Load-shedding. Unemployment. Uncertainty. Fear.
Things are looking bleak and there doesn’t seem to be an end in sight to the bad news. Self employed individuals will probably feel the pinch the most during this period and many businesses may not survive the crippling effects of intermittent power supply, among other things. There are many challenges facing self-employed individuals but two of them are of interest to me – how to manage personal finances, particularly during this tough economic environment, and how to practice self-care while on this journey.
Managing your finances while self-employed is a job on its own. For most start-ups, there is no steady income in the beginning and that must be managed with a lot of consideration. A few things to consider:
- An emergency fund – whether you’re self-employed or not, you should have some reserves in an accessible account, in the event of emergencies. It becomes even more imperative when your income is uncertain, as with self-employment
- Prioritising expenses – you need to order your expenses in terms of priority and reduce your budget to essentials, as far as possible
- Downscaling – you’ll need to make some hard decisions in order to manage your costs. When you are running your own business, downscaling things like bank accounts and mobile phone plans becomes a requirement. Scrutinize every aspect of your lifestyle and make that call, for the sake of keeping costs low
- Insurance – when the business is dependant on you for income generation and its survival in general, being adequately insured becomes a necessity. Make sure that your personal and business insurance needs are taken care of
- Retirement planning – with uncertain income, it is quite easy to neglect retirement and saving. You must select products that will allow you the flexibility to contribute as and when you have the finances to do so. You also need to speak to a professional about working out your retirement capital sufficiency. This will give you an idea about how far you are from your target
- Increase your income streams – having multiple income streams is a hedging strategy. This will help to alleviate the cash crunch and stress at any given time. The first trick is to find them. The second is to maintain them.
The issue of self-care is a difficult one. Entrepreneurs, in general, prioritize their businesses often at the expense of their health and well-being. According to the Gallup Wellbeing Index, mental health directly or indirectly affected 72% of the entrepreneurs sampled, including those with a personal mental health history and family mental health history. This study also found that entrepreneurs are more likely than other groups to experience depression, ADHD, addiction and bi-polar. Many find it difficult to manage the uncertainty and many disappointments that come with the territory.
As an entrepreneur, it is important to know what your triggers are and to realize when you’re doing too much.