You Manage Money in Your Business, and I loved how you talked there about giving every pound of purpose.

This is one of our golden rules – getting financially naked, understanding your numbers, and then actually giving every pound of purpose so that you can bring it back to more than just the numbers. It’s not just about the money, it’s about what that money brings to you that makes all the difference.

If anybody wants to know more about opening up a Starling account, where would be the best place for them to head to right now.

The website will have more details on how to sign up. You can also obviously just download the app and go through the process immediately.

There’s lots on our website around the best features, how to use us, and like I said, there’s a blog on there as well which provides useful information for small businesses.

Thank you so much Symmie for coming to spend some time with us today to talk about how we can manage business finances. Thank you so so much for your time and your wisdom. It’s been an absolute pleasure to talk to you today.

Thank you so much, Catherine. It’s been a lot of fun.

Resources:

Open a Starling Bank business account

Open a Starling Bank personal account

The 15 Minute Exercise to Change the Way You Manage Money in Your Business

How to Use the Profit First Method in Your Small Business

Join The Money Circle

Join Catherine’s Facebook Page and FREE Facebook Group

My Online Courses – Investing for beginners from £1

Catherine’s YouTube Channel 

Connect with Catherine on Twitter, Instagram and Facebook

The post How to Manage Your Business Finances first appeared on The Money Panel.

The post How to Manage Your Business Finances appeared first on The Money Panel.

See the FULL LIST of participating areas.

Appointments opened for booking on 1st October. If you want to take part, don’t delay, as slots go fast.

Jump to Section:

• How to book a Free Wills Month appointment
• Do I need a will?
• What exactly is a will?
• The steps to creating a will
• What areas are participating in Free Wills Month?
• Resources

How to book a Free Wills Month appointment:

• Enter your postcode on the Free Wills Month website to find your nearest participating solicitor who has availability.
  
• Contact the solicitor to arrange an appointment, and mention the Free Wills Month scheme. Due to the pandemic, most solicitors are offering video and phone call appointments, as well as face to face.

Do I Need A Will?

It always interests me how we don’t like to talk about taboo subjects, and death is one of those taboo subjects, right? People don’t like talking about the what if scenarios; creating a will is one of those things. So I want to talk you through the basic principles of will writing and power of attorney.

A lot of people think “I’m young and fit and healthy, I don’t need to make a will.” Creating a will is relevant whether you’re single, whether you’re married, whether you’re not married and in a relationship, whether you’re in a civil partner relationship. There are two certainties in life, death and taxes, and we should be talking about this more openly.

If you are under 55 and don’t qualify for Free Wills Month, I encourage you to check out my guide on creating a will to protect your family, or listen to the full guide below.

What Exactly is A Will?

A will is a written legal document, and it sets out your wishes as to what you would like to happen in the event that something happens to you. In order for a will to be legally valid, it needs to be in writing. It needs to be signed, and it needs to be witnessed by two independent witnesses who aren’t beneficiaries within the will. So, for example, let’s say you’ve left some money to your best friend – you can’t have your best friend witness that will because it’s a conflict of interest.

Then you then need to choose executors. An executor is who is responsible for gathering together all of the information about your estate in the event that something happens to you. So it’s important to think carefully about who are going to be the executors on your estate, and if you find you’re procrastinating, I would think about who you implicitly trust? They’re really just administering your wishes so they don’t necessarily have to make decisions, but they have to just be capable and responsible people. If you really can’t think of anybody, then sometimes people may choose a solicitor to be one of those executors, but be mindful that solicitors obviously will charge for that service.

For most people, they would like their partner or their spouse to inherit their estates, and then, if anything happens to both of them together or all the second death would then go to perhaps the children. If there are no children, then it may go to family members, friends, or maybe some charities.

Join The Money Circle today and get immediate access to our digital Money Closet. Never lose important details again! My Money Closet is a versatile digital OR print solution to storing all your financial information in one handy place.

Download or print My Money Closet immediately
Digital file makes it easy to  access anywhere & on the go
Easily update when details change
No filing necessary!

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The steps to creating a will

There are really six ways that you can get started creating a will.

1. Make one yourself – You can literally go into WH Smiths and buy a will writing pack! This is the cheapest way to create a will, and actually if your situation is very straightforward and you’re procrastinating about this right now, that is an option. It isn’t something that I personally would recommend because it’s probably a little bit risky. And the reason it’s risky is because if you haven’t done it correctly, had it witnessed correctly, or you’ve missed something out, then it could be a costly mistake. But what I would say is if you’re really avoiding doing it because you can’t afford to use a solicitor right now, that would be your best option.
   
   
2. Use a will writer – The only benefit of using a will writer is they are cheaper than a solicitor. However, they’re not regulated in the same way. So if you had a complaint they’re not regulated, whereas the solicitor would be regulated. We used will writer for our wills, and we made sure they were a member of a professional organisation. We were very comfortable that they were an expert in what they did and hadn’t just set themselves up as a will writer, which can happen. So if you’re going to go down this route, my tips would be to make sure that they are a member of one of these two professional organisations: The Society of Will Writers, or The Institute of Professional Will Writers. Get some recommendations from other people, and ask them what their experiences were, and maybe see if they have any qualifications.
   
   
3. Use a solicitor – This, in my mind, is probably the least risky option, particularly if it’s a solicitor that deals with probate wills, estate planning and inheritance tax. If you have a complicated scenario; maybe you’ve got children from a previous marriage or lots of different assets, or maybe your estate is worth a considerable amount and is over the inheritance tax threshold. In this case I would definitely go to a solicitor, because you’ll want to consider the most tax efficient way to leave your will to the appropriate beneficiaries. 
   
   
4. Use a charity – A lot of wills can be made at particular times of the year through what they call Will Aid. This is normally around October to November time, and you can actually approach specific charities and in conjunction with local solicitors, they will work with that solicitor to help you draft your will. You then make a charitable donation towards the cost. There are lots of charities that participate in this, like Cancer Research and the Stroke Association, so that could be something you might want to consider.
   
   
5. Get involved in Free Wills Month! – Members of the public aged 55 and over contact one of the firms of solicitors taking part in a Free Wills Month campaign during the designated month to request an appointment. The solicitor will help to draw up a Will that accurately reflects the wishes of the individual or couple. Those taking up the offer are under no obligation to leave a gift to one of the Free Wills Month charities, however, we earnestly hope that many will see this as a chance to help their favourite cause. Appointments are limited and are allocated on a first come first served basis. Once all available appointments are booked the campaign will close, this may be before the end of the campaigning month.
   
   
6. Download the free Will Planner from Free Wills Month – If you are under 55 but still want to benefit from Free Wills Month, you can find a handy free Will Planner download on the Free Wills Month website.

What Areas Are Participating in Free Wills Month?

The following areas will be covered:

Birmingham, Bolton, Bournemouth, Bradford, Bristol, Cardiff, Chester, Chichester, Cornwall, Cumbria & Lancaster, Derbyshire, East Cheshire, Exeter, Gloucestershire, Hampshire, Huddersfield, Hull, Ipswich, Leeds, Leicestershire, Lincolnshire, Liverpool, Manchester, Mid & West Wales, Milton Keynes, Newcastle, Northern Ireland, North Wales, Norwich, Nottinghamshire, Oxfordshire, Plymouth, Portsmouth, Preston, Sheffield, Shropshire, Southampton, Stockport, Stoke-on-Trent, Swansea, Torquay, Wakefield, Wirral and Worthing.

Resources:

Join The Money Circle to access lots of free downloads, money training, our exclusive Money Closet and lots more!

Join Catherine’s Facebook Page and FREE Facebook Group

My Online Courses – Investing for beginners from £1

Catherine’s YouTube Channel 

Connect with Catherine on Twitter, Instagram and Facebook

Get involved in Free Wills Month

The post Free Wills Month: How to Get Involved first appeared on The Money Panel.

The post Free Wills Month: How to Get Involved appeared first on The Money Panel.

