If running your own company is challenging on the best of days, how does a self-employed person manage financially when life throws a curve ball?
Independent Beach business owner Dean Oros says having a good support network in place and a healthy cash flow helps; a positive attitude is important, too.
He speaks from experience.
The forty-something photographer documents the history of people and businesses through images. One ordinary day last summer he left a meeting in the Beach, hopped on his bike as he typically would, and began riding home. Only this time, for no apparent reason, he wiped out, breaking three ribs and tearing his spleen. The injury left him sidelined for more than six weeks.
Oros has been in business for five years. When his accident occurred, he had enough savings to manage income he didn’t earn during his recuperation. But what if this had not been the case or his injury had been long-term?
Research shows a discipline for saving is not the norm in our country. A survey in 2011 by the Canadian Payroll Association revealed the majority of Canadian workers continue to live pay cheque to pay cheque, with 57 per cent saying they would be in financial difficulty if their pay was delayed by even a week. Imagine the situation for self-employed workers.
I spoke with local certified financial planner Andy Kovacs to find out what is available to protect business owners from possible loss of income due to disability. His business is located on Gerrard, just west of Woodbine; it is the first Sun Life Financial storefront office to open in the GTA.
Kovacs is also a Certified Health Insurance Specialist, a designation that focuses on all areas of health insurance, including income replacement, critical illness, long-term care, disability and group benefits. He says solutions include a disability product that replaces part of lost earned income, and another product covers fixed business overhead costs.
I am self-employed and know from personal experience that life’s curve balls take many forms, such as caring for an elderly parent. Sound financial planning should take this scenario into account too.
When my father was diagnosed with cancer at the end of last year, being able to look after him was deeply important to me. Sadly, his cancer was so advanced and aggressive I did not have the opportunity to care for him for very long. He died just before Christmas.
The experience was eye-opening. It has caused me to examine if I can be even more prepared when life takes me down this road again.
And I am not alone. With the growing life expectancy for today’s seniors and the rise in the incidence of diseases such as cancer as we live longer, the need to provide elder care is a growing reality for many people.
Kovacs notes there are options available to help self-employed people (and employees) look after elderly parents; he recommends term care insurance, an income style plan that pays a regular income.
The stress of having an ill family member is compounded if you are losing income that you are unable to replace while caring for your loved one. Likewise, when an independent business owner becomes critically ill, recovery can be more difficult with the added stress of lost income.
When I started my own business eight years ago, I purchased critical illness insurance for this reason. If I become sick with an illness covered by my policy and survive the waiting period, I receive a lump sum cash payment and can decide how I want to spend the money.
People typically do not like to think about death and injury. It is easier to put one’s head in the sand and hope for the best.
Perhaps it is my nursing background that has ingrained me with the view that one should prepare for when someone may become ill, not if someone becomes ill, for life does indeed throw curve balls.
Thoughtful financial planning and management can help minimize the risk involved in leaving the perceived safety net of working for someone else. By preparing for curve balls you can focus on thriving, instead of just surviving, when life happens.
This article is dedicated to my loving father, who died Dec. 16, 2011. Among the many things he taught me is the value of not spending what you do not have.
Christina Marshall, APR, is a health communications specialist in the Beach. She can be reached at firstname.lastname@example.org