Many business owners are so consumed with reaching the financial goals of their company that their personal and family financial goals get overlooked. But neglecting the personal side of your finances is a big mistake, says Tony Brant, a financial advisor with Skylight Financial Group.
“Your business world and your personal world are intertwined; so treat them that way,” says Brant. “You need to plan to grow your life just like you plan to grow your business and build financial flexibility throughout both your business and your personal life. And that means having available to you a number of financial reservoirs to provide for yourself and your family.”
Smart Business spoke with Brant about how to accomplish your personal financial goals while growing your business.
What is the first step to accomplishing your personal and family financial goals while growing your business?
The first step is for business owners to acknowledge and accept that their business and their family life are closely related. Oftentimes, they behave as though they are separate. At some point, every business owner will admit that to keep the business going and growing, they’ve made business decisions that have affected their personal life, sometimes even placing their family at risk.
You need to continually integrate the planning that you’re already doing on the business side with what’s important to you on the personal side. Look at what you’re doing from a business planning perspective; identify the goals, objectives, people, capital and markets that will contribute to the likelihood of the success for your business and model your personal planning after this format.
Establish a specific planning objective. If you are on track to grow your business’s sales by 10 percent this year, also consider growing your personal savings by 10 percent. Set parallel goals. After all that you’ve done to grow your business, ask yourself what you are doing for yourself and your family.
How do you begin planning?
Identify and articulate the vision you have for yourself and your family in the future by asking what matters to you; what do you want to happen, and what don’t you want to happen. Many business owners have a vision of financial security that includes a secure retirement, education for their children, freedom to pursue personal interests, enjoying a quality lifestyle, concerns over family members in need, and health care later in life. These things do not happen by themselves, and must be planned for accordingly.
At the most basic level, all business owners should incorporate a protection plan in their personal life, as well as their business life. Such a plan includes three major components. First is the protection of your income earning ability. Ask yourself, ‘What happens if I suddenly become disabled; even temporarily?’ Next, develop a sound cash reserve, both personally and financially, to deal with an unexpected financial crisis.
And lastly, ask yourself, ‘What would happen if I were to die prematurely?’ Are you prepared for such an unexpected event?
