Today’s subject is one that many will find deeply personal. We’re going to take a look at your personal finances in your 30s, 40s, 50s, or even 60s, as a business owner. Many of you might be thinking, “Justin, I’m rocking it right now,” and that’s great. But what does your net worth statement look like? You see, if we’re not careful, our businesses can wreck our personal finances.
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I’ve often quoted a statistic from the Exit Planning Institute that says that 80% of our net worth is tied into our businesses as business owners. Think about that. Eighty percent of our total worth is invested into a single asset and a highly illiquid one at that. You see, we’re so worried about growing our businesses, making them as good as they can be, that oftentimes, we do so to the detriment of our personal finances. We are so focused on making sure that we have a beautiful baby that we neglect our homes.
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We’re often so confident in the growth and value of our companies that we will re-invest our profits right back into the business. We do this even though it often doesn’t provide the same return as an equity exchange-traded fund or mutual fund. As a result, you’re doing great harm to your personal finances. So, if you’ve ever thought, “Owning a business has wrecked my personal finances,” now’s the time to ask, “How did I get here?”
There are many different ways that business owners can allow owning a business to harm their personal finances. For the sake of time, I’m only going to outline a few of the primary offenses that get business owners into personal financial trouble. If you read through this list and find that you can personally relate to any of them, don’t worry. I’m going to follow up with ways to protect yourself, so you don’t end up looking at your personal finances in your 30s or your personal wealth in your 40s, 50s, or 60s and think, “I’m going to have to work well into my 80s!”
Now that we have an idea of some of the typical ways business owners harm their personal finances through their businesses, let’s shift gears. As business owners, what are the simplest ways to protect our personal finances from our businesses? How do we protect ourselves? Finances don’t have to be difficult. So, whatever season of life you find yourself in, protect your personal finances. Pay yourself first and move on from there.
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As we wrap this up, I hope you’ve taken a good hard look at a very personal subject. You might be one of the fortunate ones that can look at this subject and say, “I’m doing great!” If you are, then I applaud you. But, maybe you’ve seen some things that you don’t like. If that’s you, what are you going to do about it? What are you going to do today to change the trajectory of your life? What you do today can affect your personal finances in your 30s or your personal wealth in your 40s. It will likely impact your retirement when you’ve reached your 60s.
Believe it or not, these aren’t uncommon issues for business owners. I see it day in and day out. We help business owners put their personal and business finances on track to work in unison to reach their goals every day. We aim to teach business owners how they could double their net worth every 3 – 5 years. If you would like to learn more about how we can help you, reach out to us!
So, friends, I know life is hard, but life is good. Protecting your personal finances from your business can be frustrating. But it doesn’t need to be. By following the steps discussed today and seeking a qualified financial advisor, we can get our personal finances back on track, at least financially simple.
Have your personal finances suffered since opening your business? Are you concerned that you’re not on track to meet the financial needs of your retirement? Schedule a meeting with us. The Financially Simple team would be happy to review your individual situation and help you get back on track!