So you have financial goals, now what?
Financial goals are usually based on a goal of attaining financial security.
Financial security... but what does that even mean?
It has a different definition depending on who you talk to.
Some would say it is having large sums of money in the bank, others would say it is being debt free, and others still would say it is both or something completely different.
No matter what your definition is, if financial security is a goal of yours, it requires planning and some strategy.
Trust me, I tried the hopes and prayers strategy before... and it didn't work too well for me.
I am going to share with you, my five tips for working towards financial security as an entrepreneur. But first, let's go over just a couple of things that you need to start with.
The first thing you need is to know where you are starting from. Just like taking a road trip, you need a map for directions and map directions always have a starting and an ending point. So where are you starting from- be honest with yourself here - this is for you to create a plan. Think about it this way- if you are wanting to head to the beaches of Florida and you are starting in Colorado, it makes no sense to map out directions from New York to Florida because that won't help you get there from Colorado.
Now for my five tips I promised you.
1. Be specific with what financial security means to you.
I hear people say all the time that they want to be financially secure, but then when I ask them what that looks like, they don't really have an answer. Financial security can mean something different to everyone and you need to truly understand what that means to you.
Does it mean that you want to be debt free and have money in the bank?
Does it mean that you want to be able to pay your monthly bills and still save for your retirement?
Does it mean that you want to travel the world and not have a single concern about money?
Take some time to think about this and journal around it to really identify what it means to you. Let this be your definition, not what someone told you it should be, or what society (ahem social media) has led you to believe it is for others... what is it for you.
2. Write out your short and long term goals.
Financial security is not an overnight process. You will have some short term goals that you may be able to achieve this year, and you will have long term goals that may have a ten year achievement target date to them. They all matter equally.
An example of short term goals may be to pay off some debt and take a family vacation.
Long term goals may be to be completely debt free and have investments that are growing for your retirement.
Write out a list of your goals to achieve financial freedom and then categorize them as either short or long term goals. This allows you to start focusing on what you need to for the short term while also keeping your eye on the long term goals.
3. Understand your financial net worth.
Almost all entrepreneurs have assets and debts. True financial security is not just about money, but also your net worth. There is a fine balance between paying off debt fast and ensuring you have positive cash flow for your business and life surprises.
You need to have a clear understanding of what you own, what you owe and how that all plays into your ability to create financial security by using all of that to your advantage.
Properly used debt can be an asset, an improperly used asset can be debt.
Knowing your numbers in business and at home can help you identify where you might be able to make changes to start increasing your net worth every single month.
4. Create a plan to follow.
A plan for financial security, often means creating a budget. This can feel really restricting for some people which makes it difficult to do. A budget should be a guide, not a dictator, and a good budget builds in some fun money and some flexibility also.
Creating a budget for business and life is one of the key things I attribute how quickly I turned around a really crappy financial situation for my family to.
It is simply understanding where your money is going and identifying if that is a priority for you or if you can and will shift to focus on priorities. Again, knowing where you are is how you start to get where you want to be.
5. Ask for help when you need it.
Navigating finances and changing how you work with them can be a difficult task to take on by yourself. If you are married, try to get your spouse on the same page as you, it makes it so much easier when you are both working towards a common goal. Having people who can see the BIG picture when you are stuck in the trenches can also be extremely valuable. An accountant can help you save on taxes. A financial advisor can help you plan for retirement. A financial coach can help you make a plan and identify where you are sabotaging yourself. A good banker can help you create opportunity. The list is endless, but the first step is seeking the help you may need to really put your plan in action.
These five tips will help you to create a goal and a plan to get to where you want to be financially. As an entrepreneur financial coach, I work specifically with entrepreneurs to help them create this plan, starting in their business where the money comes in from, and working out to their household finances, and then identify the blocks and habits that might have sabotaged their best laid plans in the past. Whether you choose to go this path alone or seek help, know that with daily action and focus, you can achieve the financial freedom you deserve!