EVERY ENTREPRENEUR SHOULD MAKEMONEY MOVES

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Starting a business involves a lot of risk and uncertainty. So when that’s your day job, make sure your personal finances are a lot more predictable.

Here are five money moves every entrepreneur should consider.

GET A GAME PLAN• Figure out how much money you have (i.e., emergency savings) and how

much you have coming in (say, from investments or part-time work).

• Estimate both your personal and business-related expenses. How much does it take to get your idea off the ground, and how long you can feasibly bootstrap until you enter the danger zone?

• Aim for six months’ worth of emergency savings for individuals and nine months if you’re a parent.

• If paying off debt, automate payments to simplify the process and make sure your expenses get paid.

TAKE A MONEY MINUTEEach morning, take a “money minute” to check your financial accounts and investments. Take a peek at investments, check for erroneous fees, and get a sense of your personal spending. This can help you stay on top of your spending habits and gain visibility to correct the course, if needed.

KNOW YOUR RISKS• As an entrepreneur, it’s crucial to understand how your personal

finances are connected to your business, because you’re so vulnerable.

• If you take out a credit card for business expenses, you’re personally liable if the card’s is in a name other than your corporation.

• Similarly, if you take out a small business loan, the bank could come after your personal assets.

• Neither scenario is ideal, so if you’re boostrapping it, be sure you know your limitations.

GET A ROTH IRA• Saving for retirement is probably not high on your to-do list when you’re

starting a business — but it should be.

• A Roth IRA, which grows absolutely tax-free, is a great and flexible vehicle for retirement savings.

• Roth IRAs allow you to invest in anything — from mutual funds to bonds up to $5,500 in 2013 ($6,500 if you’re 50 or older).

• You can access some of your money without major penalties, and also roll a traditional IRA or 401K into a Roth IRA.

CONSIDER UMBRELLA COVERAGEWith umbrella or excess liability coverage, you help to protect yourself from big financial threats. This kind of policy goes above and beyond auto and home insurance, which is good since you have more to lose. Think of it as an additional layer of insurance, worth up to $1 million or $2 million. Most umbrella insurance claims are related to car accidents, but also offer protection for work accidents.

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