In yourself, in your future, in funds - why you should always be investing.
In our latest Hatch Founders Talk: Money Changes Everything, our expert speakers discussed pensions, investing, and money mindset, all through the lens of entrepreneurship.
Emilie Bellet, founder of Vestpod, and Timi Merriman-Johnson, founder of Mr MoneyJar, have years of combined experience in the financial sector, bringing to the talk their passion for financial education and empowerment.
Hatch’s events coordinator Sosina Binyam shared how positive it was to have such experienced and recognised speakers offering guidance and advice to Hatch founders.
She said “Money and finance is always top of the priority list for new founders. Having Emilie and Timi, two expert financial influencers and educators, provide our founders with guidance and advice will really help them make better financial decisions.”
The three main tips that Emilie and Timi shared in the session were around balancing personal and business finances; investing early; and adopting a positive money mindset.
Balancing Personal and Business Finances
Starting a new business can be an exciting time, and for a new founder there is a lot of hope, passion, and expectation in the mix. It can be tempting to go all in straight away and take on running the business full time, investing all personal savings into the venture and not prioritising things like personal salary and pension.
The advice from Emilie and Timi is to take a more sustainable approach and consider growing the business more slowly and keeping those crucial savings as a layer of financial security. As Timi shares, “failure is all part of the game here” and the smart move is to have plans in place to not become totally reliant on income from the business.
Another key consideration is pension contributions. This long-term planning is often not a priority for young entrepreneurs and it can be difficult to justify putting the money aside regularly for pension contributions, particularly when contending with a fluctuating income.
In fact, there is only a 31% pension adoption rate for self-employed people in the UK compared to 88% for those in employment, and women across the board have lower adoption rates and pension savings.
It’s so important to invest in your future and to start this process as early as possible.
Emilie advises automating the process so that money is coming out regularly to take away the pressure of choosing the perfect time to invest, and to consider setting this up quarterly if monthly income is prone to lots of fluctuation.
“You should always be investing”, is Emilie’s key advice. Once your business starts making money the first step is always to ensure financial security through addressing debts and establishing an emergency fund, and the next step is to invest.
There is always risk involved when investing as markets can crash and businesses can go under, but there are ways to mitigate this risk, and being young and early in your career is a huge strength.
The trick is to set it and leave it; leave your investments for as long as possible and try not to be panicked by fluctuating markets. Those new to investment should also spread the risk by investing in a fund, which is made up of hundreds of companies and will not be as reliant on the success of an individual company.
Increasingly investors are wanting to make more ethical and sustainable decisions when choosing a fund, avoiding companies which do not align with their values, and this is definitely something to take into consideration.
Environmental, Social, and Governance (ESG) funds have certain criteria that companies have to meet to be included, and while there are wider discussions needed around greenwashing and agreeing on an objective criteria, this is a good way to indicate what matters to you as an investor.
Another tactic to use your investment for good is using your power as a shareholder to hold companies to account and push for more ethical actions internally, such as increasing board diversity.
A Positive Money Mindset
Having a positive money mindset is crucial, and something that most of us still struggle with. Money is still quite a taboo topic and not something that is often discussed, with financial education often lacking, particularly for girls.
Not having the knowledge can lead to not having the confidence to navigate financial decisions, making concepts like investment, pensions, and salaries feel overwhelming.
Having a positive money mindset starts with identifying what money means to you, and what it means to your business.
Emilie says “for me money is freedom, it’s choice, it’s a lot of positive things.”
She sees money as a form of energy that comes and goes; not something to try and store and hoard, but an opportunity to invest, to open up a new avenue for the business, to enable growth and change.
Lack of confidence around money can make investing seem daunting, and can also lead to new founders undervaluing their work and themselves as entrepreneurs. As a founder you need to value your time and the service that you offer, recognising that charging a higher rate for your time will enable you to do more good with your business.
Talking to peers about the rates that they are charging can help when negotiating for yourself for the first time, and the more we talk about this, the more we lessen the taboo and work towards a much healthier money mindset.
5 Things You Should be Doing
- Pay into your pension
- Build personal savings
- Invest early
- Talk to your peers about their rates
- Evaluate your relationship with money