Q: Dear Ruchi, I am a small business owner and even the thought of “financial planning” stresses me out to the max! It all seems so confusing to me and I feel like I don’t even have enough to be investing. Truth is… I don’t even know where to start. What are some ways I can make changes here? I am tired of losing sleep over my financial future. Help!
A: Rest assured that I have had many conversations just like this one with my clients. You’re definitely not alone. Did you know that only 33% of Americans* have a written financial plan? Many people feel they don’t have enough money to make a plan worthwhile or believe it’s just too complicated. The good news: you don’t have to wait to start making positive changes!
First things first… let’s shift our mindset. Financial planning doesn’t have to be confusing or time-consuming. Everything you’re experiencing with money often stems from a lack of self-trust, which can prevent you from taking action. The truth is, even starting small—like setting aside $100 or less each month—can lead to significant changes over time. Every little bit counts and it’s never too early (or too late) to start. Since October is Financial Planning Month, now is the perfect time to take that first step toward your most prosperous future.
Here are three tangible steps to help you get started:
1. Get friendly with your numbers.
Take a moment to peek at your monthly income and expenses. This doesn’t have to be complicated! Just listing out your fixed costs (like rent and utilities) versus variable expenses (like groceries and entertainment) can give you a clearer picture of where your money is going. Once you see your spending habits, you can identify areas where you might cut back, which can free up funds for savings or investments.
2. Set goals and explore accounts that can work in your favor.
Even if it’s just $25 or $50 a month, start by setting aside a small amount for a specific purpose— whether it’s building an emergency fund, saving for retirement, or investing in your business. The key is to make it automatic and simple; consider setting up a separate savings account where you can easily transfer this amount each month.
And while you’re at it, explore some retirement account options* to secure your financial future such as…
- Individual Retirement Account (IRA): A great option for anyone, allowing you to contribute on your own schedule. IRAs are fantastic for long-term tax-free savings.
- Simplified Employee Pension (SEP) IRA: Ideal for solopreneurs and independent workers, this option allows for higher contributions and may even be tax deductible.
- Solo 401(k): Perfect for business owners with no employees, this account lets you contribute up to 100% of your income and may also be tax deductible.
- Savings Incentive Match Plan for Employees (SIMPLE IRA): Suitable for small businesses with under 100 employees, these accounts have an easy setup with a lower employee contribution limit.
*As always we recommend consulting with your CPA or financial advisor to determine which option is most suitable for your situation.
3. Seek guidance.
If you’re feeling stuck or confused, don’t hesitate to reach out for help. Whether it’s connecting with a financial mentor or working with Watch Her Prosper, having a support system can make all the difference. Getting friendly with your finances is often the first step to feeling more in control. Remember, you don’t have to navigate this journey alone!
Planning for your future is the greatest gift you can give yourself. It cultivates not only a prosperous life for you but also creates a legacy for your loved ones. By taking small steps today, you can pave the way for a brighter financial future.
If you ever need guidance on your financial journey, remember we’re here to help! Our inboxes are always open, and we’re excited to support you in achieving your goals. Let’s take the fear out of finances together, one small step at a time.
Here’s to your prosperity!
Ruchi
*Statistic Source: Source: 2021 Schwab Modern Wealth Survey
Ruchi PinnigerOctober 23, 2024
