16. Money Management for Counselors: My Interview With David Frank

How do you craft a no-nonsense money plan as a therapist? The best starting point is to change your money narrative from fear to 'I got this!'

Many counselors start out with the exact opposite approach. They overemphasize how hard money is to get and hang on to, and research too little about how to put great financial systems in place to build a comfortable and happy life.

My guest today, David Frank, is the founder of Turning Point Financial Life Planning. He helps mental health professionals learn how to manage their money without losing their mind in the process! Having created a speciality working with therapists, David knows about why some counselors successfully manage their money and build a great life (and yes that includes retirement), and why some don't .

So how do you manage your practice revenue and personal income, even if you have zero experience? What is your number one task when you manage your money? What are  money management skills he recommends?

We learn about all of that from David today. Join us for this epic conversation to get the tools and strategies that can save you from learning about managing money the hard way. Trust me—you don't want to miss this one. Enjoy!

Today's Guest

David Frank
David Frank is a Financial Planner and creator of Turning Point Financial Life Planning. He uses the tools of comprehensive financial planning in a way specifically attuned to the unique needs of therapists. 

Get your step by step guide to private practice. Because you are too important to lose to not knowing the rules, going broke, burning out, and giving up. #counselorsdontquit.

Transcript

[00:00:00]

Kate Walker:      Hey, it’s Dr. Kate Walker with Texas Counselors Creating Badass Businesses, and I’m here with David Frank, who is going to talk to us about the “M” word. We’re going to talk about money and financial planning and all things that we need to be doing as private practitioners to make sure that we’re keeping our money where it belongs. So, David, I’m going to let you introduce yourself better than that and tell us what you do, especially for counselors.

David Frank:      Sure, yeah. I’m excited to be here, I love talking about the “M” word because I am a financial policy and my specialty, my niche, if you will, is serving therapists or counselors, licensed mental health professionals; those are the folks that I work with. I am based in Los Angeles and work with folks all across the country and I help them create financial plans, so that means making sure that all of your financial resources, including your private practice, even your bank account, your insurance, just making sure everything – the whole package – is there and taken care of and serving you and helping you lead the life you feel called to lead, because really, that’s what our financial resources are there to do, is to help us show up in the world as complete human beings professionally and personally.

                              And I just love working with therapists and counselors because it’s super important what you all do. I’ve benefited personally tremendously from a number of therapists in my life. I think if I can help the community better navigate the “M” word, they can show up more completely in their personal lives and their professional lives, and that creates this awesome ripple effect. I’m super excited to be here and to talk all about this money stuff.

Kate Walker:      Excellent. I’ve got a list of questions, but it’s funny because as you’re talking, I’m going through my own growth through the money thing. So my first experience with a financial planner was he came to my office, he was a friend, and when I showed him my books and kind of my money stuff, it felt like I was getting naked. I had never felt so vulnerable in my life. I just didn’t know all of the things I think I was supposed to know, and I was in my 40s. Yeah, so, do you run into that a lot with counselors?

David Frank:      Yeah, with everyone, quite frankly. My peers that have businesses that serve non-therapists, this is a close-to-universal experience. The reality is that we in the financial services industry, I think, have done a disservice to the world. Not intentionally, maybe, but by kind of pretending that personal finance is just very cut and dry, it’s very analytical, it’s just about numbers and analytics. And yes, it is about those things and it is super, super personal. It’s an intimate conversation. There’s all of these anecdotes and studies that no one wants to talk about their sex life in public, but they would happily do that if it meant they didn’t have to talk about their money life in public.

Kate Walker:      Amen! Oh my goodness. But you’re going to change all of that; you’re going to help us with this because therapists, we have some messed up money beliefs. Okay, so question number one: what’s the best way for a counselor in private practice to manage their finances?

David Frank:      Yeah, so this is a super broad question and it’s a great place to start. What I encourage everyone that I talk to to do is to – and we’ll start general and then talk about some specific things, but I think one of the most important things to do is just to develop a consistent practice of engaging with your money life, especially when you move into a private practice and you’re no longer just an employee working for someone else. You’re a businessowner. You’re a private practice owner. That means not only do you have your personal finances to manage, everyone has those challenges, and that’s challenging enough in a lot of cases. Now, you also have the finances of your practice to manage, and so there’s all kinds of things that really need to get taken care of and there’s no way you can solve everything in one setting. You can’t treat it as a singular project to sit down and complete once a year or once a quarter.

