Are you an entrepreneur who has worked tirelessly to build your business and achieve success? Congratulations! But what happens when that success leads to financial abundance? Are you prepared to manage your surplus finances effectively?
Here’s the thing – many business owners don’t have a plan in place to handle their newfound wealth, which can lead to impulsive decisions that ultimately cost them time and money. In fact, according to a study by UBS Wealth Management, 70% of wealthy families lose their wealth by the second generation, and a staggering 90% lose it by the third generation. This highlights the importance of not only accumulating wealth but also managing it effectively to ensure its longevity.
So, how can you ensure that your financial success doesn’t catch you off guard? Here are some strategies that can help:
As mentioned earlier, setting clear financial goals is the first step in managing your surplus finances effectively. According to a study by Northwestern Mutual, 21% of Americans have no retirement savings, while 33% have saved less than $10,000. By setting clear financial goals, you can avoid falling into this trap and ensure that you have enough money saved up for your future.
Investing in a diversified portfolio can help grow your wealth over time while providing stability in case of market downturns. According to a study by BlackRock, the world’s largest asset manager, a portfolio consisting of 60% stocks and 40% bonds had an average annual return of 7.7% between 1985 and 2019. By comparison, a portfolio consisting of 100% stocks had an average annual return of 10.1%, but with much greater volatility.
Working with a mentor or financial advisor can help you navigate the complex world of finance and avoid common mistakes. According to a study by Vanguard, investors who worked with an advisor for at least 15 years had an average portfolio value that was about 3% higher than those who didn’t work with an advisor. This may not sound like a lot, but over the course of several years, it can add up to a significant amount of money.
Financial success is not just about making money, but also about creating a plan and being intentional with your money to achieve your goals. According to a study by Fidelity Investments, the average American spends about $5,400 per year on discretionary expenses such as entertainment, dining out, and vacations. By being intentional with your money and cutting back on these expenses, you can save more money and work towards achieving your financial goals.
If you’re struggling to manage your business and your finances, consider hiring a Fractional COO or Online Business Manager (OBM) to help. These professionals specialize in operations management and can help you streamline your business processes, reduce costs, and increase efficiency. The ROI can be significant when you have the right support to be able to help you increase revenue and reduce costs.
In conclusion, financial success can be a double-edged sword if you’re not prepared to manage your surplus finances effectively. By setting clear financial goals, investing in a diversified portfolio, working with a mentor or financial advisor, being intentional with your money, and hiring a Fractional COO or OBM, you can ensure that your financial success doesn’t catch you off guard.
Remember, achieving financial freedom is within reach!
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