First, let’s get this out of the way: any mistake I mention here, I’ve made before and will make again if I’m not careful.
I am not preaching.
Just like every martial arts expert I’ve ever met has told me: there is no true mastery. Only learning. #BeginnersMind
Here’s the thesis of this essay, in big bold letters:
It’s Not About How Much Money You Make
This game isn’t about how much money you have or make…it’s about how you manage, save and grow that money. In fact, having a lot of money can actually hurt you more than help you if your habits aren’t dialed in.
That’s probably the reason why according to The New York Daily News, nearly 70% of lottery winners end up broke within seven years.
Dealing with money truly is a skill set.
Can you imagine making $423 million over the course of a career and ending up $38 million in the hole by time it was all said and done? Mike Tyson can.
Now that’s what I call a man.
These types of unfortunate outcomes show a lack financial literacy, not necessarily a lack of individual intelligence.
How much do those white tigers cost anyway, Mike?
I can only speak for myself in saying that I had very little financial training as a child or teenager. I had to develop financial literacy and the associated skill sets on my own, as many of us have had to do.
See also: These 10 Money Lessons Will Make You Rich
As an entrepreneur, there’s another layer to all this. You have to understand not just your personal finances, but also how to record, interpret and act upon the unique financial situations in your business.
What are the most important habits entrepreneurs and professionals need to adopt in order to be at the top of the money game?
To come up with this list, I basically just thought about all the mistakes I’ve made, and reverse engineered them. They are not hard, but most people can’t do them consistently enough to see the effects pay off.
So, in no particular order…
Know your numbers by reviewing all accounts on a regular basis
Here’s exactly what you need to do:
Pick a predetermined time at least once per week and turn it into your personal and business financial review day. I like #CFOSunday personally.
Login to all your accounts at once. Pull up every bank account, savings, investment and crypto account in your name / your business. Login to every account where you owe a debt: loans, credit cards, creditors, etc.
Create a spreadsheet that lists all your personal and business expenses. Here are a few of the areas I’d make sure to list.
In your personal life:
Personal bills like rent/mortgage, utilities, etc
Food, travel and other essentials
Any recurring subscriptions: Netflix, Amazon, etc
In your business:
Overhead (office space)
Software and tech
Contractors or employees
Anything else it takes to run the minimum functions of your business
Look at roughly how much you need to spend each month to keep everything moving. If you’re on any subscriptions, plans or services that you aren’t using, cut them. That’s your baseline.
Review your daily transactions for the last week. Literally go life-by-line in your checking accounts / credit cards and make sure it tracks with what you’d expect from the your typical expenses.
Do this review process at least once per week and you’ll begin to understand the flow of money in and out of your accounts. You can also catch fraudulent or inaccurate transactions as they are coming through. You will be able to avoid overdraft fees if you know how much is in your accounts at any given time and you’ll be more mindful of your spending patterns.
At The Money Moves Workshop on January 27th, I’m actually going to do a screen share walkthrough of how I conduct my monthly financial review and give out a copy of the tools I’m using so that you can do the same.
Money Moves is 6 hours of in-depth training on making more money, managing it effectively and growing it tremendously. The material is designed specifically for entrepreneurs and professionals.
If you’d like to attend the workshop, click here to learn more.
(You can attend live or watch the recording, btw.)
Separate personal and business accounts
It’s all too easy to blur, and in some cases completely bulldoze, the line between your personal life and your business life.
Trust me, I know.
Get and stay in the habit of separating everything as much as possible. Which is a bit of a joke when you’re a solopreneur with no employees using a “company” debit card to pay for your appetizer at Applebee’s. Still, that means getting separate accounts. Separate credit and debit cards. Church and state, baby.
That also means knowing when something qualifies as a business expense and using the correct method of payment. Also, not allowing business money to pay for something it shouldn’t.
Why? Because it makes your life much easier when tax season rolls around.
And why is that important? Because you want to legally avoid paying as much taxes as possible.
I recommend taking full advantage of all the opportunities the tax system has to offer when it comes to legally deducting day-to-day expenses as business expenses through the correct corporate setup. There is quite a bit of flexibility and with the right accountant, you can maximize your savings.
Wealthy people often run their entire lives like a business.
They turn everything around them into a part of the corporate identity, writing themselves a check and deducting most of what they use in their daily lives (cars, clothes, homes, offices) as expenses, thereby keeping more of their money.
This leads very nicely to the next point…
CYA: Cover Your Ass
The more money you make, the more vulnerable the business becomes to internal and external threats.
You’ll need to learn the fine art of CYA: Covering Your Ass.
1.) The government is going to try to take as much money as possible from you. If you understand how to correctly structure and operate your biz, more of that money can go back to you.
2.) If the business gets sued, you need to protect your personal assets.
A rock solid business structure can help with these types of protections.
So should you just go sole-proprietorship, LLC, S-Corp, C-Corp or some other variation? And how exactly do you set multiple different entities up to create the best structure for your needs?