                              What I encourage everyone to do is to dedicate some time on their calendar, really every week, maybe even every day if you’re just going to do five minutes, and make it sort of a low-pressure thing, at least in the beginning. Don’t make it like, “I’m going to solve everything and I’m going to figure everything out!” It’s like, no, let’s just put 30 minutes on our calendar once a week, put it on your calendar and treat it with the same sort of commitment you would a client or a patient appointment. Show up and then just start to look. Look at your bookkeeping, look at your retirement account, read some articles online. It almost doesn’t matter exactly what you do, it’s more just showing up and potentially sitting in the discomfort. And sometimes you might just sit there for five minutes and freak out. So it’s almost like a meditation-type practice where I would encourage people to just stay. Just be like, oh, this is unbearable! And just stay and sort of cultivate that practice and then explore. That’s, I think, the beginning of the beginning.

Kate Walker:      I love it, and I love that you’re using all of our words against us.

David Frank:      I get that a lot.

Kate Walker:      It resonates because it can be nauseating, it can be embarrassing, it can be humiliating, it can be confusing, all of these things, and you’re suggesting that we sit – even if we’re reading an article or listening to a podcast, just sit with it.

David Frank:      Exactly right. That is the superpower. And guess what, good news. Even though as counselors or therapists there’s a lot of money beliefs like, oh, I’m not good at money. I’m not good at math. I can’t figure this out. And there’s some shame-ridden beliefs around, I should have already figured this out, I should have done better, I’m the only one that doesn’t…it’s like you’re keeping these secrets, like, how can I talk to anyone about this when it’s so embarrassing? The reality is, why should you expect to know this? Most people don’t. No one is really taught it. Certainly counselors in their masters or PhD programs, maybe there’s some programs out there that are starting to cover some of this stuff, but chances are, no. So you just kind of accept yourself where you’re at and just be like, okay, this is where I’m at, it’s no big deal and we’re just going to work to get better at it.

                              I do like using sort of therapeutic interventions against folks – not against, it’s for your benefit. But I told a client the other week, I’m like well, you know the only way out of this is through it. She was like, “Ah! That’s not fair!” But it just sort of is what it is. It’s a very personal thing and it’s a very important thing. Money touches everything and so of course there are a lot of emotions attached to it. Of course, there’s going to be some more challenging to sit with, challenging to hold emotional experiences that are attached, because that’s just life. That’s just kind of what it is.

                              So the more we kind of expose ourselves to it, the less reactive we are to it, and the more we learn, okay, this isn’t so bad, this isn’t so scary, I’m learning more. And at some point, it starts to flip, and it starts to become empowering, and you almost get excited to sit down and to do your bookkeeping or to do your personal budget or what have you. And yes, that really can happen. I’ve talked to people, I’ve seen it. It gets better.

Kate Walker:      Awesome. Okay, so why is money management important to an entrepreneur?

David Frank:      Yeah, really good question. As I kind of alluded to earlier, when you are an entrepreneur, you’re running your own small business, your own practice, money management becomes even more important because when you’re an employee and you’re just getting a paycheck from someone else, you can count on that money coming in, you sort of know what it’s going to look like, a lot of the taxes are taken care of, and then when you transition into being a solo practitioner, all of the sudden, everything is kind of on your plate.

                              When it comes to money management, there are a lot of elements to it, but I think two of the most critical are to develop some form of a bookkeeping practice, which is when you’re looking at the money that’s coming into your practice from insurance reimbursements or copays or if you have private pay clients, whatever it is, that’s all of the money coming in the door; I like to call that revenue, it’s the top line of your profit and loss statement. And then understanding all of the business expenses that you’re incurring that get subtracted out of that revenue number, and then whatever is left over is kind of a profit before taxes, or earnings before taxes number, and that’s how much you have to work with. And a big chunk of that is, of course, going to go to the government, and if you’re in Texas, it mostly just goes to the federal government because there’s no income tax, but depending on what state you’re in, there might be a state income tax as well. And then the remainder is sort of what you have to work with.

                              So that’s sort of piece one that’s super important, is just kind of really thinking f the bookkeeping and understanding the financials of your practice. It probably sounds a little bit scary and overwhelming, and as we were talking about, it gets easier with time. And, by the way, if you develop a consistent weekly practice of looking at your bookkeeping and seeing what’s going on with that profit and loss statement, all of the sudden, tax time becomes a whole lot less overwhelming and anxiety-inducing because you’re like oh yeah, I’ve been doing it. I’ve already been doing everything that I need to do for tax time, now I just need to take this package and hand it over to my CPA or sit down with Turbo Tax or however it is you prepare your taxes.

