What is Financial Wellness?

It’s no secret that money is the #1 factor causing stress – affecting our mental and physical wellness. It’s also no secret that it takes awareness, know-how and empowering money mindsets, along with INSPIRED action to create the stressless financial reality that you desire.

Financial wellness (and “freedom”) is a mental, emotional, and educational process that provides for an intricate balance of the mental, spiritual and physical aspects of money.  It involves having an understanding of your financial situation and taking care of it in such a way that you are prepared for financial changes…and knowing where your money comes from and where it is going.  One of the first questions I ask my clients is whether they track their money…most of them say no.  In fact less than 40% of North Americans have a good understanding of their finances, and even less (20%) actually have a plan for their financial future.  Without the awareness and planning for your desired financial reality, it’s easy to become controlled by circumstance, fall “victim” to the “poor economy”, to peer pressure, to rising consumer debt – a deterioration of financial wellness.

What does financial wellness (and “freedom”) look like to you? And what actions are you taking daily to adopt those empowering mindsets and take that INSPIRED action to have your financial freedom?

Feel free to leave comments below, or send me an email – would love to hear your views.

PS – If I could give you a simple solution that would promote and empower your financial well-being (in as quick as just a few minutes), would you say yes? Click [YES] to find out how.

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Know Your Numbers

In my 20 year career as a professional accountant and now business coach, I have worked and talked with hundreds of entrepreneurs.  I’ve seen many grow their business exponentially, and I’ve seen some fail.  Many entrepreneurs have told me they’re struggling to make ends meet.  When I ask them if they know how much money they’ve made and spent in the last 6 months, or if they have a plan, almost all of them say no…they don’t track their numbers (many handing over all their receipts for the year to their accountant at tax time), or if they do have their bookkeeping done, they don’t look at the numbers.  Many tell me that they don’t look at their numbers because they don’t know anything about finance, dealing with finance/money stresses them out, and/or they don’t have time.  This certainly backs up the statistic that over 85% of business failures can be attributed to a lack of financial planning and organization.

If you want to have financial wellness and abundance, one of the essential keys is to know your numbers and what to do with them so you can take the appropriate action in line with your business (and life) objectives.

If you don’t track and review your numbers, how would you know how you’re doing?  How would you know if the products you’re trying to sell are making you money?  How would you know if your marketing and sales efforts are paying off in profitable returns?

What numbers could you be tracking?  Literally, hundreds.  But here are some key financial numbers that every business owner should know and understand:

  • Cash in, cash out, net cash flow – What do you bring in, spend, and how much is left each month?
  • Collection rates – How long does it take you to get paid? Do you have policies and processes in place to ensure you’re getting paid on time (or faster)?  Statistics show that any money owed to you that is more than 90 days old likely won’t be collected.
  • Cash burn rate – How fast do you burn through your cash on hand? Typically, you want this to be 3 to 6 months.  It’s a fast track to failure if you don’t have cash to meet your next payroll.
  • Revenues – Are your sales increasing? Decreasing? Are you hitting your targets?
  • Product and Client profitability – How much money is each of your products/services and clients making you…you want to focus on the profitable ones, and let go of the ones that don’t make you money.
  • Gross margin and profit margin – Compare your margins to plan and industry averages – how are you doing? Do you know how much sales you have to make for every dollar you spend in order to have the profits you’d like to have?
  • Capital spending and Return on Assets (ROA) – What are you investing in your business (and do you have a plan for this)? Are the assets you’re buying making you money?
  • Cost of client acquisition – What is it costing you to bring on a new client [=total marketing costs/# new clients]?
  • Return on investment (ROI) – Are your investments making you money, and how much? You can look at this not only from actual investments in stocks/funds/etc., but from every expense line and every effort you make. For example, you may want to know the ROI on your investment in your learning, investment in marketing and advertising efforts, or investment in people.

Whether your focus is on marketing, sales, productivity or profits, you need to track the appropriate numbers and review them on a regular basis to make sure you’re on track with your plans.  By looking at your numbers, and understanding their story, you can then identify the money/productivity leaks and opportunities on which you can take action to grow your business and your profits.

Every person has the opportunity to have financial wellness and abundance.  The difference between the 30% of the population who thrives financially, and the 30% of the population that struggles to survive, is that those who thrive have a plan, track and review their numbers, and take inspired action to grow their net worth.

Your numbers tell a story.  They tell you where you’re making money, where you’re losing money, and whether your efforts are paying off.  Do you know what story your numbers are telling you?

If you would like to empower your financial wellness and abundance, and get to know you numbers better, I can help.  Drop me a line and let’s talk.

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[author] [author_image timthumb=’on’][/author_image] [author_info]Linda Spencer, CPA, CA Certified Money, Marketing & Soul Coach [/author_info] [/author]