Planning for Your Financial Future as a Small Business Owner with Ariel Ward

Cover art for episode featuring Ariel Ward

If Money Were Easy

Hosted by Mary Beth Storjohann and Neela Hummel

Planning for Your Financial Future as a Small Business Owner with Ariel Ward

Graphic of a photo of Mary Beth and Neela with a blue banner that reads,
If Money Were Easy
Planning for Your Financial Future as a Small Business Owner with Ariel Ward

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Episode Summary

In this episode, we delve into the world of financial planning as a solo business owner. Our guest, Ariel Ward, is experienced in helping small business owners navigate the complex world of finance to make smart decisions that ensure both personal and business success. With a focus on providing permission, managing risks, and strategic planning, Ariel explores timely topics like business budgeting, retirement planning, insurance, and estate planning. She also sheds light on the challenges faced by business owners around paying themselves, investing in their business, and finding balance between business growth and personal financial goals. Join us for insight on how to navigate the financial landscape of being a solo business owner!

What You’ll Learn in this Episode:

  • Balancing paying yourself, contributing to retirement plans, and investing in the business
  • How Ariel guides clients through tough decisions
  • The importance of tracking business spending, analyzing returns, and making strategic decisions
  • How to contribute to your retirement savings and get your kids involved, too
  • Finding the balance between business and family needs
  • Why you must monitor return on investment (ROI) as you forecast business growth
  • Insurance policies all solo business owners should have
  • Things to think about when creating your business structure
  • Who you should have on your team to keep business growth on track
  • What to consider around using a line of credit to grow your business

Resources Mentioned on the Show:

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Transcript of the Episode

Mary Beth [00:00:14]:

Hey there. Welcome to the If Money Were Easy podcast, the show where we teach you how to expand what’s possible with your money. We’re your hosts Mary Beth Storjohann – 

Neela [00:00:23]:

And Neela Hummel –

Mary Beth [00:00:24]:

Certified Financial Planners and Co-CEOs of Abacus Wealth Partners. Today on the show, we’re talking about planning for your financial future as a small business owner. But before we jump in, a brief disclosure from our compliance department. This podcast is for educational purposes and is not intended as investment, legal, or tax advice. Any opinion shared is not an opinion of Abacus Wealth Partners.

Neela [00:00:49]:

Joining us on the show today is Ariel Ward. Ariel is a Certified Financial Planner based in Charlotte, North Carolina. She has been working in the financial advice industry for over 16 years. Ariel specializes in working with the self-employed and business owners to help them bring awareness, structure, and joy to their money choices. She enjoys working with clients who want to make an impact in their world and build a life they love through their work, relationships, and money. We are so excited to have you, Ariel. Thank you for joining us on the show. 

Mary Beth [00:01:21]:

Thank you for being here.

Ariel [00:01:23]:

Thanks, Mary Beth. Thanks, Neela. So excited to be on your show as well. I’ve enjoyed all the episodes so far and I look forward to our discussion today.

Mary Beth [00:01:30]:

Great. So right out of the gate, we know that small business owners have some complex financial lives. And so when you are working with this subset of clients, what are the main, top three issues they’re coming to you with?

Ariel [00:01:45]:

Sure. So, thinking back to some of the clients I’ve worked with in the past, I think one of the top issues is paying themselves. So how am I supposed to pay myself from the business? When do I start paying myself? Should I pay myself? So, a lot of questions around when they can actually take something out of their business and use it to support their lives and questions around retirement. So, as a small business owner, there’s retirement plans that are available to you, so helping them understand which retirement plan is right for them and when they should start using a retirement plan, when they should start contributing. And then the third issue that comes up a lot is thinking about investing more in the business in different ways. Either hiring coaches, hiring different employees, adding different benefits, or using that money for their personal finances and building their wealth, trying to find a balance between those two competing goals. So those are the main things that clients ask about on a regular basis. 

