When we think of successful entrepreneurs, we may imagine people who enjoy lavish lifestyles and spend their money freely. However, many of the wealthiest entrepreneurs got to where they are today by having frugal habits and not spending money where it is not necessary. Living a frugal life allows them to accumulate more wealth, which they can reinvest in their business or pass on to future generations.
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Brian Towne is the CEO and founder of Michigan Creative, an award-winning marketing and branding firm. Prior to founding his company, he was a teacher, but financial ambitions for his family required him to leave a secure career and take a risk.
“My first career as a teacher, although rewarding, did not pay the way I hoped or create a generational legacy for my children and grandchildren,” Towne said. “I knew I had to create something bigger than myself – something that I could one day sell to my kids, or sell and use the money to help them do the same.”
Driven by a desire to build a family tradition, he left his teaching job to found Michigan Creative. Here’s how he did it.
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Building a sustainable business
Creating a lasting business can be the foundation of wealth for generations to come, and Towne’s success with Michigan Creative is an example of how a strong business foundation can lead to prosperity.
Town’s success didn’t happen overnight, but sustainable business isn’t just about short-term profits — it’s about building models that can withstand a changing world.
“Now, 13 years later, we’re making seven figures a year,” Towne said. “I have a five-year exit plan and own a building that will be paid off by then. And my wife, who is a secretary, quit her job two years ago. She now runs a medical spa that makes seven figures and owns her own building. All of this would not have been possible if we hadn’t both taken the plunge to see what would happen.”
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Entrepreneurs like Town and his wife know that the long-term viability of their business directly impacts their ability to generate wealth that can be passed down for generations.
“There were sleepless nights, stressful days and times when we both wanted to give up,” Towne says, “but at the end of the day, it’s all up to us and we get to decide what we want to do to build this home and the future we want for ourselves and our four children. Worst case scenario? We’re both highly educated and could always get a job, but why do that when we can build our family legacy ourselves?”
Live within your means
One of the core principles of frugal entrepreneurship is living within your means. Even as your income increases, it’s important to keep your living expenses well below your income level. Many entrepreneurs make the mistake of increasing their expenses as soon as their income increases, which leads to an unsustainable lifestyle.
Even though Brian Towne has a successful business, he and his wife avoid unnecessary expenses and focus on what really matters.
“We always eat meals together at home,” Towne says. “Eating out is convenient, but it’s expensive and not very healthy.”
This approach helps them reach their goal of building and preserving generational wealth, while also exploring other ways to save money, like bringing their daughters into the workplace.
“We both have flexible schedules so I can pick up my daughter and come to work with her without relying on daycare,” Towne says.
Frugal entrepreneurs live frugally and minimize unnecessary expenses. They look for ways to cut costs wherever they can. All the money they save can be reinvested into the business and used to build a legacy for their children.
Establishing Trusts and Estate Planning
Estate planning is the best way to ensure that family assets are protected and passed on to future generations, and the Town family has made this type of financial planning a priority.
“We set up college funds for all of our children, whole life insurance policies funded in their names, and estate plans for both companies,” Towne says. “All of our children had Roth funds set up in their names when they were born.”
They worked with advisors to develop estate plans for their children, including establishing trusts and detailed estate plans, which would protect their assets and provide a clear roadmap for their children’s financial futures.
“We looked for long-term growth Roth and cash value life insurance plans,” Towne says. “For college funds, we chose the Michigan MESP 529 plan. We contribute what we can, but try to contribute a minimum of $500 per month for each child.”
A 529 plan is a special investment account that can be used tax-free for education expenses, which is a great way to ensure your children or grandchildren can go to college without getting into debt.
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This article originally appeared on GOBankingRates.com: I’m a Frugal Entrepreneur: Here’s How I Build Generational Wealth
