Money stress is killing your creative spark and it’s time to break the cycle. Pat Miller brings in legendary business author and speaker Mike Michalowicz for a show-stopping episode that will change the way you think about personal and business finances forever.

Episode Highlights 🎤💡:

(06:10) - Financial independence vs financial freedom

(12:03) - The personal-business money trap

(26:54) - A quick 24-hour money win you can try

Connect with Pat Miller ⬇

LinkedIn | Website

Connect with Mike Michalowicz ⬇

LinkedIn | Website | Instagram | Check out his ✨NEW✨ book, 'The Money Habit'

Hi, I'm Pat Miller, and this is The Professional Photographer Podcast. Money. Don't you love money? I love money. Money, money, money, Mr. Krabs. I love money until I hate money. And if you're a small business owner, you know exactly what I mean. One day, you're Mr. Krabs and you're rolling in money, things are great, and then the next day you get the credit card bill or the client cancels or the thing doesn't work or your car blows up, and things are a problem. Now, where it really gets weird is when you're talking about your personal finances because it's easier to manage your business finances because it's objective. It's your business. These are business expenses. But when you're talking about yourself, your family, tuition, the groceries, the mortgage, the car payment, can you feel that inside of you getting more and more tense? Well, today's guest, Mike Michalowicz, former keynote speaker at Imaging USA, has written a new book to address just that thing. It's called the Money Habit. It's out now, and it's here to teach you how to handle money in your personal life. If you're a Profit First fanboy like I am, this book is almost part two. What do you do with the money when it comes home to you and your family? It's a great interview. We're going to talk about AI and what he's seeing as well. We're going to talk about his new podcast and really just catch up with one of the most entertaining guys that I know, Mike Michalowicz. He's standing by. We'll talk to him next. What a treat. Mike, welcome to The Professional Photographer Podcast. How are you today?

I'm doing well. Pat, it's always a joy to see you.

Man, it's great to see you as well. And I have the pleasure of learning from you for many years and talking to you before having you at my events, but unfortunately, not everybody has had the same experience. So this is the first time they've seen Mike Michalowicz, tell them who you are and what you do.

Yeah, so this is what I look like. I know it's not anything to rave home about. Yeah. So I'm an author guy thingy and devoted to entrepreneurship. The little bit longer backstory is I've been an entrepreneur my entire life, ever since finishing school. And I've been through the ups and downs, more downs than ups, and fell in love with the process actually around it. Why I became an author, starting now, 17 years ago, is I wanted to explore every element of entrepreneurship I didn't know or didn't master, which is basically everything. And so I've written books like Profit First. I presented at the PPA on the Pumpkin Plan and Get Different. And for the first time ever, now, I'm also writing for the employees of these businesses on nailing their own numbers for themselves.

And that's where I want to talk about first is this Money Habit. The Money Habit, which is now released. Like you say, you've followed your curiosity to learn all of these different subjects. Why are you going to a book that's not just for entrepreneurs? It's for people that just want to handle money better. Why did you go there?

I never thought I would until I got a call from an entrepreneur. And the story is kind of funny. His name was Tommy, and he owned a garage door repair service and installation. And he said he used Profit First, my book for business finances to great effect. He'd become permanently profitable. He said, there's a new problem. He goes, "My employees are coming to me asking for raises or even to borrow money because they don't or they haven't mastered their own numbers because can you teach Profit First to them?" And I've always on the back of my mind that Profit First can be extended to individuals. So I said, yeah. I said, what do you got, five or six employees? That's what I was thinking. He goes, no, no, I got 900. 900 employees. So it's called A1 Garage Door Services. It's a massive entity. They have national services. And the first experience was working with a batch of those folks at his company to teach them the Profit First method translated to personal finance. And what happened in a very short period was they achieved a level of financial acuity they didn't have before. And this confidence brought about the confidence in work because they don't have to worry about money. They can come to work fully present. And they stopped feeling they need to ask for a raise. They worked to earn the raise because they understood money. And so it serves the entrepreneur, but it absolutely serves the individual. And that's why I wrote it.

What's the overall feeling about money in society right now? The entrepreneurs, but also the employees. How do you feel like people are feeling at this particular moment?

