When it comes to financial literacy, entrepreneurs rank low. For example, an extensive international study by the ACCA (Association of Certified Chartered Accountants) found that small business owners performed worse than the general population overall on financial literacy tests.
While entrepreneurs do learn to manage cash flow for their own businesses (they have to at some point, or else they’ll sink), a big financial blind spot is their own personal finances, especially retirement.
Entrepreneurs are dreamers. We think in terms of grand visions to change the world. I know we certainly do this daily at LexION.
However, those grand visions often translate into a big financial blind spot. As someone who’s in wealth management, I sit on both sides of the aisle, but many entrepreneurs don’t. They’re so caught up in their vision, and so certain that their business will become the next disruptor, that they assume things like a retirement nest egg will just fall into place eventually.
This big financial blind spot can be very costly
Many entrepreneurs play the retirement lottery. They make a concentrated bet when they assume their business will be the golden ticket for their retirement, even if that’s decades down the line.
The truth is that your savings become your only paycheck in retirement. With the failure rate of small businesses, it’s a very risky bet to assume your business will provide for your golden years. With this in mind, you should be aware that playing retirement catch-up is very difficult. Because of the power of compound interest and investing, contributing to your retirement early can make it far easier.
Want to learn how to tackle this big financial blind spot?
At LexION Capital, we aid many entrepreneurs in retirement planning, and help them create a retirement roadmap to reach their needs and goals. If you’re interested in learning more about our services or think they’d be good fit for you, don’t hesitate to contact us today.