How founders can self insure

February 27th, 2024

The life of a founder & entrepreneur has its ups and downs. Its times of surplus and as a friend said being skint. It just comes with the job.

Ideally you have more of the former than the latter! But the longer you’re in the game, the more likely you’ll have time periods of both.

The good (or bad news) is that after good times, comes bad times. And after bad times comes good times. The challenge is you don’t know how long either will last!

And life happens, just because you are a founder, it doesn’t mean you’re immune from the regular swings and roundabouts of life ๐Ÿ˜‰

Here’s some thoughts on how you can self insure as you go. You can build things to insulate yourself from these shocks, a few I’ve found:

  • When times are good, save & save & save as much as you can. Have at times saved as much as 80% of income.
  • At all times, keep your living costs in line. Keep fixed costs low. Keep a focus on value, am I getting a good deal from this.
  • Get smart & savvy at investing. Not the kind of investing you do at work, but the safe, patient kind. Remember this is to counter balance. This is a common mistake, to take the same risk profile as you do at work. Know where you earn the money, and where you invest it. Intelligent Investor, Bogle. Become an index fund maven.
  • Do all the tax deductions you can, be smart with retirement accounts, health savings accounts, college funds. The more boring the better.
  • Get life insurance, or other insurances to look after you and your loved ones.
  • Take cash off the table at regular events or as opportunities arise. Taking some cash to give future you a buffer is a good thing.
  • Get better at talking with friends (founders and non-founders alike) at how they’re investing, what they’re investing in, be a sponge to learn.

The more resiliency you have built up, the more enduring and durable you can be as a founder.

Which is a great super power to add. And the lessons/muscle memory & habits learnt from building up your insurance, you can apply to continuing to build your company.

Best case you don’t ever need to tap into your self insurance. In which case you can always donate it down the track!

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