Well, you know, we're in an economically volatile time, and it seems like these happen with some regular reoccurrence and the way out of it, the default belief is I just need to earn more, I need to work harder. And there's more and more sacrifice. Now, couple that with the rise of new technologies, AI being the current one, but there's other stuff coming. This ain't the end of it. Quantum is right around the corner. It looks like. That there's now this kind of fear response. And some people are just kind of throwing their hands up and say, I guess I'm done. I'm going to get rolled over by the steamroller. Other people are scrambling. And I would suggest there's maybe a third solution. And what it is, is first understanding how you behave as a human and leveraging that as opposed to trying to fight it and try to become something you're not. I was saying I teach in Profit First, but translates to the Money Habit is don't change who you are, channel who you are. I think we're in this great situation where we can understand and investigate ourselves and master our own behaviors, or at least understand them and channel them to the outcome we want. And specifically with money, with the Money Habit, what we're going to do, I teach, is observe how you manage money at your bank level and use that to your advantage. And while you may not become financially free, which is this, I think, how I at least define it as have such wealth that you can do anything you choose in a whimsical moment, yeah, I want to go to the Caribbean islands on a jet. That's financial freedom, where you can just do whatever. What we're looking to achieve is actually financial independence. And financial independence is where you're not beholden to your money, where money doesn't dictate your sensations, your feelings, that you become rich inside because you have control and authority over it. And I believe that's the major foundation we need to achieve. And then maybe you do achieve financial freedom. Maybe you earn income that supports that whimsical sensations you have. But we first need to achieve what I call financial independence. And that's what I hope the book does for folks.

The name of the book, I think, is really strategic, Money Habit. And you talked about the word behavior. Money seems to attract blame for all of these bad habits and behaviors that we pick up. So if we're better with understanding how money moves, would it be easier to make better choices or money gets easier when we are making better choices?

Money becomes easier when the choices are made for you and subconscious understanding becomes conscious awareness. So let me kind of unpack that. The behavior of most people is to log into their bank accounts to see what kind of balance they have, and they make decisions. The problem with that system is all the money is glommed together. You know, the household income comes in. It may be an independent person, one person, or maybe multiple people contributing, but there's money there. And we look at it, and then human wiring kicks in. It's a thing called the primacy effect, which means we put most significance in the immediate and less significance in the future. Well, I say to myself, oh, you know what I want to go out to dinner with my wife. And so I log into the account, I say, "Oh, there's enough money there. Hey, you want to go out to dinner tonight? Yeah, let's go." Then a few weeks later, the mortgage is due, and I'm short by the cost of that dinner that I didn't account for it. We put significance in the moment, and we ignore or at least can't contemplate the future. So what the Money Habit does is it acknowledges that among other elements of human wiring. And we set up accounts at your bank level to intercept. It's called a commitment device. But you log into your bank account and you see what money's available, for what purpose. So you'll have one that says dinner's out, and you'll have another one that says mortgage. And you may choose at some point to pull from your mortgage account. Say, I want to go down to dinner, and there's no money anywhere I have to pull from my mortgage account. But now, this subconscious behavior that's crushing you now becomes a conscious awareness that's not good, but you cannot deny it anymore. So you become aware of how you're moving money. And it's also human nature to work within the limitations or confines in front of us. So the fact you label an account with a certain name, you're likely to spend much more prudently, or at least in accordance with that. There's a very popular personal finance author who I love, Ramit Sethi. He wrote I Will Teach to Be Rich. And I literally was talking with him yesterday, and he said, he goes, "Mike, automation is the new discipline. Kind of like, you know, 50s is the new 30s." Because I'm in my 50s, I like to say that it's really probably the new 45s, but I'll say 50s, the new 30s. And automation, which can be done at your bank is the new form of discipline because it happens without you needing to participate. So we automatically allocate dollar amounts or percentages to these different accounts to fund them. And you cannot–you can override that, but. But you don't have to worry about it. The allocations work accordingly, and then you start working with the confines of it. So the opportunity here really is to leverage human nature and to design a system that works with us in our worst case scenarios. When we are desperate and overwhelmed and exhausted and tired, we need a system that can stand up to that scenario. Not the best of us, but the worst of us.

In my opinion, that's what made Profit First so magical. It was a provocative point to take your Profit First, but then the system, so we didn't have to think about it. When money comes into my business, I do A, B, and C without giving everything away. Will Money Habit lead us down a similar decision tree of what to do when money shows up?