                              So personal bookkeeping, I think, is part one, and part two is just having an understanding of how much money it takes to lead your great life. So these are your personal expenses: rent, groceries, health insurance, all of these things, just understanding what financial resources do you need to live a full life and then figuring out, what does the financing or what does the pricing of your private practice need to look like to support that life so that you don’t wake up a couple of years down the road and realize oh god, I’m creating this business that isn’t actually fully serving me.

                              So, anyway, I just said a lot of things.

Kate Walker:      No, no, I’m processing it because I have an anecdote. Some of the things I hear are new counselors – one of the first things they want to outsource, after social media, is their finances. Oh yeah, I’m going to have somebody else do that. Somebody else is going to do my bookkeeping. And I’m like, but you’ve got to learn it first. So you’re saying all of these words and I almost want to include a glossary for people who watch this or listen to this because you’re saying a lot like revenue and net and expenses. Some of that is even too much and too far for a lot of folks because they don’t live in that world.

David Frank:      Yeah, yeah, absolutely, and that’s a great point. A couple of thoughts. I love the idea of eventually outsourcing bookkeeping and I love exactly what it is you said: I really encourage folks, when they’re new to private practice, to start doing it themselves. And that will give you an opportunity to learn some of these terms, because if you outsource it to a bookkeeper before you understand kind of the basics, just sort of the fundamentals of what needs to happen, you don’t really understand what that other person is doing. And I’ve heard so many stories of people outsourcing to a bookkeeper, and who knows exactly what happened, but that bookkeeper isn’t doing their job, not doing everything they’re supposed to be doing, because the person that hired that bookkeeper didn’t fully understand the process of what was supposed to be happening, they didn’t know how to keep tabs on it, and then all of the sudden, things become messy.

Kate Walker:      I am so glad you said that. That is just the number – well, I won’t say it’s the number one thing, but if you don’t know what the job is, you can’t evaluate if it’s being done well.

David Frank:      Right, exactly, yeah. Exactly right. Bookkeeping, it’s a scary thing, like a profit and loss statement, sales, expenses…what are all of these terms? And I don’t want to say it’s a mistake, there’s many different ways to approach bookkeeping, and a lot of times if you start Googling, you’ll be like, okay, I need to use QuickBooks, or there’s other accounting software packages out there, and a lot of them are great. QuickBooks is kind of the dominant one in the field that most bookkeepers use – not the only one, but a popular one. It is great and it is powerful and with power comes a lot of complexity. But it doesn’t need to be – especially when you’re just getting started and you’re just a solo practitioner, if you really feel confident that you’ll learn QuickBooks, awesome.

                              If that seems way too overwhelming, it’s totally okay. Bookkeeping can be very, very simple. I’ve even talked to folks where I’m like, you can use a spreadsheet. That’s a free software tool. There’s something called Google Sheets. It used to be you had to go buy Microsoft Excel, these days you can use Google Sheets, it’s just as good. And if that’s too much, that’s okay too, you can even just start with a simple word processing document and keep track of everything. It’s really just about keeping track of the money coming in the door, the money going out the door, and over time, you’ll start to learn more about these terms, like revenue and expenses and earnings and all of that stuff.

                              And again, if you develop a consistent practice of every week spending a little bit of time working on this stuff and looking at it, you can start with a simple word processing document with bullets of all of the money moving in and out of your business, and then over time, you’ll be like, okay, I’m starting to get what all of this is about, and then you can start to transition and develop it a little bit further.

                              Anyway, so progress not perfection I think is the underlying message I want to underscore.

Kate Walker:      Okay, so progress is bookkeeping. Good, I’m glad this is my next question. You’re giving me some steps here: what are some money management skills you recommend? Number one is bookkeeping, just basic bookkeeping: know what’s coming in, know what’s going out. But then what?

David Frank:      Yeah, and then I think a similar practice for your personal life. I’m not necessarily a huge fan of “budgeting,” that’s kind of a dirty word, but just having a general understanding – and as I kind of mentioned earlier, how much am I spending to lead my great life? And that’s important to know because it dictates a lot of what your practice needs to look like, the way your practice needs to function. So that’s probably point number two.

