If you’re an entrepreneur, you are in a unique financial position. When things are going well, you can feel financially secure, with enough revenue coming into your businesses to enable you to invest in new ideas and projects. When money is tight, it can be tempting to draw money out of a savings or retirement account to tide you over. Entrepreneurs need a different kind of wealth management strategy that accounts for their level of income variability and risk. Here are some wealth management tips for entrepreneurs.

Prepare for Rainy Days

As an entrepreneur, things are going to happen to you financially that you don’t expect. Maybe a business idea tanks or your vendor sends you a poor quality product that causes a recall. Things happen that are going to make managing your wealth difficult as an entrepreneur. To manage this, create a rainy day fund with enough in it that you won’t have to turn to your other assets. Ideally, aim for 6 months of expenses as a start.

Set Aside Retirement Funds

Since you won’t have access to an employer-sponsored 401(k), you need to be proactive about setting up your own retirement plan. This may include an IRA and/or other investments. Start early enough so that any money you put aside has the best chance of growing. If you happen to have extra money come in, consider putting a portion of it toward your own retirement.

Balance High Risk and Low Risk Investments

As an entrepreneur, your life contains a certain amount of risk. That’s why you don’t want to only invest in high risk investments, even if the return is higher. Instead, focus on balancing high risk investments with lower risk investments that are sure to pay off. Perhaps you’ll lose a little money if all of the high risk investments pay off in spades. It’s worth it for that balance of security.

Spend Less

Wealth is not in the amount of money that you spend but in the amount of money that you keep. Even if you have a billion dollars, you’ll go bankrupt if you spend more than that. Aim to spend less money overall in order to increase your wealth. It’s a proven strategy that can help you improve your financial health.

Use Deductions Wisely

You’ll be able to deduct quite a few business expenses that can help you to pay less in federal and state taxes, while keeping more money in your pocket. The first step is to keep track of everything that could be considered a business expense. Next, you’ll want to rely on a financial professional to help you maximize your deductions. Remember that you’ll still be able to write off your business ideas that didn’t really pan out into successful businesses. You’ll just need to know what exactly you spent.

Wealth management can seem overwhelming for entrepreneurs who are driven to use their money to fund their next business venture. However, it’s critical to balance this with smart wealth management strategies and retirement planning. If you need help creating a comprehensive wealth management plan that works, contact Corda Management.