Exactly. Now, there's some fundamental differences between it and Profit First, but the foundational components are the same envelopes, which is accounts. Allocations, which is carving up that money as it comes in. But there's one thing I do want to reveal. I think that's very important, and I have no problem sharing all of it. But one of the big reveals is in personal finances, we have a component that I call seasonality that we don't have in business. Business has volatility, but not seasonality. What I noticed, Pat, as I was writing this book and interviewing people codifying the system. I would ask them, hey, tell me about your situation. And many would say, "Well, I'm in debt." Okay. It becomes–when you say things like I am in debt, that is a permanent state. You know, some people say, I'm financially free. That is a permanent state. And maybe it's a better one, but still a permanent state. I said, really? Finances shift and we need to have an identity that allows shift, too. So instead of saying, I'm in debt or I have debt, I say, you're in the recovery season. Now, the thing we know about seasons are seasons are temporal. They change over time, and they roll on to different seasons. So when people say I'm in a recovery season, it's an acknowledgment that they have a responsibility from the past they're recovering from, which is debt, but also that it has a lifespan before you enter a new season. Even the labels we use give us a different perspective of ourselves. It gives us, in this case, even hope. So that's one of the key components, and there's others in there. But when it came to individual finances, I had to address something that the entrepreneur doesn't necessarily experience, which is these kind of rolling seasons where the entrepreneur is much more volatile. There are peaks and valleys. It's panic to pleasure, like every minute for an entrepreneur, where if you're on a more predictable income, more of a rolling wave.

Let's talk about the entrepreneurs for a second, because this is The Professional Photographer Podcast. We've got a bunch of photographers that are viewing this particular episode. You've talked on the personal business money trap before. Can you explain what that is and how it's unique to business owners?

Yeah. And the photographers right now that are watching this, like, I don't know about Mike's lighting. I think the key light needs to–I can just feel it. So the entrepreneur, the business trap you want to talk about?

Yeah.

So I think what we do is we start a business based upon a skill set or talent we have. So I'm really good at taking pictures. I'm a photographer, so I'm going to start a photography business. That does not mean you know how to run a business. Those are two different things. You may be technically skilled, and you may even be able to have an apprentice learn from your skills, but you need to garner and gain new skills yourself. Because you're great at taking photographs does not mean you're great at running a business. Not even close. So the business trap is then to double down on our talent. I was just talking with a surgeon just a few days ago. He does plastic surgery and cosmetic stuff, and I was talking with him, and this guy knows his stuff, and he has a business that is not necessarily going to make it. And that's why we were talking, because he does not know how to run the business. So what does he do? He double down on surgery and says, I need to make more money. That's going to be the solution, which actually further aggravates the problem. I think the number one mistake photographers are making is they say, my business isn't healthy, and therefore, I need to sell more. The problem with that is sales is obligation. So say I'm your photographer, Pat. And I say, hey, we can do a shoot in my studio. We can do some great portrait stuff. Are you interested? And you say, yes, I engage you, but I'm not making enough money, I believe. So, therefore, I find another client and say, hey, I can do some shoots for you. Let's do some outdoor scenery. Oh, I can do some pictures of some of your gear and equipment for your website. And what happens is, the more I sell, the more obligation I have to more people, which actually results in more stress on me and more variability in my offering. And therefore, it triggers overwhelm. And now we entered the state of, I just need to sell tomorrow because I don't have money coming in. It's this panic and scramble. That's the trap. I call it the survival trap. It's this escape from the moment and survive one more day. What we need to do in our business is identify what does the business need next that is the best service to business. And how can we solve that, either personally or by hiring someone or bringing in a consultant or something like that? But what is the problem that needs to be fixed? The quick analogy is there's a chain between me and you, Pat, and our job is to make the chain stronger. There's always different links. The natural propensity is for us to look at the links in our hand and say, oh, I can fix these. They're right here. They're accessible. But the chain will continue to break just as easily at the exact same point. Which is the weakest link, no matter where it is? Some entrepreneurs just go sequentially. Here's the next one I see. And the next one, we just randomize it in certain cases, and we get frustrated. The chain keeps on breaking. It's because we haven't figured out which is the weakest link yet. And if magically or accidentally we fix the weakest link, all of a sudden the entire chain is stronger to the next weakest link. And we think we're geniuses because we stumbled across something and thought it was very specific and very accurate of us to determine that we are really geniuses. So the lesson for photographers is you got tons of things going on, and trying to fix those tons of things is the mistake. Instead, we take a step back and say, what is the one most important thing to be fixed? The weakest thing. You fix that, and your entire business leaps forward. And then we identify the next weakest thing. Fix that, entire business moves forward. That's the proper sequence, and that gets us out of this trap of surviving.

