Why Entrepreneurs Are Bad at Planning Their Own Finances

Entrepreneurs are some of the worst planners when it comes to their own financial future. Rebecca Irey, founder and CEO of Blue Skye Financial, says it plainly, and she includes herself. Business owners pour everything back into the business, don't get the 401(k) structure employees get by default, and then get surprised by a tax bill they can't pay. Planning takes focus and intention, and it's never too late to start.

In this episode, I talked with Rebecca Irey, founder and CEO of Blue Skye Financial in Texas. Rebecca has been an entrepreneur since about 1991 and spent 20 years as a CFO consultant. In 2017, her husband became critically ill in a matter of hours while she was homeschooling six kids. She wasn't yet 45, and she thought she had plenty of time to sort out her own planning. That experience led her to start Blue Skye three years later.

The first thing she hears from new clients is some version of "why is my tax bill so big?" Entrepreneurs reinvest everything, assuming that shields them from taxes, and then the CPA hands them a bill they don't have the cash for. Rebecca was clear that CPAs do important work. Their job is to look at last year and tell you what you owe. A tax advisor looks at the same numbers and tells you what to do differently next year. This one hit close to home. The week we recorded, two separate clients of mine told me about a huge tax bill they had just received.

She's also skeptical of the finance influencers who say you should always do a Roth conversion, or never do one. Your situation is different from the next person's, so advice that starts with always or never usually doesn't fit. One friend of hers wants the plane, the boat, and the big house. Rebecca would rather own nothing and borrow his toys. A good plan starts with what wealth means to you.

My favorite part was a story from one of her pregnancies. She had gained weight and didn't want to step on the scale, and her doctor told her the number was neither good nor bad. What mattered was whether she went for ice cream or a walk after she left his office. Rebecca says a lot of people feel that same embarrassment about their finances, especially when a loan they took to cover last year's taxes is quietly growing. Her advice is to lay everything on the table with an advisor and start from where you are. Knowing what to do only helps once you act on it.

We also talked about how the advice you need changes over time. Rebecca grew up on a South Dakota ranch that had been in her family for four generations. Her dad knew crops and cattle, but he didn't know the financial rules, and the family lost the ranch. Growing wealth and harvesting it are different games. At 30, an advisor is right to tell you a market drop means stocks are on sale. By 55 you have less runway, and you need someone who knows how to turn savings into income.

If you think you can't afford an advisor, Rebecca suggests starting with an education-based firm that will give you general guidance for free before any fees come up. She has three rules for choosing one. They should be independent, so their first obligation is to you. They should be a certified financial fiduciary, which is a higher bar than simply holding a license. And the relationship should feel good. If you can't be honest with them about what you want, even when it feels embarrassing, they can't help you.

On debt, she takes a practical view. She talked with a mom who raised her kids to never use credit, and the oldest couldn't rent an apartment because she had no credit history. Debt is a tool, and the goal is to use it without letting it use you. Rebecca gets calls every day offering business loans at rates around 40%, and entrepreneurs tend to believe the next marketing push will pay it off. For someone already deep in debt, she says there's always a way out, even if it's slow. One new client started by putting $20 a month toward her highest-interest card.

She also brings up something most financial planners skip. A lot of money decisions come from your nervous system. People hear the name of a product their dad got burned on 40 years ago and react before looking at how it works today. Rebecca lets them have that moment, take a breath, and then look at the facts together.

If you run a business, start by knowing your numbers and being honest about where you stand, then find an advisor who will plan the year ahead with you. Rebecca's site, blueskyefinancial.com, has a calculator that estimates your lifetime tax bill, and it's a good place to start.