Flex Your Financial Fitness
“You’ve got to tell your money what to do, or it will leave.” — Dave Ramsey
As a couple, my husband Chris and I have a unique perspective on managing business. Chris owns and operates Ready. Set. Game in Indian Harbour Beach and knows the daily grind and sacrifices of working for oneself. I, on the other hand, manage an organization whose partners are comprised of 80% “small” business. I thus fully understand the issues many of our partners at the Cocoa Beach Chamber of Commerce face on a personal level.
Business owners and entrepreneurs, take heed. I would like to impart the knowledge so graciously afforded to me during a recent sit-down with Senior Partner and Financial Advisor Beth Courtney with Financial Cornerstone Group.
- Secure a great accountant AND a great attorney. It’s a huge mistake to step over a dollar to get to a dime, and paying for these services up front will lead to financial peace.
- Pay yourself FIRST! Create a solid budget so you have a baseline, then ensure you personally and your business save 10% of net income each pay period. Entrepreneurs can get caught up in ensuring customers and employees are happy, sometimes putting themselves last.
- Make Social Security the icing, not the cake. There is concern that Social Security will disappear by the time Gen Xers reach retirement age. Theoretically this benefit could be reduced, but it is still expected to remain in some form. Relying on it, however, is the wrong mentality.
- Know the difference between Roth and traditional IRAs. Tax me later (traditional) versus tax me now, and then never again — including growth (Roth) are both viable retirement savings options. Meet with your financial advisor and make a plan.
- The opportunity to save through your business exceeds individual opportunities. You can only save up to $6,000 in an outside Roth IRA account (or $7,000 if age 50+) but you can save up to $19,000 via 401K through your business (or $25,000 if age 50+).
- Have emergency funds. Before investing personally or for your business, it’s essential to have three to six months of expenses saved. Liquidity should be your first priority and avoid raiding your 401K.
- Succession plan. If you love your loved ones, you must plan for when you move on. Identify someone who would continue the business OR determine that your business doesn’t need to continue, and use life insurance as your tool to replace lost income/protect those you leave behind. Also consider disability insurance — vital should you become severely ill or injured and unable to work.
- NEVER commingle funds. Keep business and personal finances completely separate.
- Be intentional and understand compounding. The value of compounding is so important, especially for younger people. If you or your business were to save just 10% from each paycheck, no matter the amount you’re paid, simply through compounding, it’s possible to retire a millionaire!
I find this last point to be the most inspiring. Whether you own a business, manage one, or are a part of one as an employee, be intentional. Your financial goals are closer than you think.
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