If we think about all the books you've written and what you just shared, that's a counterintuitive thought. Many of us think: I have a problem. Sell more things will be fine.

Yeah.

Do you think it's that? Does that come to you naturally, being counterintuitive in the way that you look at a problem, or is that just your experience talking to you and you come at it that way naturally?

It's a tool I use, and I'll tell you what the tool is. But first, it's funny how many people come to me and say, "Mike, which book of yours should I read now?" And my instinctual response in the past was, well, whatever my newest book is, oh, you gotta look at that different. That's the one. And now I'm like, oh, that's a horrible answer I'm giving. When someone says, what book should I read next? My response is, well, what's the problem you have now? Because that's the book you need to read next. Like, what is the biggest problem? And I did write a book called Fix This Next, because if you don't know how to identify your problem, you need to identify what to fix. That's why I wrote that book. So that's the answer to that. What was the other part of the question?

Just your nature of looking at something counterintuitively.

So the nature of looking at stuff. So we identified as we all have desires. And so we'll use my real Profit First around this. I asked photographer–I spoke at the PPA before–why did you start your business? And it's consistently top three answers are as follows: Financial freedom. I don't want to worry about bills. Personal freedom. I want to have flexibility. And impact. I want to serve my community, my customers, my family, you know, impact. And it's not always in that order, but it's always those three. And I say, well, what's the outcome? What are you actually experiencing? "I'm making no money. I am desperate to make money. I have no time. All my personal freedom is gone. And impact, forget about it. I'm just trying to survive, man. Just trying to survive." When the desire and the outcome is not matched, inevitably it's the method in the middle that's flawed. So that's my model. I call it the DUMBO model. D, U, M, B, O. And so desire, method, outcome. But the U and the B have elements. Sometimes people are using the wrong method. So, I believe that taking your profit last is the worst teaching on the planet. So we're told, you want to be rich, take your profit last, and you'll have that and no one does. And so I changed the method. I say, take your profit first. The U is sometimes you have the right method. You just don't have an understanding. We're not skilled in it. So that's the classic. You come in as a technician, you're a great photographer. You don't know how to run a business. You got to go to business school. Now, I'm actually not a proponent of traditional schooling, but education, Pat, go to your conferences. Like, that's a great learning platform. We were talking about Carl Gould. He's one of my favorite speakers. Not just because he's so dynamic on the stage, but the guy teaches stuff that you can deploy immediately. He's amazing. So we have to learn. That's understanding. The other part about the method is beliefs. If we don't believe in the method, we're going to be the biggest impedance to its results. So some people here take your Profit First. Like, you can't do that. That's so stupid. You can't pay yourself first. No one does that. And if you believe that to be true, you're going to be an intentional barrier or subconscious barrier to the results. So we got to change your beliefs. That comes through awareness, the willingness to challenge yourself and say, perhaps my belief is not correct. And then that's where I focus. So this kind of contrarian mindset I have isn't just to be the contrarian. I consistently look at desire and outcome. When there's a mismatch, I always look at the middle and say, what's wrong in the middle? And try to fix that.

Now that you've described that, and as I've been reflecting on your library of books that you've written, the provocative point of Profit First and the Money Habit, making sure that things are good at home and you are on financial footing that you as an entrepreneur can feel confident about, it seems like that is the final book in the trilogy, if you will, of yes, I have a business. Yes, I believe in it. Yes, I know how to run it. But it still doesn't feel complete until my family and I are good. And I'm sure that that was intentional on your part, but I never really realized that that might be why the Money Habit is so needed.

