Do you have a plan in place for how to pay the bills should you fall ill and need to put work on hold? Have you started thinking about tucking away some money for retirement, but just haven’t made the initial investment? These are things that everyone should keep in mind but when you’re self-employed, with a sometimes inconsistent monthly income, building a financial plan can seem like an impossible task. But it doesn’t have to be.
Neil Trahey, an independent advisor with Sun Life Financial, will walk participants through how to properly build a financial plan (including the importance of insurance for artists and those who are self-employed) during his workshop on February 27 at MUN’s Signal Hill Campus. Neil recently spoke with us to offer some timely tips and advice in advance of his session.
Business & Arts NL: Individuals who are self-employed have a lot on their plates (from the day-to-day tasks that go with running a business, to the work involved with getting more clients, planning ahead for the future, etc.) and some may think they don’t have the time or money to build a financial plan. Can you talk a little bit about the importance of having such a plan in place for self-employed individuals?
Neil Trahey: Sun Life Financial is my brand but technically, I’m a self-employed financial advisor, so this is something that I deal with myself. In running your own business you can experience busy times along with slower periods and there’s always that uncertainty of when and how much your next pay cheque will be; this definitely makes it tougher to lock down concrete plans. Because of the lack of group benefits for the self-employed (health and wealth), it’s even more important to make time to put such plans in place.
In the event of health issues such as disabilities and/or critical illnesses, you’re on your own to bear the financial burden. Without the proper personal insurances in place, the financial impacts can be extremely detrimental to not only your business, but also to you making a proper and timely recovery.
On the wealth side it’s no different; you’re responsible for putting a retirement plan in place through vehicles like RRSP and TFSA. There are some government programs like CPP and OAS that will help in retirement, but the vast majority of your retirement will be on your shoulders.
Business & Arts NL: For those who want to set such a plan in motion, where should they start?
NT: Starting is the key! Nobody plans to fail, but many fail to plan. For starters, you want to seek out a financial advisor that you feel comfortable with; one that shows good signs of being around long term to help you work on your financial plan for years to come. The financial planning relationship is a long-term relationship, so be picky about who you work with.
Other than that, try to go into the first meeting with a monthly amount that you’ll be willing to put towards the plan. The advisor’s job is to help you allocate that amount between the plan pieces based on most urgent to least urgent.
Business & Arts NL: What’s your top insurance/investment tip for self-employed individuals?
NT: I have two:
1. Just start – The earlier you start, the easier it will be from all angles. Insurances will be cheaper and will cover more the younger you put them in place. Investments will need smaller monthly contributions the earlier you start because they have more time to compound interest. Don’t waste anymore time being discouraged that you haven’t already started these plans, just go do it now.
2. Make your savings a bill – As I stated earlier, being self-employed can come with income uncertainty. This income uncertainty can make it harder to come up with appropriate monthly contribution amounts. You should still allocate a fixed amount towards savings each month, whether it’s $50 or $500. The amount that you choose should be set up to come out of your account bi-weekly or monthly, just like any other bill. Set a bottom line amount that you know you can contribute to start. If after a few months you find that it’s too much, ask your advisor to decrease it and if you think you can do more, ask to have it increased.
Business & Arts NL: What’s the main thing you hope people will take away from your session?
NT: The main thing that I would like people to take away from this session is that financial planning isn’t scary and it doesn’t have to be expensive. I think people will be quite surprised how far you can actually stretch a dollar when it comes to setting yourself on the right path for retirement. I really hope that my presentation will not only be thought-provoking, but will cause the audience to spring to action. I’ll say it again – starting is the key. I hope this seminar inspires people to do that!
Workshop: Insurance for Artists: Covering your bases when you are self-employed
Date/Time: Wednesday, February 27 from 1-3pm
Location: Emera Innovation Exchange, MUN Signal Hill Campus, Room B 1003
Price: Free for Business & Arts NL members, or $10 for non-members (includes a free 1-year Business & Arts NL membership)
Registration: Click here
