How to do financial planning for family before starting a startup?


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How to plan such that family financial are planned? What should be part of plan and what should not?

Getting Started Health Insurance Finance Planning

asked Oct 11 '09 at 01:52
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Jigar Shah
131 points
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2 Answers


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Planning your family's financials is always an important thing to do, weather you are starting a business or not (it is one of your responsibilities to them). You need to forecast your earnings and estimate your spending. When you work for someone else, it is easier to figure out what your projected earnings are, since you know what your paycheck is suppose to say, and assuming that the business remains stable and you stay employed, that should not change much.

When starting your own business, you have much less certainty regarding your projected earnings, and you might also need to increase your spending and invest more money in the business. You must do your best to calculate different scenarios of success and see how they work out (what happens if I get 100 customers in a year? What happens if I get only 50? What happens in the dollar drops and I sell to Europeans?). First figure out if the business makes financial sense, and then figure out how much it will cost you, both in terms of time and money spent.

You need to make sure you can afford to stop working before you start working on your business full time. You might want to work on it part time, during nights and weekends so that you can still afford a standard of living you see fit.

Since you asked about family planning, I can assume you are married, which means that you should include your wife in your plans, and make sure that she is on board. She might believe in your idea and work overtime in order to bring home more money to cover for the fact you are not getting paid. On the other hand, she might not believe in it, so a drop in her standard of living might not be something she is willing to accept. At that point you will need to figure out what is more important to you, your marriage (which is guaranteed at this point) or your business (which might be full of potential, but with no certainty to succeed)

answered Oct 11 '09 at 02:41
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Ron Ga
2,181 points

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In addition to what RonGa has said (which is all great advice) I think there are a couple core things you should do:

1) Have no debt. It's amazing how much cheaper it is to get by when you don't have car payments and credit cards.

2) Save up money to fund the business, understand that this is money you are investing in yourself and in the business. This money can pay your bills and the businesses bills.

3) Save up an emergency fund. When you start to dig into this you need to start looking for ways to replenish it, like getting a job or doing some part-time consulting.

answered Oct 11 '09 at 02:54
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James Avery
570 points

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