Neela [00:02:44]:

So I’m dying to know, because I know the two of you have had – both Mary Beth and you have worked with a lot of these clients. I’ve worked with a lot fewer of them. And so I’m so curious, how do you even begin? Because each of those three pieces that you talked about are really big issues. And we haven’t even talked about taxes yet. So how do you approach that when somebody comes in saying, “Hey, I’ve got all these questions,” where do you begin?

Ariel [00:03:07]:

That’s a great question. Typically I begin like I would with any other client. I really want to understand their personal lives and their families and other things that might be important to them. What do they want? What do they want their life to look like? What kind of things do they want to be doing with their free time? What dreams do they have for themselves? I want to really understand what’s going on and what brings them joy, what things they’re hoping to accomplish in the next few years. And then getting a really good idea of that can help us lead the conversation in all kinds of directions. 

Mary Beth [00:03:43]:

And I think for what Ariel just said, one of the things that she and I have both experienced in working with clients is this idea of coming to us and wanting to expand benefits for their employees or wanting to make seven figures from their business. Wanting their business to be a seven figure business. That’s a big one. Or multiple six figures. And then they come with this list of goals that they’re looking to achieve in the business. And then we have to ask, and Ariel  does this is, “So…Why?” And also, “What do you need?” Because a lot of people are focused on the business. Great. It is a separate entity, but especially for small business owners and entrepreneurs, it is so tied into, “We have to get clear on, is this your main bread and butter in terms of an income or is it going to be?” And based on if it is going to be, “How do we make sure that you have your oxygen mask on first? And what is necessary?” And there’s other ways to get outside funding and capital, but again, understanding what you need as an individual for your life. Before we necessarily dive into business as the thing, we’ve got to make sure you’re good a little bit over here, get clear on what the gaps are that you have to fill in. And then we do the checks and balances on the business. 

Neela [00:04:48]:

So the person behind the business is what starts it and then you move into the business. 

Ariel [00:04:53]:


Mary Beth [00:04:54]:

What do you think are the biggest risks that this group is facing when you’re looking at it? So there are all of these questions, but what do you see sometimes that makes you go – kind of breathe in and spidey sense the things that you need to target?

Ariel [00:05:10]:

Yeah, I think the number one risk is taking on too much, too fast. So it’s great to have big goals, but trying to do too much in your business, trying to grow too fast at the expense of other things, one being their personal finances and what’s happening there. So maybe there’s debt that needs to be addressed. Maybe there’s building up a safety net that’s not there on the personal side. On top of that, we all have limited time. So that’s incorporated into it, too, getting to the point where you’re spending so much money and time in your business there’s not enough of it for your personal life. Which is where you’re going to end up feeling a lot of that stress from the people around you who need you and things that need to be addressed that aren’t going to go away in your finances. 

Neela [00:05:54]:

I think it’s so interesting because we’ve talked a lot about workaholism and boundaries in general. And I would suspect that with this demographic, that’s probably a challenge because if it’s your business, you’re putting everything into it and it’s probably hard to separate from business time and personal time. And what kind of costs are you willing to pay? There’s financial costs, but then you mentioned time cost and there’s probably an emotional cost. And so just being aware of those. 

Mary Beth [00:06:21]:

Yeah, and I’d say that clients look to Ariel to give them permission. There’s a permission component, especially with this group, where sometimes they won’t give themselves permission to make the tradeoffs or to take the time or to look at things from this different angle. And so being an advisor in this role, you get to give those clients permission to say, “Okay, you can cut back.” Or, “If you do this thing, are you investing for growth in the business? Are you investing in this hirer? Because you’re going to then take your time and grow the business at a faster rate? Are you investing in this hirer so that you could slow down and have some time? And maybe the ROI might not be there in that space, but you are getting yourself some time because you’re replacing some understanding and being able to help to manage those risks.” Because a lot of times, especially when you’re in it, sometimes the clients that do come to us are looking to throw money at the problem and can’t necessarily see their way out of it. 

Ariel [00:07:04]:

Yeah, that’s all very true. I think my role – I see my role when I’ve worked with these business owners – a lot of times clients know, these business owners know what they should do or they have a really good idea of what they should do. So I’m creating a space where they can talk about it, they can have an unbiased third party take a look, and I can give my opinion on what I see as the most important, pressing issue they should focus on. So just helping them to bring some focus to one thing and maybe after the call, being able to provide a to-do list of like, “Here are some actionable items you can take,” and start taking little steps towards solving this problem, whatever it is they’ve brought in that day.