From playing monopoly to goldfish, and spending to saving, Catherine explores the financial perspective of an 8 year old. Thomas shares with us his understanding of money and what can be achieved by using Catherine’s golden rule of “giving every pound a purpose”.

As a Starling Kite user for some time, Thomas gives great insight into how children can use the pots to increase their financial education and why it is never too soon to begin learning these essential skills. We hear from a younger account holder just why Starling Bank is our personal and professional bank of choice.

Starling Kite: Is This The Best Card for Kids?

In this episode:

• The benefits of a Starling Kite account for children
• Understanding needs vs. wants for kids
• How to open dialogue around money with children
• Money blocks that can be identified even at a young age

Resources:

Open a Starling Bank personal parent account

Compare Starling VS Monzo

Compare the market leading cards and accounts for children and teens

Read the full interview with Thomas!

Register for Catherine’s FREE Financial Coaching Masterclass

Join The Money Circle

Join Catherine’s Facebook Page and FREE Facebook Group

My Online Courses – Investing for beginners from £1

Catherine’s YouTube Channel 

Connect with Catherine on Twitter, Instagram and Facebook

The post Starling Kite: Is This The Best Card for Kids? first appeared on The Money Panel.

The post Starling Kite: Is This The Best Card for Kids? appeared first on The Money Panel.

3 Top Budgeting Tips That Everyone Should Know

In this episode:

• Edoardo’s journey into building the Emma app
• How creating an app helped Edoardo improve his own financial situation
• Subscriptions and recurring payments are the big money leaks
• Having greater awareness around your finances gives you more confidence
• Giving every pound a purpose and planning ahead
• Getting out of your financial comfort zone in order to make progress towards your goals
• The future of Emma

Resources:

Join The Money Circle membership to access Edoardo’s full training session

Book in a complimentary call to discuss how financial coaching can help you move from financial overwhelm to confidence and control. 

Join Catherine’s Facebook Page and FREE Facebook Group

My Website 

My Online Courses – Investing for beginners from £1

My YouTube Channel 

Connect with me on Twitter, Instagram and Facebook

Listen to the episode about the envelope system here

Find out more about Edoardo and the Emma app on the website

Download the Emma app

The post 3 Top Budgeting Tips That Everyone Should Know first appeared on The Money Panel.

The post 3 Top Budgeting Tips That Everyone Should Know appeared first on The Money Panel.

6 Money Saving Apps for 2021 with The Coupon Kid

In this episode:

• Money saving app recommendations
• Savings tips for your food shopping
• Money saving and sustainability in reducing food waste
• Cashback and comparison websites
• Deal stacking

Resources:

Join The Money Circle membership

Book in a complimentary call to discuss how financial coaching can help you move from financial overwhelm to confidence and control. 

Join Catherine’s Facebook Page and FREE Facebook Group

My Website 

My Online Courses – Investing for beginners from £1

My YouTube Channel 

Connect with me on Twitter, Instagram and Facebook 

Find out more about Jordon Cox on his website

Jordon’s new podcast “The Secrets of Saving Money” on all podcast platforms.

The apps mentioned in today’s episode were:

Lidl Plus

Shopmium

Green Jinn

Too Good To Go

Olio

Airtime Rewards

Topcashback

Quidco

The post 6 Money Saving Apps for 2021 with The Coupon Kid first appeared on The Money Panel.

The post 6 Money Saving Apps for 2021 with The Coupon Kid appeared first on The Money Panel.

How Do You Heal Financial Trauma

In this episode:

• The Trauma of Money Method
• Intergenerational trauma and beliefs
• Trauma and its affect on your thoughts and behaviours
• Societal influences on our self worth
• Trauma reactions
• Asking yourself who’s shame you are carrying

Resources:

Join The Money Circle membership

Book in a complimentary call to discuss how financial coaching can help you move from financial overwhelm to confidence and control. 

Join Catherine’s Facebook Page and FREE Facebook Group

My Website 

My Online Courses – Investing for beginners from £1

My YouTube Channel 

Connect with me on Twitter, Instagram and Facebook 

Find out more about The Trauma of Money on their Website or Instagram @traumaofmoney

Follow Chantel Chapman on Instagram @chantelchampman

The post How Do You Heal Financial Trauma first appeared on The Money Panel.

The post How Do You Heal Financial Trauma appeared first on The Money Panel.

One of the key reasons why most people set up a business is to make money, to work towards financial freedom, because they want a better life. Maybe they want to leave a better legacy for their family. When I first started my business in 2016, I’d just come from an employed job. I’d been working as an employed financial advisor for 17 years. My money mindset was in a completely different situation to where it is now and one of the biggest challenges I found was charging my worth. This is why we spend so long talking about these topics on the podcast.

One of the books that I read on holiday a number of years ago was a book called Profit First. I just want to share a little bit about what happened for me after I read that book.

So I’ll be really honest with you. The first two years of my business, I was really just focusing on growing my audience and therefore my profit margins were lower and probably lower than they should have been or could have been had I have known how to implement Profit First from day one. This is why I’m really excited to introduce this to you today.

If you’re listening to this and you’re at the early stages of your business, or even if you’re a well established business owner, this is the time to think about implementing the lessons of Profit First.

When I read Profit First on holiday, I sat there with all of my little sticky labels and I bookmarked the hell out of this book, twice! I read it and I felt myself nodding my head going yep, that makes complete sense. Of course it does. Why have I been doing it like this?

The two years prior to Profit First, I had transferred all of my banking over to Starling Bank, and I really started to bring some curiosity and awareness to my habits, my beliefs around money. Why was I overspending? What were the emotions sitting behind my decisions? Within six months I had switched my banking, given every pound a purpose and really started to focus on curiosity and awareness, which is one of the first steps I talk about in terms of improving our financial situation. We have to bring conscious awareness to our spending habits, conscious awareness to our numbers.

But I was terrified to do so because I had a negative relationship with money and debt became something that was comfortable for me. I was comfortable to be in my overdraft every month. I was comfortable to be living on my credit card and overspending to fill an emotional void in my life.

So when I read Profit First, one of the key aspects of Profit First is about putting your profit first, putting your own needs first in your business, because if your business is not profitable, then it’s not really a business at all.

The principles in Profit First are centred around four key principles, which I will let Mike explain to you on this podcast episode. If you follow these four principles, I can almost guarantee that you will be making more profit in your business. You will be focusing on creating strong, powerful financial habits and that’s what it’s all about ladies. That’s what all of your relationship with money, how you manage your financial habits and behaviours is really at the centre of everything that we do.

Every decision that we make or don’t make around money centres from our relationship with money. This is all centred around Parkinson’s law. The psychological explanation, that in order for us to focus on profit, we need to have motivation. We need to be thinking of the small steps, the big wins. What’s the next right thing for us to be doing.

So it is with my greatest pleasure to welcome Mike Michalowicz onto the In Her Financial Shoes Podcast today. Mike has launched and sold multiple multi-million dollar companies, and he’s the co-founder of Profit First Professionals.

Mike has written a number of books, one of which I recently finished on my most recent holiday, Clockwork. Today we’re going to be doing a deep dive into his book Profit First. A massive warm welcome to our guest today on the In Her Financial Shoes Podcast.

Did you know Kindle Unlimited isn’t just for the Kindle?! You can download the Kindle reader app onto any phone, tablet, or device and read unlimited titles wherever you choose!

Hi, Mike, how are you doing?

I’m doing well, Catherine, thank you so much for having me and doing this.

I’m so delighted to be talking to you today, Mike, because the book Profit First literally changed my life. I know that it’s changed the lives of so many entrepreneurs. This is one of the reasons that you wrote this book was to create huge change and to help people out of entrepreneurial poverty.

First of all, I just want to thank you, Mike, for writing that book because it really seriously changed the whole way that I manage my business finances.

Well, you’re lighting me up. That is my dream. Actually it’s funny, you said eradicate entrepreneur poverty. I’m devoted to that. That’s on my wall right over there, eradicate entrepreneurial poverty. I feel compelled to carry that message.

