For small-to-medium business owners the line between the personal and the professional can get blurry. It goes beyond spending time on your home computer at nights catching up on emails and urgent tasks. It’s about emotional involvement first and foremost and how the decisions you make affect your life-work balance.
The simplest example would be taking a vacation. For a company employee it’s a no-brainer – you’ve got your allocated annual paid leave (the number of days you can take off) and you make sure to take advantage of all of them. As a business owner, it’s not as clean-cut. You want to take your family to a nice beach vacation during the summer, but as an all-natural popsicle maker, the summer months are your busiest, the time when your business needs you to be there.
Things get sticky, as they always do, when money gets into the picture. Financial considerations are of main concern. They impact all facets of your business and influence your strategy and business dealings, as well as your personal finance. Many business owners decide their own salary based on how their business is doing and let it fluctuate accordingly; business is good, then they draw a nice salary but when times are hard the salary shrinks.
This is where lines get real blurry. If you’re cutting your salary you’ll need to check your personal finance for where or what can be scaled down. Most people would cut down on relative luxuries – fine dining, designer clothes, that second yearly family vacation.
Another approach is to leave out seemingly unnecessary expenses. The most glaring example would be renters insurance; it’s one of the most overlooked insurance policies, even more than landlord insurance. While the vast majority of homeowners have a policy, more than half of tenants don’t have renters insurance.
Why So Many Renters Don’t Get Insurance?
There are two main reasons why most renters don’t get insurance. The first is the renters themselves and the second one is the insurance companies.
From the renters’ side, it is seemingly something they can get by without. Some would believe that the landlord’s insurance covers their belongings as well – it doesn’t. Misinformation definitely plays a role here. Most renters aren’t even aware of the value of their personal property or how much coverage they need – basic questions like how much renters insurance do I need are left unanswered.
Others would reason the decision to forgo renters insurance based on chance; what are the chances, they say, that a flood will hit my third-floor walkup in Astoria? What are the chances that my upstairs neighbor’s bath will overflow and leak through the ceiling all over my flat-screen? Or even – what are the chances that somebody will break in and steal my precious single-speed?
From the insurance companies’ side, they aren’t that eager to deal with policies that carry small premiums. They’d rather deal with homeowners policies that carry hefty premiums; it’s a numbers game, unfortunately. It’s not that insurance companies refuse renters that seek insurance, but they don’t go out of their way to get as many renters as possible on policies, like they do with homeowners.
The combination of both result in most renters left uninsured.
The Insurance Predicament – The Renters Edition
If only renters insurance was more like auto insurance. With cars, you don’t even need to think about it, you must get insurance (except from in New Hampshire by the way, the only state that doesn’t mandate auto insurance.)
With health insurance, the debate over whether to get a policy or not is more acute. It is your health that lies on the line, and if you happened to get to a hospital without health insurance, well, you know how hospital bills can get. Basically, if you can afford health insurance, you probably have one.
Renters insurance on the other hand, is much less scary. You’re not surrounded by folks that drive 80mph while texting, it’s just you in your humble apartment with your smart speaker. So you start to think it is worthwhile to save money on renters insurance.
But hear this – if you rent an apartment, you can afford renters insurance. It costs, on average, not more than a movie ticket and a large popcorn; sometimes even less. Is it worthwhile your for peace of mind? Probably. Is it a better investment than popcorn? Definitely.
Circling back to life-work balance and how as a business owner your balance sheet affects your personal finance choices, it is a matter of finding the delicate balance between necessities and pleasantries. We all need to tighten the belt here and there, that’s how life works, for most of us at least. If you didn’t get it by now so no, saving money on renters insurance isn’t worthwhile in any way. Put it up there in your necessities list, right below Netflix.