Financial Freedom | Bigg Success

Uncertainty. It’s a word you hear a lot these days.

How do you live with uncertainty? How do you face the great unknown?

Think like an entrepreneur!

BIGG success is life on your own terms. You’re the person in charge of your life.

Entrepreneurs know that you can’t predict the future.

So don’t try. Instead, do what they do – create your future.

But not just any future. The future you want.

Build your own personal economy day by day, moment by moment.

Watch the inflows and outflows in your economy. Build a baseline for future flows of money.

Inflows

How much do you plan to increase your income next year? The year after?

Build a plan for three to five years. Then ask a very important question:

How will you get from where you are to where you want to be?

Be on the lookout for opportunities that match well with your passions and proficiencies. Then go for the ones that you think are the most profitable.

It’s a powerful combination when your passions and proficiencies meet profits.

Outflows

Many people never stop to think about this basic reality:

It’s easier to control your outflows than your inflows.

So while you project your income to grow, be careful about future increases in expenditures.

Sure, some will go up. Inflation will play in. And you probably want to enjoy some of the fruits of your labor now.

But controlling your outflows will give you more options and create a more sustainable personal economy.

Surplus

You do plan on a surplus, right? No deficit spending here!

With the surplus you generate, you can invest. Your money starts working for you. It’s a powerful thing.

Because, eventually, your Department of the Treasury will dwarf your Department of Labor.

It’s what you want – the freedom to work when you want, where you want, with who you want. That’s BIGG success!

Image in this post from dleafy

personal_finance Bigg success is life on your own terms. You are the entrepreneur of your life. Entrepreneurs look at the world through a different lens than do large company CEOs.

For example, large companies and small companies use different financial models. Large companies generally have the ability to raise large amounts of money when they need it.

___

Hear George & Mary-Lynn discuss today's topic on The Bigg Success Show! Click the purple player to listen while your read: Play Now | Play in Popup | Download

___

For small companies, it’s much more difficult. So it’s more critical for small business owners to watch their cash flow. For us as individuals, our financial model is much closer to the entrepreneur’s.

The two decisions

There are two types of decisions which we must think about: investing decisions and financing decisions.

For large companies, these two types of decisions are independent. They decide what they will invest in. They determine how they will finance their firm.

In an entrepreneurial firm and for us as individuals, these decisions are interdependent. We invest in the things we can finance. It could be a new business or a piece of real estate. But it could also include a new car or a new house.

If we have an idea for a project, we first must either have the needed financial resources already available or we have to sell someone on funding it.

If neither of those is true – if we don’t have the money or we can’t sell someone on funding it, we can’t do the project.

Now let’s look at four ways to think entrepreneurially about your personal finances:

Bootstrap
Entrepreneurs understand that they have limited resources. They recognize it, but still make the most of what they already have. You can carry that same attitude into your personal finances.

Retain earnings
This is what we call it when a business saves money. Pre-fund your projects when possible. If you know that you need financing to make an investment, why not finance it yourself? That’s financial freedom.

If cash is king, reserve borrowing capability is queen.
Protect and preserve both your credit rating and your credit capacity. Then you’ll have the ability to fund your bigg opportunity when you see it.

Create value with your projects
Simply stated, Value = Cash Flow ÷ Cost of Capital.
Entrepreneurs must understand that capital comes with a cost. It may mean giving up a stake in the company. It may mean sharing the money with partners or bankers. In all cases, it requires a reasonable return on the money invested.

As an individual, your capital comes with a cost as well. You have to share some of the money you will make in the future with your funders. So just like an entrepreneur, you need to understand if the benefit you will receive from the project makes it worth the money you’re investing.

To determine this, look at the incremental cash flow from any project you consider. If the return on your investment exceeds the cost of the capital needed to fund it, you should do the project and vice versa.

Let’s say you have an old car that’s requiring a lot of repairs. You see that you can save money if you buy a newer car and pay interest. That’s a project that’s worth doing.

Smart entrepreneurs and wealthy people look at every cash outlay as an investment. They want to make sure they’re getting enough value out of the investment to make it worthwhile.

Now that value may be somewhat fuzzy – like it makes you happier or adds to your sense of well-being. In any case, thinking entrepreneurially about your money leads to bigg success.

___

Get the tips and tools you need to be a BIGG success. Subscribe to the Bigg Success Weekly – it’s FREE!

___

Thank you so much for reading our post today. Please join us next time when we’ll talk about the long and winding road to bigg success. Until then, here’s to your bigg success!

Subscribe to The Bigg Success Show in iTunes.

Subscribe to the Bigg Success feed.

Direct link to The Bigg Success Show audio file:
http://media.libsyn.com/media/biggsuccess/00486-092209.mp3

Freedom Or Security – Which Do You Choose?

(Image in today's post by srbichara)