By Millicent Hicks, Wealth Advisor, Scotia Wealth Management
If you are like most entrepreneurs, you would love to have more time and money—not just to invest in your business, but to enjoy more quality time and memorable experiences with loved ones.
The demands of running your own business always seem to be growing. It’s hard to find time for other priorities, let alone save money for a rainy day. The bad news is there is never going to be a perfect time to start. But that’s also the good news. There is a sense of freedom that comes from knowing a worthwhile task, even if it is difficult, can be successfully undertaken at any time. Whether you start today or a year from now, choose to make a conscious, well-informed effort to identify what’s most important to you and make a plan to achieve those goals.
Saving money is complex for entrepreneurs. You have more obligations and responsibilities than many other people, and your financial priorities are often different as well. While you should always work with your wealth management team to develop a comprehensive, responsive, and customized financial plan, there are many general tips that a majority of entrepreneurs find helpful in getting started.
1. Take care of your debt.
I tell my clients who are entrepreneurs that the first and most important thing they should do is pay off their business and personal debt. Depending how much you owe, it may take a while, but it should be your top priority. The faster you pay off your debt, the less money you’ll lose paying interest and the faster that money can go into savings.
2. Budget an emergency fund.
As an entrepreneur, you have almost certainly run into a significant and unexpected expense. You certainly wouldn’t be alone if you found yourself in a mad scramble to quickly pull together hundreds or even thousands of dollars. Save yourself that headache by setting up an emergency fund. Even if you only put away a small amount each month, eventually that fund will grow and you will benefit from the peace of mind that comes with knowing you can handle an unexpected bill.
3. Use the right accounts.
Since time is such a constraint for entrepreneurs, some choose to keep their banking accounts as simple as possible. You are wasting money when you keep your savings in the same chequing account you use for daily expenses. It doesn’t take much time to set up a savings account with higher interest or even tax benefits. Likewise, you should also start saving for retirement now. Putting money in the correct accounts helps keep you focused on your goals and organized in reaching them.
4. Get clear about your spending.
Maintaining a healthy savings is a lifestyle. You don’t have to become a Scrooge to save money, but you should be conscious of your spending. It’s like how people can absentmindedly eat an entire bag of chips while watching television: don’t absentmindedly waste your money in ways that don’t align with what you want and enjoy. There is nothing wrong with loving an afternoon latte; it’s just important that you are conscious of how much it costs and agree it’s worth it for you. That’s true for every expense. Spend your money where it truly matters to you.
Millicent Hicks, Wealth Advisor,
Millicent holds the Certified Financial Planner® designation and draws on the expertise she has developed over her more than 15 years in the financial industry. She works with families of high net worth, business owners, women in business, widows, and successful professionals to help them achieve their financial visions with clarity and conviction. Being able to truly listen to what clients would like to achieve enables Millicent to successfully build the comprehensive financial plans that are involved in managing complex affairs and significant wealth. Millicent engages her clients by using language they can understand, being objective, and adding a dash of humour to keep things interesting!