A recent survey found that though many black women are confident and have dreams of entrepreneurship, they are not so confident when it comes to financial planning. Northwestern Mutual, a leading financial services company, asked women about finances, 48% consider themselves confident, and more than one-third of women attribute this to not having a financial plan in place, the survey findings show.
“I think oftentimes as women, we’re not talking about [financial planning] as much. It’s not part of our daily conversations—it’s more private,” says Andrea K. Williams, a certified financial planner with Northwestern Mutual. “The more we have conversations about these things, I think that will set them in the right direction to better prepare for [financial goals including] entrepreneurship.”
Black Enterprise talked with Williams on four quick money tips for women 9-to-5ers seeking to become more confident in taking charge in planning for entrepreneurship.
THE FOUR QUICK MONEY TIPS:
Check your motives for transitioning and prepare while working, not after a rash decision. Your timing for taking the leap shouldn’t be based on emotion or being tired of your boss. Prepping early for becoming the person responsible for all business activities is a must. “A lot of people will quit their jobs and then on Monday, there’s nothing to do, and they don’t have the contract in hand—they don’t know how to go out and find new business,” Williams says. “They’re in trouble because they haven’t aligned their time with activities that genuinely generate revenue. Those are the people who end up having to [go back into the workforce] because the job had all those things already in place—salespeople who find customers, and so on. You have to identify what is in your control and [ask yourself] does it make economic sense to do this.”
As cliché as it sounds, invest in a good, certified planner. “You develop more than just a financial account,” Williams says. She adds that the key with a planner is that you’re building a long-term strategy—whether it’s to pay off your credit card debt, pay student loans, or finding best ways to save enough money so you can be in a position to venture out and cover the costs of a startup. “Discuss your goals and personal priorities,” she adds. “What are your financial habits?” Also, a planner knows about other avenues to save money or ensure cash flow for the future, and they can keep you organized and accountable.
Think beyond what your employer usually offers when it comes to the products you include in your financial plan. “It’s not just about IRAs and 401(k)s. [Consider things like] estate planning and special-needs planning,” she says. “Also, a lot of people don’t know you can insure your salary… When you’re at your job, you have a W2, and an insurance company can help you insure that income. Also if you ever become sick or injured, when you leave an employer you no longer have benefits to cover the loss of income, and that can leave you exposed. You want to be prepared and proactive.”
Know your financial habits and keep it real with your adviser. “One of the things I’ve realized in 10 years of being in financial planning; when people hit a personal recession—someone loses their job—there are a lot of things that do not change as a result of that. People still get their hair done, their nails done.” You have to identify the things that you still consume regardless of our financial situations and the decisions we make on a continual basis.” This will help with making a realistic savings plan and nipping a few habits in the bud in terms of helping you meet your goal to transition from employee to boss.