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What if you could get more of what you want in life? But not through pushing, forcing, or pressure.
You can.
When it comes to money, time, and energy, no one’s gonna turn away more.
And Kate Northrup, Bestselling Author of Money: A Love Story and Do Less and host of Plenty, is here to help you expand your capacity to receive all of the best.
As a Money Empowerment OG who’s been at it for nearly 2 decades, Kate’s the abundance-oriented best friend you may not even know you’ve always needed.
Pull up a chair every week with top thought leaders, luminaries, and adventurers to learn how to have more abundance with ease.
Entrepreneurs very, very, very frequently make the mistake of focusing on top line revenue instead of profit. And top line revenue literally means nothing because sometimes a business has $500,000 in revenue, but spends $600,000 and is in the hole a $100,000. So top line revenue, quite frankly, doesn't really matter. It's far more important that you have profit. Welcome to Plenty.
Kate Northrup:I'm your host, Kate Northrup, and together, we are going on a journey to help you have an incredible relationship with money, time, and energy, and to have abundance on every possible level. Every week, we're gonna dive in with experts and insights to help you unlock a life of plenty. Let's go fill our cups. The end of the year is nearly upon us, and now is a time of, you know, possibly holiday cards, holiday baking, gift buying, wrapping, travel, family, all that stuff. However, it also needs to be a time of financial consciousness because there are 5 things that you can do before the end of the year that will set you up to save money and have a more prosperous New Year.
Kate Northrup:And some of these things cannot be done after December 31st, so I want you to listen in and listen up. Here are the 5 things that we do every year before we wrap up the year, and I wanna pass them along to you because some of these things, I learned the hard way. Alright. So number 1 is part of our annual planning ritual is that we do a financial wrap up. So this is parts 12.
Kate Northrup:The financial wrap up has 2 parts. One of them is quantitative. So there are a few numbers that I recommend you total up at the end of the year. Now some of these you won't exactly know until January because, exactly know until January because, you know, your numbers from your bookkeeper may not come in and everything, but you can get a ballpark. So those are your income.
Kate Northrup:So, personally, right, it would be your income. So how much did you make this year? Personally, your expenses. How much did you spend this year? You may even want to go through with a fine tooth comb and look at what did you spend your money on and were those things in alignment with your values?
Kate Northrup:That was kind of like a bonus. How much did you save this year? How much did you increase your savings this year? And did you reach any of your financial goals or make significant progress towards any of your financial goals? And do your financial goals need any kind of reassessing?
Kate Northrup:Now the other pieces, if you run a business, what I would recommend taking a look at is what was the top line gross revenue for your business? What was the profit for your business? How did it compare to last year? What did you spend this year in various categories in your company? Is that an increase over last year, a decrease?
Kate Northrup:Are there any areas that you could eliminate or cut down on for next year? I recommend that with personal expenses as well. This is, like, a great time to reassess and just say, hey. Are there any areas where I could reduce expenses while still receiving the same quality of life or quality of my business. No matter how much money you make, being a positive, powerful steward of your money matters, and that means that every dollar you spend matters.
Kate Northrup:Just because you make more and more and more money doesn't mean you get to get financially unconscious. In fact, some of the wealthiest people I know are some of the most conscious about their spending because they know that their money matters. Right? The energetics of it matters, so they're not just gonna let it spread around willy nilly even though they have extra. They're intentional.
Kate Northrup:They're devotional, and I recommend you do that as well. So that's your financial wrap up from a quantitative. What did you make? What did you spend? What did you save?
Kate Northrup:Did you hit any of your goals? What was the profit? And any other key metrics that are quantifiable that you wanna add in. Then step number 2 is your qualitative assessment, your qualitative wrap up of your financial year. And this could be questions like, what went well financially this year?
Kate Northrup:What didn't go well financially? What did I learn this year when it comes to money? How did I grow as a steward of my money? What was the best decision I made this year financially? And anything else that you wanna look up, maybe what am I the most proud of from this year as it relates to money?
Kate Northrup:And write them down. Focus in on what really worked, and, of course, focus in on the lessons and how you can integrate those for the year to come. So that's your financial qualitative wrap up. Now step number 3 is to meet with your CPA and take a look at what are you going to owe for taxes. Now we meet with our CPA in early q 4 to do a mock up of our taxes for the year, a mock up of our tax return, even though we don't yet know, you know, by the end of October what we will have brought in total in the company.
Kate Northrup:At least, we can kind of do a ballpark so that we're not shocked by an unexpected tax bill. I don't really know anyone in business who has never been shocked by an unexpected tax bill, so just know that if you ever got yourself a tax bill that you didn't expect and that you didn't have the cash on hand for, it doesn't mean you suck. You're not a failure. You're not an f up. It just means you were early in business and, like, no one told us, right, for the most part.
