The old money management habits of hairstylists must be revamped with financial literacy, and we must learn how to manage our daily cash flow. One of the perks of this business has always been the ability to make money every day, knowing if we didn’t have it now, we would have it by the end of the day. And it’s a known fact that if you do hair, you will always be able to make money. None of these things matter if the money is coming and going faster than you can make it. One of the biggest mistakes most hairstylists make working in a cash industry business is failure to pay themselves weekly. Instead, they dip into the cash throughout the week. This can create an epic failure and one of the easiest ways to become deficit or not see the fruits of your labor. Not convinced? Okay, let me explain. In other words, you should make it a priority and a strict rule to pay yourself weekly as you would if you were working as an employee receiving a paycheck from an employer. Having that paycheck enables you to create an income stream and not just have money coming in and money going out. There are many reasons why this is important. First, it allows you to get a clear view of your weekly finances and really evaluate how much money you have coming in before it goes out. Creating a habit of not dipping into the money when it is so accessible leads to another benefit of paying yourself– it empowers you to save more money and have fewer losses overall. It’s okay to live on a “fixed income” meaning if you pay yourself once a week and find yourself coming up short on cash throughout the week, you will be okay! Just know that by Friday or whatever day you chose as “payday”, you will get paid again. This is a good business practice, and if you cannot manage your own personal money habits, how will you manage your business?
When you learn how to pay yourself weekly and not daily, you will develop better spending habits. You will be aware that if you spend it all on Monday, and spend it on Tuesday, and then again on Wednesday, and so on, you will be broke by the end of the week. If your budget is $500 a week, learn how to budget that $500 wisely. When you have no budget, it’s like constantly pouring into a bottomless container; you may never be completely on empty because, after all, you make money daily. Nevertheless, you will never see a plentiful harvest.
There are so many things we frivolously buy simply because we have cash on hand. But if you put yourself on a fixed income or budget, you will find that most of those things you won’t even worry about. I can remember the many years while working in the salon with people coming in selling merchandise such as bags, jewelry, clothing and other items. Most hairstylists were quick to go into their daily earnings to buy things that were not needed or even thought about! Sometimes we even told the person to come back in an hour or two, and we would have the money then. This is an old way of thinking and behaving; it’s time for us to be smarter and more conscious. I have watched so many stylists over the years leave the industry or take on other part-time jobs because they could not make ends meet. Why? Lack of money management. The truth is there are people who manage their minimum wage salary successfully, so it can be done. We don’t have to have money in our pockets all the time—it’s more important if your bank account, saving, and investments are growing, and all the bills are paid. Just remember payday is coming so you will have something to look forward to.
While I strongly urge you to take on these habits, I am also aware that it is not easy. If you are already in a financial hole, it definitely will not be easy. If you like to spend money and have a weakness for the people selling the latest items in the salon, or you simply like to splurge and live it up like there is no tomorrow, you will find this to be almost impossible to fathom. I have been paying myself and living on a budget most of my career. I had to, or I would not have been able to run a successful business that has passed the test of time. I made it through a recession and many hard times by paying myself first, having a rainy-day fund for the business, and paying attention to how the money was going out. By looking at the weekly and monthly budget, I was able to better prepare for slow times in the business. This is so vital because if you spend the money as fast as it comes in, you cannot prepare for the times it is not coming in as fast. Every business experiences a financial trend on how the money is made — sometimes it is seasonal. Sometimes it is according to the time of the month. Either way, the only way to really prepare for these inconsistencies and not fall short is to take a week-by-week, month-by-month approach and study the trends of how your business makes money. I cannot stress enough how serious of an issue this is in the hair industry. The numbers would probably be astonishing as to how many of us live off the money we make daily instead of the applying appropriate money management strategies like paying ourselves weekly.
Now, I’m a practical person, I understand that if this has been a way of life for you, it will not change overnight; or if you are barely making ends meet, it may seem impossible to implement. This is why I am a huge advocate for baby steps. Start small by simply cutting back on the daily spending, making a few sacrifices here and there. The next thing is when you have your busiest week out of the month, put a little something extra aside for your rainy-day fund. It doesn’t matter how small it is, something is better than nothing; but this will start the gears turning. When you come upon your struggle week, then you will have a little something to fall back on. The goal is always to be financially secure no matter what work you do for a living; there is no security in spending money as soon as you make it. As you implement these money management practices and build your rainy-day funds, you will be able to increase your pay. And guess what? It will not be contingent upon how much you made that week but instead contingent on how much you have decided would be a comfortable amount of money to live on until next payday. In the beginning it is okay to go by what you earn weekly to determine how much you have for yourself. It is no different from starting at an entry-level position with a lower pay scale. If you want more money, push yourself to work harder for greater gains.
Even if you are a top-paid stylist and money is always fluent, you still need to practice money management and discipline to have sustainability. Nothing lasts forever but if you learn good money habits, you will almost always be able to recoup from the unexpected slow times or downturns in the business. And if you start early enough with paying yourself and setting monies aside, you will already be prepared for those times. These are the entry-level steps to obtain wealth. This is how the rich get rich. In order to make investments, in order to have savings and retirement funds, in order to become wealthy, you must first pay yourself and set money aside. You must cut back on frivolous spending, and start to put yourself on a budget or as I like to call it, a “fixed income.”