Neela [00:07:42]:

I love that. Just like a helpful sounding board that you’re not necessarily being like, “I’ve got all the answers,” but helping them take that next step and maybe not take on too much and over commit. 

Mary Beth [00:07:54]:

Yeah. And it could be something like a team member, that you’re looking at the P&L and you can see, “Oh, you’re spending X amount on this marketing thing or you’re spending X amount on these team members. Like, what’s the return that you’re getting there? Is that paying off the way that you expected it to?” And sometimes the answer is yes. And it’s great because you can kind of track down the growth that’s happening and sometimes it’s a no, but they’re afraid to make the decisions and make the cut or they haven’t looked at it through that lens, maybe of like, “Hey, you’re looking at your P&L, the percentage that’s going to this thing. Would you rather deploy those funds elsewhere? Would you rather have that to take home? Would you rather use that to invest in these areas?” So it’s providing space to kind of pose and kick back some questions and bounce around ideas. So they’re not necessarily comfortable, fun conversations for the business owners… 

Ariel [00:08:36]:

Not always.

Neela [00:08:37]:

We talk about risk, and the other side of the risk coin is opportunity. So what are some of the great opportunities that you see for small business owners that maybe aren’t available to their salaried counterparts? There’s got to be opportunity, right? Otherwise, what are we doing here? Why would anybody ever choose it, right? 

Ariel [00:08:57]:

I mean, I think the biggest opportunity, especially if you have a business that has something that can be repeated and you can grow, like I’m just thinking of some of the group therapy practice owners that Mary Beth and I have worked with in the past. Being able to build out systems in your business that are going to be easily repeatable and thinking with those owners, being able to add on therapists and have a way that they can attract new clients and build revenue for that therapist and make that hire worthwhile. So that’s the biggest opportunity. Building something that you can continue to grow over time. And sometimes to get to that opportunity, it means doing some uncomfortable planning up front, saving more and cutting back in other areas. Kind of like you can on the personal side as well when you have to save for a big goal.

Neela [00:09:48]:

So creating some degree of scalability for a business that can scale outside of just the labor that you’re putting in, you’re kind of creating a framework that could then grow and grow beyond itself without you putting in increasingly more hours. Ideally.

Ariel [00:10:01]:

Yeah, exactly. 

Mary Beth [00:10:02]:

That’s what we see with a handful of our clients from the therapy practice and then in other areas as well. But the scaling of it to get yourself out of being the workhorse, that’s the goal. Even when you get out of being the workhorse of delivering the service or product, there is still managing the business that comes into play, but getting yourself out of that or making it repeatable and bringing in others and finding new markets, that’s the biggest growth opportunity in terms of wealth building. That’s where the wealth building comes from. 

Neela [00:10:26]:

And Mary Beth is going to tease me because I’m going to talk about the T word, which nobody ever knows what I mean by the T word, but the T word is taxes. 

Mary Beth [00:10:33]:

I know, I know where we were going. 

Neela [00:10:37]:

Drum roll, please. Taxes, anything. 

Ariel [00:10:42]:

Yeah, I mean, of course, as a business owner, there’s some different tax rules that apply to you that you definitely can’t take advantage of when you’re just a W-2 regular salary employee, one of them being different expenses you can write off. So there may be certain things that a self-employed person or business owner are paying for already, like maybe internet or services for their home or like gas for their car, things that they also use in their business that they can write off from their taxes. There is also the qualified business income deduction, which for pass through income, that income is – only 80% of this taxed. You get a 20% deduction on the income subject to certain limits. But those are some things that apply to business owners that don’t necessarily apply to somebody else who’s working for a business or other employer. 