It’s a shame that there’s so many entrepreneurs who’ve started a business with this grand vision of financial freedom and personal freedom. I can do what I want, when I want, I don’t have to worry about bills. We have this vision and then the reality of entrepreneurship is we work like mad dogs. We have no time for life. We have to work more and more, and we’re not making money. So this gap is what I call entrepreneurial poverty. I feel extremely compelled to resolve it.

I believe yourself, myself, all entrepreneurs, we have a big mission, particularly now with this COVID pandemic. There is a global recession upon us. We are in economic turmoil and we’re just in the beginning of this, in my opinion. Who will see us through this? It happens every single time, it’s small business. We must be successful not just to serve ourselves and our family and our communities, but to serve our collective globe. So I am rooting on entrepreneurs and will do everything I can to support entrepreneurship.

It’s so powerful what you just said there. A lot of the women that are in my audience Mike, really struggle with charging their worth and many of them will give away their time or their money free because of that lack of self worth.

I always say that if we undercharge for ourselves and we don’t put profit first, profit at the heart of our business, we’re not going to grow the economy. The economy is going to suffer as well as our own pockets.

And we start stealing jobs. So let’s talk about the downside. I get it. I get that the opponent to raising prices is in our mind. If I charge too much, people won’t want to work with me.

But we have to realize that if that’s our belief, that means people see us only as the cheap provider, not the good provider, not the valuable provider, but the cheap provider. If we increase our price, if they’re going to leave us, it’s because they want the cheap solution and who wants to be cheap.

But to your point, there’s something much bigger going on here. If I feel compelled to keep my prices cheap, I have to do the work. I can’t afford to hire the people. I have to grind it out even more, which means I’m actually stealing jobs from other people.

There was a study conducted, a global study of entrepreneurship. Only 7% of the people on this planet will ever be entrepreneurs or business owners, 7%. We are the weirdo minority. 93% of people are looking for good, reliable jobs where they can get consistently paid and do work that they enjoy doing. Our job is to build and provide jobs. Our job is to give jobs and shame on us if we have to be the cheapo, the low price provider, because then we’re stealing jobs from other people.

There’s one last piece I want to share because you can really tell I’m riled up about this. When we set a price, I want everyone listening in right now to realize that is your biggest marketing message you have. Hands down. I don’t care if you have Facebook ads and these other forms of advertising that gets noticed. What matters is the price. The second we see price, we determine value. It perceives value.

For example, if I put down a thing that looks like a diamond, I pop it on the table and say, hey Catherine, that thing’s worth about $5. I don’t need to say anything else. Oh, that’s a cheapo costume jewellery. It’s trash. It doesn’t matter if it gets lost. If I put the exact same piece down and say that’s worth $50,000 now, it’s like whoa. We’ll take tweezers. We’ll carefully put it into an envelope and put into a safe quickly.

The number one marketing message is your price. It sets the expectation for how the customer is going to behave. If you increase prices, you increase perceived value by default. It’s a necessity. Do it.

We can just finish the interview there and that would just be like a golden nugget Mike. Thank you so much for sharing that with us today. I think that will really help a lot of our listeners who really struggle with pricing in their services.

I haven’t read your latest book but what you were just talking about there really resonates with some of the work in your Clockwork book about getting your business to operate so that you don’t have to be working in your business all the time. That really resonated with something you just said there.

Take us back Mike, to before you wrote Profit First. Share with us a little bit about your personal story.

The inception, I guess, of how I became an author might be interesting. So I’ve been an entrepreneur ever since university. So my entire adult life I’ve been running businesses. By the way, I never aspired to be an entrepreneur. I didn’t have a newspaper route as a kid. My family are not entrepreneurs, but I decided to become one because I had to become one. I couldn’t get a good job when I was 21 years old and I’ve been an entrepreneur ever since.

I fell in love with the process. I’ve had the good fortune of building some companies in the technology space and then selling these companies. But my mindset became chock full of two dangerous elements. Arrogance thinking I know this thing now. Build a business to sell it. Pump it and dump it. And also chock full of just ignorance. So arrogance and ignorance is a deadly combination.

I started a third business as an angel investor with my own money, with the wealth I’d accumulated. I started making bets on different businesses. My arrogance was like, well, since I’m here, these businesses will be successful. I started 10 companies over a six month period and all of them collapsed within that year. I was a train wreck.

Sometimes moments in life, we see our bank account dwindling so quickly that we logically can see it fading, but emotionally don’t accept it. We hope that one big customer will come. I’m like, that one investor will come in and save my life, but it didn’t happen.

I’ll never forget the day. This was the day I became an author effectively. It was February 14th, Valentine’s day, of 2008. I got a call from my accountant who said, he’d finished doing the finances and the tax return plans for my business and told me that I should actually declare bankruptcy. He’s like, you are in a bad way. You’ve two choices, declare bankruptcy and see what you can do. Or liquidate your final assets, which was my house and a couple of cars. Liquidate that and go get a job.

I chose option two minus the get a job part. I decided I gotta liquidate things. I went home to my family that day and told them we have no money left. It’s a shocker because I’d been lying to my family by omission by saying, everything’s great. I got this, things are good, when they were shit.

I came home and I’ll never forget this. My wife and my three children were there. They had prepared a meal for us for Valentine’s day. They were sitting at the table. I came home half hour late. Not because I was running late. I didn’t know what to say to my family. I was sitting outside crying.

When I finally came in, the food was cold. I was sobbing. My face was red. My wife was like, did someone die? What’s wrong? That’s when I told her we’re going to lose our house. We lost it 30 days later. We’re going to lose our cars. I lost everything.

I had to tell my daughter, she was nine years old at the time, that I couldn’t afford to send her to horseback riding lessons. It was $20 and a group session she did with with six or seven kids and I was broke. As I said this, my daughter stood up and just ran. I thought she was running away, which honestly, Catherine, that’s what I wanted to do was just run away. But she was running to her bedroom to grab her piggy bank. She grabbed it and she came running back to me and she puts it on the table. She goes, daddy, since you can’t provide for our family anymore, I’ll step up and do it. I’m getting emotional.

I have told that story I can’t recall how many times now and every time it triggers me because I’m so ashamed of my lack of understanding of entrepreneurship. The outside effects. Entrepreneurship poverty: thinking I’m successful, I’m amazing. The reality, no understanding. This gap, this collapse I experienced. I devoted myself to fix that, to eradicate entrepreneur poverty.

The last little part of the story – and it’s not like a nice little bow tie on it! It wasn’t like the next morning I woke up and said, now I’m an author and I’m going to save the world – the next day I woke up and I started drinking.

I drank more than I should because I was medicating myself for another reason. I was an insomniac and I socially distanced myself from people before socially distancing was a buzzword. It took me about two years of depression and slowly moving forward that I came to this awakening.

I was writing a journal during that period, a guy’s term for a diary, and writing down all the things I didn’t understand about entrepreneurship. I still have it. I have a collection of things I need to fix myself. So every book I’ve written, Profit First too, is a solution for something I don’t understand about entrepreneurship. Admittedly, I’m writing the books that serve myself, but I also hope it serves countless entrepreneurs in navigating through those challenges. That’s how it came about.

Wow. Like I literally was getting goosebumps on my arms. I have a nine year old son and my youngest is seven. When he was five years old he contracted bacterial meningitis and we nearly lost him.

That was my moment when I was like, there was so much jargon used in the medical profession. I didn’t understand what it meant. When I went back to work in the finance world, it was like, how many people don’t understand money because they don’t understand the jargon.

There’s always like a pivotal moment isn’t there in our life. Thank you so much for sharing that with us. I can only imagine what that must have been like.

Devastating and thank you for sharing yours. We’ve all had, now I understand to be, trauma. I thought trauma was physical violence or something worse, like sexual abuse, but there’s all of these flavours of it, if you will.