Kate Northrup:So over time, we know better, so we do better, and, hopefully, we pay our quarterlies, and we get better at assessing ahead of time what is going to be required. Now one of the things from a business, you know, business cash flow management perspective that I recommend you do is that take every deposit that comes into your checking account, right, for business at the end of the week. This is what we do on Friday mornings. During our money meetings. This is one of the things we do.
Kate Northrup:Every single dollar of inflow, we take a percentage of it from the weekly total that is a set percentage that we put in our taxes account, which goes it goes in a high yield savings account. We keep a running tab of how much in our high yield savings account is has is earmarked for taxes, and it's just handled. So there's never a time when we have a tax bill where we're like, oh, no. We didn't put aside the money. We put aside the money right away, and we take it out of our business checking account so that we don't, by accident, spend our tax money.
Kate Northrup:So that's just a hot tip, but you wanna meet with your CPA, whether personal or business, to just have an idea of what am I going to owe to the government next year so that you can have a plan in place and to prevent surprises. Now there also may be things that you can do to decrease your taxes in a perfectly legal above board way that will help you to have more cash flow to invest in other things. So that brings me to item number 4, and that is there may be things that you were gonna spend money on anyway next year for your business that are business expenses. Maybe you're investing in a mastermind. Maybe you are going to buy some piece of equipment.
Kate Northrup:Maybe you're gonna buy a new company car. I don't know what you were gonna spend money on. Maybe you have an event coming up that you know is going to be a 5 figure investment anyway or a 6 figure investment anyway. If you can if you were gonna spend that money anyway, like, in q one of of next year, why not spend the money in this current year so that your taxes in this current year are lower and that you have, that expense on the books earlier. Why is that powerful?
Kate Northrup:Right? Because you're like, well, I'm gonna spend the money on taxes either way, whether it's this year or next year. Well, that is powerful for you because the more capital you have, the more dollars you have in your power now, the more power you have to benefit from investing that money in things that is going to give you a return, whether those are assets like paper assets or real estate that's gonna give you a passive return or whether that's investing in your business in a way that is going to give you an active return because the best investment you can always make is in yourself and your business no matter what. So for example, if I was going to join a $25,000 mastermind next year anyway and it starts off in January, I would if I had the cash flow available now, I would pay in full for that ahead of time because I would rather have the tax deduction this year on the books so that, overall, I'm paying less in taxes this year so that I have more money left for me this year to then be able to invest in other things that will make me money sooner.
Kate Northrup:Because the more money you have and the sooner you have it, the more you can benefit from the time value of money, which is that when you invest in things with more time, you get to benefit from compound interest or benefit from that investment earlier on. So that was number 4 is possibly spending money on business expenses you were gonna spend anyway in q one next year, spend it in q four this year if you have the cash flow available. You can also think about, like, paying in full for software services. So if you pay for certain things monthly, maybe they have a savings available to pay for a year in advance so you could pay in full, get the savings, and get that tax savings this year. So those are some smart tweaks that you can make to your spending.
Kate Northrup:And then number 5, set financial goals. I am sure you have heard the many, many times quoted study from Harvard where they took a percentage of the graduating class and those who had written down their goals were a very small percentage, and then, like, 30 years, 20 years in the future, they saw that the people who had written down their goals had achieved them, whereas the people who hadn't did not. Now we could pick apart this study and be like, is it just because the sort of people who would write down their goals are also the sort of people who would achieve them? I mean, likely, but that also means that you can become the kind of person who would write down goals and achieve them and start by writing them down. Now I personally have had a tricky relationship with writing down goals because I'm like, I don't wanna undercut myself.
Kate Northrup:I don't wanna overdo it and then be disappointed. But I just wanna say, like, goals are not spells. Right? Just because you write something down doesn't mean it's automatically gonna happen. Right?
Kate Northrup:It's not magic. It gives you something to shoot for. And so what I like to do when it comes to financial goals is to state something that feels like a stretch, but that also I can hold with an open palm, like, that I can be unattached to. And the way I do that is I set that goal, and I say it's gonna happen at this year or at some time in the future. So let's say you wanna have, you know, what you wanna make $500,000 a year in your business.
Kate Northrup:Maybe you'll put that as your goal for next year. Now maybe it feels like, well, can I do that this year? I don't know. I'm not sure. Now I'm getting anxious, da da da.