Mary Beth [00:11:33]:

One of the things that we’ve seen questions on, and we do have a few clients who do this as well, is the hiring of children inside the business and being able to set up Roth IRAs for them at a very young age. And so you talk about generational wealth-building opportunities. That’s a huge one when you look at something like that. And I know it’s very trendy right now. I’ve seen a TikTok or Instagram reel going around about Beyonce… Beyonce’s daughter. 

Neela [00:11:57]:

Custodial Roth. Custodial Roth. Are you doing anything if you’re not setting up a Custodial Roth?

Mary Beth [00:12:03]:

And so it’s very funny because now we get – I know I do, I’m sure Ariel does, too – I get questions off of Instagram reels in terms of small business owners for planning opportunities. And it’s always like, “We’ll tell you when that one comes into play for you.” 

Neela [00:12:15]:

We should also say, that says something about your TikTok algorithm. They’re like, “This one, she wants all the Roth content.” 

Mary Beth [00:12:20]:

You need money tips? Money tips about the trendy money tips? I’m curious as to what they’re saying, but I don’t know. Ariel, you’re experiencing that as well. 

Ariel [00:12:31]:

Yeah, yeah, definitely. So that’s something a lot of my business owners who are also parents, who have kids of various ages, they get asked about that and you can definitely hire your kid in your business. You might want to make sure there’s a valid job role you’ve created for them. But the benefit for your children and for your own self as well, is you can pay your child a salary and then that money can then be contributed to a Roth IRA up to either what they’ve earned for the year or whatever the Roth IRA limit is, which is $6500 right now. So that’s a really cool benefit. And there’s also some, if you want to get really into it, there’s some ways that you can set up a family LLC and have somebody, maybe your partner, run the family LLC and manage the children’s work and pay the LLC and avoid Social Security and Medicaid taxes as well. So that’s like next level tax saving, contributing to your children’s future. But it’s a really cool way to set up some money for your kids that can be used hopefully for retirement. There’s a couple of other ways you can use the Roth money as well, but it will grow tax free, which is a huge benefit considering if you’re starting with someone who’s ten years old, money they’re not going to use until they’re 60. It’s pretty amazing.

Neela [00:13:42]:

Compound interest wasted on the young. Right? 

Mary Beth [00:13:44]:

So talk to us also in terms of retirement savings. So salaried employee traditional plans we have 401(k), 403(b). There’s the max that traditional salaried employees can do. The catch up. There’s benefits obviously, to being self-employed in terms of the different accounts available and the maximum that you can put in. Tell us a little bit about those. 

Ariel [00:14:02]:

Sure. Yeah. So that’s something that’s unique about business owners is they have the opportunity to pick their own retirement plan and use it in the way that’s going to most benefit them in that particular tax year. So the ones most people have heard of are like a SEP IRA. So a SEP IRA is employer only contributions. And with the SEP IRA, a self-employed or business owner could put in 20% of their net income. It’s going to be tax deduction. And in a SEP IRA, the money grows tax free and can be pulled out of the account in retirement. You’ll pay taxes, but their money grows tax-free between when you make the contribution and the retirement date and then individual 401(k). So 401(k), you can make both an employee contribution, which is like $22,500 this year, and then you can also make an employer contribution, which is 20% of your salary or net income. So that one gives you the advantage of you can always put in the $22,500 as long as you’ve earned that much and then that extra boost of putting in 20% of the net income. So depending on what you earned for the year, one of the two, SEP IRA or the 401(k), is going to allow you to max out, put in the most you possibly can and reduce your taxes by that amount. 

Mary Beth [00:15:18]:

I can’t remember the max for this year, is it 50? There’s a max, but so it’s much higher than the $22,500 that you can do as an employee that’s basically 56. Ariel’s checking her worksheet. I don’t know what it is. Oh my gosh, I’m way behind on inflation.

Ariel [00:15:33]:

It’s $66,000. Next 2024 is going to be like $68 or $69,000. I don’t think there’s consensus on the exact number yet. 

Neela [00:15:41]:

So, again, that’s money that you can put aside, not pay any tax on, and that’s a lot larger than a salaried employee. 

Mary Beth [00:15:47]:

Yeah. So taxes you’re not paying today on those funds, which is fantastic. And then depending on where your tax bracket is at in retirement. 

