Don’t get me wrong, I do not believe in thinking negatively. However, I am a big fan of Murphy’s Law- ‘if enough trials are made, everything that can go wrong, will go wrong.’ Therefore, it is in our best interests to hope for the best and be prepared for the worst.
It’s just how probability works. There’s always a slight chance of something going wrong.
Whether you’re planning to start out as a small business, or a solo entrepreneur, it is crucial for you to learn how money works.
Here are 5 facts about money, to keep in mind when starting out:
1. The all-time classic- A basic cash-flow chart:
Grab a pen and paper, and draw two columns: 1, ‘In.’ and 2, ‘Exp.’ They stand for your income and expenditure, respectively. Now put down every single source of income and expenditure; everything. That coffee you grab on your way to the office, the money you pay to the neighborhood kids for walking your dog, the money you spend on cigarettes- every tiny little way you take money in our out of your pocket.
In the end, subtract the difference and act accordingly.
Do this once every month. If you see a downtrend, you’re headed towards a disaster. Optimize your spending.
2. Don’t over-spend:
Sure, increasing your bank balance requires you to increase your income. However, don’t forget that reducing expenditures is a great way to improve your cash flow chart, too.
Quit spending money on the large Frappuccino and make your own coffee at home. Quit the cigarettes. Walk your dogs by yourself. Do what it takes to keep expenses checked.
Take the extra money you get and invest it in an asset that has chances of appreciating- your business, bonds, education, etc.
3.Learn to cook:
At home, I brew coffee for myself with sachets that cost a dollar. At Starbucks, I pay nearly 8 times over.
I don’t mean to put it in a bad way, but food and beverage companies really do rip us off.
Food, is a major area where you can start cutting down costs.
On a side-note, the one money advice book that changed my financial life, was Rich Dad Poor Dad, by Robert T. Kiyosaki. Robert talks about how you can get our of the 'rat race', and become financially independent. Paraphrasing his words, "The poor and middle class work for money. The rich make money work for them. If you ask rich people what they work for, they'll say assets."
Assets appreciate over time. Money lying around in the bank, depreciates over time as a result of inflation.
If you want more insights like these, make sure to buy yourself a copy of the book. It is linked below this article. We provide free shipping on all our products.
4.Shop at discounted prices:
Another great way to keep expenses at check is to shop at discounted stores and wholesale outlets. Clothing when bought form mall showrooms, usually tends to be 30% costlier than its ‘factory outlet’ counterpart.
All I’m trying to say, is try and spend money in the best way possible.
5.Put in time and money into your business:
Keep your eyes on the end goal. Use your circumstances to motivate you.
Remember that if there’s one thing that can allow you to live a more convenient life and not have to curb your expenditures much, is a better income.
Once, again, if you're looking for more concrete personal or business financial advice, you must get hold of a copy of 'Rich Dad Poor Dad', by Robert T. Kiyosaki.
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