The Ultimate Guide to Simplifying Your Financial Planning Process with Wendy Brookhouse

podcast Aug 04, 2022

As they say, money makes the world go round. Thus, it's critical to be smart about handling your finances — both personal and business. Correctly managing your money requires a well-crafted financial planning process; it allows us to step up our game as business owners and make informed decisions around our short-term and long-term financial goals. Financial planning empowers us to take control of where every last bit of our money goes to build the personal and business life we dream of. 

In this episode, financial advisor Wendy Brookhouse joins us to explain how to plan and manage your personal and business wealth as a law firm owner. She highlights the importance of beginning with the end in mind; it’s best to start as soon as possible in financial planning and investing. We also discuss shifting the perspective around getting credit, HR assets, risk assessment, overcoming money issues, and building good money habits. Your financial planning process is critical to your success, so don’t delay.

If you want to know everything you need to simplify your financial planning process as a law firm owner, this episode is for you.

Here are three reasons why you should listen to this episode:

  1. Discover the right time for business owners to invest outside their business.
  2. Learn the concept of a power number.
  3. Find out how to overcome your money issues with a better financial planning process.


Episode Highlights

The Real Bottom Line

  • Wendy interviews entrepreneurs in The Real Bottom Line to find out about their journey and subject matter expertise.

Wendy: “There's so many lessons from other people's success and also their failures, right? Like things that didn't quite go the way they planned, sometimes, I find that's where the bigger lesson is.”

Wendy’s Journey as a Financial Advisor

  • Wendy used to do consulting but realized she would do better as a financial advisor after working with one. 
  • Working independently was a challenge, but it allowed Wendy to develop unique methodologies and a better financial planning process to help her clients.

Wendy: “Products are so important, but they’re a byproduct of a good plan.”

  • She loves simplifying people’s entire financial system down to one number so they know what to focus on and where they can affect change.
  • She prefers working with business owners and entrepreneurs. Many don't pay attention to their personal wealth because they're busy building business.

The Right Time for Business Owners to Invest Outside Their Business

  • Tune in to the full episode to hear about the concept of Profit First!
  • Wendy suggests beginning with the end in mind. Starting as soon as possible enables you to develop habits around saving and investing.

Wendy: “Our business is a tool to provide the money to have the life we want.”

  • The business shouldn’t be there to take all your time and help others without helping you as a business owner. Reflect on the interplay between your personal and business life.
  • Identify how much it costs to have the life you want, with all other financial elements in mind.
  • With a better financial planning process, you can work your way to the top line and figure out how you can fund that.

Achieving Your Target Revenue Number

  • Wendy analyzes three months of the client’s personal spending to determine what needs to go in the spending plan.

Wendy: “I use the word ‘spending plan’ versus ‘budget.’ It's just a mental thing. I think it's the difference between a ‘diet’ and a ‘lifestyle eating plan.’ I like spending—it sounds more less restrictive.”

  • Firstly, people forget stuff all the time. Second, looking at the spending analysis allows you to get a real sense of the issues you need to address.
  • Getting to the top line depends on your law firm's payment structure and cash flow management.
  • Break down your target revenue number into target hours or packages per week, so it doesn't seem daunting.

Shifting the Perspective Around Getting Credit

  • Paying off a line of credit in one go and going back in can be demotivating. It's better to make it a regular, reliable payment, so you have move reserves.

Wendy: “There’s a difference between borrowing for growth and borrowing because your business isn’t performing.”

  • Think of it as borrowing money for a mortgage for an asset that has a purpose and will grow in value.

On HR Assets

  • Depending on your cash flow requirements, you may or may not need HR assets. Good hires will pay for themselves more.
  • At most, you will need three or four months in the bank to pay for your staff until they’re paying for themselves.
  • It’s freeing to have resources and capacity that you can bring to bear because everything’s not all on you.

What to Do Next After Achieving Your Target Revenue Number

  • First, celebrate that achievement.
  • Then, talk to a professional who understands the ins and outs of the different offerings available to you.
  • Think about the legacy you want to leave and when enough is enough for you as a business owner.
  • Achieving your power number means having enough to walk away when you want to. 

