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A big no-no for entrepreneurs
DISRUPTIVOI asked a fellow entrepreneur if they were investing.
They responded, “Right now, I’m focusing on investing in my business.”
“Why the delay in investing in your financial future? You’re young; the time is now.” I asked.
They went on to belabor how important investing everything into their business is.
I get it. The business is your baby. You have to feed and nurture it to grow. But at the same time, you have to nurture your nest egg.
Many business people and entrepreneurs have become successful following the path of investing everything they have into their businesses, but more have yet to create financial success for themselves because they refuse to prioritize their financial health.
I’m sure you’ve heard of entrepreneurs who invested everything (e.g., their life savings) to fund their businesses and lost it all; this isn’t your story, but there is a lesson to learn here.
If you put all your money on one horse, you’re going to win big or lose it all. There are no other options.
When you bet on one horse and hedge your bet, it doesn’t matter if you lose, you’re still winning.
If a business doesn’t pan out, start another one. It’s that simple. And have money stocked away while you jump on the next business plan. For steady-run business owners, still, invest a minimum of 10% in your financial future.
It’s rare for a person to say, “I regret investing money into my financial future.”
It’s Hard To Save As Your Income Increases
Have you ever noticed how it’s harder for many people to give money as they accumulate more?
The reason for this is that they were stingy on the accumulation path.
If you practice giving when you have less, you’ll continue to give as you acquire more. It boils down to habit.
The same applies to saving. The more income you earn, the harder it becomes to save.
It’s NOT easier to save money as you accumulate money.
Always Prioritize Your Financial Health
10%.
This is the recommended number to put aside monthly for your financial future, but the more you can put aside, the better.
When you’re running a business that you’re passionate about or experiencing great success, investing everything back into the business can be tempting.
But diversification is critical.
Here’s a question:
Would you invest all of your money in cryptocurrency?
For some people, their answer is yes.
But 99% of people would likely answer “No” because that situation is highly volatile.
A business is volatile as well. No matter how well your business performs, you should always ensure you walk away daily with something in your bank account.
Steps To Grow Your Financial Independence As A Business Person
Create a 12-month emergency fund. It is recommended that business owners have at least a one-year emergency fund since their income can be less stable.
Invest 10% of your income in your financial future – even before you pay your bills, expenses, and creditors. If you pay everyone else first, you may sometimes have nothing left over for yourself. Paying yourself first will increase your urgency to pay the other folks if less is left over.
Maintain multiple income streams. Plan for success, and always have a back pocket income source to decrease financial anxiety and expand your options.
Final Note: Never put your business before your financial future. Invest while you build.
This content is for informational purposes only — not professional advice. Consult a qualified professional before making any major decisions.