5 Steps to Help You Reach Your Income Goals for 2022!
Looking to make some improvements to your studio this year? Have big goals that seem so hard to reach? Well, I'm here to tell you that your dreams are achievable, your income can be larger, and your studio can grow! Listen in as I break down the 5 simplest steps to reach your income goals for this year.
Enjoy this week’s transcript!
I'm Carly Walton, and this is the Teach Music Online Podcast. Welcome.
I love the month of January. I think it's an amazing opportunity to reflect on the past year and to have a fresh start with new beginnings and new intentions. I like to focus my goal setting on three major categories: family, relationships, and financial goals. I think that it's easy to get overwhelmed with all of the many ideas and people posting about huge goals, or their long list of goals. I'm not really one of those people. What I like to do is really reflect on my family relationships and how I'm spending my time and giving my attention to people that I love in my life. Also, self care. This is so important. Checking in with some simple questions. Am I healthy? Am I eating wise? Am I exercising? Am I reflecting? Am I journaling? Am I reading my scriptures or doing my study work? Then I look at finances and my business goals. These are huge. These set the intention for the year, and without them, you just kind of let your business happen to you. And I don't think that that's a great way to think about money.
I like thinking of these three categories and embracing those goals, then I envision myself being that person who does all of these things really well. As I envision the person who has a great relationship with all of her kids, I can see her. I can see how she talks. I can see how she spends her time with people. The same thing goes for financial numbers. If I have an income goal, that's a certain number, and I envision what I would be like with that number in mind. I can instantly see how I spend my day, how I start my day, how I set business goals. I also envision a person who gives back, who gives to charity, who looks for nonprofits to support. And that's how I like to think about goals, rather than thinking, “I'm never going to be that person” or “that feels so far away.” I think we can be that type of person now, and that helps us to achieve a lot of our goals much faster versus looking at the past.
In today's episode, we are focusing on income, and I hope that doesn't make you cringe or want to run and hide in your closet. But my hope today is that by breaking down how to set better income goals that make sense, it will help you to be more excited about looking at your finances versus running from them. Before we dive into the specifics, I wanted to share a little bit about my income journey with debt and finances. Many of you who've listened for a while know that I attended Berkeley College of Music in Boston, which I loved. Boston’s my favorite city, and my family and I, we just went back in October. It was so fun for me to walk around Berkeley College of Music with my family and visit all of the playgrounds in the area because that's what you do when you have toddlers. And I was like, I had no idea Boston had the greatest playgrounds. So I loved studying at Berkeley. And I feel so grateful to my parents who were extremely supportive of my dream, along with many wonderful music mentors and piano teachers of mine.
But Berkeley comes with quite the price tag. So I did what most College students do, and I took out student loans. So every semester, I had to take out loans. I worked as much as I could to pay for housing, but I had to take out loans to pay for school. And I was a bit uneducated about interest rates and paying your debt back. And I wish I had known so much more. Regardless, now thinking about my education at Berkeley, I'm so grateful. But debt was something that I was ashamed of and I was embarrassed about at the time. I was single and I hesitated to ever bring it up to anyone that I dated for obvious reasons. But I had this enormous number, this enormous amount attached to me. It was consuming. It was frustrating. With the high interest rates, I thought I would be paying off my student debt for at least 30 years. I mean, it was overwhelming. Well, luckily the story has a very happy ending.
My husband Mike is very money conscious. He graduated from College debt-free and he worked hard to stay debt-free. Since then, together, we made a plan to knock out my student debt as quickly as we could. So in our first three years of marriage, we cut all of our spending. We spent $150 a month on groceries. We never ate out. I mean, I can probably count on one hand the number of times we ate out in the first several years of marriage. We didn't, because we had this huge goal. We went on hikes for dates. When we traveled, we stayed with family. We did every single thing we could to increase our income and send every extra penny towards my student debt. So when I say we were paying $6-9,000 a month to pay off my debt, that's how we did it. And in a strange way, I'm so grateful for my debt and what it taught me about money and finances. It also taught me about communication and budgeting. Because of this, I look at money so differently now.
