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Retainer invoice example for Product Management

I'm Jessica with Smith AI I'm the product marketing manager at Smith AI so you'll see me hosting these webinars you'll see me at trade shows I'm typically the one that posts on our social media accounts um I send out our product update emails I do all sorts of marketing stuff for the Smith AI team and today we have a special guest um Darren who um I'll let him really do a lot of his own introduction but um he specializes in financial planning for law firms he has a huge um background a huge pedigree and he is also the host of the lawyer millionaire podcast and has written the book the lawyer millionaire so if you've ever seen that that's him that's Darren so Darren um go ahead and set the stage of why you're here and like why you are the the authority to talk about this today because you are like you are well thank you Jessica yeah um excited to be here with all of you today um as Jessica mentioned we have the book the lawyer millionaire also the podcast the lawyer millionaire podcast uh we're financial planners not attorneys but we are very unique as financial planners in that we only work with Law Firm owners um I come from a background of being you know a general financial planner working with lots of different folks and you know there were some things about the way financial planners work that we wanted to change we wanted to I wanted to change I wanted to make different um so we built a model of working exclusively with Law Firm owners we built a service model really tailored to the challenges and needs that you guys face um cash flow being one of those extremely important um but also business planning in general so you know we recognize that for our clients business planning is really number one it's it's your biggest thing it's your biggest challenge it's your biggest concern um biggest priority but also you know it's your easiest Pathway to wealth in many cases is to grow your business and so we said well you know as financial advisers let's let's offer business planning too you know let's let's make that a big priority for us so we brought that into um the work that we do and we revolutionized the model so instead of the traditional model of working with an advisor where it's investment focused and there's an investment based fee uh We've structured our services as memberships and so it's a flat monthly fee you pay pay for a membership there's like three different membership types we have and you get access to all of our services and benefits just right there and then you don't have to transfer any money you know you don't have to do anything like that you just sign up you become a member and um you get access to all of our services so three main areas we focus on wealth growth a lot of financial advisers are Focus there of course uh but the two that are a little bit different are profit maximization which we're going to talk about a little bit today that's cash flow and tax planning and then of course business expansion which is really um thinking about how you scale and grow your business not just to make more money uh but also to have more time which is critical for a lot of busy Law Firm owners yeah yes having more time is critical and that's something that here at Smith AI we talk about a lot with our services as well is having more time and maximizing your time um some other things we're going to talk about today are strategies for managing and forecasting cash flows um and diversifying your revenue streams I know at least one person um that registered had questions about that um and then are we able to talk about the profit first system or yes okay okay perfect let's please talk about that okay and that sounds perfect and the importance of personal cash flow management um to ensure both your firm and your personal finances are line for long-term success so that's the general overview of what we're going to dive into today and um you guys feel free to ask questions as we go along I did already um review the questions that came in on the registration page um so we'll make sure to cover those as well and Darren I know you have a few slides you wanted to start with so if we want to kick those off and then um we can move into after that we'll move into I have some questions as well to kind of make sure we cover everything okay sounds good let me queue up the slides here um let's see I'll hit the share button do you have it or do you needing is not turned on oh no worries let me you know Jim and I my my uh lead planner that happens to us all the time figure out how to do that it's under the the host tool yep yep yep yeah yep yep yep yep yep um okay well well if not oh you may be the host hey that works close enough I couldn't find the share the give share button so sounds good okay so we'll just go here and then um let's see how I can I go full screen with this oh I see you use beautiful slides they're very very nice platform absolutely um oh I think it's this button here there we go yes beautiful AI uh I love AI by the way if anyone's looking for AI tools beautiful.ai is a great tool for making presentations um I'm not great at designing but I'm great at content and um the AI will help you really design stuff anyway um optimizing cash flow so here are some ideas I have for you I mean first of all Jessica we could just talk about the importance of cash flow I mean it's it's number one right yeah you have you have a strange Black Box in front of your uh it's the zoom box I think let me move it out of the way oh yeah how about that thank you thank you great job yeah uh this is one of the areas we hear Law Firm owners need help with the most you know dealing with the ups and downs of cash flow with the irregularities