Coaching Session with Emilie Mckay- How to Give Yourself Paid Vacation Time

4:28PM Oct 13, 2023

Speakers:

Krista Dicks

Emilie McKay

Keywords:

vacation

week

pay

work

saving

emily

money

day

episode

feel

savings

account

savings account

put

expenses

home

tfsa

divide

average

year

Hello radical massage therapist. Thanks for tuning in to another episode of the radical massage therapist Podcast. Today is a short 20 minute episode and it is a recording of me being coached by Emily McKay. Emily McKay is an RMT. And she's also the owner of the RMT printer, offering coaching services and lots of wonderful core courses both online and in person. And I really encourage you to also check out an episode that we previously did number 37, which is on effective networking. There is also a sustainable practice episode with Emily featured on massage therapy media. So this episode, I just wanted to share with you that you know, you're not alone, if you have no idea what you're doing with yourself as a massage therapist and being self employed. Sometimes we think the grass is always greener, right. And we might have friends and family members who work in the nine to five, and they work a desk job and they work in larger corporations and they have their weekends off and they get benefits and they get vacation pay. And sometimes it's really hard to navigate for ourselves as independent contractors if you're self employed. So this conversation is about how to pay yourself when you do want vacation pay, or how to give yourself a paid vacation. Essentially, I could say that a couple of different ways. And it's really me just clarifying with Emily. So I decided to save according to a coaching session that I previously had with Emily, I decided to save 4% of my take home pay for an entire year, in order to give myself two weeks of vacation. That would give me complete financial peace of mind. And I do like to overcomplicate things sometimes. So this conversation is really just me clarifying with Emily that I am on the right track that I am, everything I'm doing is going well. And I just also wanted to share that this is something that works well for me. And I highly encourage you to listen to the episode because I know you probably have questions or the what ifs or Yeah, buts. So this episode actually really helps clarify that Emily is a fantastic coach and puts everything into perspective very clearly. So I really hope you enjoy this episode. And if you would love to see more sessions like this, let me know. And if you'd love to get in touch with Emily, I will leave her contact information in the notes.

So I saw your little note, so you want to chat about the vacation pay? I do I want to chat about the vacation pay. You know, when I put it in my account how much I'm putting in my account, I feel like I have you know, I have an idea. But I just wanted to also like confirm with you. And then you know, being able to share this information just even with other like if a colleague asks or whatever. You know, because I think what happens is, especially for me, when you hear that you have to save like two weeks worth of your pay for a vacation. I mean, I immediately went to the full rate, like okay, so I have to make like 125 times like two weeks of massages. But that is not the case. No, no, it is not the case. Because that's not what you're taking home. I know you're your take home is something different. And that is what you are saving so that your take home looks the same on your week off. And two weeks is, you know, really, you need the full year of saving if you're only doing 4% to be able to use those two weeks worth.

But if you're using only one week, then you needed half the year to save that you needed the, you know, 25 weeks. Yeah, so I guess where to begin. So say you are like yourself gonna take a week off? Then you want to make sure yeah, you want to see how long you have been saving for? And what are you calculating that 4% on. So if you're calculating every week, and there's some fluctuation on how much you've made each week, then you really are going to want to average out what your your weekly take home was over the weeks that you have spent. So say you've done one full year of savings and you're ready to take two weeks off. Then you could just look at what your yearly income was for that year that your take home and then divide that by 50 weeks. So I always recommend going 50 weeks instead of 52 because you're not putting away savings on your weeks off. So your two weeks Don't count into your savings of 4%. Unless you're saving 4% on your vacation pay you're taking out or I don't know. But it's it's over the the 50 week. So basic simple math say you made a take home $60,000 Last year, you would have put 4% Aside of that. So over 50 weeks $60,000 would be 1200. And then 4% of 1200 would be $48 a week, you would have been putting aside. So after one year, you should have $2,400 in that bank account. And you go take your week, you take out half of that and you pay yourself from your your savings account, that 1200 And the next 1200 is there for your next vacation. If say you haven't done the full year yet, and you are looking at taking a week off, and you've had sort of fluctuating pay the past, you know, half a year and you have some savings. You can look at averaging out over four weeks, that usually is a good estimate. If you think you really had some light weeks in a certain month, then go the past six months of of what you sort of made and make sure you're dividing that then by 25. And seeing what's in there.

