Financial Planning Tips for Business Owners Raising Kids
BORKs face specific challenges that other business owners don't, so they need a different approach to their financial plans to ensure their family is protected.
Wealth managers and financial planners love acronyms.
From HENRYs (high earners, not rich yet) to DINKs (dual income, no kids) — acronyms are widely used to categorize demographic groups with unique financial needs. However, to date, there’s one population for which a common acronym hadn't existed: BORKs, or business owners raising kids.
BORKs are a growing but overlooked demographic who face complex business and personal challenges. Unlike some HENRYs or DINKs, BORKs uniquely juggle the dual pressures of managing a business and raising a family.
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My father-in-law, Michael, was a BORK who showed me the power of early and intentional planning. Michael was larger than life — a devoted husband and father as well as the founder of a successful business. Tragically, Michael was diagnosed with ALS — commonly known as Lou Gehrig’s disease — and passed away in 2018 at just 56 years old, 74 days after I married his daughter.
Michael’s loss was devastating, but decisions he made early in his career ensured his family would be cared for. Seeing how Michael’s planning safeguarded their future inspired me to help educate and serve other business owners.
The rise of BORKs
So who are BORKs? For the sake of this column, the BORKs we’re discussing are Millennials and Gen Z, neighboring generations that are large and economically influential. They are also proving to be quite entrepreneurial. Over just the past year, Millennial small-business owners alone have increased by 27%. Meanwhile, 62% of Gen Zers said in a Microsoft survey that they have already started, or plan to start, their own business.
These young people are also raising the next generation of kids. A 2023 analysis found there were 73.5 million children under 17 years old. Estimates suggest that by 2030, that figure will reach 75.7 million. With the number of business owners and number of children projected to grow, we can expect the ranks of Millennial and Gen Z BORKs to expand in coming years. As such, it’s likely that more BORKs will face pressure to balance the demands of entrepreneurship and family life.
Unique challenges facing BORKs
Raising kids comes with its own set of responsibilities, from childcare to education to extracurricular activities. But when running a business is added to the mix, complexities compound. Coupled with the fact that much of the conversation around financial planning often focuses on long-term strategies like retirement, BORKs may not always have the information they need for right now.
It’s first important to understand the distinct pressures that BORKs face compared to salaried employees. Unlike some of their HENRY or DINK counterparts, BORKs’ financial security is tied to the performance of their business, and unlike employees who enjoy consistent paychecks, BORKs may experience more income fluctuations, making it harder to plan for the future.
Add to this the fact that BORKs don’t have access to employer-sponsored benefits. While salaried employees can rely on their employer’s group benefits, BORKs are responsible for choosing their own investment strategies and taking on the task of comparing and acquiring insurance coverage. Finally, the dual responsibility of managing both personal and business taxes adds more complexity. BORKs may overlook the importance of tax planning, which can lead to missed opportunities for tax-efficient strategies or mistakes that might cost them later.
With little time to spare between personal and professional responsibilities, many BORKs delay essential decisions that could protect their family and business.
Planning strategies for BORKs
Given the list of challenges BORKs face, it’s important to next understand some tools that can help balance personal and business needs. While every situation is unique, here are a few strategies that BORKs might consider to safeguard their family and business.
Designing the right protection plan. One critical step for BORKs is to ensure they have the right insurance coverage in place. Life insurance provides a family safety net in the event of death, making sure that dependents have financial support. Disability insurance goes further by covering not just personal income but also essential business expenses, such as payroll and rent, keeping the business running if the owner is unable to work. Additionally, key person insurance protects businesses by compensating for the loss of a crucial employee or partner, preventing operational disruptions.
Business continuity and succession planning. Planning for the future of a business can be as important as financial protection. Succession planning ensures that the business can continue even after a change in ownership. For BORKs with business partners, a buy-sell agreement funded by the business can provide a solution in the event of a partner’s death, allowing the surviving partner to buy out the deceased partner’s share. A buy-sell agreement was an important strategy my father-in-law, Michael, implemented early in his career, which helped secure his business and safeguarded his family’s future.
Start early, review regularly. One of the biggest hurdles for many BORKs is time. With endless responsibilities, it’s easy to put off planning. However, starting early can make all the difference. Whether it’s locking in favorable life insurance rates or implementing tax strategies, proactive steps today can protect tomorrow. Equally important is regularly reviewing these plans. Life changes — kids grow up, businesses expand or contract and health evolves. A financial strategy needs to reflect these shifts, ensuring that it always meets the current needs of the BORK and their family.
Business owners raising kids are at the intersection of personal and professional responsibility, and they need financial strategies that recognize their unique position. By starting early, using the right tools and reviewing strategies regularly, BORKs can ensure that their legacy, much like Michael’s, remains secure for the generations to come.
This article is for informational purposes only and does not constitute financial, investment, or legal advice. Readers are encouraged to seek professional advice tailored to their individual circumstances before making any financial or investment decisions.
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