One of the greatest lessons I learned from my parents as I grew up was saving money for a dream purchase.
When my twin and I were just turning into wonderful and perfect teenagers (a fact not exactly verified by our parents), we really wanted to purchase a motorcycle. We lived out in the country, and a motorcycle would be a great way to explore our farm and beyond. Our father came up with a great way for us to earn the money to purchase it.
In one of the farm fields, we grew soybeans. The field was producing a fabulous crop of weeds that year. Dad said he would pay us one penny for every weed we pulled or cut down. We pulled enough weeds to buy the motorcycle. It was a Honda C-70 Passport, and it was awesome! Good planning and hard work – coupled with saving – led to a rewarding purchase.
One of the greatest things you could do for the children in your life is to help them fully grasp this concept as it will equip them with a key skill necessary to live a fully funded life.
NOTE: This is an except from my book for young people – What Everyone Should Know About Money Before They Enter The Real World. It is written for young people just beginning their money relationship. You can learn more and purchase this book and its related study guide HERE.
If you ever find yourself stuck with a particular aspect of your business, it might be time to find a partnership.
For example, when I fired up I Was Broke. Now I’m Not., I was the developer of all our web resources. I created most of them with Microsoft Word. You don’t even want to know how bad those looked! So I found a couple of web developers and the partnership helped both of us. The web developers made money and the websites helped us get more free financial tools to people and sell more helpful financial resources!
Our organizations have also partnered with companies that provide database management, marketing consulting services, and leadership coaching. They’ve all helped us move our businesses forward.
Great partners bring expertise and focus that may be difficult (impossible?) for your company to deliver.
One last thing:I’ve heard it said before that “Good partners COMPLETE each other. They do not COMPETE with each other.” Be sure your partners aren’t participating in the same business space as you are as it could create unwelcome competition.
- What areas of your business do you feel are STUCK?
- What partnership(s) could you form to get UNSTUCK?
One of the greatest challenges small business owners face is projecting income.
When providing financial coaching to small business owners, I ask, “How much are you paid by your business?”
The answer is usually some variation of: “Whatever I can take. It’s always up and down.”
This makes it extraordinarily difficult to manage household financial affairs and can literally drive the bill payer completely crazy.
Here’s solution to this problem.
- Stop “investing” (spending) all the extra money. When you have a great month of revenue, don’t view it as a ticket to spend money. Instead, view it as a ticket to stabilize your income! Save the extra money in an operating reserve account.
- Establish a monthly (or weekly, bi-weekly, or bi-monthly) salary. In your household budget, determine the amount of money your business needs to pay you each month in order to thrive. Ensure your household budget includes saving for Known Upcoming Non-Monthly Expenses (KUEs) such as Christmas, Special Days (birthdays, anniversaries, weddings, showers, etc), HOA, Insurance Premiums, etc.
- Pay yourself the set amount of money each payday – and leave the rest alone at the business! Even when the business is thriving, it is important to continue to draw only your salary. This is because the “down times” will be coming soon through the natural business cycle of your business. It’s not fun to leave the money in the business during times of plenty, but it sure is nice to have those reserves when the business is struggling!
It’s how I operate my businesses, and I’m confident it will work for you too!
My book, Oxen, is a great resource to help you establish a new business or acquire an existing one.
Money is a foreign concept to most children until they are about 4 or 5 years old. It is at around this age they become aware that money has the ability to purchase things. However, most of their financial knowledge is focused on spending because that is what they SEE happening with money.
- Mom gives money to the grocery store clerk and carries groceries out of the store.
- Dad swipes his credit card at the gas pump, and it allows him to put gasoline in the vehicle.
- Grandma gives money to her beautiful grandchildren (your children, of course) and you take the child down the toy aisle to buy something with it.
Since “spending” is what we see happening with money from our earliest days, it is what most children grow up knowing about money. For them, money equals spending.
The important financial principles of giving, saving, investing, and budgeting are not learned. Consequently, grown children leave the house knowing only that money equals spending. This is a recipe for financial disaster!
Here’s a simple thing you can do immediately to change that for your children (grandchildren):
Ask the child to prepare a budget for any money they receive – BEFORE they are allowed to spend any of it.
For example, my daughter receives money for her birthday. She and I count the money so we know exactly how much she has received, and then I confiscate it. Upon receipt of a well-planned budget, I release the money to her for use. Later on, I do a “check in” to ensure the money has been used according to the plan.
In a recent budgeting moment, my daughter was planning the use of $20. Her first budget had $2 for giving, and $18 for spending. I rejected it because there was no saving or investing. Her revised plan showed $2 for giving, $0.25 for saving, and $17.75 for spending. She gave the budget to me with a smile – knowing there was little chance of it being accepted.
I rejected it.
Her third try included giving, saving, investing, and spending. I released the funds to her.
Here’s the reasons I love this process:
- Teachable Moments This process creates space for “teachable moments” about money. It forces conversation about the importance of giving, saving, and investing. It allows us to talk about the “spender” mentality that we both share.
- Learned At Home Before my daughter enters the real world, she is receiving real financial knowledge that will set her apart. She knows what a mutual fund is and how it operates.
- The Pain of Wasting $20 is Less Than The Pain of Wasting $20,000 I want her to recognize the pain of poor financial decisions NOW when she is making $20 decisions so she doesn’t have to learn the lesson with a $20,000 purchase later.
- My daughter actually enjoys the process My daughter actually enjoys the process. It has helped her save a substantial amount of money toward her first car. She has financial margin. She knows her parents care about her.
I have my daughter use our FREE BUDGETING TOOL called the “Mini-Budget.” It’s perfect for kids.
My book, What Everyone Should Know About Money BEFORE They Enter The Real World, is a perfect resource for helping your child start out life with the financial tools and principles essential to life.
I recently posted the following thought on Twitter:
“Some days are for planting seed. Others for harvesting. But MOST DAYS are for preparing, tending, and waiting.”
It raised quite a ruckus and a chorus of “that’s the truth!”
Anyone who has been involved in gardening or farming knows this fundamental fact.
In the spring time, there’s a mad dash to till the soil and get the seed in the ground. In just a few days or weeks, the work is over.
Then we wait. Wait for the seed to come up.
Then we wait. Wait for the crop to grow.
Then we tend the crop by eliminating weeds and applying fertilizer.
Then we wait. And we prepare the equipment. We clean up the planting implements and prepare the harvesting equipment.
Then we wait. We wait for the time to harvest.
Then another mad dash occurs at harvest time. We work like crazy to get the crops “in the shed” before weather can destroy it.
Then we wait. And we prepare the equipment again for another season. We prepare the soil for the next growing season.
The same is true for your finances and in your leadership. There will be moments where it will require the “mad dash” of effort. Then there will be moments where it will be waiting, tending, and preparing.
It’s what you do in the “then we wait” moments that dictates how well you will perform in the “mad dash” times.
Are you preparing for your next mad dash? My book, OXEN – The Key To An Abundant Harvest, is a perfect resource to prepare you for a maximized financial future.