The US labor market has seen a rise in burnout among workers due to long hours, financial uncertainty, and lack of resources. Self-employed individuals face an even greater threat of burnout as they are responsible for managing their business and generating income. Surveys have shown that 30% of entrepreneurs admit to feeling burnt out often, while therapists, who often operate in solo or small practices, have a burnout rate of 45%.
The causes of burnout can vary from personal goals to financial concerns. Many individuals push themselves through the business-building process to make their practice or business self-sustaining, neglecting their personal health in the process. To create financial space as a self-employed individual, it is essential to invest in long-term protection, savings, and wealth through various investment tools such as the market, business, or real estate.
Investing in the market is a common way to save for retirement or long-term protection. For solo entrepreneurs, a Solo 401k can offer significant advantages and potential savings. You can invest income as both an employee and employer, with a maximum cap of $69,000 in 2024. Those with a few employees may need to consider a Sep-IRA until their business can support a regular 401k.
Investing in the business is essential for growing the client base and ensuring a stable income. However, it is crucial to invest in a way that turns the business into an asset that can be sold. Creating a business that can last beyond the owner requires opportunities to sell the business to successors who can manage it effectively. An installment sale allows the buyer to take over the business and pay the remaining balance over time, allowing the business owner to pass along assets and protect their retirement funds.
Real estate investing offers various opportunities depending on the location, property type, and renter profile. It is important to benefit from the four ways real estate can generate income, including cash flow, appreciation, equity, and depreciation. While real estate can be a valuable investment, it requires active management and involves risks. When integrated into a broader investment strategy, real estate can provide significant protection using self-employment income.
By diversifying investments in the market, business, and real estate, self-employed individuals can create financial stability, reduce burnout, and improve the long-term viability of their work. Taking steps to protect personal health and financial well-being can help individuals achieve a balance between work and personal life while ensuring their financial goals are met. Ultimately, investing in various assets can help self-employed individuals secure their future and avoid burnout in the labor market.