of cash flow uh some months it's great some months it's not great um some quarters it's great some quarters it's not great and cashell really is King I mean you know I hear from clients and and others all the time about you know the balance sheet or the financials say we had a profit of x amount well where did it go right cash flow is real time what's in the bank account and that's CR critical for law firms so many law firms are operating on such razor thin margins if you're not tracking the cash flow you don't know where that the cash flow is going you can find yourself in a very tricky uh situation I have a whole bunch of different ideas and we can dive into any of these um as far as it goes for optimizing your business cash flow um from a very basic standpoint you or someone you delegate needs to be check in on your cash flow on a regular basis um I do this right now for my firm because we're small but at some point I will probably delegate this um twice a month on the 10th and the 25th of each month I go in I review all of the numbers really you should be looking at your numbers weekly you should be reviewing your balance sheet your profit and loss uh you should be reviewing those numbers on a weekly basis and you should have somebody preparing those reports for you uh an up-to-date balance sheet an upto-date income statement or profit and loss statement and and that's really the same thing as a cash flow statement unless you're using an acrel method of accounting or something like that but that's from a very basic fundamental starting point have somebody setting up those systems for you um a lot of folks use QuickBooks um I imagine a lot of you on this call are using QuickBooks but are you really using it effectively QuickBooks is complicated I would highly recommend you know delegating or hiring somebody to manage your QuickBooks for you because it can be a lot it can be a lot of work um it can take hours on a on a weekly basis just to go in and clean it up and keep it up to dat and you really need up-to-date numbers to run a law firm effectively you need those numbers to be uh you know not numbers that were last year's numbers you need last week's numbers otherwise you're not going to know where you are are and where you're going so um have somebody manage your QuickBooks for you if you're not big enough to have QuickBooks you really don't need QuickBooks at this point um there's another one I really like called wave and Jessica have you heard of wave I've not okay wave apps waveapps.com it's like a really simplified QuickBooks and I like it because it's just much more intuitive it's much easier to understand if you're a solo or really small firm you just have like a paralal and an assistant or something something like wave might be all you need um and you can manage it yourself rather than a lot of the complexities of QuickBooks you may not need all of that kind of stuff um the the second area is cash flow forecasting you know once you are preparing those numbers you need to be forcasting down to the penny where you are going to be next week next month next quarter and you can do it right so it takes it takes some math you know maybe math isn't your thing so maybe you need someone on your team who likes math now I like math because I'm a finance guy right so this is easy for me but I did this in my practice we could project out we have our clients listed out we know the cash flow coming in from each of the clients we know when it's coming in so we can forecast what cash flow is going to look like over the next quarter even over the next year I have a forecast for what my cash flow is going to look like 12 months from now I know and it's crazy right A lot of these are projections based on my business goals based on where I want to take the business but I hit my I hit my goals because I've gotten that good at forecasting where the cash flow is is going and moving towards this can be tricky you know depending on when clients are paying how clients are paying are you a flat fee firm are you an hourly firm Are you a retainer firm right um but it is it is possible to do you just have to know what's what's the likelihood of this money coming in at a certain time frame and then you can project it out but that's really important to be able to forecast the cash flow if you're a firm who's never done cash cash flow forecasting where do you where do you even [Laughter] start um the most basic way to get this going would be like an Excel spreadsheet list out your client matters and list out where you anticipate money coming in when you anticipate money coming in uh from each of those client matters then the other side of the coin is projecting out your expenses so you need to know where what are the big expenses coming up this quarter what's coming out when right and and know okay at the end of the quarter are we going to have a net positive or we going to have a net negative right so that that's where it's really critical now the expenses part can be a little easier because you can look back historically yes you kind of know what's coming out um this could be a simple Excel spreadsheet like here's where we are today and then here's what we anticipate coming in over the next month minus what's coming out over the next month and where we'll be at the end of the month something like that perfect thank you now there are more complex tools that you can use QuickBooks has more complex tools that can that can help you project out but at a very basic level something like that is extremely helpful I always did this with my business because I started my own business and I was I was always petrified that I wasn't going to going to have any money you know I was going to run out of money so I just naturally always intuitively did this