Neela [00:15:54]:

So, I do wonder a lot of small business owners have what we would call that empire builder mindset. We did a session with Brent Kessel, who wrote about eight different financial archetypes, and one of those is the empire builder. And so how do you approach retirement planning with the mindset of, “I’m going to kind of keep putting it back into my business because the business is going to be the ticket to Greece or the retirement that I want.” How do you get them to kind of balance them versus the business? How do you approach those conversations? 

Ariel [00:16:24]:

I think it goes back to that initial conversation we had around what is it that you want out of life? Most people, even empire builder, they don’t really want to spend all their time and energy in the business. They’re doing that because they have this greater vision for what that business can do for their family or their kids. So one thing I like to do is kind of map out the, if your goal is to spend more quality time with your family, maybe we could put a dollar amount on that also. And envision like, “What if we took $10,000 a year out of the business and set it aside for travel to do some things? I’m with your family. What if we invested $6,000 of this a year into a 529? So you have that set up for your kids.” So just envisioning out and mapping out the possibilities and having the discussion around it. Like, “What if your life looked like this and you knew you had the cash set aside and then there’s still money that we can assign to your business? Maybe we set a goal of like, let’s keep 10% of the profits in the business for future growth.” I think just setting some specific limits around it, seeing, having the discussion around, “Does that align with what you’d like to have happen in your life?” Looking at it as baby steps in the direction for whatever it is they want, time with kids, being able to provide for college education. It doesn’t all have to be done at once. And the same thing with the business, it doesn’t all have to happen at once. Both could happen at the same time. 

Mary Beth [00:17:48]:

Yeah. With the empire builder and with most people, I’d say coming back to why you’re doing this, what’s the impact you’re hoping to make? What is keeping you invested? And then, as Ariel said, there’s a variety of different ways we’ve hit it in terms of, here’s what we propose you do. It’s negotiation, right? We’re bringing our side to the table, they bring theirs to the table. And then you kind of work out what can be agreed upon in terms of what feels good. When you have an empire builder, I think you do feel like this anchor. You’re anchoring them to this other thing to kind of remind them, there is this thing over here. There is this option where you don’t have to be in it all the time. And also, this is kind of the best diversification way to do it because all of your eggs aren’t over here. And so it’s just kind of being that anchor. And sometimes you can feel like a wet blanket, but you do feel good, and you run the numbers and know they’re protected on that side, too. And it’s not that we’re trying to slow the growth and keep them held back, because sometimes they’re like, “You can’t see what I can see, right?” Sometimes you have that. But that is kind of our job in having those rational discussions around, “Okay, what’s the turnaround time? When do you expect to hit those things? What are your plans?” And so there is a bit more digging and pushing. If there is this big vision of what they’re doing, what does it look like and how long are they giving themselves to get there? Does it make sense?

Neela [00:18:57]:

It’s almost like going from this idea of, “Should I invest in myself or should I invest in the business?” And you’re helping them see that it can be an ‘and’, that you can do a little bit for you and for your long-term security that is outside of the business while also still investing in the business in a pragmatic way that also gives guidelines. Like, just hearing those guidelines from you, Ariel, is great. Like, okay, well, what if we still do like – “That feels really good as a business owner, I still feel like I’m moving this forward while also giving myself some downside protection.”

Mary Beth [00:19:25]:

Also, Ariel’s a rock star in doing this. I’ve seen her do it countless times. It’s like “Okay, over here. Okay, well, here’s what it looks like.” And just like, “No, I hear you. And then also there’s this.” And it’s so great to see. I love watching Ariel.

Ariel [00:19:41]:

I always go into it knowing it’s some sort of compromise, right? I’m probably going to come with the more aggressive, let’s invest more here, over here, and these specific accounts where I know how things are going to work out. But working with the business owner, like Mary Beth alluded to earlier, they know what’s happening in their business and they can see the growth that can happen. So there’s going to be some deviation from my perfect financial planner plan that fits in with what they want and also helps them see that they can move towards their outside goals at the same time, if they grow their business. 

