Entrepreneurship 101: 3 steps to take care of your personal financial plan

Shlomo Freund China Plus Published: 2017-12-30 11:39:19
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By Shlomo Freund

I’ve met an endless number of entrepreneurs in China perusing their dream. Typical startup life in China is called “996”. Meaning, working 9am-9pm 6 days a week and that’s the absolute minimum. 

China is ultra fast-paced and those entrepreneurs want to make it big, but what they forget on the way is their personal lives and within this their personal finance as well. Having a large pile of money in your bank after selling your company is not a good strategy to reach financial freedom. The percentage of startups that really makes it is tiny. What happens if it fails? 

A staff member works in a real estate agency in Beijing, capital of China, March 31, 2015.[Photo: Xinhua]

A staff member works in a real estate agency in Beijing, capital of China, March 31, 2015.[Photo: Xinhua]

I’m not here to discourage. I’m an entrepreneur myself and been pushing myself to succeed ever since I started this journey a long time ago, but it’s the reality check that those entrepreneurs are lacking. 

Thinking and planning your personal finance is as important as planning and succeeding with your startup. You are your own CEO as well, not only of your company's

Here are a few steps you should go through.

1. Find your number - How much money do you need for you and your family when you’ll retire (at whatever age that would be). This amount is important as it sets yourself a goal. It doesn’t mean that you have to stop working once you’ve reached that, but it means that it’s enough for your personal life and can now choose to work and not have to work. It’s a different mindset. 

2. Calculate your net worth - The next step is understanding how far are you from that net worth number? Keep a monthly or quarterly track of that number. Are you making progress or getting further behind?

3. Find out what’s your cash flow each month by tracking your expense and income. If you are a positive cash flow then you obviously in a better position than if it’s negative as you are making progress. But you need to make sure it’s at a sufficient pace for your retirement plan. If it’s negative, cut down on expenses. Separate between the things you want and consume versus the things that you have to consume and get back on track.

Going through this process will make you better of most people. 

You might realize that you need to move to a smaller house or a different area in town to cut expenses. Or perhaps you’ll realize that you can save even more and retire earlier than you thought. It’s all a matter of choice and understanding what’s the meaning of our financial decisions. 

As an example, if you buy your coffee every day at Starbucks in China and that costs you 500 yuan a month, you might want to give up on that expense. Or alternatively, make a decision that this daily cup of coffee is what makes you a happier and more productive person and therefore willing to postpone retirement because of that monthly expense. 

This monthly expense can be a difference of the time you retire in an even a year and in larger ones even a more significant time, because of the compounding interest effect on the money you save. 

After going through those expenses you really understand the value of those decisions and can address those as needed. 

All this might be a different mindset than what you are used to but will prevent you from making financial mistakes you can’t fix later on.

(Shlomo Freund Is the co-founder of Free Financial self helping entrepreneurs reaching their financial goals and financial freedom) 

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LU Xiankun Professor LU Xiankun is Managing Director of LEDECO Geneva and Associate Partner of IDEAS Centre Geneva. He is Emeritus Professor of China Institute for WTO Studies of the University of International Business and Economics (UIBE) and Wuhan University (WHU) of China and visiting professor or senior research fellow of some other universities and think tanks in China and Europe. He also sits in management of some international business associations and companies, including as Senior Vice President of Shenzhen UEB Technology LTD., a leading e-commerce company of China. Previously, Mr. LU was senior official of Chinese Ministry of Commerce and senior diplomat posted in Europe, including in Geneva as Counsellor and Head of Division of the Permanent Mission of China to the WTO and in Brussels as Commercial Secretary of the Permanent Mission of China to the EU. Benjamin Cavender Benjamin Cavender is a Shanghai based consultant with more than 11 years of experience helping companies understand consumer behavior and develop go to market strategies for China. He is a frequent speaker on economic and consumer trends in China and is often featured on CNBC, Bloomberg, and Channel News Asia. Sara Hsu Sara Hsu is an associate professor from the State University of New York at New Paltz. She is a regular commentator on Chinese economy. Xu Qinduo Xu Qinduo is CRI's former chief correspondent to Washington DC, the United States. He works as the producer, host and commentator for TODAY, a flagship talk show on current affairs. Mr. Xu contributes regularly to English-language newspapers including Shenzhen Daily and Global Times as well as Chinese-language radio and TV services. Lin Shaowen A radio person, Mr. Lin Shaowen is strongly interested in international relations and Chinese politics. As China is quite often misunderstood in the rest of the world, he feels the need to better present the true picture of the country, the policies and meanings. So he talks a lot and is often seen debating. Then friends find a critical Lin Shaowen criticizing and criticized. George N. Tzogopoulos Dr George N. Tzogopoulos is an expert in media and politics/international relations as well as Chinese affairs. He is Senior Research Fellow at the Centre International de Européenne (CIFE) and Visiting Lecturer at the European Institute affiliated with it and is teaching international relations at the Department of Law of the Democritus University of Thrace. George is the author of two books: US Foreign Policy in the European Media: Framing the Rise and Fall of Neoconservatism (IB TAURIS) and The Greek Crisis in the Media: Stereotyping in the International Press (Ashgate) as well as the founder of chinaandgreece.com, an institutional partner of CRI Greek. David Morris David Morris is the Pacific Islands Trade and Investment Commissioner in China, a former Australian diplomat and senior political adviser. Harvey Dzodin After a distinguished career in the US government and American media Dr. Harvey Dzodin is now a Beijing-based freelance columnist for several media outlets. While living in Beijing, he has published over 200 columns with an emphasis on arts, culture and the Belt & Road initiative. He is also a sought-after speaker and advisor in China and abroad. He currently serves as Nonresident Research Fellow of the think tank Center for China and Globalization and Senior Advisor of Tsinghua University National Image Research Center specializing in city branding. Dr. Dzodin was a political appointee of President Jimmy Carter and served as lawyer to a presidential commission. Upon the nomination of the White House and the US State Department he served at the United Nations Office in Vienna, Austria. He was Director and Vice President of the ABC Television in New York for more than two decades.