I was interviewing a psychologist. I’m just fascinated about how the human mind works. She said something fascinating. She goes, I’ll tell you how to find your life’s purpose. She goes it’s either a big T, a little T, or the letter C. I said, what’s the big T. She said, that’s the big trauma when there’s a moment in your life that is so visceral, so painful that we make a commitment to ourselves to never allow that to happen again to us or others.

The little T is the drip trauma. That’s when you’re picked on for something growing up as a child or your parents do a bad job parenting and there’s this nagging thing where it becomes this overwhelming moment, but it results in that same thing. I will never allow this to happen to someone else, including myself.

The C is a childhood dream. This aspiration we had one day when I grow up, I will and that dream gets abandoned. Then there’s that day where you say, I will not let that dream pass. If we grasp the big T, little T, or the C that becomes this mission.

Honestly, I think when I’m out trying to teach, I’m really trying to learn. That’s the honest truth. What I’m trying to give is actually what I need to get. I think that’s true for all of us.

So where did you go from there, from that moment of going bankrupt and then writing Profit First, what happened in between that?

Desperation. Desperation’s a dangerous thing. Desperate people do desperate things. My desperation was, I didn’t have a house anymore. Thank God for our neighbours. They knew our situation and they were actually going to Europe to live, I think, in the Netherlands for a job assignment for a period of time.

They were seeking to get a house sitter to maintain their property because they weren’t gonna sell it. They heard our situation and said, listen, just pay a rent that you can reasonably afford. Your house sitters now. They gave a shelter that gave me time. I started to dabble in different things, trying a little consulting, writing some stuff. I remember actually at one point, my wife says, Mike, this is not working. You have to get a job. You really have to get a job which to an entrepreneur, the words get a job, you might as well take a dagger and stab it in my eye over and over. That would be less painful.

But there was this burning desire to become an author. It was building there. It was actually part of my childhood dream. I wanted to be of service in a big way. Somehow, someday. I didn’t have the words author, but it was something that was calling me. Then I just did it. I actually did a vision board. I believe in those and I wrote down if I didn’t have the problems I have today, what achievements do I want for myself? And there was my first book.

So I just started to do it. I started to write it. The first book came out. It was called the Toilet Paper Entrepreneur. It was this irreverent approach to entrepreneurship, very scrappy, but the book worked and required tons of hustle. I was now thrown into a new business. Selling books is like selling cereal. It’s any other product – you can go to the local market and there’s ridiculous amount of cereals available. How do you pick the one and how do you market so that the customer picks you? Well, that’s why I had to learn about books.

It was a struggle for sure, but I learned different approaches and ultimately what became popular in a cult classic type of way that a mainstream publisher said, we want to work with you going forward. That’s how I got in the door with a mainstream publisher.

Then I started to write my other books. Today I have, I think, six books in circulation. I’m actually actively writing one that can be released in 2021. My ultimate goal is to write 25 books. It’s all in that journal. I wrote it all down during that period of my life, the things I got to write. So I’ve a lot of work in front of me.

Wow! This is just the start of your journey then?

Oh yeah. We’re just scratching the surface. To me it’s like music. My favourite band admittedly is Def Leppard. They work really hard, just like every other band. Then you have a hit song. My hit song is Profit First right now.

What I learned from Def Leppard and all these other bands is, once you have your hit, you better perform that a lot. That’s what the people want to hear. I don’t want to hear the B side things when I go to concert. I want to hear stuff from Pyromania or whatever.

So I realized once I have that hit song, I have two responsibilities. Deliver on that because that’s what people want to hear and need. Secondly, I better write a bigger hit, so it’s a responsibility to level up. Every book I’m working on, I’m trying to deliver a concept that is of greater service and bigger service.

I’ve written two books or three books now since Profit First and I think the concepts are life-changing, but they’re not the hit songs yet so I’m going to keep on delivering Profit First until people are tired of hearing that song. Hopefully I’ll deliver some other hits in the meantime.

For those people who haven’t read Profit First, Mike, if you were going to summarize the four principles that you teach in Profit First, what are those four principles?

So it starts off with understanding the essence of why most businesses aren’t profitable. I thought there’s something wrong with us. It’s like the human mind, because you think about it. You got into business, I presume, to be profitable, to live a lifestyle that you define as comfortable. I did the same and so do the vast majority entrepreneurs.

That’s what financial freedom is. We can live a lifestyle comfort without worry, financial worry. Well, I’m like, how come almost all of us start a business for that reason yet we never achieve it. That’s when I saw the foundational formula and the foundational formula is sales minus expenses equals profit. Your turnover minus your expenses equals profit. What that formula tells us is that profit comes last. In human nature when something comes last, it means it’s not important. Most of us don’t look at profit until the end of the year when it doesn’t happen.

What we need to do is make profit a habit. I say in the book, profit is not an event eventuality. Profit is a habit. So I flipped the formula. It’s sales minus profit equals expenses. In practice, every time revenue comes into your firm, you immediately take a predetermined percentage of that money as profit and allocate it away.

The four principles are this.

• First of all, set up multiple accounts at your bank. One account acts as a depository account, money flows in, but then we’re going to carve up the money for different responsibilities, profit being the primary responsibility.
• But you also have to take a salary different than profit.
• You have taxes. I’ve yet to visit any country on this planet that doesn’t have a government with a long sticky hand that pulls money out. That’s our obligation and responsibility.
• And the business of course needs operating expenses.

We set up these multiple accounts. It’s like the envelope system if you’re familiar with that. When money comes in, you carve it up to its responsibilities and envelopes prior to spending the money so then when you do spend money, you know what’s available before you spend it for that purpose.

The second account is sequencing. It’s human nature that we need early rewards. We need to get the pat in the back to feel confident about something. A big mistake for example, someone hasn’t exercised for years and says, I can get back to that gym. New year’s day. I’m going to go and walk that treadmill. You know what? I’m going to run a marathon. I do whatever distance a marathon is and they injure themselves, they can’t sustain it and they say, clearly I’m not made for fitness.

The problem is we went too fast, too soon and instead of getting a reward, we got punished. The first day of the gym should simply be a stretch. Just stretch out. Let’s see if we can feel a little better and build that momentum.

With Profit First, what we do is we start with a low percentage of profit just to start stretching the business and start accumulating profit. It starts rewarding us – for the first time ever you accumulate cash profit. We get excited. We feel good. We add more profit percentages over time. So the sequence of allocating profit first is important because it is a reward mechanism. And in growing those profits over time, that sequence of events builds that strength.

The third principal is remove temptation. As we accumulate profits and other reserves like taxes that we’re gonna pay out in chunks to ourselves or to the government, if it sits in front of us, it becomes very tempting to borrow from it. Listen, I’ve been doing this Catherine for 12 years now. I’ve had 47 consecutive quarters of profit distributions. But in the very beginning, when the bills were stacking up, I looked at my profit account and I looked at my operating expenses. I didn’t have enough money in my operating expenses. I said, I’ll borrow from my profit account and I unwound the entire system.

Lesson is this: the op ex account, if you don’t have enough money in there, if you can’t pay your bills, you can’t afford your bills. There’s something fundamentally flawed. We got to cut costs, more importantly, amplify margin. Like we said, at the beginning of this, raise your prices, please. And hide away that tempting profit. We reserve those taxes. That’s gonna come out, but it has to go to the government. You have to pay them.

Then the final principle is to get into a rhythm. Doing things sporadically like going to the gym for a couple of days. You work out like an animal and you don’t go for three months and like, Oh my gosh, I haven’t gone in so long then you start up again, drives no results.

It’s that consistency over time and that persistency, that drives results. We set the rhythm of accumulating money, allocating out, spend within what’s available, reserve profits and taxes, and repeat the process again on a periodic basis. Then part of this rhythm is every 90 days, that’s what is called quarterly distributions. And so the quarter ends and that’s when this money comes out. The money that’s been accumulating in the profit account, comes out as a reward to you.