All right, that makes that makes sense. Yeah, so I've been saving my like the 4% from my take home. Like so like, taxes go and then I calculate my 4%. Yeah. And, okay, yeah, so that's not as complicated as I was making it. I mean, I was kind of averaging. Yeah, go ahead. It's averaging

out. And as long as you're not like if you're in a system where you're a corporation, and you're paying yourself as an employee, that would look very different, or like a salaried sort of position. But if you're your own sort of independent contractor is sole proprietorship, this is savings put into a savings account, that is after tax dollars. And it's not necessarily it's not a business expense, it is just you being wise with your money.

So we're averaging out the 50 weeks per client for for the clients that we see. I was also looking at only putting money back into the while I'm away again and making it more complicated, possibly it was like, but while I'm away, you know, I don't work Sundays or Tuesdays. So I wasn't going to add those into the mix. I'm currently taking Saturday's off. So like I was like, Oh well, it's even last days, so I don't have to put as much back but do you just recommend do the average and have that buffer you can have

the average of what you think you need that week, you could go down to a day rate so how you would you know do this if you were paying an employee they would get a 4% on your on their paycheck and keep that in a sort of reservoir and say they just needed three days off not a full week because they were leaving on a Wednesday and coming back to work Monday then it'd be averaged out on just the daily rate. So again, so going from you know, the if you did a full year, divide that by 50 and then divide that by five again to get a daily rate. If you're a five day week, you could also average it out over what you've normally worked because maybe you know we don't always work five days a week and then you can get a daily rate of what you would pay yourself on those days. You've had the savings and it's there I don't think you need to worry about oh well I'm not actually working the Saturday or what have you you've had weeks where you've worked a lot that now has been beneficial where you can now take a quote unquote longer vacation or a better paid vacation because you've put in the time earlier and have put the 4% on that saving on that income we're just

kind of looking at like the average of income because again part of my complicated brain was also like well and like my essentials day to day are like this much of my budget so maybe I only need to again pull this you know I like ultimately like if I give myself the take home pay I still divide that take home pay like it's you know, between my vacation pay it's between my TFSA or RSP you know I've got like a percentage in there for fun money so but I don't need because that's already been gone from the first time I divided that so it was like I could give myself I should be should I be giving myself and last because like

you could like I see where your thought is going and maybe for people listening where that thought is is that on your week off. I If you aren't earning that income, so you're not necessarily wanting to do the same with it as your take home, as in every week, you don't need it, put your own 4% vacation and pay away that week, because you're not earning that money, you don't need to put your TFSA money away, because you're not working that week you're on vacation, I would still take that same take home, because a vacation is going to cost you that vacation itself. You know, you have probably extra expenses on food, you have some hotels there, you have all these other things that maybe you've been diligently trying to save, or I've already paid off, because you've pre booked. But there's always this other flex money on a vacation. So you could if you want to just take do the full take home. So you have that breathing room. And at the end of vacation, if you say Oh, I actually didn't need that full amount, then you can divide that into the savings accounts and other accounts that you didn't need to contribute because it's a vacation week.

Awesome. Yeah, that'll that'll make sense. Let me see if I had any more complicated questions here.

I love it. The flip side is you can still contribute to those if you want to. Right, you know, like just at the beginning, you know, you take that and you that's your pay for the week, and you do it the same way you already have. And you put that 4% Back in vacation pay and you do all that and you you don't need as as much. Yeah, I

mean, I like the idea of like the flex money? And do you usually put that into your account then when like st just before you're gonna go away? Or do you save it for like the payday the normal payday that you would would get with with yourself there?