um but don't run your practice just doing client work and expecting money to come in and not really knowing what's coming in you know precisely what's coming in and what's going out that's that's going to give you confidence so that you can make investments to grow your business to grow your lawm great um so some other things we can talk about also um speeding up the cash flow um this this may probably is going to be more applicable to the the firms that are billing by the hour but uh let's think about your invoicing practices right um first of all the the number one rule is make it easy for the clients to pay yes so are you accepting credit card payments if not you should be right make it as easy as possible if you can uh make it as easy as possible for the clients to pay send out the invoice in an email have it clickable let have them able to just click through and pay online uh that right there number one number two speed up the process right have the invoices go out quickly right as soon as the work is done um also don't if if you're like working on retainer and and you know it's an ongoing matter are you billing the clients monthly that's tough for clients some people aren't some people are billing their clients quarterly I mean he most people live paycheck to paycheck they're not even even high income people okay by the way well that we could talk about that you know um so it's going to be very difficult for people to get a really big Bill once a quarter and have to pay it or once a month even and have to pay it make it easier than that by bonly you know twice a month invoice the clients for work that's being done that also speeds up the time at which you're getting the money it makes it faster for you get to get the money and think of other ways that you can speed up that cash flow a lot of firms struggle with with ar with accounts receivable and getting the clients to pay right um so how do you do that how do you reduce that account's receivable time and get to a no AR firm right um think about how you can maybe incentivize clients to pay early could you offer a discount for them to pay early and now everyone's like oh no I I can't discount my services well hang on bear with me here maybe you could raise your prices and then disc right you know raise the prices and then offer a discount then there really is no discount right um raise raise your rates but offer a discount if it's paid early are you charging late fees are you charging interest if clients are not paying on time you are having to fund you are becoming a lender to them and if they're not paying on time and you're not charging interest you're a 0% lender I mean what a great place to be in right no one's offering 0% loans right now but you are so maybe there should be um some interest for payments that are delayed into the future so just some things to Think Through now every practice is different um some people are like well you know I I can't like I had a client who was working with really big institutional clients and she's like my clients will pay you know it's just they don't pay on time right and she's waiting sometimes six months to a year to get paid for work and she's like well I can't bug them because they're institutional clients if I bug them then they're not going to want to be my client anymore well I mean they're being quite disrespectful to you you're offering them a great service right by by not collecting on on the um on the this the work that you've done so we strategized and we came up with that idea of maybe you could have some kind of a discount if they pay early other businesses that are you know hiring you to do legal work work they may really appreciate that because that may help their bottom line right get the money up front would be best of all right so a retainer yeah so you absolutely can um bug people for their yes to pay their bill first of all um and if you personally don't want to do it which is 100% understandable what I would recommend in that case is to set up a automated billing reminder yep that does not come from you it comes from a generic billing email address um then it's not personal than it is strictly business um but we did um Darren we had a question in the chat how do you handle credit card service fees do you build it um into the fee do you add on extra costs do you give cash discounts um what do you what do you think about that you can do all of those things uh just depends on what you feel is best for your practice um it it would be you know yeah those credit card fees can be a lot so um you know add adding that in a lot of a lot of places do that they add that in as a convenience fee to use a credit card or you could offer a discount for a cash payment um that's a really great question you know those are those are great things to think about and I think all of those could be strategies you could implement it just really depends on what what's going to work for you and and your practice and the clients that you're serving and then another question is do you think a $10 a day late fee for bills under $500 a month is excessive $10 a month $10 per day for a bill under $500 a month that might be a little much um I would do it as like a percentage um like an annualized percentage right so you owe $1,000 you know it's an annualized percentage of 10% um if your bill isn't paid on time you know you really you want to consult with your Lo your bar association also and make sure that you're uh whatever you're doing is isn't going to raise any eyebrows um it shouldn't be so high as a percentage that it's going to make you look like a Payday lender you know um I think somewhere around you know in the neighborhood of 5 to 10% would be reasonable on an annualized basis yeah any other questions Jessica that was it from