Achieving Your Power Number

  • When you have the answer, you start figuring out what you need to do to get there.
  • Identify what your biggest assets are. Also, remember that your law firm itself is a valuable asset.
  • Build value inside and outside your business. You should still be okay if you suddenly lose your law profession.
  • Determine what your endgame is. That includes estimating your age expectancy and your expected value by that time.

Wendy: “If you know your end goals, the rest of it’s kind of just math and setting distinct goals along the way.”

Assessing the Risk Appetite of a Business

Moshe: “Sure, you can build a law firm. It can be really, really valuable. You can sell it, and you can walk away with a ton of money. But the reality is that when you have all your eggs in one basket, when you have all of your financial assets tied up in a single investment, your risk level is too high. There's too much that can happen that can make you lose it practically overnight.”

  • Understanding your risk tolerance is instrumental in navigating the right path for you.
  • Wendy has recently worked with a firm offering a more dynamic emotional intelligence assessment risk. 
  • Number one, recognize that it’s a spectrum. Number two, there are a lot of behavioral things that affect your risk level.
  • Heuristics are the shortcuts our brain takes around money. Awareness of these behavioral elements allows you to be more mindful of your business decisions.

Are You a Stock or a Bond?

  • A university professor functions like a bond because they have stability in their job. 
  • Entrepreneurs and business owners are more like stocks because they have more volatility and uncertainty.
  • Thus, entrepreneurs may want to be a little less risky outside their already risk-prone job.
  • Be honest with yourself about what your risk is. Pull out any fear of missing out and focus on reaching your real goal.

How to Best Start Investing

  • Wendy suggests starting with asset allocation. The spectrum that assets play in is much bigger than stocks or bonds.
  • Map out where you want to be.
  • Asset allocation is something you would use your risk tolerance to help put together.
  • Build an opportunity filter. What must be true for you to make that investment, regardless of its asset class?

How to Overcome Your Money Issues

  • Imagine a bus. Where are you on the bus? How long is it?
  • You don't have to drive the bus right away. But you need to move up over time so you can take over the bus if you have to.
  • You don't need to learn everything at once. Think of it as learning a new language.
  • What is your first memory of money? What did your parents do with money that you'd like to imitate? What is one thing your parents did with money that you never want to do?
  • If a lot of baggage surfaces from these questions, you may need to talk to a money mindset coach.

The Emotion We Tie Up in Money

  • Doing something your parents did that you never wanted to do happens a lot unconsciously.
  • Money is a tool for good. Having a healthy money environment and growing a family unit with healthy money habits will multiply its effect.

Wendy: “Changing your relationship with money can change the world.”

  • A parent's job is to help children build good habits around money.

Tips on What Parents Can Do to Help Their Children Build Good Habits

  • Create a more flexible allowance system.
  • Have a prescribed formula for spending, savings, and donations.
  • These two tips allow children to be in control of their income and get used to spending, saving, and donating.
  • Moshe also suggests giving them a range of amounts to allot for these different aspects. It’s like a Profit First and grandma’s envelope system for kids.
  • Tune in to the episode to learn more tips on building money habits!

Lagging Indicators vs. Predictive Indicators

  • Your credit card statement and sales at your firm are lagging indicators.
  • Predictive indicators include knowing what inputs you need to stay on track all the time.

Wendy’s Final Piece of Advice

  • Building wealth is about a mindset, system, and all the activities there. 
  • You can take Black Star Wealth’s five-minute note assessment tool to determine where you are on these three aspects.

About Wendy

Wendy Brookhouse is a financial advisor, money coach, and the award-winning founder of the boutique financial planning firm Black Star Wealth. Wendy has been helping professionals and entrepreneurs change their relationships with money and achieve their financial goals faster and easier. She is also the creator of the proprietary financial planning tools One Number Solution™ and One Number Solution for Business™.

Wendy currently serves on the faculty of the Women's Leadership Intensive and previously served as chair and director of Junior Achievement of Nova Scotia and Junior Achievement of Canada. She is also a media ambassador for FP Canada and the host of the Real Bottom Line, a podcast featuring entrepreneurs for entrepreneurs.

If you wish to get in touch with Wendy, you may take Black Star Wealth’s Entrepreneur Wealth Diagnostic Tool and book a call with her.

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