Yeah, so it all depends on your own personal cash flow, you are the you are the business owner. So if you want that as sort of that flex cash money, then pay it to yourself early, that is perfectly fine. You're the business owner, you can manage the money as you see fit. If your cash flow is healthy and fine. And you know, you know that there's not going to be things coming out of the account during your time away, then do it on the regular cycle too. So it all depends on your own sort of comfort level with that if you know, bills are going to be coming out and you need the money in the bank while you are away. And you don't want to have to think about that, who is the cash there, I'm supposed to be away, I shouldn't be engaging with my business right now. I should have stepped away, it might be better to have it in the accounts you need it in. Especially if you are using the same accounts for you know, spending on your vacation, because that flex money again might be something you need for that time. If payday is falling when you are away, that's also something you'd want to consider. So if you're in control of when you can move that money, move it ahead before so that you're not away and having to do transfers and things like that. The whole you know, wonderful point of taking this time away is to be away, you're getting money, you've put the money aside, your cash flow is going to be good. And you don't have to think

right okay, that was most helpful. I mean, that 4% I mean, it always never seems like a lot like it's only 4% of your take home and you kind of just put it in your like I put it in a high yield savings account and then but yeah, it's been nice to see it grow to two that I can walk away with and know that like my expenses are covered for that for that week. So that feels really good.

Yeah, I want to know so because it's been a year over a year since you've been doing it

I feel like it has been a year because yeah, when when are you first introduced me to it was probably about a year ago.

So yeah, so how's that felt sort of every week? Like how has it felt daunting to move that type of money over has it felt like a big a lot and you're you've noticed the pinch or is it feel small?

No, no, I mean if it does feel it feels almost too small that I can understand why people might not even do it because they don't they don't see how that is going to turn into two weeks of vacation. You know, sometimes I see a mobile client and it's one a one hour treatment and I will still transfer that like $2.70 over into that account. I like doing that anyway like I like interacting with my account putting everything in the different like savings accounts that I have or or labelled like goals. So I like doing that but I can certainly understand somebody doing looking at $2.70 and being like really, like that's not worth it to me. But then you get like a two week paycheck and it's still like it's still not significant when your taxes you know are like they go and you're like wow that would have been nice if I could put that in my in my staycation fund. But it but I but it does add up over time and then especially if you are putting it in a you know, a little something with a little bit more interest on one of those accounts in it. It helps a lot. I put it out of the way I put it in another like I don't I don't have access to it. It's a couple steps. For me to get it back into, and I honestly haven't needed it. So it's been, it's been good. I like that kind of comfort when you're when you're going to be away. Yeah,

it is, it's a very small amount every week, and it can feel almost insignificant depending on Yeah, what you've done in that week and, and what's going over. But it's, it's really taking advantage of time. And that every week you're doing it and that's going to accumulate into a nice amount so that when you are on vacation, when you want to be resting, you're not worried about what that vacation is costing you, and how you know, those regular day to day bills are going to be paid because you have already pre planned this. It's also one of those things where if you had waited, then the amount becomes so much more bigger. Yeah, you feel like okay, yeah, $1,200 right now would be hard for me to save, because that's a full week of pay. Rather $2 every treatment seems so much less, it's, you know, a toonie here and there, you know, put that in a jar, and it's there. He also as you said, yeah, you take advantage of any sort of interests, on on savings. So that's always a wonderful advantage. That's free money in your account. If Yeah, you can always talk to your financial advisors to see the best way to to be saving that, you know, if you are wanting to gain a bit off of your vacation pay, it could be something but it is such a small amount. I wouldn't say it's worthwhile to invest it in in something major, you want to make sure you have it when you need it on vacation. Yeah,

no, I do. I agree with that. Like, it's not completely away away, but it's not part of my main my main access to, you know, to my expense expenses.