the chat um I did just want to say related to the credit card fees um there are a handful of States I don't know what they are out the top of my head um where you're not allowed to charge credit card fees so just check with your um local state to make sure before you do that yes definitely check and if you're not allowed to charge for credit card fees also check if maybe you're allowed to instead of that offer a discount for like a cash payment right so kind of yeah do it in an indirect way basically exactly exactly okay so invoicing yeah um another idea of course is is trying to get the money as upfront as possible so you know having a retainer system if you're if you're billing um by the hour and I a friend of mine suggested um having a retainer but not billing against the retainer so maybe you have a retainer but the retainer is just like an emergency fund if the client doesn't pay you have the retainer but then you're still going to invoice the client for work that's being done all goes well they get the retainer back at the end of the engagement right uh that way if they're not paying the invoice you can dip into the retainer but ideally you don't have to that's going to cut down on a lot of administrative work because it's a lot of tedious work you know doing your Iola accounting put the money in your trust account bill against the trust account if you just put the money in there it's there as a reserve if the client doesn't pay and then they get it back at the end of the engagement then you've eliminated a lot of tedious administrative work that you have to do do uh you've also given yourself kind of an insurance policy if they don't pay now I am a big fan of flat fee engagements um I think they're great for clients you can do kind of a hybrid approach where maybe it's a flat fee that for all of these services but if you you know go over a certain number of hours or you need to go into these extra areas there might be an additional charge but I think the flat fee is great because it really will incentivize efficiency number one it's great for the clients because they know what the bill is going to be it gives them certainty and it also gives you certainty you know exactly what you're going to get for a matter um so it eliminates a lot of that cash flow uncertainty and I think I just love flat fees I think they're great we do we do flat fees in our business so yeah I'm a big fan did we have a question on on the flat fees versus the the hourly um there was a registrant said we have both fixed rate and hourly how do we calculate how to best maximize both rates we seem to not Bill enough hourly interesting I would definitely want to ask a lot of follow-up questions but I think you need to really have good data um I think one of the the data you need to have kpis that you're tracking so even for your flat fee work you should still track the time it takes for a matter to get resolved you should still track the amount of time that people are spending on that so then you know what your hourly rate is you know how efficient you're being with time um so and I think that would give you some really key insights into how you can you know maximize your profit margins in in that kind of a situation um yeah I I hope that that helps on on that one and then you can think about improving that time efficiency what are some ways you can use software Outsource delegate you know if if one of your high paid Associates is doing really tedious you know $20 an hour work can you Outsource that to somebody else and you can think about who's doing the work and how that should be delegated that will really Drive efficiency and and profit in your firm all right um revenue streams oh expense management uh so you know this is just key I mean it's so easy as a business owner to sign up for things and everything's a subscription now so we have all these things that we're signed up for oo this software looks really cool let me sign up for it and then we forget that we're signed up and we're getting builded you know $100 or $200 a month and those expenses add up over time so what you need to do is on a regular basis maybe annually maybe quarterly review your expenses and ask yourself are we really using this service or this product to its maximum usefulness do we really need this anymore can we eliminate this always be on the lookout for ways you can reduce expenses right on the on the other side are there services that we're using that we really love that we're going to be using for a long time can we set that up on an annual payment right and maybe get a discount um are there Services we're using maybe we can shop and find a better more cost-effective provider so that is a way that you can really Drive some profit and maximize your your cash flow just regularly remembering to look through your expenses and valuate which ones you still need when we talk about expenses um can you share some tips about developing and sticking to a expense budget yes um I think profit first becomes a very good way to do that um because it it it builds in you know how much you can afford for these things and this all goes back to cash flow forecasting right so if I can forecast out my cash flow for next year I know what I can afford to spend and then these decisions become emotionless they become very matter of fact right I'm working maybe I'm talking with a salesperson at a company and they've got a great product and I you know I really feel like I'm being pressured into buying it but if I look at my financials and it's like doesn't really make sense for me okay as a matter of fact well great or here's here's the classic one people come to you they want you to sponsor their thing right everybody wants you to sponsor their thing sponsor my golf outing sponsor this sponsor