A Financial Guide for Women Entrepreneurs: Investing, Planning & Business Stability
Today, there are an estimated 14.5 million women-owned businesses in the U.S. This represents approximately 45% of all businesses.i A study conducted by Fidelity Investments showed that women are often less prepared for retirement than their male counterparts.ii Here are several financial habits women entrepreneurs can consider in pursuit of their money management goals:
Become an investor
Statistics have shown that women generally outperform men when it comes to investing, however, according to The Motley Fool, women have traditionally been less likely to invest than men creating a significant financial moat. The average retirement savings is $50,000 for woman compared to $157,000 for men.iii Identify your risk tolerance, conduct your own research and get the help you need from a financial professional to make the most informed decisions. It can be difficult to prepare efficiently for retirement without a way to potentially grow and preserve your wealth. *All forms of investing involve risk including possible loss of principal. You should only invest the money you can comfortably lose should there be unexpected market volatility.
Expand your financial literacy
Understanding finance, conducting your own research, and making informed financial decisions with the help of a financial professional could benefit you in the long term. “When you have knowledge, you make a better client,” says wealth manager and author Nancy Tengler.iv
Safeguard your credit
A strong credit rating is critical for business growth, access to financing and landing a favorable interest rate. It also provides the ability to build trust with business partners and suppliers and creates the foundation as a credible and stable operation.
Prioritize your debt repayment
Prioritizing paying down your debt is important because it helps to avoid paying interest that would accrue if you only paid the minimum each month or failed to make payments on time. These costs could grow significantly over time.
Carefully manage your spending versus your revenue
As an entrepreneur, managing your spending versus your revenue is critical to keep working toward financially strengthening the business. If you aren’t careful and your spending exceeds income, you could find yourself in a budget deficit. This is an indication that the company might be unstable.
Have an emergency fund
Ensuring you have cash on hand is critical should your business experience some form of disaster. Microsoft CEO Bill Gates is noted for stating that his goal was to have enough cash on hand to cover payroll for an entire year. That may be excessive and impossible, especially for first-time entrepreneurs. However, should something unexpected occur, saving up a few months’ worth of cash could be the difference between riding out a storm or sinking.v
Diversify your finances
Never put all your eggs in one basket. Having your finances diversified over various instruments can help mitigate the potential risk of any one investment not performing as you hoped. Diversification involves putting money into investments across a broad financial landscape from a variety of industries, asset classes, and geographic regions.vi
Consult a financial professional
You may be great at starting and running a business as an entrepreneur. Finances, though, are a different set of challenges. Consider getting help from a financial professional who can help you conduct a comprehensive review of your finances and create strategies and manageable goals to keep you on track.
Transform Your Money-Fears into Money-Loves!
Unlock your patterns, gain clarity and focus, and become supremely confident with money using my simple 8-step approach to changing your financial future.