Neela [00:20:14]:

It’s a good partnership. 

Ariel [00:20:15]:


Mary Beth [00:20:16]:

I’d say the other great thing that in terms of working with an advisor that Ariel’s also really good at is swatting down Shiny Object Syndrome. I think a lot of business, small business owners have Shiny Object syndrome. There’s so many different things that you want to pick up and like, “Oh, there’s this new thing I can do or this new product I can launch, or this person I can hire who’s going to fix everything,” all of the wishes. And I think that’s like, the great part about being an advisor is to bounce those ideas as well. When you’re kind of in it with them on that planning basis, you can redirect them back again to that initial conversation like Ariel was talking about. 

Ariel [00:20:46]:

Yeah, and I learned that from you, Mary Beth, because I had a number of times when clients were going to hire this coach that was going to cost $12,000 a year and was going to solve all their problems. You saying, “Okay, well, what’s it going to bring to your business? Tell me. Explain to me how this is going to work out in the long run and you’re going to build your wealth and you’re going to have more free time.” Whatever it is that the initial goal was, bringing them back to it and reminding them that one object, one person, is not going to solve all the problems. So root it in reality. 

Neela [00:21:16]:

Yeah, I love women. Women, just like “game respects game.” I just love that. 

Mary Beth [00:21:22]:

It’s accountability. You spend the money, but what’s the ROI that you’re looking for? What makes this a successful investment? Neela and I manage a bunch for Abacus, so we’re looking at that every day. What’s the ROI that we expect on these things that we’re doing and if you’re spread too thin? So I think it makes a lot of sense that happens. And when you are working with small business owners and their business income is so intimately tied to supporting their personal goals, it’s hard to stay out of. Small businesses in general typically can be a separate entity, but when you’re working with these types of owners, it becomes very integrated in helping them meet their personal goals. So, as an advisor, I let it become invested there with clients, and Ariel picked it up and continues it with a lot of clients as well. Having an eye on both is helpful because if the business is off and you don’t know, it blows up their personal and they’re stressed out about it. You’re an advisor for just their personal and they’re stressed out about this thing over here and you’re kind of like, “Oh, we don’t really work with that, so just let me know when…” you wouldn’t recover. And so you’ve got this little box, but they have questions on the business planning. That’s how it gets there.

Neela [00:22:19]:

The lines kind of blur a little bit. 

Ariel [00:22:22]:


Neela [00:22:23]:

So the finance industry loves the quick rules. The quick rules that encompass how much you should be saving for retirement, how much you should be putting aside an emergency fund. Are there specific rules that you go back to over and over that specifically speak to this demographic that they find really helpful? 

Ariel [00:22:41]:

The one that’s coming top of mind is business emergency fund. That’s always an easy one. Do you have a business owner who’s got the tendency to hold more cash than they need in their business? Or the opposite. There’s not enough cash for problems or things that go wrong. Keeping three months worth of operating expenses set aside in a business savings account is a good rule to follow that pretty much would work with a lot of different businesses. So that’s one I often across the board will recommend to clients.

Neela [00:23:11]:


Mary Beth [00:23:12]:

So I have two other questions. One, what is the team that you work with in terms of small business owners? Is it just you and the client? Are there others that are at play with this? 

Ariel [00:23:22]:

Yeah, so I often want to work with their bookkeeper just to understand what’s happening month to month in their business, what the trends might have been from the time they started their business to now in terms of growth and expenses and what we can project going forward based on those. And then also I would like to meet their CPA. And if they don’t have a CPA, I’m going to introduce them to one as well, just so that we’re all on the same page in terms of taxes, because those can also be a surprise, especially if you’re a new business owner and haven’t been in the habit of making estimated payments. I think that’s a great person to have on your team. And then going beyond that when questions come up around hiring and what’s legal in that area, or expanding their business in different ways, having a good business attorney that they can talk with but also be a great member of the team. 

Mary Beth [00:24:11]:

Yeah, so I think in addition to that, so the team is a really great one. And then we talked about cash flow and kind of the long-term planning from a budgeting and retirement standpoint, but talk a little bit about the risks in terms of the estate planning aspect and some of the insurances that you see small business owners are facing. 