that you know um and you should do some of that right for your community community Goodwill but if you have a certain amount that's allocated to that stuff then you can very matter of factly once that budget's been used up you can just say well you know we we've already allocated the funds for that purpose and we don't have any money left for that purpose that's right so that that's very helpful and are you seeing any areas that um firm owners or operators um are seeing significant cost savings at in expense management like any areas that are extra leaky I think software is is probably most leaky just because we so easily sign up for things um and there's always new software being being developed and created right so you know we were using one type of Note Taker for our our Zoom meetings and it wasn't really great and it was kind of expensive and so we shopped around and we found another one that was a whole lot better and a lot less expensive you know so yeah keep evaluating those things and see where you can negotiate you know are you working with a with a consultant in a particular area maybe come to them you know I was working with a with a marketing consultant um and they told me that they were going to be raising their rates and I told them I was like hey guys you know we've been a really really great client for a long time we've worked with you guys consistently for many years is there some kind of a loyalty discount that you could offer us and they saidou know what forget about it we're not going to raise your rates we'll keep you at the same rate and I was like okay there's a couple hundred dollars a month back in my pocket right you know what I mean all you have to do is ask and let's think about it $100 a month you could so easily cut $100 a month out of your spending budget that's $1,200 a year right that's not insignificant and that's a small amount imagine if you could do that a few times you could very easily save yourself 102,000 over the course of a year just by keeping tabed on your expenses yes you could so a couple of other areas um I'd love to talk about revenue streams diversifying revenue streams you know it doesn't have to be that the only way you get clients or or make money is clients come to me with this matter and I do this type of work and I build them I encourage my clients to think creatively right is there a practice area that is very closely aligned to your current practice area you could maybe add um is there maybe a an ancillary service that is very much aligned with what you do but could be a a side generating a side Revenue generating uh piece for your business the easy EST example is like business law if you practice business law maybe you could add business Consulting Services uh or business growth strategy and you could also you know provide some some ongoing coaching for business owners that's kind of what we did you know what I mean um add that into your list of services as something you can do for your client so I encourage my clients and others to think outside the box in terms of maybe there are some other things and we call this another way to think about this is a term called value stacking so if somebody comes to do work with you you could charge a premium for your work if you have additional benefits and services that you're stacking in to what you're providing right um trying to think of a good example I mean I gu in our business right um tax planning right we we've built in tax planning that's an additional layer of service to what we already do it's closely aligned with what we do but it allows us to charge a higher fee for what we do because we're doing more work for the client right so are there things that are maybe they're not exactly law practice specifically but they're very closely aligned they would be in the client's best interest for the client to have access to these additional services and benefits and you could offer these as either part of your package or um another Revenue Source uh for you um the other way to develop other revenue streams is through having referral Partnerships that can be really really huge but be careful that your business doesn't rely exclusively on those referral relationships because if one of those referral relationships decides that they want to you know go into different Direction let's say you have a um a personal injury firm is getting all these leads and sending you the ones they don't want and that's your main source of business well be careful because what if they change their model and they decide they want to keep all the leads to themselves then you're in trouble because there goes your Revenue stream so uh don't rely on that exclusively that's why it's important to have a diversified range of Revenue uh streams yeah anything on that any questions there or things you wanted to add Jessica um no thank you I didn't see any questions in the chat either okay cool but yeah just think creatively um get get a little bit outside the box and think what are some other things we could do for our clients uh that would especially if they're recurring Revenue models that is where the gold is if you could set up some kind of a subscription model or a recurring Revenue model number one that's great for your cash flow but more importantly and this is why we love it it makes your business more valuable because you are uh reducing the risk of income coming in so your business is going to be more attractive to a potential buyer in the future if you have a solid source of recurring Revenue okay accounts receivable we talked a little bit about that the last one here is really liquidity uh as I mentioned I think earlier so many law firms are just running on razor thin margins there's no cash in The Firm all the money gets distributed that's a