This is not your salary. You should be taking a salary, but this is a bonus on top of it. A thank you for running a business, that’s contributing to your society, your country, to our globe. It’s a thank you for being an entrepreneur.

We repeat that cycle every 90 days. I’ve just raced through something I usually teach in about one or two days, but that’s the essence of Profit First.

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I read Profit First twice on one holiday and I was so excited to implement it. I literally sat on my sunbed, I had like sun cream all over my notepad, worked out all of my taps and my caps, all of which are in Mike’s book. The first thing I realized is that I was my expenses were around about where they should be. I teach personal business finance, but even though you’re a financial professional, it doesn’t always mean you do it for yourself. Right? And I think that’s really important to distinguish.

The cobbler’s kids they call it.

The curse of knowledge.

I sat there and thought, okay, so my operating expenses account is about where it needs to be, but I actually plugged a few of the leaks that were there. I’m a big believer in actually bringing conscious awareness to our finances. So for me, I actually look at my money every single day, which I know sounds a bit excessive, but every day I top up my tax pot. In the UK, we have VAT to pay. So a proportion goes into my VAT pot.

Now I’m going to let you into a little secret, Mike. I don’t move my profit first plus account into a separate bank. The reason I don’t is because I spent years in debt. So now I see money accumulating, from a mindset perspective, it spurs me on to keep going with my money mindset.

I think actually the principles that you talk about are so important because if you’re an over spender, for example, then moving your profit account out of sight, out of mind is just genius, pure genius.

Profit First is a framework meaning it’s not something we have to adhere to 100% and that if you go off or you modify that you failed. The goal is to have a framework that then works within our behaviour.

Profit First is a behavioural cash management system. So a couple of things you said resonated with me. You said you check your bank accounts daily. Well, I think that’s awesome. I would argue most entrepreneurs do that, sometimes more than daily, maybe hourly. The reason we do is we want to see how much money we have. Did money come in? What’s my situation? Did money go out?

Now, traditional accounting says never look at your bank account. It doesn’t reflect your business. Read all those complex statements. But what we typically do, almost every entrepreneur, myself included is we revert to the bank accounts. That’s why Profit First exists at the bank level. It’s at the bank accounts because it intercepts our behavioural path.

I’ll give you an example. I’ve exercised sporadically my entire life, but the last five, maybe actually seven years now, I don’t miss a day. I work out five days a week, worked out this morning. I don’t miss it. The change was understanding my own behavioural path, my pattern. What I notice is when I wake up in the morning, that’s the best time for me to work out. I think it is for many people. But what I was doing was I wake up, I go to the bathroom, I come out of the bathroom, I’d make some coffee, I’d read the paper a little bit. I’d say, Oh, I really got to work out and I’m like, Oh my gosh, I’m late for work and I’d skip the workout.

Well, going through that sequence of events, I would say, I wake up, go into the bathroom. Oh, I go into the bathroom every single time. I will put my gym shoes on the top of the loo and intercepts by being a real path. The only way I can use that toilet is if I pick up the shoes. Now I have the shoes in my hand, I need to put them on my feet or I feel compelled to. And I started this positive momentum. It intercepts my behavioural path. That little change, changed everything.

With Profit First, we set this up at the bank so that when you log into the bank, you see what money is allocated to what purpose? The thing you said that resonated with me is you actually liked seeing the money accumulate right there at the bank, because you have clearly a very visceral moment with debt and your experience around that, that the accumulation of money fuels you.

There is a financial expert here in the US who’s very popular named Suze Orman. I don’t know if she broadcasts out in Europe, but it was fascinating. I’m not even actually a fan of hers. I don’t watch her television program, but I did see this one thing she said, and it was a eye-opener. She says, I can make you rich today. The moment you get more joy out of something, that’s what you should be doing. The fact that you’re getting joy out of the accumulation of money and you can see it and you get joy from that, it will continue that momentum.

For many entrepreneurs, myself included, as money piles up, I get the joy out of using that money, spending on something expensive. Therefore I have to hide it for myself. Then as the money accumulates on the side and I don’t see it, I work within the confines of what’s available. What gives me joy now is finding how do I get results that I want with scant money, with way less. So I start becoming very innovative. There is no wrong answer here in regards to the system, there’s a right answer in regards to your behaviour. What gives you joy?

I think as well, what you were just saying there, Mike, about focusing on profit. The typical traditional accounting method of sales minus your expenses equals profit. That’s just an accounting method.

When we flip that on its head, like you do in Profit First, it’s sales minus profit equals expenses. For me, this is all about the behavioural side of money. How we manage money is depending on our relationship with money.

One of the things that I often find with people that I work with and I’ve done a lot of study around this in financial psychology as well, is that often, most people’s values are inherited and they’re often values that are driven away from pain rather than towards pleasure.

In the scenario you talk about in your book of the toothbrush and if you’re brushing your teeth every single day, which hopefully everybody’s doing, is anchoring that new habit into something you’re already doing. Like you say, put your gym trainers on the toilet so that when you’re going to go to the toilet in the morning, you’re setting yourself up for success and you’re setting yourself up for success to work towards something that’s pleasurable rather than something that’s cemented in pain and pain away from debt or away from something or away from being bankrupt or away from not managing the finances how you’d like to.

In your experience, Mike, how often do you think entrepreneurs focus on money versus their mission and their purpose?

Ironically, while the intent often is coupled together, I want to serve the world and make money doing it. It gets decoupled very quickly and there is a fear of the money, the numbers.

I think the vast majority of entrepreneurs say “I’m bad at math.” I don’t look at the numbers and there’s this perverted expectation that one day, if I hustle and grind long enough that an avalanche of money will just appear my bank account. That one day, this switch will magically flip and all this money will appear and we buy into this and it’s totally false.

Like I said, money, profit specifically, is not an event. It’s a habit. Profit is an accumulation of small little wins that happen every day, every hour. Not that just magically fall into your lap. We need to put the habit in place today.

What was interesting too, and I tell people this with Profit First, you can start being more profitable, permanently and effectively immediately, if you do two small steps. One go to your local bank today and set up a savings account or checking account and call it profit. Here in the US that takes about 30 minutes, 60 minutes. It’s an investment of time, but it is a game-changing investment. It’s worth the 60 minutes.

The second step is any money comes in, take a small percentage. I even suggest starting with 1% of your cash flow into that profit account because the impact is inconsequential. If a thousand pounds come into your business today, 10 pounds is like nothing. It’s 1%. Put that into the profit account because if you can run your business off a thousand pounds, you can run your business off £990. It makes no difference. But what makes a massive difference is you start seeing a cash accumulation in that profit account. Then we start building that muscle. Now we’re stretching at the gym and that becomes walking and ultimately running a profit marathon. That’s how we get started. It really is that simple.

I get a lot of resistance too. I’ve been speaking all over the globe and it’s the ultimate privilege of a lifetime, but people come up and say, listen, I’m skeptical. This is a shell game, money’s money. This isn’t going to work. I hear them because that’s what I thought. A percentage is a percentage. It doesn’t matter where it’s going. But I found out it does because this is a behavioural aspect.

It’s the human mind. We like to get little reward bursts, dopamine. That’s why we like to surf Instagram and do all those things because of the little dopamine hits. The second thing is we want to avoid pain. So if we align something that gives us pleasure and avoids pain, meaning no money left the end of the year, don’t know how to pay taxes. If we avoid that and we have this accumulating profit, it will work into perpetuity.

I’m proud to say we have well over 350,000 companies globally doing Profit First and the feedback’s consistent. It’s a consistent drip of great results on building profit and pain avoidance. I don’t have to worry about taxes anymore. My taxes are paid. My business is running efficiently and effectively. Profit First is not a shell game. It’s a behavioural system.

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Are there any typical mistakes that people make when they try and implement Profit First?

So the most common mistake is I’m not going to use my bank, I’m going to do it in a spreadsheet. I get the idea. The reason it doesn’t work is because that does not intercept the behavioural path. That’s not the gym trainers on the toilet seat, right? That is something you don’t look at.