                              Point number three I think would just be also understand taxes and just be setting money aside for taxes. That’s just a really foundational piece, and it’s tricky, but it doesn’t need to be totally overwhelming. Again, it’s just sort of developing that practice, understanding what your earnings before taxes are, and then setting aside an appropriate amount. So that’s probably going to be in the neighborhood of 25% of whatever your earnings before taxes are. So that would be whatever is left over after you pay all of your business expenses, 25% of that number. Again, that’s not going to be perfect for everyone, but it’s going to be a pretty decent start.

                              So taxes would be number three, and then number four is that dreaded retirement planning and just be thinking about setting some money aside for the future. And a big part of planning for the future is retirement. Now, I say that, let me caveat that: I talk to a lot of therapists and counselors especially who are like, yeah, I love what I do, I don’t ever see myself retiring, so I’m not going to think about that. And I’m like, amen, awesome, I love that! Let’s reframe that. Instead, let’s make a plan to make work optional because we don’t know what we’re really going to feel like in the future. And maybe you never retire. And awesome if you don’t want to, but let’s give you the option. And what making work optional means is we get you to a point through savings and prudent investing that you no longer need to work to support your life because you saved up enough money that you can live off of the savings, maybe whatever social security is providing for you. It doesn’t necessarily have to be a traditional retirement, and let’s still plan for it.

Kate Walker:      Okay, so I’ve got a question then. When you talk to people about retirement, do you talk to them about – I call them disabled years above ground, like you’re still alive, but somebody is needing to care for you. I know as women, especially in our 50s, if our relationship didn’t work out or something like that, it’s one of the fastest growing demographics of folks in poverty, right? I mean, they don’t have the funds to, like you said, optionally stop working, and then, gosh, you get to that space where, oh wow, I can’t take care of myself. Do you feel like counselors are a little in denial about that?

David Frank:      I think it can happen and I think it’s not specific to counselors, it happens to a lot of folks, and again, I think it happens because it seems so overwhelming. I think this is like a Chinese proverb or something that’s like, “The best time to plant a tree was 20 years ago; the second best time is today.” I think the same applies to retirement savings, it’s to just meet yourself where you’re at and getting started today is better than getting started tomorrow or a couple of years from now. There are many more options; it’s not like you just need to save up millions of dollars to be secure.

                              There are a lot of financial tools, like long-term care insurance and all of the other things we can put in place that we can consider, but the foundation is always going to be to begin saving through some type of retirement fund, whether it’s through an IRA, which is the easiest way to get started, or whether you want to use a set-buyer rate or an individual 401k in your practice. There are a lot of different options, but for getting started, for most people, just open a Roth IRA and just start contributing some money to it. You want to make sure you’re under the appropriate income limits and there’s some rules to follow and all of that, but for most counselors, especially those just getting started in private practice, just open it and throw in a couple of hundred bucks every now and again – that’s a tremendous place to begin.

Kate Walker:      Awesome. I think the question I get asked a lot by folks that are just starting out, they don’t really know what they need to live on, so living your best life, and so they’re pulling money out of their business, they’re running up their credit cards, because it’s a write-off. It reminds me of that episode of Schitt’s Creek, “It’s a write off!”

David Frank:      Yep, I know the episode.

Kate Walker:      Is that something you feel like you do well with counselors, is educating them on this idea of, no, you really only have this much to spend, no matter how much of a wonderful life you want out there? I mean, does that make sense?

David Frank:      Yeah, and I think it’s a journey. It’s confusing. When you’re in business by yourself, there’s money flying all over the place and it just gets confusing, so I think it’s a journey of awareness that I work through with a lot of clients. What I tell people is that sometimes beginning to work on your finances or developing money practices can be a little bit like starting therapy in that we do it to feel better and put ourselves in a better position, and in the beginning, sometimes we start to feel worse. I was telling someone the other day, denial and avoidance are not phenomenally good tools, but they are tools, they do have some benefits, they work, and in the short-term, they’re really good. Sometimes it’s just necessary, like it’s a survival tactic. But then when we want to move forward and make some progress and really work on these things, and we need to move out of denial and lack of clarity into greater awareness and greater clarity, well, that doesn’t always feel great. Sometimes there’s just some things that we have to confront that are uncomfortable and that’s all part of the process.

Kate Walker:      I’m so glad you’re saying that. That’s so important and you’re really being honest with us, I mean, not that you wouldn’t be, but you’re being real with us. You’re not sugarcoating it. I mean, if somebody sits down and they’re ready to look at their finances and finally deal with them, it’s just like going to therapy and learning how to deal with emotions. Maybe you didn’t have a childhood where you learned emotion words or things like that, nobody ever taught you about money – it’s going to be uncomfortable at first.

