There are two ways to create wealth – we’ll share both the well-known and the less-known ways with you today.
Click the player to listen on the BIGG Success Show podcast, or read the summary below.
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When we think talk about capital for a business, we usually think about money. One timeless wealth-building secret is to use other people’s money, commonly referred to as OPM.
Today on The BIGG Success Show, we brought back one of our favorite bits – Terms from a Hat. This time we pulled out…The Rule of 72.
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The Rule of 72 is a quick way to determine how many years it takes to double your money. You simply divide the interest rate into 72 to get the number of years it will take to double your money. For example:
Let’s say you have an investment that earns 6%. 72 divided by 6% = 12 years. You’ll double your money in 12 years.
See how easy that is!
Here’s a concept that business owners often struggle to really understand: Every penny you spend is an investment.
We’re used to seeing investments show up on our Balance Sheet. We buy a new computer and we see it added there.
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When we spend money on advertising or office supplies, it shows up on our Income Statement rather than our Balance Sheet.
But we’re still spending money. It’s an investment for the purpose of increasing our sales.
The financial statement on which it shows up on is based on accounting rules. We have to understand that we are spending the money with the purpose of increasing sales.
While we say business owners, this concept applies to our personal finances as well.
As a business owner, particularly a business owner who owns 100% of your firm, your business finances and personal finances are completely linked.
Not in a legal sense – you’ll want to talk with your attorney to select the right entity for your company – but in a philosophical sense.
Your business has to do well or it will affect your personal finances. We all get that.
What a lot of people forget is that their standard of living may affect their business. If you spend too much personally, you put more of a burden on your business to produce more income for you to take out of the business. It can really add to the pressure, particularly for a start-up business.
In our personal lives, every penny we spend should add to our happiness. If it doesn’t, it’s not a worthwhile expenditure.
There’s a technique that helps you decide if the returns you’re getting are sufficient. It’s called zero-based budgeting.
For every line item on your Income Statement, you assume you don’t need to spend any money. Then you add to it for the outlays you determine will give you the return you desire.
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I do this in my businesses every three years. Costs can creep in. You commit to this service or that program. It all adds up. Instead of doing it all every three years, you may pick a few line items every year for review. Just make sure you cycle through all of them every few years or so.
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Let’s take an example that applies to our businesses and our personal lives – our cell phone. I might ask myself: Do I need the package I currently have or could I cut back? Do I need unlimited texting?
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You’ll also consider alternatives. If you weren’t spending this amount of money on your cell phone, what might you spend it on? You might find you could increase sales faster or be a lot happier if you spent this money on another thing.
You might decide to increase your long-term happiness and invest this newfound money. That may make you happier now and then.
By justifying the expense all over again, away from the emotional point of purchase, you’ll spend your money on what you really want. You’ll get the returns you seek. That’s bigg success.
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Thanks for the gift of your time today. Please join us next time when we ask, “Have you evolved enough?” Until then, here’s to your bigg success!
Direct link to The Bigg Success Show audio file:
http://media.libsyn.com/media/biggsuccess/00492-093009.mp3
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You’re probably familiar with the old saying, “Be careful what you wish for because you might just get it.”
Bigg success is life on your own terms. The terms we use to define our bigg success are incredibly important.
When we get what we wished for, it better be what we really wanted!
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For example, we may seek financial security. How do you define financial security? Is that what you really want? Or is there a better term for what you seek? Are your actions consistent with your definition?
These are a few of the questions you might ask about a term which is a goal.
Financial security means safety. You have a refuge from any storm. This is the reason a lot of people like having a regular job. They feel like it gives them some sense of security.
We often confuse financial security with financial stability. One of the reasons we like that job is it provides a steady income. That’s not security; it’s stability.
This highlights the importance of understanding what a term really means to you.
Does a job or a career offer you financial security? We think it doesn’t.
You have to create financial security for yourself. But that’s just the first level. You may really want more than just safety.
You may seek financial independence. You want to be self-reliant. You don’t want to depend on anyone or anything to meet your financial needs.
You’re able to live a comfortable life. You may have a job but you also have investments or other sources of income in case something happens with your career.