Ariel [00:24:29]:

Yeah, well, I think from the estate planning aspect, it’s thinking about if something happens to you, who’s going to run your business? So this could be a scenario where you’re sick or you’re having to care for a family member. Your business still needs to operate, so what do you have in place to make it easy for that person to operate? And it could be some legal document that allows somebody else to make decisions for you in your business. Or it could be a document that just outlines specifically what needs to happen if this happens. 

Mary Beth [00:24:57]:

So business continuity plan for the client? 

Ariel [00:24:59]:

Yeah, business continuity plan. And also letting whoever your backup person is, letting them know that they’re that person. And this is like things to be run if I’m not able to do the same thing, depending on what kind of business you have. I’m thinking about the worst-case scenario you pass away. That’s something you also want to have outlined. Like how do we unwind my business? How do I make sure employees are taken care of? And all of those things could be outlined in a business continuity plan as well. 

Neela [00:25:28]:

Just going to do a shameless plug here for Co-CEOs because there is built-in succession and continuity planning and that’s it.

Mary Beth [00:25:37]:

And then I know one of the other things as a small business owner, and especially if it’s your small business and your ability to earn an income for anybody is supporting your personal life, what are you seeing in terms of the insurances that small business owners need? 

Ariel [00:25:50]:

Yeah, so definitely having if you’re in a business of providing a service or advice of some sort, having professional liability insurance, also known as E&O insurance, that would protect you if you did have a client come back and sue you based on advice or services that you provided. And then also just general business liability insurance is especially important if you have like a physical place that you do work where something could go wrong, property could get damaged that would protect you in that case. And then I think the number one thing that we haven’t talked about at this point is if you are running a business to have the correct legal structure. So depending on your situation and maybe where you live as well, having an LLC. So that creates a separation between your personal assets and your business. Or even if it’s right for you, like forming a corporation, just some way that you’re creating a legal separation between yourself personally, your personal finances and your business finances. 

Neela [00:26:50]:

Anything else that we’re missing? I mean, I know you hit the legal structure. Any other big takeaways that you would want our listeners to leave with? 

Ariel [00:26:58]:

I think the biggest takeaway is, I like to treat when I look at a client’s business, I like to treat it a lot like I do when I look at their personal finances. So thinking through from the top, “What’s my budget for my business? How does it fit in with the revenue I have coming in? What are some places that I need to have cash set aside either for future investments” or like we talked about, for the emergency fund. “How am I going to retire from this business someday? So what’s the retirement plan look like? What should I be thinking about there?” And we talked about insurance. So making sure you’re insured properly and you’re not taking any unnecessary risk in that area. And then finally looking at your estate plan. “So what happens if you’re not available to run the business or you’re no longer alive? What happens with your business?” 

Neela [00:27:44]:

I love it. 

Mary Beth [00:27:45]:

A lot of business owners use financing to launch, right? So there’s financing, there’s startup capital, there’s lines of credit that you can use to keep the business running. How do you approach that with clients when they want to put it on a credit card, they want to get a line of credit and then they’re taking the line of credit or they’re taking the thing and they’re like, “This is going to help me grow. My intention is I’m going to take this amount, I’m going to put it here, it’s going to grow me X amount.” Are you just like, let it run? Do you have a cautionary tale? How do you handle that with clients? 

Ariel [00:28:13]:

Yeah, I mean, I think it really is going to depend on the kind of business you’re in. There are certain business types. Like if you’re running a retail business, having a line of credit is going to be really useful because there’s times of year when you don’t have revenue coming in and then there’s other times of year, the holidays when you have all the revenue coming in. So there’s going to be a use for credit. I think overall it goes back to understanding what are your numbers, what can you consistently bring in, what can you afford in the budget when it comes to servicing the debt? So, like, if you’re going to take on a line of credit or borrow $50,000, do you have enough room in your current operating expense budget to add that debt in? And then in the long run, what do you need to bring in to make this pay off? What dollar amount of revenue is going to make that investment, that debt worth it in the long run. So until you’re clear on those numbers, I typically don’t recommend that clients take on debt, especially if they don’t need it, and especially if they’re not sure on how it’s going to pay off in the long run.

