By now it’s clear that business owners and other professionals who work for themselves need to take charge of planning and saving for their own retirement. Most small-business owners can’t count on selling their companies to pay for retirement. And conventional, government-sponsored retirement plans come with hidden wealth traps.
All of which adds up to the reason business owners, entrepreneurs and other self-employed folks need a “Plan B.” Here are three surprisingly simple keys to finishing rich as an entrepreneur, business owner or another self-employed professional:
1. Increase your profits and your personal wealth.
Learn everything you can about “direct-response marketing.” This tactic lets you track every dollar you spend to the return on investment you get from it. Don’t let anyone talk you into any other kind of marketing, which is designed to make them rich at your expense.
Equally important: Keep increasing the money you pocket from your business. No doubt you’ve seen the sobering illustrations that reveal how much money you’ll need to have a comfortable retirement. Ideally, you should pocket at least $1 million a year.
Related: How to Double Your Desired Income in the Next 6 Months
2. Keep your lifestyle in check.
British economist C. Northcote Parkinson wrote an insightful little book called “Parkinson’s Law.” In it, he notes: “A luxury, once enjoyed, becomes a necessity.” Smartphones didn’t exist all that long ago, but today most of us can’t imagine having one with us at all times. Parkinson also pointed out that “expenses rise to equal income.” How true is that! Have you ever noticed how quickly your increased income is absorbed by a new “necessity?”
Credits: Pamela Yellen