Do you Have a Bad Relationship with Money?

Female Entrepreneurs and Finance

It’s 50 years ago that women in Switzerland were granted the right to vote and while this might seem like a reason to celebrate it is also scary. Unlike in other countries in Europe women in Switzerland had to fight for a long time to be granted this right. You would think gender equality is self-evident here but it is not. Reality is still that many women earn less than their male counterparts, that having a career as a woman is rather unusual and being a female breadwinner is still an exception. And while I always worked or had my own money since I left high school, money and I have never been great friends. Money is a source of stress for me that I either avoid completely or obsess over. In an attempt at healing my relationship with money many years ago I first had to learn a few basics and make some key mistakes. I want to encourage you to learn more about finance and money and become financially independent.

I repeatedly asked myself three questions when I started my own business in Switzerland:

  • Will I ever get my head around the financial side of the business?
  • Will I ever get better at managing the cash flow?
  • Will I ever make enough income to not feel stressed and under pressure?

Cash flow did not make sense to me. 

I am really good at computing cost projections and balance sheets for expats. I can explain the difference between purchasing power parity and cost-of-living index. I can tell you how COLA relates to foreign exchange rates. I was excellent in Math as a student. So it’s NOT that I don’t like numbers or that I am not a “numbers” person (which unfortunately a lot of women attribute themselves with). I like math and numbers but I missed something else.

My issue was more that I lacked the practical understanding of a “good housewife”. I didn’t know how much a liter of milk would normally cost in the supermarket. I didn’t know those little secrets of saving money in Switzerland such as the fact that Migros and Denner are essentially under the same corporate umbrella but you can buy twice as much food at Denner.

When I was working as a Global Mobility Leader, I had a good paycheck. In Germany, I would even go grocery shopping in the “bio” shop Alnatura. My mother would say that I might as well go shopping in a pharmacy. For me, this meant “quality of life”. It meant that I would not be stressed at the cashier on Saturday because five other people were in line behind me like in the other supermarket. And I had the idea that I was eating healthy and helping the environment by buying “bio”.

There was another issue why I stopped learning more about finance, investments, saving money when I was employed: I had a bad relationship with money. Money stinks. Money doesn’t make you happy. When you have money, you don’t talk about it. I had all sorts of relationship issues with money. Money reminded me of scams or bad deals my mother and I had gotten into because we were naive and believed a banker would know what they were doing.

This article is for you if you started out as a business owner or if you feel that you need to heal your relationship to money. And if you are not a female but you feel you need to get better with money, you may read this article as well. Let’s try to understand a few basics of finance and financial independence.

Maintain a Cash Flow Plan

If you want to run a sustainable business, work with a cash flow plan. It can be a simple one, but you need to have your finances in order. In the early days of my business, I asked my BFF (who is a Finance guru) to review my business plan. She explained that I would just need to ensure that there is a cash flow in and that this is bigger than cash flow out. Easier said than done, but I still use that same plan a decade later.

Move from Fixed Income to Fluctuating Income

When you are used to a certain lifestyle with a fixed monthly income you rely on that paycheck a lot because you tend to tailor your lifestyle around your consistent monthly income. If you are unemployed or if you start out as a freelancer you have to get used to a fluctuating income. 

A starting capital and cash reserve are important. If you are responsible for rent, health insurance, phone bills, transportation, food and other necessities you need to ensure that you can cover your basic needs for several slow months. In the first five years you might make a lot less than you are used to. You will need to change your lifestyle significantly.

Ideally, you have a reserve for a year in your bank account or someone who would help you out such as a parent or friend. Don’t bring your partner or spouse into your business. This can weigh heavily on your relationship and you also have to consider what it means in case of them facing unemployment, serious disease or death. Before you start a business in Switzerland, you should understand what this would mean for a (married) spouse. The legislation is not always logical, hence you need professional advice before you stir yourself and your partner into a dead end.