I explain to people, if you have an accounting system like Xero or QuickBooks, that is a glorified spreadsheet, all your numbers are already carved up. It’s called the general ledger. If that’s not serving you, a spreadsheet won’t serve you either. We must intercept the behavioural path.

The other common mistake I see is people going in too fast, too soon. They hear the profit first system and they say, I want to have a 50% profit. I’ve never had profit before. I want to have big numbers. I want to pay myself this massive salary and they start off that way. But now you’re trying to run a marathon where you haven’t exercised for the last 20 years. You’re going to tear your legs off your body. It’s too dangerous.

So you have to start slow and let it grow. If you avoid those two mistakes, generally we see significant success from businesses that implement it. So much so that they actually are not just more profitable than their contemporaries, they actually grow faster than their contemporaries because they’re focused on the efficiencies and what works within their business, as opposed to doing pot shots and just throwing money at different trend the ideas of the day.

Great. So first step then is I would say, read the Profit First book. Second step then is just to start, go to your bank. I mean, in the UK, we have providers like Starling Bank and Monzo, where you could literally open an account in about, probably about 20 seconds.

Really?

As long as you’ve got your drivers licence or passport it’s super quick.

Actually, the likes of Starling and Monzo, they are perfectly built for this type of module because you have one bank provider. Your main bank account is your operating expense account and then you just set up what they call these goal pots and you can put pictures behind them in your VAT pot or your tax pot, you could have a picture of a tax man and your profit pot, you can have a nice vision board behind it to inspire you to pay your profit.

So it’s beautifully equipped for this.

Tell us a little bit, Mike, about the taps and the caps. How do people work out their taps and caps?

This is a little more of an advanced concept in the book. Taps is an acronym. It stands for targets allocation percentages and caps stands for current allocation percentages.

Profit First is a percentage-based system. So we start with looking at where your business is today and then we compare it to taps. What do we want to target? In the book, I give examples based on different revenue ranges of what might be really effective taps. This was based upon a survey I did of about a thousand companies. You set the taps, but that’s not where you start. That’s where you target. That’s the marathon we’re going to run.

Then we rewind back to today and say, where are you currently? What’s the physical health? Are you having any profit? Do you have zero? Do you have some? And that becomes our caps, our current allocation percentages. Then we develop a rollout strategy.

Every quarter, every 90 days or so we make adjustments. We enhance the profits, somewhat. We improve your compensation. Reserve more for taxes. We put downward pressure on the operating expenses of the business. Then we let that settle in for 90 days to see how we’re doing. And we reiterate that process again. We repeat it again and again, until we hit the taps for our business.

Amazing. So good place to start then would just be to actually just understand your numbers and understand what are your expenses, what are your sales? And then you can start to work out roughly what percentage of your sales are going out for expenses?

What percentage of your sales are you putting aside for taxes and VAT and profits?

Yeah. Look at your historical performance. We may not be thinking in these terms of target allocation percentages and profit first percentages and all that stuff, but you are doing it in your business. We can extrapolate from your numbers very quickly what percentage of your revenue is translating to profit, translating to owners compensation and so forth.

Everyone has a starting point. We just evaluate your numbers. I would work with a financial professional like yourself, evaluate your numbers, understand your current position, then determine where you want to be and intend to be and then step in that direction.

Amazing. Any final words of wisdom, Mike? One of the questions that came in from my audience, actually just to finish off:

Obviously we are going through a huge global pandemic right now and it is impacting on people’s businesses in lots of different ways, some more positively than others…

I just stepped on my soap box.

I don’t know if you saw me do that, but I’m on my soap box. Here is the deal.

The clients that you have, your clients want you to be wildly profitable. Let that one sink in. Your clients want you to be wildly profitable.

They will never say, hey charge me more for what you’re doing, or could you rip me off a little? Of course they won’t say that, but here’s what they will say. I want your full undivided attention. I want the best of your services and products. I don’t want you worrying about trying to land a client. I want you worrying about serving me and the only way you can serve your clients exceptionally, the only way you can be focused on them is by not worrying about money.

Because if you’re worried about money, you’re worried about getting that next client in the door. You’re giving some attention to your current client while trying to get another one. They’re getting half of you if they’re lucky.

So your clients will not say the words charge me more, but they want you to. They won’t say, could you be more profitable, but they want you to, because that’s the only way you can give the best of yourself to your clients.

You have a responsibility to be profitable.

That was just beautiful!

My strap line of our podcast is small steps, big wins. It’s not about the money. And that’s exactly what you just said so thank you so, so much.

I know I can speak to you all day and I really appreciate your time today. Your book’s on Amazon, Mike but if anyone wants to check out any of your free resources that are available to help people get started with Profit First, where would they be able to go?

If you want to learn more about Profit First, I encourage you to go to profitfirstbook.com. That’s probably the best spot to get started on this book. There’s resources there to download and get you started and of course, access to the book and some free chapters too.

Great. And you have a podcast too, haven’t you?

It is called Mike Up In Your Business. It’s a brand new release and it’s just a different spin on podcasts. At least from my perspective. They’re really deep dives. They’re not how to necessarily, but you’ll find maybe some how to’s in it. They’re stories, but there are stories that I think are atypical. We just booked someone to do bio hacking. We talked about racial injustice for entrepreneurs. Topics that don’t get addressed as much, I think, as they should.

Great. I believe I’m going to be coming on your podcast very soon as well. Thank you so much for your time. Mike, it’s been an absolute pleasure to have you on the podcast today. Have a awesome rest of the afternoon.

Catherine, thank you for having me.

Resources:

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profitfirstbook.com

Mike Up In Your Business Podcast

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The post Putting Profit First with Mike Michalowicz first appeared on The Money Panel.

The post Putting Profit First with Mike Michalowicz appeared first on The Money Panel.

This is a really interesting topic and one that I want to dive into. We have spoken about how to manage money and the emotions around money, particularly when dealing with a financial transition such as divorce, before on the podcast. But I think it’s one of those topics that does need re-looking at because with divorce work especially, there’s so much that goes on emotionally, physically, and mentally when it comes to managing money and everything else surrounding that. This is Tamsin’s area of expertise on the podcast today.

We talk about:

• What am I going to do for money?
• Where am I going to live?
• What about the children?
• Should I use a lawyer?
• Do I need a financial plan?
• What about pensions?
• What not to do
• Emotional Support & Financial Abuse

So welcome, Tamsin, how are you?

I’m good. Thank you. Thank you for inviting me to come on to the podcast. I’m really excited about talking to you.

You’re so welcome. Thank you so much for joining us. As I mentioned in the introduction, Tamsin is a chartered financial planner, which is pretty much the highest you can get in terms of qualifications. She’s been in the industry for over 20 years, so she knows her stuff.

I wanted Tamsin to come on and talk about her own experience of going through divorce and then actually talking about what is the best way for us, as women, to manage our emotions and the money side when we’re going through a divorce.

Tamsin, for those listeners who haven’t come across your podcast and your work before, could you give us a little bit of an idea as to the sort of work that you do and how you help women who are going through divorce?

Yeah, of course. I work with both couples and individuals to help them to figure out how to divide their money from their marriage, to come up with an amicable settlement with their ex partners, or soon to be ex partners.

I tend to work with parents because the really important thing is if you’re going to co-parent together, you decided to have those children with your partner and you need to co-parent them, let’s be honest, for the rest of their life. I don’t know about you, but my parents are definitely still parenting me at the age of 47!

The idea is that whatever happens, you can be in the same room with that person and not be frightened of it. Sorting out the finances, is a massive fear when you go through separation and divorce. We do also help couples who are going through desolation of a civil partnership as well. It doesn’t have to be different sex couples. It can be same-sex couples as well.

That’s a great point. Thank you. How did you get into this work in the first place?