big mistake you need to have sufficient reserves in the practice right the practice needs to have its own high yield money market account where there is money being squired away as an emergency fund for the firm that's really really critical those are firms that survived covid are firms that did just that or they had a line of credit established at a bank well in advance you get the line of credit when you don't need the line of credit because if you get the line of credit when you need it the bank's not going to give it to you but even the line of credit can be dangerous because if banks decide they don't want to lend anymore they can just decide they don't want to give you a line of credit anymore right so the best way to do it is Cash Cash is King right have an emergency fund for the firm separate from you in the name of the firm in the name of the practice where you have some funds squired away um and I would recommend at least six to nine months worth of operating expenses and and that's your red line you're not going to go under that red line you're always going to have that money um and if if you need to dip into it you're going to work on rebuilding it almost immediately so those are the main points I have on on cash flow we can talk a little bit about the profit first system I love the profit first system because I think it's just a very easy way to do accounting um in it's it's banking accounting accounting by banking basically um so with profit first if you're not familiar the main idea is that you set up separate bank accounts for different purposes and that way there's always money there for different purposes um and the other part of profit first is the name profit first is that you prioritize setting aside your profit ahead of time instead of profit being what's left over so excuse me here's how it would basically work you would have five accounts set up you have an income account where all the money flowing in comes to first then from there it's going to be distributed into each of these four accounts first you're going to allocate funds to your profit account and if you if you're starting this for the first time start with a small amount like 1% and I tell my clients you're not going to miss 1% of your Revenue you're not going to miss it if you leave it in your operating account you're going to spend it but if you take 1% of everything that comes in take 1% off the top and put it away in a in a profit account that is separate from all your other accounts you're going to be setting aside additional profit for yourself that you're not going to spend and you won't miss it then you have your tax account uh very critical you have a certain amount of money going into the tax account you know maybe 25% um so that you have money to pay taxes when tax time comes do not let the IRS become your lender it's a very bad situation to to be in because it's a hard situation to get out of so if you're ahead of schedule you have money set aside to pay taxes you're not going to be scrambling to make your quarterly estimated taxes you're not going to be scrambling when your accountant comes to you in October and says here a sign last year's tax return oh by the way you owe 60 Grand oops where's that going to come from you know what I mean so it's it's really best practice to have that tax account now the here's the beautiful thing you may find yourself in a situation where you have more money in the tax account than you need what a great place to be in there's some automatic forced savings there let's say I have 50,000 in my tax account and I get my tax bill and it's only 30,000 oh well Hallelujah great we got some extra money that's a great spot to be in then you have your owner's compensation account that's where your money goes the money that you are going to use to pay yourself with your W2 and your and your draw your payroll and your draw it's all going to come from here and then finally you have your Opex so Opex is last operating expenses is last everything is left over that's what we're going to use for for growth and for investment and for operating costs and things like that now you have to tweak the percentages we've done this in our practice and the percentages we're always tweaking them a little bit to try and get them just right you know start off with a small amount in profit you know figure out what what your taxable rate is approximately your average effective rate in taxes that should be your taxx percentage owner's compensation whatever you pay yourself and by the way you should be paying yourself a regular income we should have probably talked about that on the business Cash Flow side so so many times what I see is Law Firm owners are taking money out of the firm when they need money and then they're putting money back in The Firm when the firm needs money big mistake it's going to be very hard for you to grow your practice and manage the financials of your practice so pay yourself a regular paycheck and set up a draw that's on a regular basis right so that you're not just drawing money I had a problem with the air conditioning so I took $10,000 out of the firm to pay my repair man no don't do that your firm is not your piggy bank and you should not treat your firm like your piggy bank that's really really critical and if you're doing that it's going to be very difficult to grow your practice you've got to get cash flow stable first then you can grow then you can invest um but it it's it's difficult to get out of that cycle anything you want to add there Jessica on profit first no this has been great so far fabulous um well we can apply the same Concepts personally so you can think person about this as well how can you optimize your personal cash flow yep personal budgeting um no one likes to do that uh you