8 Smart Steps to Fiscal Responsibility

8 Smart Steps to Fiscal Responsibility

As our businesses grow and our schedules fill with serving clients, it’s easy to overlook how our personal
financial needs might have changed. Here are eight best-practice tips of millionaire business owners and
how they personally protect their wealth.

1. Move your money from banks to brokerage accounts.

Instead of having their money tied up at banks, most affluent individuals hold brokerage accounts at
investment companies. The advantage is that you can more easily invest excess cash in fairly low-
risk interest- or dividend-bearing investments such as bonds. I’ve even seen multi-millionaire use their
brokerage accounts as checking accounts.

The bottom line is your money should always be working for you. Make sure you don’t have huge
amounts of cash lying around earning no interest. It’s harder these days to get a good interest rate, but
not impossible, and every little bit helps.

2. Protect yourself with insurance.

I suspect everyone reading this has the requisite auto and homeowner’s insurance. The question is, are
you fully covered for every contingency that could happen, and if not, are you willing to shoulder the risk?
Just a few of the types of policies to consider include:


Personal: home, auto, health, disability, dental, life, umbrella, and many more.


Business: property and casualty, business services liability, director’s and officer’s liability,
worker’s compensation, business interruption, auto, non-owned auto if you have employees
driving for you using their own cars, health insurance for workers, life insurance for officers, and
many more.

I recommend meeting with an insurance professional who can perform a risk audit to make sure you
are aware of any coverage holes, especially if your business has grown significantly or your needs have

3. Keep more of what you make.

There’s nothing wrong with paying the least amount of taxes that are legally required. The fourth quarter
is when to make most of your tax-saving moves, so don’t wait until March or April when it could be too

Make sure you have a great tax adviser, and reach out to them at least once a quarter for ideas on how to
keep more of what you make.

4. Hire slow, fire fast.

You’ve probably heard it before, but it’s more important than ever. It’s a good idea to run extensive
background checks on all new hires (and current employees as well if you haven’t done so). A criminal
background check is essential, and I’d recommend running employment verification, social security
number match, education verification, and social media search (one of my most recent customer service
applicants was tweeting lots of four-letter words with a known gang leader).

If your state laws allow it, I recommend running a credit check too. Risk of fraud becomes real when three
things are present: 1- opportunity due to poor cash controls (which is more common in small businesses),
2- dire need, which has grown exponentially lately as life savings have been depleted and borrowing has

increased, and 3- rationalization in the employee’s mind. You can really only control number one, but with
a credit check and where it’s allowed by law, you can see if number two is present. Be careful, though;
in many states, it’s illegal to make hiring decisions based on credit checks if the person won’t directly be
handling money.

5. Create a bright future.

Pay your future self out of the earnings you make today. Set up a retirement plan so that you can
maximize deductions and ensure a comfortable future for yourself.

6. Make it easy on your heirs.

It’s never a good time to think about what will happen after you’re gone. But especially if you run a
business, you’ll want to not only have a succession plan in place, you’ll want to make sure someone
knows enough about your operations to be able to slip in to do an orderly shutdown, a sale, or continue
operations. Something as simple as not knowing your passwords and pins or where all of your accounts
or contracts are can wreak havoc on your grieving loved ones, not to mention business operations.

If your personal will is not up to date and your circumstances have changed, then it’s time to revisit
documents such as your medical instructions, organ donation wishes, burial preferences, and the like.
Gruesome, yes. But imagine these two scenarios: 1- your grieving family and they don’t have a clue
where anything is, what to do next, what you wanted, and the confusion that exacerbates the grief, and
scenario 2- your grieving family who has a clear checklist of where everything is, who to call for help, what
to do next, and exactly what your wishes were in these emotional times. Which one would you wish on
your loved ones?

7. Pay attention to your numbers.

I hear it over and over again: the people who become millionaires are clearly on top of their operational
numbers. They know their business by the numbers, inside and out.

A good accountant can help you develop the systems and reports you need to stay close to your numbers
like the millionaires do. Let us know how we can help you with this.

8. Pay it forward.

When you’ve been successful, you can decide if you want to support causes that are near to your heart.
This might mean helping people in need that you can relate to, volunteering, or simply providing a big
tip to wait staff. People who are highly successful often create their own foundations and nonprofit
organizations so that they can become champions of causes they believe strongly about.

How did you measure up on the eight tips to fiscal responsibility? If you know you have some work to
do, mark it on your calendar, break it down into small manageable steps, and get started on building or
protecting your financial prosperity. If we can help in any way, please feel free to call us.