When I was paying off my debt, I had 50+ piano students. But I also doubled my teaching rates, which allowed me to pay off that huge number in student debt per month. But I also couldn't believe the income I was creating for myself. And the reason I created it was because I had this purpose. I had this drive to pay off that debt. I am proud of what we were able to accomplish during those years. And I feel like it really set us up for success in years to come with how we talk about and deal with money. We paid off that debt in four years. And now I'm applying those same principles to my business, our lives, our marriage, all of our ideas and how we work as entrepreneurs. That way, when you run your business, when you teach any student, when anyone pays you, it comes straight to you and not through a boss or through someone that you're contracted to work with. You are running a business, and you have so much in your control and on your side to make big changes. But they don't happen unless we plan, and think ahead, and get some mentorship, guidance, and accountability along the way. With all of that in mind, we're going to dive into five steps to setting smarter income goals. I'm so excited to share these with you. I just did some live coaching calls last week, and some of you listening may have been in attendance. I presented this financial plan and got such great feedback and excitement around the idea of really how a slight adjustment in how you think about your rates can make a big difference in the long run. So here are your five steps to setting smarter income goals.
1. Think about the entire year in a much bigger picture. When you think about a big number or the entire year or how much you want to make for the year, you work differently. So, for example, if last year you made $50,000 in net income, without any expenses, that's a great income. That's wonderful. But what if you said, this year I want to make six figures? I hope to make $120,000 or $100,000 this year with my music businesses. Maybe that includes teaching and gigging, and maybe you're creating a course.
First of all, it's totally possible. I want you to know that. And when you have a bigger number in mind, you think differently about what you charge and how much you teach. So the first step is to stop thinking about the one on one lesson, stop thinking about what your neighbor is telling you that you need to charge, stop thinking about what that one parent said about raising your rates. None of that matters. They don't matter. They can go out the door and you can leave them in 2021. What matters is your vision and your goal and the motivation you have.
2. List out all of your business expenses. If you haven't done this already, it's going to be very helpful for you to think about how much you're spending on your business expenses for the entire year. That includes what you're spending on subscriptions, apps, conferences you're attending, studio rent, even gas. Anything that you would expense as a part of your business is a studio expense. I hope that you have a little bit of an idea, but take a second and open a spreadsheet and write out what you're spending monthly on expenses.
You may think it’s bad to have so many expenses, but business expenses are a good thing. Business expenses help you charge more, because you have more value in your business. Things like memberships, conferences, subscriptions, they are your professional development. They are your community. And you can charge for that and work those expenses into your business. It's not that you have to pay so much money to be a better teacher. No, it's the fact that part of being a business owner is going through courses and subscribing to apps that maybe help you to be a better teacher. It's totally normal. So listing them out is just going to help you be aware of it and help you to calculate your net income.
3. Project your income for the coming year. So this step is to project your current income. Multiply your current lesson rate by how many students you have and how many months you teach. So either twelve or ten months of the year. Sometimes teachers will have recurring payments. I hope you're all doing a monthly payment that's the same throughout the year. We're going to subtract your expenses. And I forgot to mention, take out 20% for taxes or 15%, depending on what bracket you're in. And let's figure out what your net income is going to be for 2022 if your studio stays as is. So if you figure you're going to make $60,000 on lessons alone, but then with your expenses, maybe you have $8,000 in expenses, you have around $52,000 in net income.
4. Plan what you'd like to make or hope to make in net income. This is where it gets really fun. So this is where you think big. This is where you put that number aside and you say, I'm not going to think about what I'm currently making. I'm going to think about what my dream is. And maybe that's $80,000, maybe that's $120,000, maybe that's $200,000. Everyone is different, and has different goals. This is where I'd encourage you to really think big and play around with some numbers a little bit. So write down a number, have it in your mind. Choose a number that you feel like is a little bit crazy. Let's not be conservative, just be an amazing dreamer right now.
