Financial Serenity Month - Chapter 3

Last week we discussed about the retirement ideas that pertain to entrepreneurs. This week we will also include the employees in our conversation. I would like to share some scary statistics, with the hope that you take them seriously and act on the information we are sharing here.

For someone who has a job, the retirement planning is set in place by the employer, and all they have to do is follow the system. Even with all the steps already planned, a large number of Americans do not take advantage of the offers. And the scary part is that among solopreneurs and the self-employed (without the path already designed for them) the numbers are even higher.

There are some really scary statistics I want to share: only 2 out of 3 Americans save for retirement currently (according to a statistic from 2017). And if this is not bad enough, more than half of the ones who save, have less than $10,000 in their retirement account. Yet, surveys say that 51% of Americans feel they are saving enough. The article I was reading was stating that “Transamerica found that only about half of workers feel they are building a nest egg that will sustain them in retirement” (The Motley Fool, April, 16^th, 2017). While the article implies there are not enough people who are comfortable with their level of savings, my first reaction is: how can that many people even feel they have enough? Reading the statistics, I realized that only about 30% of the U.S. population has more than $10,000 in retirement savings. And with that being the case, where does the extra 21% of people get their feelings from? Did I scare you yet?

As entrepreneurs, solopreneurs and self-employed increase in numbers all across America, this is a unique opportunity for them to change these statistics. I’m not saying it is easy but it is simple: there is no other way to be and feel secure in retirement. Even employees who see their retirement coming from the employer diminish, have to also set aside money. Entrepreneurs don’t even have that luxury. There is no cushion that can provide a feeling of security. For those who can sell their business, there may be a stress-free retirement in sight. But the majority of small businesses – the solopreneurs and the home-based businesses – will probably never have that option.

If you own a sellable business and decide to sell it, the first thing you need to find out is the value. And you need to understand that the value you think it is worth and the amount of money that someone is willing to pay may be two different things – as is most often the case. After having a valuation done by a third party, such as a CPA, the next best step is talking to a financial specialist who can educate the seller in a few options – financial and insurance products – that can be set up by the buyer in order to increase the amount received by the seller through this transaction. This is a way to increase either the retirement income or the family protection, or both.

When selling the business is not an option – or if you want to have more money in retirement to ensure enough income – the best idea is to start saving as early as possible. Now, I understand that most entrepreneurs reinvest the majority of their income in order to grow their business. Even so, retirement savings must be a priority. And if the 10% that financial advisors advocate sounds like too huge and intimidating of a number, it is OK to start with a lower percentage. The main goal is to start. You can always increase the amount. Plus, something saved is always better than nothing saved. One of my favorite quotes is a Chinese proverb: “the best time to plant a tree was 20 years ago. The next best time is now.”

Saving – for retirement, for a big-ticket item, or for a rainy day – works the same way. The younger you are or the earlier you start saving, the more time you have for it to grow.  But it is never too late to start, and you are always better off starting to save NOW than Never, or even Later.

Financial Serenity Month - Chapter 1

There are so many financial gurus who advocate for financial freedom – the ability to maintain your lifestyle without having to work – either by accumulating a certain amount of money that is invested to generate the income, or by generating a passive cash flow that is equal or higher to the salary/commission received from the current work.

I started my financial education in the US with Suze Orman and Robert Kiyosaki, and I always thrived to achieve the financial freedom they taught me about. And through my journey toward financial freedom I heard Tony Robbins explaining about “the science of achievement” and “the art of fulfillment”. And this cemented my commitment to achieve financial serenity.

What is financial serenity to me?
Financial serenity is a combination of financial freedom and the serenity brought on by feelings of accomplishment and fulfillment. This is the result of achieving worthy goals and reaching significance by being able to give freely to a cause one is passionate about (may that be time or money). I learned from Zig Ziglar that financial independence means you can do what you want when you want. My goal then became taking women – and a few good men – to the next level, and guiding them to financial serenity: a step beyond freedom and independence.

According to statistics, getting out of debt or saving more money – or even financial freedom – is a popular New Year’s resolution, second only to losing weight. The problem with setting this as an annual goal – over and over again – is that it really is wishful thinking, and not a well thought out plan. Therefore, the resolution is renewed the following year, rarely with any significant success. Most people want to make a leap from the have-not to the have column when it comes to their finances. They feel that they can triple their income, or annihilate their debt within the year. Tony Robbins wisely said that “most people overestimate what they can do in a year and underestimate what they can do in a decade”.

The most likely approach to achieve a financial goal is the “slight edge” – per Jeff Olson, in his book with the same title. He talks about doing small things every day that will compound over time to achieve big results. While this approach can work with any goals, from health and fitness, to relationships and personal improvement, I believe it is the only sustainable path to achieve lasting financial goals.

It is my hope that more people will have financial goals for this year than the previous, and that even more will have these goals the next year. While anyone can achieve his/her financial serenity with proper planning and a focus on the long term goal in order to stay on track, I believe that the most likely path to lead to this accomplishment is through your own business.

I'm not suggesting that an employee cannot achieve such a goal, I'm merely expressing my opinion that self-employment or business ownership can be a simpler path to it. And with that, I must explain that I am by no means saying it is easy - just a simpler formula because you hold all the cards when you own your source of income.

Let's look at some ideas on how to accomplish such a goal next week!