Everyone will benefit from managing their personal finances more closely. However, it’s still worth acknowledging that business owners tend to have different needs compared to employees primarily because their source of income is unstable compared to workers who can count on a fixed monthly income.
For entrepreneurs struggling to make various decisions about personal finances, here are some helpful pieces of advice from wealth manager Lucia Langella.
A Game Plan
The first thing Langella suggests business owners do is to determine what their specific short, medium and long term goals and needs are. She also shares about people who decided to give themselves a set deadline in their game plan from the beginning in case their business’ prospects don’t pan out.
They did this by setting a goal income they need to meet at a specific time. And if they don’t meet it, they go back to full-time employment.
Set Contingencies
Of course, the future remains unpredictable and unforeseen events can always happen. In these instances, entrepreneurs should be prepared to make the appropriate adjustments to their personal financial plan.
This means having contingencies to put into action instead of reacting to the unexpected using emotions. The same can be said for the different stages of life that a person goes through. Langella reminds people to plan according to what they might want as they grow older. For example, a business based in a college dorm room will have way different needs and risks than what one manages in their middle age.
Put Prime On Certain Objectives
In some cases, the St. James’s Place Wealth Management partner points out that financial and professional objectives can clash. She uses her decision to get her MBA as an example. While getting her degree means investing into her career, it also dented her personal finances negatively at the time due to the high costs of tuition.
Meanwhile, she also cites instances when some business owners worked for free in pursuit of certain opportunities. In the end, though, she reminds people that these trade-offs wouldn’t be sustainable in the long term and should only be necessary for certain stages of their career.
Understanding One’s Well-Being
Another insightful advice Langella has for business owners is to their financial well-being as a part of their overall well-being as a person. Because money matters are often a source of stress in life, caring for one’s finances also means caring for oneself.
And although it can be tempting to put the welfare of a business venture above everything else, people should realize that choosing to look after their personal finances also has positive impacts on their business’ sustainability.