This is the place where a seasoned accountant or attorney can be worth their weight in Bitcoin. You don’t want to wait until you need the water to start digging the well. This is why they say “an ounce of prevention is worth a pound of cure.”
What they are setting up will be an incredible defense against government and legal bullshit, but it has to be ready and waiting in advance. If you stay ready, you ain’t gotta get ready.
Try to find a great accountant or attorney who has experience in your particular industry of interest, working with people like you or slightly above your level. Get them to set up your corporate structure for you.
Don’t try to get H&R Block to do this. Ask around and get referrals from your network if you can. For instance, my friend Lorenzo Abbatiello is a CPA who specializes in crypto taxes.
Click to play EP021
In Episode 21 of The New Wave Entrepreneur Podcast, he goes pretty deep into how you can offset a huge chunk of your crypto gains legally. Worth the listen.
I’m grateful to have friends like him in my network. I consider him part of my extended team. Over the years, I’ve also seen how vital it is to build that team.
Actually, that leads me to my next point.
Build a great network around you
One of my side hustles that never got off the ground was wholesale real estate.
The idea is pretty simple on the surface: find houses that are in or near foreclosure. Offer the original owners a fair deal at or below market value. Find new buyers who are willing to pay at or slightly above market value. Take the profit in the middle.
It’s harder than it looks to pull these deals off and requires a lot of time to get good. My experience amounted to many frustrated homeowners screaming at me over the phone, but I did learn a ton!
I think what intrigues me most about real estate is the element of relationship building required to be successful. You have to know somebody who can help you finance a deal, many people who can work on the house itself and still find somebody to buy the thing!
I think of my career in online business just like I would building a house. I have to know lots of different types of people who can help me do my job better. For instance:
- Artists and designers
- Editors and videographers
As I continue to work on projects, I meet people who fall into these buckets. I get their contact information and follow up with them. Sometimes I connect them with each other. Other times, I’ll ask for introductions within their network.
I gave some of my thoughts on networking and relationships at my friend John Romaniello’s event a few years back:
Every niche of the business and professional space has a community. It’s your job to grow a smaller team within that bigger community. Your team is your close network.
Think of this network like your share of the social capital of your market in your community. It’s extremely valuable. Actually, it’s priceless.
How your network makes you more money:
- Time: a solid network greatly reduces time to action on projects because you don’t need to spend time interviewing contractors or shopping for partnerships.
- Savings: you can get better rates with people you work with repeatedly.
- Referrals: the relationships in your network can lead to other clients and lines of business.
If there’s one thing I cannot stress enough, it’s this: your network is the most valuable asset you own. It may not be liquid, but it cannot be taken away from you. Every other asset or resource can. Therefore, it contains the majority of your earning potential.
I’ll just stop here, ok?…
I feel like I have to physically restrain myself from continuing this essay, because now I want to write an entirely new article on how to build a network — and that’s outside the scope of today’s post.
Looking back at the above, here’s what you can take with you:
Know your numbers
Don’t spend the wrong money
Stay legally protected
Build a strong network
These sound so freaking simple. And they are. Still, many businesses have gone up in flames because these simple habits aren’t maintained.
But that won’t happen to you. Right?
If you want develop your best money habits this year, I highly recommend you check out the Money Moves workshop.
Workshops Coming In January 2022
The Money Moves Workshop
Thursday, January 27th, 2022 @ 10am – 4pm PST via Zoom (will be recorded)
“I don’t dance, I just make money moves.”
If I’d ever thought there was a chance that I’d be quoting Cardi B in a promotion, I’d have give up writing a long time ago. But alas…here we are!
In January, we’ll be hosting the Money Moves Workshop.
What: Practical Strategies To Make More, Grow Your Wealth and Cover Your Ass-ets
When: Thursday, January 27th 2022
Time: 10am PST – 4pm PST
Capacity: limited to 100 live attendees.
Location: ZOOM (link will be sent prior to start)
Note: All live sessions will be recorded for you to watch later. Live attendance is not mandatory.
Level: beginner to intermediate
Investment: Early Bird Tickets are $99.
What We’ll Cover:
How I separate my biz and personal finances w/out headaches
How I track cashflow to make sure I always have enough
Tools I use to calculate monthly revenue, expenses and investments (w/real examples)
How I consistently set and hit my goals with money
Whatever else I think of
We’re also going to bring in guest experts to talk about:
Day-to-day bookkeeping, financial tracking + understanding cashflow and accounting for self-employed and entrepreneurs.
How to build a balanced portfolio that makes you wealthy over time.
Advantageous tax structure for solopreneurs and entrepreneurs.
The new regulations you need to know in crypto taxes.
Simply put, this is designed to give you a tremendous ROI.
Listen On Your Favorite Platform
- YouTube: https://www.youtube.com/danieldipiazzatv
My VIP group via SMS (for exclusive drops): https://superphone.io/f/11kmu1ar
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