Kate Northrup:That's not the vibe. That's not what we want. And so if you have that kind of relationship with your goal where it makes you feel anxious or pressured, what I would recommend is lengthening the timeline and just saying, okay. I'm gonna put 500,000 annually down as my revenue goal for this year. I also recommend having a profit goal, by the way, because entrepreneurs very, very, very frequently make the mistake of focusing on top line revenue instead of profit.
Kate Northrup:And top line revenue literally means nothing because sometimes a business has $500,000 in revenue but spends $600,000 and is in the hole a $100,000. So top line revenue, quite frankly, doesn't really matter. It's far more important that you have profit. Now top line revenue does matter if you're in, like, the VC world and you're raising money and blah blah blah, but that's not what we're talking about right now. Most of the people that I talk to are in more of a lifestyle freedom business where their profit is actually more of what's available for them to live their desired lifestyle and to have the freedom that they wanna have.
Kate Northrup:So that's kind of why I'm having this conversation. But we make the mistake or so many people make the mistake of getting all seduced by top line revenue. Oh, so sexy, 7 figure business, whatever. But it's like, if you have a 7 figure business and you're also spending 7 figures, you have no money to live. So pay far more attention to your profit.
Kate Northrup:But what I was talking about in terms of holding an open palm when it comes to your financial goals is it really helps me to say, like, okay. Well, if I want a $500,000 a year, $500,000 year, or maybe even a $500,000 profit year, do I think I can do that next this next year? I don't know. Maybe. But do I think I can do that in my lifetime?
Kate Northrup:Absolutely. So why not have that as your guiding light this year and be moving in that direction and know that you're going to be closer to it if you set the goal than you are if you don't set the goal in the first place? But you can always lob the timeline out a little further. And I find that when I give myself a specific goal, but I allow myself more wiggle room and more of a spacious timeline when I feel anxious about the pressure of time, it instantly is more relaxing, and I instantly have more oxygen in my brain, right, because I'm now not in a sympathetic dominant nervous system state where I can say, like, oh, yeah. I have plenty of time.
Kate Northrup:There is abundance here, and then I get more creative. And then it is far more possible for me to come up with ways to work strategically towards that goal. Now, specifically, I want you to ask yourself about whatever your financial goal is, revenue, profit, whatever it is, income for your year, savings goal. You can come up with all sorts of different goals. I would ask yourself not how am I going to make this goal happen because that can be very limiting.
Kate Northrup:Right? We we often try to figure out how to make the goal happen, but we're referencing the past. We're referencing our lived experience thus far. Our lived experience thus far doesn't have much to tell us about achieving this goal because very likely, you are setting a goal that you have yet to achieve. So you don't know how to achieve that goal, otherwise, you would have probably done it by now.
Kate Northrup:So don't ask yourself, how am I going to achieve this goal? Instead, ask yourself, who do I need to be in order for this to be my reality? And that is going to give you gold because identity shifts lead to behavioral shifts. Identity shifts lead to lead to behavioral shifts. So ask yourself, who do I need to be?
Kate Northrup:Not what do I need to do? Alright. So in summary, the 5 steps to take before the clock strikes midnight at New Year's are, number 1, do a financial wrap up. Do one that is quantitative with numbers, step 1. Step 2, do one that is qualitative.
Kate Northrup:Step 3 is take a look at your expected taxes, meet with your CPA, do whatever you need to do to plan for your upcoming taxes. Number 4, spend money early if relevant to save on your taxes this year. And then number 5 is set financial goals and ask yourself, who do I need to be for these goals to become a reality inevitably? Thank you so much for listening. I hope these 5 steps are useful for you, are empowering for you.
Kate Northrup:Please let me know how it's going for you. Send me a DM, and happy new year. I'm getting at least 1 DM a week that says, when do the doors open for relax money again? I'm ready. Now relax money is our signature neuroscience backed methodology to help you get financially healthier, and we only open the doors one time a year for our live cohort.
Kate Northrup:However, we are growing the wait list early. So when you get on the wait list, there are special bonuses, goodies, surprises, freebies, and you can get on there over at relax money.comforward/plenty. Thanks for listening to this episode of Plenty. If you enjoyed it, make sure you subscribe, leave a rating, leave a review. That's one of the best ways that you can ensure to spread the abundance of plenty with others.
Kate Northrup:You can even text it to a friend and tell them to listen in. And if you want even more support to expand your abundance, head over to kate northrup.comforward/breakthroughs, where you can grab my free money breakthrough guide that details the biggest money breakthroughs from some of the top earning women I know, plus a mini lesson accompanying it with my own biggest money breakthroughs and a nervous system healing tool for you to expand your abundance. Again, that's over at kate northward.com forward slash breakthroughs. See you next time.