Pat, you are a stud. You nailed it. You freaking nailed it, dude. That's exactly it. Here's the reality. If you come from a position of financial security at your home and you start a photography business, that's a flop financially, your business is going to leach off your home and pull your home down. Now, the reverse is true, too. You can be a financial disaster at home, and your business is crushing it. Your home will pull down that business as it leeches off of it. These two work as perfectly meshed gears, and that's why we need both. It all starts with the entrepreneur. You got to nail them both. And then, over time, it's your colleagues that need it too.

So if you're a Mike superfan like I am, get the Money Habit. It's out now. Congratulations on the release, Mike. Super excited. Now, while I have you, I want to know, I'm dying to ask you this question. What the hell is going on with AI? What are you telling your clients right now? And just tell me what you're seeing when it comes to AI implementation for small business owners like us.

Pat, if you could throw a softball lob pitch to me. You just did. Thank you. Thank you. That was a great pitch gesture.

Thank you.

Thanks for doing that. The reason it's such a pitch is because photographers know this inside out now. Maybe not modern photographers. Past photographers do. It happened in the late 1800s. I want to say it was 1885, and I'm sure someone listening in will say, no, it was 1887 or whatever it was. But Kodak, Kodak introduced the commercially available camera. The camera already existed as an invention, but now it became available to regular folk like you and me. The day prior to that introduction, artists who were paid the most for their work were commissioned on doing portrait work. So the more specific I could be in my artwork, the more accurate I could be depicting someone, the more I was paid. The day after the camera was invented. Because the camera, of course, could do a superior picture. It could do portrait art, if you will, perfectly. The abstract artists came about. It was the rise of a whole new generation. And so I think the fear of AI is, ugh, this is going to take over everything. You know, people don't need to come to a photographer anymore. Just throw your crappy picture from your iPhone onto ChatGPT and it'll take out all the– it'll make you look amazing. I think the opportunity here is to go abstract. What can happen now? How can AI be your all, to take care of the fundamentals and. And how do you play at a whole new level game? Pablo Picasso crushed it by not doing portraits. I think we can do the exact same thing as photographers by having AI take care of the baseline and then we live at the whole next level, whatever that may be. It's abstract. I do know that for sure.

I'm really fascinated right now by automation and some of the background tasks that AI can take over. I totally agree with you that getting into AI photography is just a slippery slope, but using what it's really good at, I think, which is digesting information, maybe agentic behavior, which is this white whale that we're all chasing, of course, but that AI agentic automation that will help us take care of some of the busy work so that we can go be the artist. Are you seeing that with any of the companies you work with?

Yeah. So I, I'm involved in multiple businesses, but the corporate business is my own brand. And so I have in there an assistant, her name is Erin. She's amazing and I would say 60% or more of her time is simply scheduling travel. I travel so much and I cannot wait for the agentic component that manages scheduling. And we had a conversation about it. She's like, but Mike, that's what I do. I'm going to lose my job. I said, no, no, no, no. You're going to have an "employee." I'm doing air quotes around that employee that works for you so you can do a greater job. You become a manager now of all the agentic technology we have. We as an organization can play 100 times bigger and better because that work, which is now considered trivial because the computer does it, doesn't need to be done by you, because now you can do something which is magnificent. I think that's the future of us to leverage the agentic movement.

Yeah, I think that's going to be a role in almost every organization that exists. A director of bots, if you will.

The DOB. I'm a DOB, director of bots.

It'll have a fun name. But that's something we get to in a bit.

CBO, Chief Bot Officer.

Yeah, Chief Bot Officer. I kind of like that. Okay. Talking to you was fun. I love hearing you in podcasts. You've got a podcast, Becoming Self-Made. Tell us about it.

I don't know if you saw my Home Alone visual I'm doing right now. That's how excited I am. That's how excited I am. I have a new podcast. I have been podcasting myself for about two years. I've been doing a little bit of here and there, but not a seasonal type of show or so with seasons. Relay Financial is a banking platform I've been working with for years. I think you may have done some stuff with them.

Yeah, absolutely.

