Be Your Own CFO (part 2) Mind Your Own Business
| June 5, 2008 | Posted by Roshawn Watson under Uncategorized |
By: Roshawn Watson
Life is sometimes hectic. Working a full-time job, fulfilling family and social obligations, staying physically fit, and enriching oneself mentally and spiritually all require time. Clearly, time is the most valuable resource. Whatever you have in life, whether it’s a good relationship or abs of steel, you or someone else has sowed the seed of time to get it. Time matters to the wealthy. In fact, I can predict your future by your attitude towards time. Consider the following illustration. If you had 10 pounds of iron, you could use it to make: (1) horse shoes (worth $30), (2) needles (worth $300), (3) watch springs (worth $3000). Your time is like that bar of iron, and your productivity and income depends on how you choose to use your time.
Most of us trade our time for income from our employer; in fact, we often are at work more than we are at home. Clearly, working is essential for most people, providing both income and possibly a sense of purpose. However, many should ask themselves “is working at a job the best way to achieve my goals?” If your goal is financial independence, the answer may startle you. Did you know that business owners are 5 times more likely to become millionaires than typical employees? I would never advocate simply quiting your job to start a business although some have taken that path. Instead, I am arguing that it is imperative that you get your financial affairs in order by saving, investing, minimizing consumer debt, and budgeting. Essentially, treat your finances like you are managing a business. Read a personal finance book or magazine, attend a conference, etc. Invest the time in yourself.
It is a sad day when you have worked for 10-25 years, and your employer decides to sell the company or just eliminate your position, and you leave only marginally better off than when you started working. It happens! Avoid this by building YOUR own wealth. I’ll write about investing and wealth protection soon, but I would like to share some tips to minding your own business. It may sound trite because it is common sense, but so few people do it. The first tip is live on 60% of your income; the principle is to live on less than you make. If you can live on 60%, you can give 10% to others (i.e. the church or charity), save 10%, pay debt with 10%, and invest 10%. This also helps explore your creativity because you have consciously decided not to touch 40% of your income. After paying yourself first and eliminating debt, you should buy assets, with an emphasis on things that generate income. One remarkable testimony for building a residual income is Steven Spielberg, I have read that in a year that he does not make a movie, he earns roughly $70 million . Lastly, don’t forget the numerous short-term and long-term vehicles to stash your cash: 401K, Roth IRA, exchange traded funds, mutual funds, etc. In summation, try these principles, and invest your time in learning more about personal finance, it may be the single decision that gives your more time to do all the other things that you love.
© Copyright 2008, Roshawn Watson, Pharm.D.
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Interesting perspective, it appears the key is to be cognizant of your financial health regardless of whether you are an employee or business owner.
Michael, yes that is a key point.
However, what do you do when being your own boss makes you self-slaved when it comes to time, but not as profitable as expected.I mean you work 18 hours a day and you only get a minimum wage… perhaps matter of review your financial independence strategy.
Everyone must assess whether or not they are profitable regardless of whether you are a business owner or an employee. If one elects to work for himself (or herself) and is not profitable, then he would need to investigate why. Sometimes, there is a problem with the business model. What worked yesterday may not work today (i.e. Blockbuster comes to mind). As you know, businesses fail for a number of reasons. However, I would never tell someone not to be an entrepreneur because of the risk. You merely MANAGE the risk NOT AVOID them. However, everyone is not cut out to be an entrepreneur. That doesn't mean that it is alright to neglect diligently managing one's finances. That's the point of this article. Regardless of whether you work for someone else or yourself, take care of YOUR financial business.Thanks for the comment