Future-Proof Your Finances

As a woman small business owner, managing your finances can feel overwhelming, especially when balancing the demands of your business with personal financial goals. To thrive, it's essential to take control of your financial future, making sure you are prepared for whatever life throws your way. Here’s how you can future-proof your finances to secure both your business and personal life.

1. Understand Your Net Worth

The first step in future-proofing your finances is understanding your net worth, which is the difference between what you own (your assets) and what you owe (your liabilities). Begin by listing all your assets—this could include your home, car, savings, investments, and even your business. Next, list all liabilities, such as mortgages, car loans, credit card debts, or any other outstanding obligations. Subtract your total liabilities from your total assets to determine your net worth. Knowing this number is crucial because it gives you a snapshot of your financial health, allowing you to plan effectively for the future. You can then use calculators (like on the Money Smart website) to help you calculate the superannuation you could have based on what you contribute each year, and what your investments could look like if you contributed a certain amount each year (for example, after 5 years of investing $500 per month, with an average annual return of 8%, you could have just over $31,000, and after 10 years, you could have just over $91,000!).

2. Plan for Large Expenses

Unexpected expenses can derail even the most well-thought-out financial plans. Whether it's a new car, business investment, or a family vacation, planning for these costs in advance can prevent unnecessary stress and financial strain. Create separate savings accounts for each of these large expenses, and contribute to them regularly - start with the end amount in mind and then how much you can contribute per month, and how long you will need to save for to reach your goal. Doing this will help you when the time comes, as you will have the funds available without resorting to debt or dipping into your business's cash flow.

3. Project Your Financial Future

To truly future-proof your finances, it's not enough to know where you stand today—you need to project where you’ll be in five to ten years. For example, if you plan to invest in your business, purchase property, or fund your retirement, consider how these goals will impact your financial situation. Use tools like compound interest calculators (i.e. the Money Smart website) or financial planning software to estimate how your current savings and investments will grow over time. This long-term vision helps you make informed decisions now that will benefit you later.

4. Manage and Monitor Your Money Regularly

Money management is an ongoing process. Regularly review your assets, revenue and expenses, update your net worth, and review your progress toward your goals. This will help you stay on track and make adjustments as needed. Additionally, consider seeking advice from a financial advisor who understands the unique challenges women business owners face. They can provide personalized strategies to help you grow your wealth while managing risk.

5. Balance Business and Personal Financial Goals

As a business owner, it's easy to focus all your energy on your business, sometimes at the expense of your personal financial goals. However, it's essential to strike a balance. Set clear, achievable goals for both your business and personal life, and ensure that your financial plans reflect this balance. Remember, the success of your business should enhance your personal life, not overshadow it.

By taking these steps, you’ll be well on your way to future-proofing your finances, giving you the confidence and security to grow your business and live the life you desire. Remember, financial planning is not just about numbers—it's about creating the future you want for yourself and your loved ones.