Should You Save For Retirement or Invest in Your Health Coaching Business?
As a health coach and business owner, you are often faced with decisions. Decisions about your business name, your target market, your location, your brand, what to invest, and how much to save for retirement. As a salaried employee, it is easier to save for retirement, but things can be a little more complicated when you are self-employed.
As a business owner, there is always some degree of financial insecurity. Even with profitable businesses, it is impossible to expect the unexpected. This is why it is so important to find a balance between spending and saving.
There are no clear-cut answers to the debate surrounding saving for retirement or investing in your business and much depends on personal circumstances and the nature of your business.
Many business professionals suggest saving money before investing money. Your savings will serve as the foundation to build your finances on. In other words, your savings will provide the capital to feed your investments, in this case, your health coaching business.
THERE ARE MANY REASONS TO SAVE FOR RETIREMENT:
- Tax benefits – Putting money into a retirement fund protects your income from taxes by decreasing your taxable income.
- Protection against the decline or loss of a business – If a business fails for whatever reason, it can be possible to start over again with the backing of a large retirement plan.
- Distribution of assets – If the majority of your money is going to your health coaching business, you are dependent upon this single asset for financial security. On the other hand, if you put a large amount of money into your retirement plan, you have a diversification between two major assets. In other words, while you are growing your business, your retirement is also growing through financial investments that are not dependent on your business.
- Necessary for businesses with no resale value – Some business can be sold, but in many service business where the owner is the business, it often has minimal resale value. In this case, the business will not provide the necessary funding for the owner’s retirement. Now, of course, you can position your business to be sold, even if you are the main focus. It just requires a bit of forethought and planning but I digress.
Establishing a retirement plan for your health coaching business is beneficial because it gives you options. When the time comes, whether you choose to retire or continue to work, when you have options, you will feel more satisfied with whatever path you choose.
ON THE OTHER SIDE OF THE DEBATE, THERE ARE MANY REASONS TO INVEST IN YOUR BUSINESS:
- Investment into your health coaching business creates increased income and retirement savings – It’s simple – the more you invest, the more your business grows, the more you can save for retirement.
- Investment lowers tax liability – Investment into your business for equipment purchases such as a laptop, camera, or printer can be written off, which lowers your taxable income.
- The sale of your business is your retirement – Businesses that are likely to be sold are those with large assets, property, and cash flow that can continue even after the business owner leaves. The sale of this type of business can be the business owner’s retirement fund.
- Business owner rarely retire – Because many health coaches love what they do and are drawn to their career because of their passion, many continue to work and never retire!
While there are many benefits to both sides of this argument, a health coaching business owner will do both – invest in their business and set aside money for retirement! If you are still unsure, don’t be afraid to seek help. Remember, as we teach here at ITN, there is no one-size fits all! You need a personalized solution. Enlisting the help of a financial planner can make it easier to sort out the pros and cons and make the best choice for you, your business, and your family.