Yeah, which is really good, too. Because it might feel so tempting to just reach into there and you're thinking, okay, you know, I kind of want to take a half day, you know, just to do this, maybe I can reach into my my vacation pay. But see what that is for you. You know, and I think we mentioned this last time is, as you're getting used to this, you can increase your percentage, it's 2% for every week. So if you want to start taking more time off, then you can increase to 6%. And that could be something keep in mind that you know, there is sort of a trade off in there. I don't know the exact numbers. But if you're not paying yourself vacation on the vacation pay, the more 2% you add, the less your grand total is that makes sense. So at the beginning, say you take home 60,000 a year. And you decide that you don't want to do 4%, you want to do 6%, you want three weeks vacation, well, instead of dividing it by 50, you'd be dividing it by 49 for your average, because there's three weeks now that you aren't, you know, actually working. So that does change sort of what that percentage is, but you know, the percentage is percentage, so work your butt off. All those other weeks, you're gonna have the money there for when your vacations.

Yeah, I mean, and part of what I like about it, is that I don't feel that that need or pressure that I would normally have to make up the hours. I mean, certainly it's an advantage in our profession to make, you know, to make a little bit extra, or it's not even making up a little bit extra really, it's just working harder pre or post your vacation, and then really wondering if you even had a vacation. It's

taking those 20 clients you saw and then adding five the four other weeks around your vacation. Yeah, like Yeah, it doesn't feel like it's it's a vacation. So this way, it's good. Yeah. And that's the thing, you want to make sure you, you have the time off, and you feel like you're actually enjoying that time off and not just working like a dog up until it

Yeah, like I've definitely had that like old mentality. And it's like, oh, well, I'm taking next Saturday off. So maybe I should work this Saturday to make up for it. But then like, fortunately, like and again, it might all play out. And I do need to add some days but and it also just depends on the client as well. But if I'm looking at it from an income perspective, I'm really trying to just trust that I'm I'm saving for my vacation days, and I don't need to make it awkward or come in on a day that I was kind of mentally prepared to have it off and now I'm working and and that kind of thing.

Yeah, it's the way I like to try to frame it for people. And this is hard, I think in our industry, but try to look on bigger scales of like the month, the quarter, the six months the year and see that rather than the individual day I feel people get so fixated on that individual day. Oh my goodness, you know, one client's not showing up. That's how much of my income for that day. You will make that up at one point in the year. How much do you need to make in that year and that's where that See, the savings comes in. Also feels easier is because you're averaging it out over a year, you're not having to do it just in that week in that moment. That day, I need to make up what I lost yesterday, you'll find time you will make it work. There will be busier weeks because that's just the nature of our business. But then it'll it'll even itself out for those quiet times. And I think that's important to see.

That's it from that's, I think that's that's everything, then I know, I appreciate your time, because just Yeah, giving me some of the the less complicated answers that I was trying to, I was trying to make it like a daily, you know, a daily thing like, you know, okay, well, I normally see five, but you know, maybe I'll just knock it down to four. Because some days I see five sometimes and sometimes I see four. And then I don't have to give or take so much out of my vacation pay and it was all a bit and I only need 52% for essential. So I'll only take 52% of that day. I was it was a whole it was a whole like beautiful mind on on a wall situation.

But I guess the thing is, is that vacation pay is there for you to take I think that's important to think like it's not you're not taking from your other savings. Your other savings are there for when you need to this is this is for vacation, like you're using it for what it's supposed to be there for. You know, of course, like don't take all of it if you've saved two weeks, and it's going to quit doing one week. Right? You know, obviously make sure you're calculating it right. But yeah, like it's, it's there if you're using it what it needs to be used for cement. Hey,

anything Christians know I think that's, that's everything but yeah, it's been it's been great. And I mean, like from our first conversation, like, I mean, it's, it's like just from, from where I was to like, yeah, where I am, um, now like I'm certainly I'm feeling a lot more peaceful in my, my clinic space and with, you know, the work that I'm doing so it's good. Good.

Excellent, Christa. All right. Good to see you all send you this recording.

All right. Thanks so much, Emily.