Financial Planning for the Self Employed

Being your own boss has many perks. You can set your schedule, work when you want and you get to focus on building a business based on your vision and values. However, whatever results you earn is based solely on your efforts, and that includes creating a retirement plan to save for your future. 

Getting Started

So how can you get started? First, if you don’t have a retirement plan set up now, get one started. Second, make sure you have appropriate insurance coverage coverages in place. These two proactive steps can go a long way to helping secure your financial present and future and it is your responsibility to protect yourself. (For more, see: Retirement Planning for the Self Employed.)

The main reason most people don’t save for retirement is because they have not taken the time necessary to figure out and understand what they need to do to get started. First, know what type of retirement plan meets your needs, open an account and your future self will thank you for taking this very important step.  Contributing something is better than nothing, and you are creating a healthy financial habit along the way. 

You can start now by doing one of two things. If your income is unpredictable, commit to yourself every time to put a percentage of your commission into your retirement plan or commit a monthly amount you can comfortably save. We all know we must contribute money to our retirement accounts for our financial well being just like we know we should eat more fruits and vegetables more than sugars and snacks. But if we are not funding retirement or eating well your health can fail. As a business owner, you cannot afford to be sick. 

The Importance of Being Insured

We all know not having health insurance can be catastrophic to an individual and family. However, when you’re a business owner you must be able to look far enough down the road to take care of potential problems before they arise. For example, what would happen to your business if you became disabled and were no longer able to work? Disability insurance may not seem like a big deal, but if you can no longer provide for yourself you can be assured your income can be supplemented to pay your bills and depending on your profession the cost of insurance can be affordable.

In addition, the insurance premiums you pay for disability, liability, long-term care, etc. are all tax-deductible expenses. It can pay to be protected in the unfortunate event something happens to you or your business.

Where do you go from here? You are probably thinking, “This sounds great, but I am too busy to worry about this now. I’ll do it when my schedule allows.” We all have great intentions, and understandably your biggest priority should be your business. You have a great responsibility to your customers, employees and you have a vision only you can fulfill. However, you shouldn’t have to do it all on your own. You may want to consider speaking with a financial planner who specializes in helping small business owners make sense of your situation and helps you along the way. (For more, see: 10 Tax Deductions & Benefits for the Self-Employed.)