You Need to Become the Entrepreneur of Your Personal Finances this Year
Perhaps you’ve thought to yourself, “I wish I was an entrepreneur like Steve Jobs or Mark Zuckerberg…” Here’s a surprise, you were born an entrepreneur.
Being an entrepreneur doesn’t start as an occupation, but a mindset. You can be the “entrepreneur” of your career and, as we will see, your personal finances.
Think of your personal finances as a founder of a start-up thinks of his new company, you’ll see many similarities:
Pivot Your Finances
The photo-sharing service, Flickr, actually started off as a multi-player online game. What they found out was that most players spent time working on their avatar images rather than actually playing the game.
Seeing opportunity, they pivoted away from the online game to a full-blown photo-sharing service, now one of the largest.
You need to cultivate that “Pivot” mindset with your finances as well:
1) Set financial checks to see what’s working. If you’re focusing your budget on not eating out as much, yet you find you’re constantly at the drive-thru, Pivot to another focus.
Don’t just say “I won’t eat out.” Go enjoy eating out, instead pivot to focusing on cutting your grocery bill in half. Beating yourself up over failure will just bog you down to fail more.
2) Check your debt-payoff strategy. Sometimes paying off debt is like a treadmill. You’re running hard but you’re not going anywhere. If you feel that way now, it’s time to pivot.
Take your credit cards. If it seems you’re not making any progress paying them off, adjust your strategy. Perhaps you need to focus on paying off just 1 at a time, or look at where you do well staying in your budget and see if you can take more from that to put towards your cards.
All entrepreneurs go through failures. Instead of “trying harder”, find a different avenue. Pivot.
Online entrepreneurs, such as Tim Ferriss and Chris Ducker, are notorious for automating certain administrative tasks to Virtual Assistants to focus on more important aspects of their business.
You can do the same with your finances.
1) Automate your investments. Let’s be honest. Most of us don’t fully understand investments and the difference between “good” and “bad” investments. Couple this with our emotion attached to the risk in investing and most will lose money with this path.
Like online entrepreneurs, start automating your investments, not just through your 401K, but a personal account that you can invest for as little as $100 at a time. You’re virtual assistant will be an online broker, and you can avoid any “emotional investing.”
2) Automate your savings. The simplest way to save up for that vacation and wedding is to let the system work for you. For the New Year, my wife and I have set up a handful of online savings accounts to implement this step.
Online accounts are best as funds are not as easily transferred to your main checking account as normal banks. We remove the easy access to temptation.
Set up a name for each account (Marriage Savings, Vacation savings, New Laptop Fund) and allocate a certain, automatic amount to each at consistent times. As with 401k funding, you don’t miss the money after a while as it becomes normal.
Let the systems set up be your Virtual Assistant, and you don’t need to tip them!
Bootstrap Your Financial Shoes
Some entrepreneurs are known to be on their last pennies before they finally hit the profit milestone. They live off of food scraps, ramen, and water until their company starts bringing in a cash flow.
Now, I’m not suggesting bread and water diets, but sometimes you may need to cut some costs, but also earn more!
1) Cheapen meals at times. Some weeks are going to be tight in the finance department. Instead of pulling out the good ol’ credit card, we would cut back that week on dinners. Instead of chicken night, it’s baked potato night. Instead of steak night, it’s cereal night. Surprises happen, prepare your finances and self for bootstrapping.
2) Make More Money. If you want to take more control of your personal finance success as an entrepreneur, find ways to hustle for more money. Sell your junk. My wife and I started selling furniture, a Wii and such and have made $100’s. A goal for 2013 for myself is to also find freelance writing opportunities to earn more.
You were born an entrepreneur, so take control of your life as a start-up. Take control of your personal finances your way now.
Sources: “Start-up of You” by Reid Hoffman and Ben Casnocha
Good stuff Joe! If you ever feel like you want a Wii again, I’ve got one I can let go for a price 😉
We haven’t missed it since we sold it. I have a PS3 I use every so often for gaming, but mostly we use it for Netflix which works BEA-utiful, we used to run Netflix through the Wii but ran into problems regularly which is why we pitched it.
Nice piece Joe. Keep up the good work.
Heyyyy! Thanks Lawyer, appreciate the comment and support! Cheers!