Neela [00:29:14]:

“But why?” All comes back to, “But why?” I love it. 

Ariel [00:29:18]:

Exactly. Yeah. 

Mary Beth [00:29:19]:

Okay, let’s transition to our wrap up questions. Ariel, what is the best financial advice you have ever received? 

Ariel [00:29:27]:

Well, I’ve been saving this one for, you know, haven’t shared this with any of my clients. My dad used to always say when we were growing up, “Never use only and money in the same sentence.” And I hope he listens to this because he’ll get a huge kick out of me repeating this. And I think his intention in saying that was he didn’t want us to make financial decisions that were only driven by something being on sale. So we knew not to come to him and be like, “I want these shoes, they’re only $25.” Whatever. He wanted us to make decisions like, “I want the shoes because my old shoes are worn out and I really need them for basketball” or “What’s the value it’s going to bring? Do you really need it or is it just because there’s a certain price attached to it?” I didn’t always feel that growing up, but as an adult, I can see that’s probably what he meant by driving that into our head so much. 

Neela [00:30:21]:

I love that so much. 

Mary Beth [00:30:23]:

I do! Neela just wrote it down. I bet it comes up in a future podcast. It’s going to get used again. 

Neela [00:30:29]:

I’ll cite you. What’s your dad’s name? 

Ariel [00:30:32]:

Dale Maddox. 

Neela [00:30:33]:

Thank you, Dale. We’re going to credit you for all future attribution reasons. All right, Ariel, what is your favorite money mistake you’ve made and why? 

Ariel [00:30:44]:

Yeah, I feel like I’ve made a lot of money mistakes that I have enjoyed at some point in my life. But my favorite one that has been most useful also is in college. One summer I had a job and I qualified for a credit card. So, got the credit card and I don’t even know what I bought, but I maxed it out to whatever the limit was, $750. It was so painful. A college student who’s making maybe $100 a month to have to pay that $750 off. But I did it. And it was a really good lesson to learn, to don’t spend more than you have. Don’t spend more than you can pay off in a month. And I’ll say to my parent’s credit, when I told them I got this card and I charged it up, they were just like, “That’s really bad.” I mean, not bad, but they’re like, “I’m really sorry for you that you did that.” They could have solved the problem for me. They could have paid it off. They could have fixed it for me. I wouldn’t have to worry about it. But they let me go through the pain of making the payments. Having to dial my budget down to $50 of spending a month, that’s been a super valuable lesson because that was the last time I was in credit card debt. 

Neela [00:31:50]:

Oh, I love that also, You’re a closing question ninja. 

Mary Beth [00:31:55]:

Okay, fill in the blank. If money were easy… 

Ariel [00:31:59]:

Let’s see. If money were easy, I think that people would probably feel more comfortable talking about it. They’d feel less shame. I think a lot of times when clients come to me with different questions or topics, I can sense there’s a little bit of shame around it. Or they’ll say, “This is a stupid question. I feel like I should know this, though.” That shame. And, “I feel like I should at this point in my life, be this certain way.” I think some of that would be gone because hopefully if money were easy, we would know exactly what to do with it and we wouldn’t be concerned about how other people might be judging us about how we’re using our money or not using our money or investing it or spending it different ways. 

Neela [00:32:38]:

Oh, I love it.

Mary Beth [00:32:40]:

So great. 

Neela [00:32:40]:

Okay, Ariel, tell our listeners how they can find you on the Internet in the interwebs, how they can get in contact with you.

Ariel [00:32:48]:

Sure. You can find my bio on the Abacus website, so that would be a great place to contact me. Or they can reach me at

Neela [00:33:00]:

Thank you so much.

Mary Beth [00:33:01]:

Perfect. Thank you for coming on the show. 

Ariel [00:33:04]:

Yeah, thanks for having me. 

Neela [00:33:07]:

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