I always dreamed of having my own business. At a young age, I sold Girl Scout cookies, kool pops, and helped my dad with his barbecue business. During that time, I had no idea about the financial side of the business. I knew I had a product people wanted and they would pay me. I know many feel the day way I did when I was a kid, but that is not reality.
When I did start my business, I didn’t have things together. I opened a business account and got a DBA. I had no one guiding me through the process to make me understand the importance of credit, savings, and conducting my business the right way.
The following steps will allow you to give you the support you need, strengthen your weakness, and set your business up for success.
1. Hire a financial coach to help you with your personal/business financial life.
I learned when I started my business and helped my own clients, they/I didn’t have my financial life together when I started my business. At the beginning of your journey, you are excited you made your dream come true, but not caught up in the details. One thing I learned people don’t want to talk about or share the mistakes they have made when it comes to money. DON’T make that mistake! I took time out to learn from wealthy and successful business owners and I learned they had financial coach/mentor, several retirement accounts, and insurance.
The first you should start is getting your personal finances in order. How you manage your personal income will be the same way you handle your business. For instance, if you get paid from your full-time job and never save, invest, or pay the debt you will repeat the same behavior in your business. One thing I learned when your financial life is together you will feel better about yourself and have less stress. It feels good to know when I retire or when happens I can financially handle it. My favorite financial affirmation I say daily is: I can laugh at the days to come because I am financially prepared for them. Say this every day and see things change for you in your financial world.
Your financial coach/mentor is there to help you achieve your financial goals and guide you in the right direction. Face your fears when it comes to money and gets more knowledge about money so you can have a better understanding. This will confidence and prevent someone from taking advantage of you when it comes to your money.
2. Open a retirement account
When you start your business, you’re HR. The same process when you work for someone else applies the same process to your business. Figure out how much you need to put into the retirement account. The rule of thumb is 10% of your income. Use this retirement calculator to find out the exact amount: Retirement Calculator There are different retirement accounts you can open when you work for yourself. Here are a few:
- Index Universal Life – allows you to have a tax-free retirement, disability coverage, pay for funerals, and take out loans against your money. This is a great product. You can take advantage of the stock market but lose your earnings when the market drops. Also, when you die your family will have access to the funds. I personally have one!
- Traditional or Roth IRA – $6,000 in 2021 and 2022 ($7,000 if age 50 or older). Tax deduction on contributions to a traditional IRA; no immediate deduction for Roth IRA, but withdrawals in retirement are tax-free. You can roll old 401k or 403b funds from a previous job.
- Annuity – You can contribute monthly or yearly. Rollover monies from old retirement accounts Have the option to have a lifetime income.
- Talk to a professional about the options above or others about which savings vessel is best for you.
3. Make sure you get the right insurance
As you know when you fire the boss and decide to work for yourself, you no longer have access to insurance benefits. You want to ensure if you get sick, die, or get hurt your business, family, or business partner doesn’t suffer because you are not able to work. You’re probably thinking I’m young or healthy and nothing is going to happen to me. Don’t have that attitude! I went for my yearly wellness in August, and I was told I needed to have surgery ASAP. I was down for six weeks and not able to work, drive, or generate
income for my business. At that time, I had a full-time contract job. That job didn’t have health insurance, but I made sure I had insurance for me and my family. If you are not sure where to start, get the following coverage first:
- Life insurance – we all are going to die, but unsure when. If you have cell phone insurance to cover your phone, please have insurance to cover your funeral cost. Also, if you are married, have children, or have a business partner you need to have life insurance.
- Health insurance – it’s used for when you get sick or prevent mental, physical, or physical sickness. You have one body, so take care of it. Get your yearly wellnesses exam and see your doctor throughout the year to make sure you are healthy. Being a business owner it’s important for you to eat right and take care of your body. Doing these simple steps will allow your business to grow and be healthy as well!
- Hospital insurance – GET THIS! If you are hospitalized, put into observation, or have a day procedure this insurance will pay daily. You can receive $100 – $600 a day. Depending on the package you pick. It’s affordable and allows you the money to pay bills, purchase medicine, or use it for whatever you need. For instance, when I had my surgery, I was in the hospital for 24 hours. The package I had paid me was $300. A few weeks later I received a check for $300.00!
- Health Matching Account/ Health Saving Account – Getting insurance outside of a group will cost you more money. There is a company that allows you to put monies aside to pay for co-pays, high deductibles, dental procedures, and much more. Here is more information about it.
The Financial Lady is here to help you! I can answer your questions and show you how to sign up for any of the above products. Learn more: Book Time with Me
Be aware, be informed!