Everyone needs to save--especially business owners. Sure, we all dream that our enterprises will prosper and flourish, but the reality is that there are sure to be plenty of rainy days in the future.
Smart entrepreneurs set money aside to weather those storms.
Take me, for instance. For the past five years, I've earned six figures from my business. This year I'll be lucky to earn five. I gave up a high-paying gig, and now my monthly income doesn't come close to covering my expenses.
But I'm not panicked. In time I'll earn more money; meanwhile, I can live off my nest egg. You see, over the years, while I was making much more than I needed, I socked away money in savings.
As a result of my forward thinking, I'm able to focus on the big picture ahead instead of freaking out over day-to-day expenses. It's a sweet feeling and one you can enjoy yourself--if you take action now.
How Much to Save
The standard recommendation from financial advisors is to save 10 percent of your income. That's a nice guideline, but the truth is that each person's situation is different. I have three recommendations.
- Always save something, even if it's just $20 a month. Starting small will turn saving into a habit.
- Aim to sock away 20 percent of your after-tax income. This will be easier once you realize that paying off debt and contributing to your retirement plan counts toward that goal.
- If you're in a position to sock away even more, go ahead and save as much as possible. I encourage people to save until it hurts, a sort of financial version of "No pain, no gain."