Read Finance Information with Different Angles

It is challenge to read finance information when it is written in a bad way and often directed at bankers or industry professionals rather than the “simple user”. I have addressed communication with bankers several times already. Most financial information is written in a way that no one wants to read it. Some of it does not even make a lot of sense. I received a weird letter the other day and sent it back with edits and side comments. The main message was: We could not deduct money from your account but there was a lot of fluff around it. It took me a while to understand why this company wrote to me. 

Also, I was very happy when a few years ago for the first time the bank gave me two female relationship managers: One for my personal account and one for my business account and we immediately noticed that we had a lot in common.

I have started to read the Cash Guru and I also find the LGT Navigator helpful. If you like “Gossip Girl” you probably enjoy “Inside Paradeplatz”. Another good resource is Finews.ch

Learn Vocabulary and Budgeting

If you want to appear financially competent when talking to your bank manager, financial advisors, insurance brokers, mortgage providers, or lawyers, you need to know a few basics and speak their language. For example, you need to understand interest and how it works. Also negative interest, debt, and how you get into debt. What is an advantage of a mortgage versus paying rent? How do open and closed investment funds actually work?

In the early years and even before I launched GPT, I used to spend more than I earned. I applied “Reaganomics”. What works in politics, does not really work for a small business. At the time, I did not really understand that this investment could hinder my potential for getting out of the red figures in the long term.

I made bad financial decisions. For example, I started to pay myself a salary too early. I listened to an advisor and should have listened to my gut feeling. Remember that other people’s experiences in the business world could be biased. They have opened their business many years before. Switzerland has also suffered from the global economic crisis.  Often the Swiss have access to networks that foreigners will not really get into. Depending on your type of business, you should have a current account, which balances your company and your personal investments. I would advise that you separate your private and company accounts.

Split Larger Invoices

My business is cyclical and once I understood the cost and earning cycle, I could prepare myself better for the downtimes. For example, I have a lot of annual invoices in January but January is often a slow month. You can ask to split invoices into smaller payment plans. Often, when you ask the insurance provider they are willing to support you on a payment plan. If you want to be ahead of your costs, you should ask for larger invoices and pay them as soon as you possibly can. You can ask for an extension of a payment deadline and mainly you have to know that you need to be in contact with the company who raised the invoice to you. They don’t like it if you ghost on them.

Pay Vendors and Freelancers in Advance

When I can I pay all my freelancers in advance so that they would always get their money. It means that I have to budget their quarterly invoices too and it happened once or twice that I had to put a service on hold because of lack of funding. 

Another principle I have developed is to check my account twice or thrice a week, sometimes even daily. I issue an invoice as soon as the service has been delivered or as soon as the booking has been confirmed.

Many large relocation companies and training agencies have very long payment periods. I suffered greatly from these in the early years of my business. I had delivered a service but sometimes was only paid 60 to 90 days later. In some instances, invoices got lost in cost center discussions and bad processes. Once I got paid two years later only. Now, I am more careful about the agreements in the contracts and I follow up on outstanding invoices faster. This doesn’t always guarantee that all invoices are paid on time but companies sometimes agree to advance payments and you can always decide to stop working with a client if their payments take too long. However, with private clients you should always agree to a full payment in advance or a payment plan.

At the moment you might still try to find a job in your new country and you hesitate about working as a freelancer or starting a side gig. The good news is that the steps for both are pretty similar. We will be happy to give you further guidance and inspiration through our HireMeExpress program starting again in April. Sign up here to find out everything you need to know in order to earn an income in a new market. 

Angie Weinberger

HireMeExpress

HireMeExpress is the online course that will get you from desperate to carving out an income and feeling at home in your new country. Sign up here to find out everything you need to know in order to land a job in Switzerland or another market you are not familiar with. We will shortly give you access to videos, live workshops and add you to our waiting list for when HireMeExpress opens again in April 2021.

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