By: Eric Leider, CFP Ⓡ, RLP Ⓡ, BFA ™️
In this article, we’ll explore the most common financial mistakes that self-employed personal trainers make and provide specific advice on how to avoid them.
Being a self-employed personal trainer can be a rewarding and fulfilling career. However, managing personal finances can be challenging, especially if you’re new to the game. As a self-employed personal trainer, you must be your own financial manager, planner, and advisor.
The decisions you make about your finances can have a significant impact on your business and personal life. Therefore, it’s important to avoid common financial mistakes that self-employed personal trainers make.
Nobody wants to make financial mistakes! Let’s unpack what we can do to avoid them.
One of the biggest financial mistakes that self-employed personal trainers make is not having a financial plan. A financial plan is a roadmap that outlines your financial goals and the steps you need to take to achieve them. Without a plan, you’ll have no direction, and it will be challenging to make informed financial decisions.
Create a financial plan that outlines your financial goals, including saving for retirement, paying off debt, and investing in your business. The plan should also include a budget that outlines your monthly expenses, including taxes, rent, and utilities. By having a financial plan, you’ll have a clear understanding of your financial situation, and you’ll be better equipped to make informed decisions about your money.
We actually go deeper at MVMT Life Planning and strongly encourage personal trainers to have a financial life plan – which is a more values-based & intentional version of a financial plan. We wrote about this on point #7 in this article titled, ‘11 Personal Finance Tips For Personal Trainers That Are Self-Employed‘.
Another common financial mistake that self-employed personal trainers make is not saving for retirement. Retirement may seem far away, but it’s never too early to start saving. Without a retirement plan, you may find yourself struggling financially in your golden years.
Start saving for retirement as soon as possible. Consider opening a retirement account, such as an IRA or a 401(k). Make sure to contribute regularly to your retirement account, even if it’s a small amount. The earlier you start saving, the more time your money has to grow, and the more comfortable you’ll be in retirement.
Another common financial mistake that self-employed personal trainers make is not separating personal and business finances. Mixing personal and business finances can make it challenging to keep track of your expenses and income, and it can also make it difficult to file taxes correctly.
Open a separate bank account for your business, and use it exclusively for business-related expenses. This will make it easier to keep track of your income and expenses, and it will also make it easier to file taxes correctly.
As a self-employed personal trainer, you’re responsible for paying your own taxes. Failing to budget for taxes can lead to financial problems down the line.
Set aside a portion of your income for taxes each month. You can use this money to pay your estimated quarterly taxes or to pay your annual tax bill. Make sure to keep accurate records of your income and expenses throughout the year, so you can file your taxes correctly.
For a deeper dive into budgeting as a personal trainer, take a read at one of our published blog articles titled, ‘Budgeting As A Personal Trainer: How To Manage Your Finances Like A Pro.’
Investing in your business is essential for growth and success. Failing to invest in your business can lead to stagnant growth and lost opportunities.
Create a budget for your business that includes investments in marketing, equipment, and professional development. Make sure to track your return on investment, so you can adjust your strategy as needed.
Taking on too much debt can be a significant financial mistake, especially for self-employed personal trainers who may have irregular income.
Create a budget and stick to it. Make sure to only take on debt that you can comfortably pay back, and avoid high-interest loans or credit cards whenever possible. If you do need to take on debt, make sure to have a plan for paying it back, and keep track of your debt-to-income ratio.
As a self-employed personal trainer, it’s essential to keep track of your business expenses, including equipment, training courses, and travel expenses. Failing to do so can result in missed deductions, which can increase your tax bill.
Keep track of your expenses using a software program or spreadsheet. Make sure to save receipts and invoices for all business-related expenses, and categorize them accordingly. This will make it easier to claim deductions on your tax return and maximize your savings.
Managing personal finances can be overwhelming, especially for self-employed individuals. Failing to seek professional advice can lead to costly mistakes and missed opportunities.
Consider working with a financial advisor or accountant who specializes in working with self-employed individuals. They can help you create a financial plan, manage your investments, and provide tax advice. While this may involve an additional cost, it can provide peace of mind and potentially save you money in the long run.
Being a self-employed personal trainer requires hard work, dedication, and passion. However, managing personal finances can be a challenge, especially if you’re new to the game. By avoiding these common financial mistakes, you can ensure that you’re on the right track towards achieving financial success and stability.
Remember to create a financial plan, save for retirement, separate personal and business finances, budget for taxes, invest in your business, avoid taking on too much debt, track business expenses, and seek professional advice. By taking these steps, you’ll be well on your way to achieving your financial goals and securing a stable financial future for yourself and your business.
As a final note, it’s important to remember that everyone’s financial situation is different, and what works for one person may not work for another. Therefore, it’s crucial to seek personalized financial advice and make informed decisions based on your unique circumstances. With a little effort and dedication, you can achieve financial success and thrive as a self-employed personal trainer.
Top 10 Most Common Financial Mistakes
6 Common Business Mistakes That Most Personal Trainers Make
For additional resources, you can always visit The MVMT Life Planning Blog, The Human Potential Podcast, and the Life Planning For Personal Trainers podcast.