That’s a good question. I got divorced about five years ago and going back even further than that, I am a child of divorced parents. My parents split up when I was about 12. I still in touch with both of them but they didn’t have a great divorce. They didn’t really manage to do it amicably. They’re not really great at being in the same room together, even now 35 years on.

I didn’t want that and nor did my husband. We wanted to try and part so that we could still phone each other if we were having dramas with the children, we wanted to be able to go to parents’ evenings together. We want to be able to share the big things in our kids’ lives. If my son has a big rugby match, we want to be able to rock up together and there not be a big drama about it.

That was my experience and we came through it. Don’t get me wrong, it was not a perfect experience. All divorces are roller coasters. We both stuffed up at various points along the way, and we probably are still stuffing up at various points along the way because we are all human.

I wanted to be able to help other people to come out of their breakup in an amicable way, to be able to move forward and be able to pick the phone up to one another. It struck me that the work that I was doing as a financial planner with other clients who were planning for their futures and getting clarity and peace of mind from being able to see their future financial plans, that that would work brilliantly well for people who were going through divorce, who were suffering that initial fear, that trauma, that lack of clarity about what their future might look like. So I started Smart Divorce in 2018.

You talked there about the initial fears for people when they’re going through divorce. What are the typical fears that you see and hear from your clients when they’re going through that first initial stage of divorce?

The biggest three are;

1. What am I going to do for money? How am I going to manage financially? Because you’re going from one home to two homes and most people, even if they’re good with money and they put some aside, it’s still putting some aside for the future that they believe they’re going to need in the future. Very few people tend to have huge amounts of surplus money that’s just swirling around that’s able to fund another house if they needed it.
   
   
2. The second is where am I going to live? Most women desperately want to stay in the family home. They don’t want to move the children. Sometimes that’s the right decision and sometimes it might be that actually moving home doesn’t have as big of an impact as they think it’s going to.
   
   
3. The third one is, what about the children? Am I going to have them all the time? Are we going to split looking after the kids 50/50? How’s that all going to work? I don’t really want them shifting from house to house.

Those three things seem to be the things that really impact the most. In terms of those challenges then, the initial fears of, how will I manage financially? Where am I going to live? And what happens with the children?

I haven’t been through a divorce myself, but my parents divorced actually at a similar age, Tamsin, to your parents.

I would say my parents never really co-parented. It was probably more parallel parenting than it was co-parenting. Maybe we can talk about that in a moment, but with those fears about managing financially, I know that for some of you listening to this podcast, you might be thinking actually divorce or separation might be the next step, but the fear there is that I can’t because I’m financially dependent on my partner.

We’re actually going to do quite a deep dive into this subject on a future podcast episode coming very soon. We’re going to be talking about that in some detail, because I think that for me is almost a whole different challenge for people who are in relationships, who know that they want to take that next step, but don’t know how.

But in terms of those fears about once you’ve made that decision, how do I manage financially, where will I live, and what’s going to happen with the children, from your expertise, Tamsin I know that you do some close work with solicitors. What are people’s choices?

If they were to have a checklist or a list of things that need to happen over the next three or four months, what would you recommend people start thinking about in that stage?

The first thing to do is gather all the financial information that you have and that you know about, because one of the early stage processes is to exchange information with your other half.

There are various choices that you have in terms of legal separation of how to do it. You could, for example, do it yourself, you can use a mediator, you can use a family lawyer. Look out for those that are Resolution members, because Resolution encourage what they call dispute resolution without going to court if it’s not necessary. Those lawyers will try and help you to settle things out of court.

Those are the main initial options that you have about who you’re going to talk to. One of the first things to do is to exchange financial information. Gathering together all the information that you have about the financial products that you know you’ve got. So what savings accounts have you got, what investments, what pensions. Try and remember all the places that you’ve worked in the past that you might have gathered pensions from and try and pull together some of that information. That’s where we try and help people if they are not sure where to go.

The next thing to do is try and put together a budget or a spending plan. Pull together what you spend money on because that’s how we can start looking at needs. Putting together a budget or a plan when you’ve never ever done it in your life before is really, really, really tricky. If you’ve never had that experience and you have no idea where to start, we’ve got some budget planners that can help to write down what things you want to think about what you spend money on.

It’s a really good point actually, because for a lot of people, this may be the first time that they’ve ever done a recce of what they have in their finances.

It’s something we talk about a lot, in our Money Circle membership. We’ve provided these PDF money portals where they can store all of their financial information. We’ve also created things like Trello boards for people because sometimes people like to use different tools and things to help them get organized.

I think sometimes it is just having that awareness, which I think is relevant whether you’re going through divorce or not. We should really all be as aware as we possibly can about what we are spending. What are our spending habits? Not to restrict your outgoings, but actually just to create some awareness over what your spending habits are and which will essentially help you to manage money better.

You talked through there about a couple of options about going through Resolution, going through a family lawyer, etc. How does a financial plan work to support that journey?

A mediator can’t give advice. We quite often work with mediators because they can’t advise. They’re there to mediate the conversation. If you find it difficult to sit in a room and have a conversation with your ex, without it turning into a massive row or them hugely overpowering you, which can happen. A mediator is there to ensure that everybody gets a fair say and that everybody’s putting their point forward on an even keel.

We quite often support clients who are going through a mediation to educate the person who’s financially less aware and bring them up to the same level or to create a plan for them so that they can see if they separate the money in a certain way, how that’s fair.

When we look at divorce, we look at two different ways of sharing money out. One of them is called a needs basis and one is called a sharing basis. Sharing basis is very, very rare in the clients that I work with. In fact, I don’t think I’ve ever come across a sharing case. They tend to be multi-millionaire business people, footballers or people who have huge amounts of surplus money.

The majority of us normal people would divide our assets on a needs basis. So there is maybe surplus money for one house, but actually when you’re then funding two houses and two lifestyles, actually you need to split the assets so that everybody’s needs are covered. On a needs basis, you’re looking at making sure that both parties financial needs are dealt with in a fair way.

That doesn’t necessarily mean 50/50. If you’ve got one person earning £100,000 and one person earning £10,000, then splitting all the assets 50/50 is not going to be fair because one of them is going to continue to add huge amounts more. They’re going to be able to build their assets back much more quickly. They’re going to be able to achieve a mortgage much more quickly. They’re going to be able to build pension benefits up. So we need to think about all those things. That’s where we come in to help to show you what that might look like in the future. What a fair split might look like.

Certainly from my experience of financial planning work as well, one of the key things that can come up around choices is maintenance. Do I take a monthly maintenance or do I take a lump sum? That’s where the power of financial planning is incredible because visually then you can map out scenario A looks like this and scenario B looks like this.

It can be clear to then stand back and say, okay, that makes much more logical sense. Let’s go and have a further conversation about that arrangement.

You mentioned when you’re gathering data about pensions – I know from my experience in financial planning that this is one area, and this includes friends of mine that have been through separation divorce, where they’re like, I’ve not bothered looking at the pension because it’s not worth anything. They focus on the house, the physical, tangible assets.

How important is it to include those pension conversations when we’re looking at sharing or separating finances?

100% essential. In the majority of relationships, the biggest marital assets will be the house and the pensions. Man are quite possessive over their pensions. Quite often you hear women say, oh, I’m not going to touch his pension.

Well, it might be in his name, but if you’ve not worked because you’ve stayed at home to look after and bring up children or even you’ve taken a step back from your career to allow them to move forward with their career, those pensions are as much yours as they are his, even if they’re in his name. Allowing him to keep hold of his pensions and ignoring them and not even having the conversation about it is not a plan because you’re looking very short term, you’re saying I’m only going to look at what’s happening in the next five years.

But if you look longer term to your retirement, you might have to work more years because you’ve not looked at his pensions. If you think you could’ve had an extra couple of years putting your feet up and going traveling and doing nice things rather than having to work longer. It would be madness. It’s essential to look at pensions.

That includes final salary scheme arrangements because they will have a value attached to those. As Tamsin said, they can be significant.

