Budgeting & Self-Employment

Because I have been self employed for so much of my life, I was already prepared for the highs and lows of working for myself. As in any self-employment situation, you MUST be comfortable living with an income that fluctuates. If you are used to a steady income or want one, then find work in another field with a fixed income, because in a massage context, even working for a spa is a variable income situation. As in any start up situation, it will take some time to build your business and you must have either another source of income or a trust fund to sustain yourself in the meantime. Most people keep their "day jobs" or spa jobs until they grow their massage clientele base enough to cover their basic expenses.

I had to learn how to budget my money and time. I had to learn where to invest for the best return. Accepting a low paying client may be worth it if that client can refer more business to me, but may not be worth it if the time working with that client is taking me away from better paying clients. How did I know know which was which? I set up a time limit to my "introductory" rate which expired unless I got at least one paid referral.

I'll discuss how I set my rates in another post, but this is a good place to mention that if you are a newly self-employed therapist, you should always set up the new referred client at a higher rate (at least $5-$10 more per hour) so that your rates continue to inch up with new business; your original client will feel like they are getting a deal (they are).

I save at least 10-15% in a business savings account and put at least 20-30% into a business checking account to pay for my self-employment taxes, licensing fees, and credential renewals. Yes, all this adds up to about 50% of what I make, which is exactly why it takes time to build a rate and clientele base to a point that will sustain a comfortable lifestyle (comfort to me is being able to pay all my bills with a nice sum leftover to put into savings and play).

Are you a new therapist who is able to budget, comfortable with a fluctuating income, and excited about working for yourself? Read tomorrow's post about setting your rates.