When it comes to the topic of money, we can sometimes get kind of “squirrely." After all, politics, religion and money are just not proper party conversation topics—and a lot of this has to do with our money mindset. How much money you have, or don't have, is a very personal question. In fact, accountants are held to some of the same ethical standards around confidentiality as mental health and healthcare providers. Discussion about personal and business finances is something we hold up as something to be protected and confidential.
For the most part, most people develop their attitudes and values around money based on how they grew up. Unfortunately, having money can determine empowerment to some degree. The assumption is that when people have a lot of money, they also tend to have more influence and power in society, which can create some “money shame.” This shame can surface from having either too little or too much money.
“Money shame” is something that I would encourage you to try and put aside. Thinking about money can be an emotional issue. As they say, money does not determine happiness, but it can create more security around our basic needs and the lifestyle we want to keep. Also, try and develop an abundance vs. scarcity mindset.
Here are some mindset shifts that I think are important for us as private practice owners to adopt in order to be successful in our practices.
1. Take the Emotion Out of It
One mindset shift is to look at money as simply a tool that we use to get the things we need and want in life. Money is tangible and measurable. Do your best to take the emotion out of how you think about money. Look at it as subjectively as possible.
2. Don’t Hide from Your Numbers
One mistake that a lot of people make in private practice is that they don’t know their numbers. In other words, they don’t know or understand how money is moving in and out of their practices. When you know and understand your numbers, then you can be empowered to make changes and have a clear direction with your practice. Even if you are maybe feeling a little scared about analyzing your numbers, I would encourage you to start diving in—rip the band-aid off! After all, if you are going to meet any sort of financial goals, you need to know where you are now in order to get where you want to be.
3. Think ROI When It Comes to Spending
One old adage you may have heard is, “you have to spend money to make money.” I would add, you need to spend money wisely in order to make money. This is where ROI (return on investment) comes into play. When spending money or investing in your practice, it's important to consider what the return will be in terms of both your money and time investment. Will it give you more money or time back if you invest in it? A couple of areas that people tend to neglect and hold back on are investing in outsourcing and/or tools that will help them automate more. They make the thinking mistake of “I can do it better or more cheaply on my own.” Sometimes this is true, but as a practice grows this becomes more and more difficult. For example, investing in a virtual assistant to handle phone calls and scheduling appointments is almost always a good ROI. If having an assistant that helps you gain 1 or 2 more new clients, they will absolutely pay for themselves. The same is true with investing in systems and processes that save you time, such as TherapyNotes™. It will free up your time to see more clients, which will pay for itself.
4. Consult with Professionals
It is important to get some expert advice when it comes to your finances. Having a trusted financial advisor and/or accountant will go a long way in helping you feel more confident about your money. This is especially true when it comes to taxes and knowing how to navigate all of that. Having a trusted accountant that knows the ins and outs of your practice and how you operate is always a good ROI. One thing that can and has happened to a lot of practice owners is ending up with a huge tax bill at the end of the year (I know, because it has happened to me). Having an accountant/financial advisor can help you plan for this and not be caught by surprise.
5. Pay Yourself Well and Keep a Reserve
Another pitfall that people can fall into is not paying themselves enough and keeping a cash reserve for their practices. As a general rule, I think it is good to have a minimum of three months salary and expenses in reserve. In other words, if you ended up not seeing any clients for three months, you would have money set aside to pay yourself and the expenses of your practice. As was mentioned earlier, money represents security for us. By having a reserve, you take away the stress of running your practice. If you don’t already have a reserve, I recommend to start building one for yourself today. Even if you start by setting aside 1% or 2% of your income each month, this will get you on the right path. I promise, it will make you feel much better about your practice and your money.
6. Educate Yourself About Finances
Finally, educate yourself about finances and the money side of your practice. This knowledge will empower you and help with your money mindset. You really need to understand how money works and moves in and out of your practice. To get started, I’ve put together a free financial analysis guide. There is also a course I created that will teach you the financial side of private practice. Again, you can find out more about that using the same URL.
Your money mindset is one of the most important determinants of your success in private practice. By educating yourself and understanding your money mindset, you can feel more financially secure. Don’t let “money shame” get in the way of knowing your numbers. Begin by creating a financial buffer for yourself and your practice. Adopt an abundance mindset rather than a scarcity mindset when investing in your practice in order to get that ROI. Private practice can be rewarding both financially and emotionally by having the right mindset. You can do this!