David Frank:      Yeah, absolutely. And that is the hardest part of this work. The hardest part is not the dollars and doing the math and doing the spreadsheets. Yeah, that’s work, but this is simple math, really. It’s addition and subtraction. I guarantee you that everyone listening to this podcast has at least gone through a masters program, passed licensure exams. You are beyond intelligent enough to figure this stuff out because it’s basic. The mechanics, the technical side, is reasonably basic. It’s the emotions that are difficult to navigate.

                              And so I’m a broken record here but getting in the practice of being comfortable with the emotions, that’s the trick. And especially in the beginning, it's like you go in and it’s like, oh no, and you run away and forget it. It’s cultivating that practice: keep coming back, keep coming back, keep coming back, and eventually, yes, it gets better. I say this a lot, but it’s like what they say in Alcoholics Anonymous: easy does it; but do it. It’s like, be infinitely gentle and kind with yourself and do it, keep showing up.

Kate Walker:      Okay, and so if somebody went to your website – which is fabulous by the way, because you have just this “Start Here,” and I love that, tell me what to do. Tell me what a counselor listening to this, they’re wanting to just get their shit together, what would they discover when they click “start here”? What would you do? What would happen next?

David Frank:      Yeah, so I think especially for folks just getting started, I have on my website, I think it’s on the resources page, we can put a link to this in the show notes, but I call it my Private Practice 101. You sign up for it, and there’s a 40-minute recorded webinar where I walk through a lot of the basics that we’ve been hitting on today, but in more detail. I’m talking about a profit and loss statement and thinking about taxes and just planning for setting up your business. Even though sometimes you think, it’s not a business, it’s a private practice, it’s like, it’s yes/and. Your private practice is a small business, and maybe it grows into a large business someday.

                              So I would say, start there, and you’ll get a package of information with that webinar, there will be some worksheets, a lot of educational content to help you begin to learn these basics. And again, one of the cool things about signing up for that, and then you’ll get signed up for my email newsletter – and it’s not a bunch of spammy garbage. What it is is it’s like every other week or so, just sharing a little bit more information, so it helps you cultivate a money practice because you’re slowly getting exposed in a low stakes kind of environment, like, oh, here’s some terms. And I do my best to explain what these terms mean because I think one of the biggest challenges that everyone faces when dealing with finances is that we get thrown into 500 or 600 level courses when no one bothered to get us through the 101. So I try to give 101 level courses so we understand the terminology, we understand the basics, and then when we go to higher level courses where we can think about putting in place different types of retirement plans and so on and so forth, we kind of have a common language.

                              So that’s how I would encourage folks to start. And then if you click the “Start Here” button, that is for working with me one-on-one. The way I begin that is the same way most therapeutic relationships begin, which is like let’s just get together and talk about what’s on your mind, see if we’re a good fit. And honestly, so many people have said, wow – regardless of whether they end up working with me or not, they have a free 30-minute conversation with me, which I offer to anyone. They’re like, wow, this is so helpful! Just verbalizing it, getting it out between the messy place between our two ears and out into the world, it helps us process, it helps us organize, and when there’s an empathetic listener on the other end, it helps us make progress and even decide for ourselves, oh, this isn’t as scary and overwhelming as I thought it was going to be!

Kate Walker:      You sound perfect for us.

David Frank:      Well, thank you.

Kate Walker:      Where were you? When I started out, my accountant said, go home until you learn QuickBooks. Don’t come back until you learn QuickBooks. Oh, and by the way, you owe $10,000 in taxes, which I had never set aside. It was horrible. I think I went home and cried. You’re going to be so much better for us, and thank you. Any takeaway you want to give us before we close today?

David Frank:      The biggest takeaway is just be optimistic. As I said before, you have so much going for you. Whoever you are listening to this podcast, you’re highly educated, you know how to pass really difficult licensure exams and all of this. You absolutely have the capability to figure this out, it just requires some time and some effort to do so. Reach out – reach out to me. There are other supportive resources online and out in the world. Don’t hide it and don’t keep all of it to yourself. Talk about it with trusted friends and trusted colleagues and see what resources are out there because what you do is far too important to let a small thing like money and finances sabotage you.

Kate Walker:      Excellent. Thank you, thank you so much. Everything that David talked about we’ll put in the show notes, links, all of the things. Thanks for joining me today, David.