Her Financial Journey

A will says who gets the house. It often doesn't decide who gets your retirement accounts, your life insurance or your business. Those are controlled by beneficiary forms and business agreements, some of which you may have filled out years ago. In this episode, Darlene covers:

• Why beneficiary forms come first. They're direct instructions to the company holding the money, and they don't go through your will.
• Divorce. Depending on your state and the type of account, divorce may not remove an ex-spouse from your forms.
• Four common mistakes: leaving the beneficiary line blank, naming no contingent (backup) beneficiary, naming your estate, and naming a minor child directly.
• For business owners: what your operating agreement or buy-sell agreement says happens to your share, how the shares get valued, and whether there's money behind the agreement.
• If you're alive but unavailable. Financial powers of attorney, and who has authority on the business side.
• A yearly one-hour review: retirement accounts (including old ones), life insurance, bank account titles and transfer-on-death designations, business documents, and your will and powers of attorney. Review again after marriage, divorce, a birth, a death or a new business partner. Make sure someone knows where to find everything.

If you get a 1099 instead of a W-2, nobody hands you a retirement plan, health insurance or paid time off. That doesn't mean those things aren't available to you. It means nobody is going to set them up for you. In this episode, Darlene covers:

• Think like a business owner. You're not an employee without benefits. You're a business owner, and that gives you options.
• Taxes come out of every payment. Plan for self-employment tax on top of income tax. Move a set percentage of every payment into a separate tax account, pay quarterly estimates, and track your deductible expenses.
• Retirement you open yourself. Traditional and Roth IRAs, the Solo 401(k) (you can contribute as both employee and employer), and the SEP IRA. Starting with even $50 a month beats waiting. Opening the account is the hardest part.
• Protection. Health insurance options, disability insurance (especially if you work with your hands), liability coverage (a client's policy may not cover you), and life insurance if someone depends on your income.
• Smoothing uneven income. Build your budget around your worst month from the last year, pay yourself a steady paycheck from your business account, and build a three-to-six-month cash cushion.

Most business owners would never put their life savings in a single stock. But when that stock is their own company, it feels like the American dream. In this episode, Darlene covers five mistakes she sees again and again:

• No written exit plan. "Five years from now" can stay five years away for a decade. Buyers pay for what the business will keep earning after you're gone. Could it run for three months without you? How much of your revenue comes from one customer? Are your books clean? Start fixing these three to five years early. It makes the business easier to sell and more profitable to run.
• The wrong retirement plan, or none. A quick look at Solo 401(k)s, SIMPLE IRAs, 401(k)s with profit sharing, and cash balance plans for higher earners in their 50s.
• Filing taxes instead of planning them. Filing is a history lesson. Planning happens in the fall, while you can still change the ending: how you pay yourself, timing income and expenses, funding retirement plans, hiring family members who do real work, and planning ahead of a sale. Your CPA, attorney and financial professional should be talking to each other.
• Not protecting the business if something happens to you. Key person insurance, a buy-sell agreement that's actually funded and up to date, and disability coverage, including coverage for business overhead.
• No money outside the business. Keep separate accounts, pay yourself a steady paycheck, and build real cash reserves. It's what lets you keep taking swings in your business.

Don't try to fix all five at once. Pick the one that makes you most uncomfortable and put one hour on your calendar this month.