know so many the folks I work with when they first come to me um they're making good money but they have no idea where it's going if that's you you need to set up some kind of system that's going to first track your cash flow so you know where the money is going and then you can start to be a little bit more more strategic about where it goes uh one of my favorite tools for personal budgeting is Monarch monark money uh so Google that one uh when you get a chance it's it's like mint but better because you have to pay for it and the reason I like the fact that you have to pay for it is because that means there's no ads and there's no you know secret back room deals where they're trying to sell you stuff um yeah so check out Monarch money that's one that we actually use with clients we can collaborate with clients um but the the difficult part about programs like that is that they they do require some maintenance now what's beautiful about Monarch is you can automate a lot of your budgeting so you can automate the categorizations um it's just really really cool if you want to take a look at it with me grab some time on my calendar and we can take a look at it together um debt management is another area you know I have clients who are in their 50s late 50s still have student loans student loans are a big thing for a lot of a lot of folks out there um and a lot of attorneys you know there there's pressure maybe among your peers to live a certain lifestyle so it can be very easy to acre debt um key points on that just make sure that you're paying down those High interest rate cards and high interest rate uh loans first prioritize those first uh and and you know make that a part of your budget um if you're stuck in a cycle of credit card debt the only way to get out at least what I've observed is to just stop using the credit cards and go to a cash system and then okay I've got this $70,000 in in credit card debt the only way you're going to pay that down is just stop adding to it start just paying for things with cash then you can set a Target okay I'm going to put $1,000 a month on my debt until it's gone and then just set it up right so it's automatic that is really what from what I've seen in practice working with folks um as long as you're still using the cards you're never going to get them paid down income diversification you can think also about that in terms of your personal life you know a lot of Law Firm owners I know love to invest in real estate maybe there's other businesses you want to invest in it doesn't all have to be the stock market it could be other types of um income generating Investments to supplement your your legal practice uh some kind of side hustle that you really love right speaking engagements right whatever it is what do you really enjoy doing maybe you can turn that into a passive stream of income for yourself and then finally of course the liquidity Factor so you need to have liquidity on both sides personal emergency fund and business emergency fund the business is not your personal emergency fund nor should it be that's really important and one more thing I want to share pay yourself yes yes absolutely you can apply the profit first idea to your personal cash flow here's just one idea of how that might work in practice you have an income account where you pay yourself and then from that account you're going to distribute money to other sub accounts a Financial Freedom account or or accounts those could be your retirement Investments your 401k your IAS could be additional Investments number two is that emergency fund that true cash-based emergency fund for unexpected expenses once that's filled up you don't need to put money in it anymore um you can direct those funds elsewhere uh the third account is the fixed expenses account so this is where it really gets critical you have one account where all the subscriptions come out of all the fixed things come out of like mortgage rent car payments Insurance utilities debt payments all the things I can plan for because I know what those are going to cost I know you know next month I all of these things are coming out and it's going to be x amount of dollars so you can you can allocate funds to that account and you're not ever going to spend money from that account like at a restaurant or things like that because those funds are already allocated right I have X amount going in here that's going to pay the mortgage and everything else where you going to where you going to um take money for like a restaurant or groceries or you know any kind of going to the movies or spending that's your day-to-day spending account now if you want to get real Advanced each member of the household could have their their own day-to-day spending accounts so for a couple each spouse maybe has their own day-to-day spending account why is it important to have a separate day-to-day spending account well I do this and what I love about this is I can look at the day-to-day spending account and I know I have X number of dollars to spend and I can go spend it right now and I know that's not going to disrupt anything because nothing else is coming out of that account there are no automated payments coming out of that account right I can go to the grocery store I can spend I you know I know I have X amount to spend I can just look at my my I can pull up my banking app and I know okay I've got this much money to spend boom done I don't have to do any fancy budgeting it's right there in front of me and I know what it is um and you could also do this for kids you know you have each kid can have their own separate account where they put their money and stuff like that and then finally you have your fund money account that's you you know saving for vacations for leisure travel other stuff