I love them. And just a quick plug. If you go to banklikemike.com that brings you to their site because it's the bank I use. And they came to me and said we want to serve entrepreneurs in a way through media that we haven't before. Would you want to host a podcast? And so we came together a year ago and this show is me going into celebrity entrepreneur businesses. So 1-800-GOT-JUNK. I was just out in Vancouver. Mutual friend Don Miller, the author of Storybrand, that's an explosively growing company that's leaning into the AI movement more than any other author-based business. I know the Savannah Bananas, of course, like, you gotta have them. These are all businesses we met with, and what we explore is their story of how they got to where they are. But not in the traditional like, oh, you did X, Y, and Z and you're amazing. It's like, I want to know the struggle points of the journey, and I want to know the struggle points now. And what you're going to hear is these are really real people in the moment, and just because there's some more zeros in their numbers, they are having struggles, perhaps, that you can relate to. I think the journey of the photographer, the entrepreneur, the professional is less daunting when you know you're not going alone. And it's less daunting when perhaps some folks that you admire from afar, you realize are doing exactly what you've done. I think it's so inspirational. I think it's raw and real, and you're going to see us talking about things that none of these guests have spoken about before on any other show. So it's called Becoming Self-Made. Powered by Relay, the company and hosted by me, Mike.

Where can we get our hands on it?

Your favorite podcatcher. So wherever you listen to podcasts, but if you do, please do subscribe that supports me and helps get the word out.

The Money Habit, we're really excited for the release, and I understand that you have a quick win for us, something that we can start doing today from the book to show us that whoa, Mike does get me, and this is something that I can look forward to as I consume the whole book. So give us a quick win that we can start doing today so we can understand the power of the Money Habit.

This will transform your personal finance finances, I promise you, within 24 hours. If you do it, it's a couple steps. First is an analysis of yourself. And there's a real simple analysis. What financial worry do you have most frequently? Or if the word's not worry, maybe it's the wonder. What financial wonder do you have most frequently? Here's what I mean. Are you worried if you can pay the mortgage or the rent at the end of the month, that kind of rings in your head? Are you worried if you can pay groceries, maybe something more immediate? Or do you wonder if you can go on that vacation you've been dreaming about or buying that property or that car or whatever it is? The thing that you consider the most financially and puts the most stress on you, write that down. Step two is go to your bank of choice. If you love your current bank, go with them. If you want to find an alternative bank, Relay works with business owners are amazing. Go to Bank Like Mike, and set up an account with the name of that worry or wonder. So let's just pretend my biggest concern is, am I going to cover the mortgage this month? I set up an account called the mortgage. Nickname it accordingly. Next step is you're going to allocate the proper amount of money every time you earn income to assure that that mortgage or that wherever that worry or wonder is, is taken care of when it's due. So if my mortgage is $1,000 a month, every week, I'm making sure $250 is going in there. Now, here's the magic of this simple system. You have alleviated in a worry, a financial worry, because your assuring is taken care of, so you'll feel that stress level reduce. But secondly, you will also have a conscious awareness of spending money because the other kind of big pot you've been pulling from will have less money because you've allocated it to, in this case, your mortgage. And it'll force you to make conscious decisions now. Maybe we can't afford that dinner out. Maybe vacation has to be delayed, but you have to now consciously consider it. So it's the one account, one worry alleviated technique. And you can do that all within 24 hours. You ain't gonna get rich overnight. That's not the plan here. You may not even achieve financial independence, but you're not the first step in its pathway. You'll feel lighter. You'll feel more in control. And that's the beginning of you taking authority over your finances.

We look forward to learning more with the Money Habit that's out now. Mike, it's awesome to catch up with you. Thank you for joining us on The Professional Photographer podcast. I appreciate you coming.

Appreciate you.

Thanks so much for tuning into this week's episode of The Professional Photographer podcast. Do us one more favor, will you? Make sure you leave us a comment on the episode. Tell us what Mike said that made you go, oh, I hadn't thought of it that way. Or what was your highlight or favorite moment? Both of those things help me and the team know what we're doing right and what we can do better. Also, of course, like and subscribe because that gets me a cookie. And as you've heard me say, I like cookies. The other thing is, if you're not yet a member of Professional Photographers of America, you're missing out. PPA offers incredible resources like equipment insurance, top-notch education, and a supportive community of photographers ready to help you succeed. It's perfect for photographers who are serious about growing their business in a sustainable and profitable way. At PPA, you belong here. Discover more about membership at ppa.com. That's PPA.com. I'm Pat Miller, founder of the Small Business Owners Community and the host of the show. Thanks for spending some time with us. We'll talk to you right here next time. Take care.