I worked with a client two years ago and we managed to figure out that he was actually hiding a pension and we found out the information about it. She received something like £70,000 more because we really pushed back on finding out more information about this particular pension. It made quite a significant difference in terms of her own financial future.

If there’s one thing that you could take away from this podcast in terms of divorce work, please, please make sure if you ever going through those conversations, don’t dismiss the pension contributions. Don’t dismiss the historical pensions because it can make up the second biggest asset in terms of the marital assets.

Thank you for backing that up Tamsin. It’s definitely something I’m really passionate about in helping women to be more aware financially.

Absolutely. The other thing to bear in mind is you’re talking about final salary pensions before. Quite often, you’ll get what’s called a CETV, which is a cash equivalent transfer value. Often they’re not a realistic assessment of what that pension’s worth. So don’t necessarily assume that because the pension provider tells you that that’s what the pension’s worth, that’s what the overall benefits actually are worth.

I know that sounds like a bit of a bonkers thing to say, but we had a client with an NHS pension and they got a report from an actuary who can give you a correct analysis of what the pension’s actually worth. Their pension was valued at 40% of what the value of the actual assets were, and that’s hugely different.

If you’re saying, you keep your pension and I’ll have the equivalent amount in the house, for example, you could be doing yourself out of a huge amount of money. So that’s really important to look at.

The other thing to look at is state pensions. Your ex might have contributed to state pensions all the way through, and you might have years missing. Now if you’re getting child benefit those years are added. But it’s not just about child benefit, you might have years that you’ve not accumulated that your ex has. So again, really important to look at all these areas.

We’ve popped a link at the end of this article: it’s very simple to get state pension forecasts. For any of you listening to this, it’s something I always put on a financial annual checklist.

Just go to this website, put in your national insurance details, you’ll need your government gateway login, which I know is an incredible pain because it’s like Fort Knox trying to get through the HMRC website sometimes. But if you can, update that regularly.

If you think you’ve got missed years of contributions or you’re not sure, it’s a great place to get started.

So we talked there about the initial fears then of what the struggles and things and the challenges and the fears that come up for anybody going through a divorce. What other tips Tamsin, would you share with anybody that we’ve not already mentioned for people to consider when they’re going through a divorce?

I think there are a few things. Make sure you get as informed as you can. So know what your choices are, know what your options are, know where to get proper quality advice. The guy in the pub and your mate who went through divorce is not necessarily the font of all knowledge that you think they are.

Friends are brilliant and I know they try and help, but everybody’s in different situations. It’s important to take professional advice. Gather all the information together on yourself, on your policies and so on. Don’t be tempted to pinch information about your ex’s financial statements and so on. That will not do you any good in the long-term you’re not allowed to do that. Worth knowing because it’s incredibly tempting I’m sure.

So they shouldn’t go and try and find their ex’s financial information?

It will be asked for if you’re going through either mediation or if you’re using family lawyer. If the information that you’re sent by your ex you don’t believe is accurate for whatever reason, your lawyer can go back to them and say, I don’t believe this is true. I believe that X, Y, Z is missing. But you’re not allowed to go and pinch your partner’s information. So that’s worth bearing in mind.

If you weren’t using a lawyer, because I know some people listening to this might think that using a family lawyer is really costly and can’t afford to go down that route. How else would you tackle that challenge? If you think that maybe there is some missing information, but you’re not using a lawyer?

It’s really difficult. I think the long and short of it is, if you really think that your ex isn’t disclosing accurate information, I think really your only option is to go down the legal route.

There are ways of funding divorce that you can go through that lawyers can explain to you if you can’t afford to pay for it initially yourself, and there may be options in some circumstances, particularly if the partner has withheld information, where if a court gets involved, the court may award the fees to the spouse. You might be in a position where you were awarded fees because you’ve been upfront and honest and your ex hasn’t.

It makes me think about this topic that we’re going to be talking about around financial abuse because actually it’s one of the red flags isn’t it?

If somebody is not giving accurate information or hiding money away, that can be a red flag around some financial abuse. I was just intrigued as to what you said there around, don’t try and break into their house and steal information because it will be used against you potentially.

It’s really tempting! I’ve had lots of people say, oh, well I could just photocopy X, Y, Z. Don’t do that!

I think another thing is don’t rush. It’s not a race. You don’t have to get this done as quickly as humanly possible. It’s better that you come out with the right answer rather than a really quick answer. Sometimes taking a step back, taking a breath, giving yourself some space to get your head together and to think about what the solution is better than racing to the answer.

I would definitely suggest that there’s usually one party in a divorce that’s emotionally further in front and if that’s not you, then you need to slow the process down. Just because somebody is shoving you and pushing you and jiving you and getting you to quicker doesn’t mean that you have to. You’re as in control of this process as they are.

Sometimes even getting some emotional support. On our podcast, in series two, we talk to some people who’ve been through divorce themselves and come out the other side. Both men and women actually said, we’ve come out the other side well but what we needed emotional support, some form of counselling, some form of therapist or divorce coach.

These guys are really, really helpful and I would almost say, if you don’t use them as you’re going through divorce, you will probably need them later because you have to, at some point, deal with the emotional pull and the emotional upheaval of divorce.

I would say in all honesty, the emotional support is probably the most valuable support because sometimes what happens is that the emotion is so strong that actually we just act irrationally. Not because we know that it’s right or wrong, but because the brain is flooded with emotion.

When the brain gets flooded with emotion, it can’t act in any logical capacity. So you might be thinking, I knew he had a pension, but I didn’t do anything about it because the emotion was – I just want to get it done. I just want to get it out of the way. I’m feeling pressured as you say, to get it done quickly.

I think the emotional area is so, so important to get support whether that is through counselling, therapy, coaching, because if we can manage the emotions, we’re then in a much stronger position to make more rational decisions, particularly when it comes to money.

We know that, as humans, we don’t typically come from a place of rational decisions sometimes. We know that we should be spending less than we earn, but people still get into debt. It’s because of the emotional aspect of what drives us. Also, these experiences become part of our blueprint.

Often what I find happens as well is that people who have been through significant financial transitions, like divorce, like inheritance, it’s like grief. We have to know how to manage that whole grief cycle. There’s a whole grief cycle wrapped around divorce because it’s about reconnecting with your sense of self. I think that’s so, so important to really focus on how can you be supported emotionally as well as practically.

Yeah, I think you’re absolutely right. Then the final thing that I would say is this isn’t a winning and losing scenario. You don’t want to go this thinking I’m going to win because the way to move forward with it and be able to get onto your next chapter as soon as you’re both ready is to compromise a little bit.

There’s a judge that said if one party is happy with the result that comes from a divorce, it’s probably the wrong outcome because actually neither should feel like they’ve won. Neither should feel like they’ve lost. They should both have had to make some sort of compromises financially. So if you’ve had to do that, but you’re both in a position where you feel that you can move forward and that you’ve got a fair outcome, then that seems like the right result.

That’s a really lovely way to position it because again, emotionally divorce can be amicable, but it can also be not amicable. Again, that’s when the emotions come up and it can cause us to feel ‘I need to be really tenacious and not quick with this.’

There’s lots of and lots of emotions that are going to be flying around with any financial transition work.

Finally Tamsin, if anybody wants to connect with you to have a conversation with you about a challenging situation that they may be going through or to maybe connecting with your podcast, where would be the best place for them to come and find you?

The podcast is The Smart Divorce Podcast and that’s on all normal podcasting places. If you want to connect with us, we’re on Instagram and we’re on Facebook. We’re also on Twitter and you can find us on our website, which is smartdivorce.co.uk.

Fabulous. Head over to Tamsin’s podcast. It’s a great podcast. You’ve had some fantastic guests on recently that I’ve been listening to. Thank you so much for coming on today and sharing your wisdom around these subjects.

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The post How to Prepare Financially for Divorce first appeared on The Money Panel.

The post How to Prepare Financially for Divorce appeared first on The Money Panel.