5. Make adjustments that will help you reach that income goal. Here is how we make the magic happen. Figure out the adjustments that you need to make. Reduce your expenses if necessary. If you're spending money on a studio rental, but you can teach online, get rid of the rental space. If you are spending money on some subscriptions that you're never using, or you have some equipment that you can sell to help reduce your expenses, cancel the subscriptions and sell the equipment. There are ways to reduce your expenses. I should probably do another podcast episode just on budgeting in general.
There are a lot of areas in your life you should be reducing expenses on, like which subscriptions you have. With Hulu and Netflix and Disney+, they all add up. You can also look at how much you're spending a month on eating out. I just learned some crazy numbers for what the average couple spends a month on eating at restaurants, and it boggles my mind because that money can be better spent going towards savings or paying off debt. Because of the way I started off, recognizing how much money is wasted, now I'm so frugal and we budget now for eating out. So we have a certain amount that we pay ourselves so we can do that and that's just fine. I think it gets out of control when it's easier to just go and eat out.
And this is the most fun part. I'm going to walk you through this math and I'm going to put this also in the show notes so you can see it visually. But this is really, really simple math that I want you to do for yourself. So the first thing, the first number we need to get is your total income goal. So your net income is without expenses. If your net income you want is $100,000, but you spend $20,000 on expenses, your total income would be $120,000 that you make within your studio. For this example, we're going to say $100,000. So we're going to say your net income goal is $80,000, and assuming that around $20,000 has gone to taxes and expenses. So you want to make $100,000 in 2022. I think that’s a great number. I think it's a great goal. And listen, this is going to blow you away to how easy this is.
Let's say you have 40 students. If you don't, let's talk about your ideal number of students. What is your ideal number of students? Maybe it's 20, maybe it's 50, maybe it's 35. I'm going to say 40. I feel like for me when I was teaching full time, full time, around 40 felt like my max, and also it felt like a full studio. So we're going to divide $100,000 by 40 students, which equals $2,500. That's how much each student is paying you every single year or within one year, we're going to divide $2500 by twelve, because that’s how many months are in the year. That gives you your monthly rate of $208, how much each student is going to pay you per month. And guess what? If you have 40 students paying you $208 a month, you will make $100,000 this year.
Isn't that so exciting? You can create a number goal, think about the number of students that is ideal to you and just do some quick math to give you what rate you should be charging. That rate is not set in stone. I'm not telling you at all that you're not worth more or less than that. This is just the backwards math to help you realize your rate is directly tied to how much income you can make in a year. So if you're still being conservative and charging $100 a month at that rate, if you were charging $104 a month, you would make $50,000 this year with 40 students. So if we double your rate, there's so much possible for you. And sometimes it's as easy as looking at the numbers and going, okay, maybe you are charging 200 a month, but you only have 20 students. So your goal is now doubling your studio. Maybe you're creating group classes. Maybe you're hiring other teachers, which, by the way, I teach you how to do all of these things inside the Teach Music Online course and membership. I also have rate calculators that help you know an estimate for what you're able to charge depending on your experience and level of teaching. But I also have a calculator that gives you these numbers as well, where you enter in all of your expenses, your income goals, and it tells you exactly the rate you can be charging or that you should be charging to reach that income goal. I want you to do this. I want you to actually go through these steps.
So let me give you a quick recap of how you can set the best income goal for 2022.
One, get rid of 2021 and think of a bigger picture. Think about the entire year. Two, make a list of all of your business expenses and come up with your expense number for 2022. Three, project your current income for the coming year. What is your current number going to look like? And that's just to give you an idea for where you're at now and help you dream big. Four, plan what you'd like to make or hope to make net income-wise in the coming year. Five, make adjustments to your rates. Make a couple of adjustments, reduce your expenses, raise your rates, and recruit students.
I would love to hear from you, you can email me and tell me what your income goal is for 2022 and what your new rate is going to be when you increase your rates. My email is carly@teachmusic.online. I would love to connect with you. It's my favorite thing to connect with teachers who are listening to the podcast.
Thanks for listening, and I'll see you next week.
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