How to Prepare Financially as an Entrepreneur with Motive Financial

Do you know the most common thing people tell me when they hear I quit my job back in January to work for myself? “Oh wow, you’re so lucky!”

And sure, working from the comfort of my own home is a heck of a lot better than taking the subway in rush hour, wearing heels that pinch my feet for 8 hours a day, and having a cap on how much I can earn each year. But what those people may not realize is there are a ton of trade-offs when you’re self-employed.

I may save a ton of time by giving up my daily commute, but I also work way more hours working for myself than I ever did working for someone else.

My feet don’t pinch from wearing heels anymore, but I have to pinch my pennies more than ever to make sure all my bills are paid, I can afford all of my business expenses, and I’m still saving for my future.

The sky’s the limit on how much I can make each year, but since I’m still in my first year of business and have yet to launch my financial counseling service (and my Rich & Fit Bootcamp is still very new), if I can match the salary I made last year at my old job, I’ll be over the moon!

Now, this isn’t to scare you if you’re thinking of leaving your job to work for yourself. This is just some good ol’ #realtalk. You need to be prepared before you make such a big leap, otherwise, you’ll risk getting into debt or need to go back to that 9 to 5 life you were so excited to say good riddance to.

Cut Back on Your Personal Expenses

You see, my husband has been self-employed for over a decade, but there was always the security that I had a stable 9 to 5 to keep us afloat if anything happened to his business.

Ever since I became self-employed, that security went out the window. That’s a big reason why my husband and I have taken our finances even more seriously now than before.

Moreover, our expenses are way higher than in previous years. Before I became self-employed, I was making good money at my day job plus the income from my side hustle. We were both approaching our 30s, and we really wanted to fulfill our dream of becoming homeowners.

So, last summer we bought our first home together. It’s been amazing owning our own home, but it’s expensive! Our cost of living has essentially doubled, and that’s not including all of the things that have broken that we’ve needed to replace this past year.

What this means for us financially is that cutting down all of our expenses has never been more vital. So, we’ve made a concerted effort to stop going to brunch every weekend (yes, this was a big problem for us), make more meals at home, cut down on driving or Ubering when we can walk or transit, and of course, we’ve been crazy diligent in terms of tracking our spending every month.

Obviously, we’re doing this now while we’re already self-employed, but if you can do this beforehand you’ll be way better off. If you can cut back your expenses as much as you can in advance of becoming self-employed, you’ll be way more financially prepared to deal with all those fun and expensive entrepreneurial challenges that will inevitably come your way.

Find a No-Fee Financial Institution to Bank With

One of the things we’re also looking into to help us cut our costs is moving to a no-fee financial institution. You may think paying a few dollars per month in bank fees isn’t that big of a deal, so here’s my rebuttal. First, those fees may look small, but over the course of many years they can add up to hundreds if not thousands of dollars. Second, why pay fees when you don’t have to?

Nowadays, there are a ton of no-fee financial institutions out there and it’s always nice to have options. One of those options is Motive Financial.

If you’re wondering where the heck Motive Financial came from, it’s actually a division of Canadian Western Bank. That means that if you bank with Motive, your deposits are held at Canadian Western Bank, which is a member of the Canada Deposit Insurance Corporation (CDIC). Why that’s important to note is because since it’s part of CDIC, your deposits with Motive are insured for up to $100,000. I wanted to make that clear because a lot of people I talk to feel a bit weird about online banks, but if it’s an online bank part of CDIC, it’s as secure as the big banks.

Motive, like many other online banks, is trying to set itself apart from the traditional brick-and-mortar banks by offering more value without nickel and diming its customers. And because they are solely online and have no physical locations, they can afford to offer products that are free like their Motive™ Chequing Account and Motive™ Savings Account which both offer no-fee day-to-day banking with no minimum balance required.

Shop Around for Higher Interest Rates

Besides offering no fees on their chequing and savings accounts, Motive™ also offers higher interest on their accounts compared to the big banks. Actually, most big banks don’t offer any interest on their chequing accounts, whereas Motive™ offers 0.60%. As for their savings account, they offer 1.50% interest.

Although it’s important to cut down on your costs as much as you can, at a certain point you’ll hit a wall and there’s just nothing left to cut back on. That’s when you start looking into ways to earn more money, and one way to do that is to earn more money on your money by way of earning interest.

Here’s a quick example. Let’s say your chequing account currently pays you no interest. Your money is just sitting there and actually losing you money. Do you know why? Inflation. If it’s not earning any interest, then it’s not keeping pace with the inflation rate (currently sitting at 1.40%), which in turn means it’s losing you money.

But the goal isn’t just to keep pace with inflation. Your goal should be to go above and beyond that! You may not find a chequing account that’ll do that realistically, but that’s why you shouldn’t keep a big pile of money in your chequing anyway.

That’s what a savings account is for, and it looks like the Motive™ Savings Account is outperforming inflation by 0.10%. So, it’s keeping up with inflation and earning you something extra. Not only that, but let’s not forget the power of compound interest. The higher the interest you earn, the greater the sum will be in the future because that money earns interest and then compounds to grow and grow.

So, If There’s One Last Piece of Advice I Can Tell You…

Self-employment, entrepreneurship, whatever you want to call it can be great. I love it, and I really can’t see my career going any other way now. But…it’s not without its challenges. If you want to work for yourself, if you want to start your own business, if you have dreams of being on Dragons’ Den or Shark Tank, you need to be diligent with your money.

You need to be prepared, you need to track everything, you need to be careful with your spending, and no matter what you need to make saving more and earning more your priority.