you guys want to do as a family any questions on this no we are um coming up close to the end of our time so I would love to encourage everyone that's watching um if you have questions please put them in the chat or in the Q&A um to ask Darren we have about eight minutes left so please do ask any questions if you have them um Darren I'm not sure what else you want to talk about but I'd love to talk a little bit more about um your book because I know you have the book The Law your millionaire um you know what are what are some of the key topics of your book is is it towards um personal finance or is it towards firm Finance yeah it's a little bit of both it's a little bit of both okay uh the book is meant to be like all of my knowledge put down on paper um it it's it's really supposed to be like a DIY guide for your personal financial planning for lawyers uh so if you're looking for a resource that that just kind of will give you that that One-Stop guide on everything from when you graduate and first you know get that first job all the way up until you know retirement and and figuring out how to sell your practice right the book kind of walks you through each of those you know the the the life cycle from early career to mid-career to late career and all the different things that you need to think about along the way um from some of the basics getting set up to some of the more advanced things like tax planning and and strategies um Investments business structure um all the way to retirement and success session planning yeah quite a lot it's a lot it's and there's not a lot of fluff in there U it's it's good content you know you some books are you know it's like it could be one article you know this is one main concept A lot of this is this is meat and potatoes perfect and you know because we have a lot of firm owners here um you know I'm not sure how many have worked with um financial planners or financial advisers in the past so for people like me who are not in the financial world I've never worked with um a financial adviser or financial planner in the past if I was looking for someone to either help me with my firm or to help me with my my personal finances you know what kind of questions should I ask or or what should I look for yeah um I think one of the key things is to know how that how your advisor is compensated so that you know if they are going to be giving you objective you know clear unbiased advice um or they're going to be um steered in a particular direction uh so I I would suggest that you look for a fee based advisor or better yet a flat fee advisor like we are U who's just going to charge that flat fee to give you strictly advice and is not going to be uh compensated elsewhere so like for example not commission based not commission based now those people serve a purpose you know in terms of maybe connecting you with products and services but in terms of getting you know real straightforward advice you want someone who is really free from any kind of conflicts of interest um you know we don't sell any insurance we we advise our clients on insurance we review their insurance policies we'll analyze them we'll make suggestions but we don't sell them so that way we are not you know going to steer you in any particular direction yeah okay perfect we did have another question in the chat you mentioned Monarch are there any other applications you would suggest for businesses yeah the other one I really like is wave wave wave apps.com um for and that was the QuickBooks alternative you mention QuickBooks yeah the QuickBooks alternative and I mean gosh there are so many um you know for for lead management for project management um for managing your business strategy what about expense management because we did spend a significant amount of time talking about expenses yeah I like wave for that purpose okay great yeah um because wave is very much like a person budgeting program but for business so you go in it's just it's a very simple interface it's very easy to understand and intuitive um you would think I work for them right you know like I just I just been using them for so many years I just really like uh what they have yeah oops I was muted are there any other questions um from anyone in the audience I only have one last question I would say go ahead if you want to pick my brain on other softwares as well there's there's so many that we know of and that we use I can't even think of them all um but but for other aspects of your of your practice be happy to do that with anybody as well absolutely okay everyone I'd love to um thank you all for coming out um thank you Darren for coming to the show today I will send out the recording so if you missed any of it I will share it um if if you don't get the email today first thing in the morning for sure um to reach Darren he is on linked he also can be found at the lawyer millionaire.com that will take you right to their website very easy to remember um again I'm Jessica with Smith AI um I I think a lot of you already know me but if you don't know Smith AI we are a call answering service we can do everything from answer your calls qualify leads to see if they're good fit for your firm and if they are then we can help book consultations on your calendar and even take payments for those consultations um to help with that cash flow right there so let us know if you need anything again I will send out the contact information for both of us after the call and I hope you all have a great day thank you so much thank you Jessica we've been using Smith AI for I think three or four years now maybe longer yeah and uh just you guys do a really great job thank you so much Daren I appreciate you saying so all right everyone have a great day all right thanks for having me Jessica bye