The next step up is financial freedom. You’re free to live the life you really want to live. Your income exceeds your lifestyle costs by a significant margin.
Randy Jones, author of a book we highly recommend to you, The Richest Man in Town, wrote about the trap that keeps many people from reaching financial freedom on his blog a while back. He said:
“A stable salary can be addictive: like a drug, it feels good, helps you cope with the ups and downs of life, and it is very hard to give up. But dependence on a salary is a major impediment to becoming the richest person in town. The regular fix of a paycheck from the other guy makes you risk-averse, and the ability to take risks is one of the qualities that defines an RMIT.”
So if you want to be free from money worries, you have to take risks. Risk is the opposite of security. But you have to take those risks to reach the level of financial freedom.
And by our definitions, a person who reaches the level of financial freedom is also financially secure … and then some.
No job can make you financially secure. No business can do it. No investment can do it. You have to do it by putting all the pieces together.
It starts by defining bigg success and then going for it!
Share that by leaving a comment below, e-mailing us at bigginfo@biggsuccess.com or calling us at 877.988.BIGG(2444).
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| Get the tips and tools you need to be a BIGG success. Subscribe to the Bigg Success Weekly – it’s FREE! |
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Thanks so much for the gift of your time today. Please join us next time when we talk about an old-fashioned tool that increases your productivity. Until then, here’s to your bigg success!
Direct link to The Bigg Success Show audio file:
http://media.libsyn.com/media/biggsuccess/00481-091509.mp3
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(Image in today's post by nusrin)
This is the final installment of our five-part series on freedom. In the first three parts, we discussed the 3 levels of freedom – freedom of, freedom from, and freedom to. Last time we talked about financial freedom.
Now we want to talk about the freedom to spend your time however you want. If you can do that, we think you’re a free agent. We’ll identify four types of free agents today:
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Aggressive Passives let their money work for them so they don’t have to work. They make enough money from their investments to pay for their desired standard of living. So they are free to spend their time however they want.
The amount of money you need to be an Aggressive Passive is a lot less if you’re perfectly content not living lavishly than if you want to live large. But it’s life on your own terms, go for what you want.
In our last post, we discussed paths to financial freedom. If you want to be an Aggressive Passive – and you want it sooner rather than later – you’re going to focus on the wealth building path. Maximize income, minimize costs and build Assets – most likely your own business or real estate.
Passion Players love what they do so much that they don’t feel like they’re working. In many cases, their hobby is their craft and their craft is their hobby.
We have a friend who had built up an incredible business and sold it off. Now he’s back in the same type of business only this time he’s doing it with no employees. He chooses his clients very carefully. He takes plenty of time off, yet he’s still doing very well money-wise. He’s thrilled!
You may choose to work inside a corporation and be a Passion Player. Just keep in mind that, in addition to your work, you must love working for and with the people around you. Since you only have one client – your employer – that may be difficult at times.
Inside or outside of a company, your focus as a Passion Player is building up your personal brand. It may make sense to do this while you have the security of a full-time job. But there’s also some real security – as well as freedom – in moving from an employer (which is like having only one client) to multiple clients.
Automatic Pilots don’t just sell a product or a service. They don’t just create a brand. These free agents build a business.
In that business, they develop systems and controls. The systems insure a consistent standard of the product or service they offer. The controls allow these free agents to step away from their business without fear of it falling apart.
While they develop their systems and controls, they also train a protégé who can run the business in their absence. Once the protégé is fully trained, the entrepreneur is a free agent!
These free agents sit at the hub of a network. They tap that network to bring the best people to the table.
Synergizer bunnies don’t just do projects with others. Bigg success comes to them by creating entire businesses through strategic alliances. Everyone involved is well compensated and the customers receive a great value. It’s a win all the way around.
That’s the key to becoming a free agent of any type: Help others find ways to improve their lives and you’ll be a bigg success.
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Thanks so much for checking in on us today. Please join us next time when we’ll discuss one of the best assets to have today. Until then, here’s to your bigg success!
Direct link to The Bigg Success Show audio file:
http://media.libsyn.com/media/biggsuccess/00430-070609.mp3
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