Leaders of the Free World

Believe it or not you are your own little company, a one man incorporated. You have a cash flow, expenditure, company shares (grand total of one, you own the lot!) and some of you out there even have company assets (your house, savings, car etc.)

Here’s the kicker, your company is probably solely focused on staying afloat, cash flow only, and the vast majority of us aren’t doing a very good job and are cash flow negative. Luckily for us we don’t have to report to a board of directors or give an earnings report and pay dividends to share holders. So what? What I’m getting at here is for you to be a success, the more you look at yourself like your own little business the easier it is to break things down and prosper. How’s your research and development department ticking along? None existent? How’s your balance sheet? Are you always battling to keep your head above water?

Your Little Company

Once I’ve managed to convince you that you are the sole share holder in your company we’ll look at how we can improve things within your organisation. Here’s a look at what we’ll talk about;

• Expenditure - Household Bills, Groceries, Insurance, Social Money
• Balance Sheet - Your personal budget
• Company Assets - Your house, car, investment properties, shares etc.
• R & D - Your education, learning, seminars, books
• Business Plan - Personal Goals, where do you want to be in 5 years time?
• Your Balance Sheet

Before we can dive into building up your assets, freeing your time (employing another means of income) and looking ahead to the future, you have to start with your current situation – your weekly balance sheet.

Currently; most people earn their weekly wage, spend away at will and are then struggling to make ends meet when the electricity/phone/gas bill arrives, feel the pinch at Christmas and birthday time and live from pay to pay. You receive your pay, spend away, struggle with bills and expenses and then think about saving what’s left, but hey, you’ve worked hard so you can always save a bit next week?

Your Current Spending Pattern

Now that we’re going to look at things as a company things will be a little bit different. A company forecasts a yearly budget for all of their anticipated expenses. A company knows how much their employees annual salaries are (your spending money) and they know their profit targets for the year (your savings). Throughout the year things fall into place as per the business plan, and adjustments can be made along the way.

The key to this system is setting a realistic budget. I don’t care how much you want to spend on cigarettes, beers and going to restaurants, knock yourself out, but all of these luxuries fall under the ‘spending/income’ category of your company budget. Here we’ll look into a budget and later at an automated transaction system.

Your New Cash-Flow Structure

What? That’s not right, I earn $1000 a week and I’m only allowed to spend $200?! That’s all you can afford to spend or you’ll be broke! In a company structure you’ve allocated some of your money for your bills & expenses, you’ve put some money to the side to grow, you’ve bought a book or two and maybe attended a seminar (education is optional, but recommended) and then finally with the remaining balance, you’ve paid yourself some spending money.

I’ve set this up for several of my friends and colleagues, it’s not rocket science. I recently read a ‘get-rich-quick’ style book that was listed as a best seller on Amazon.com. I couldn’t believe my eyes when the focus of his book was budgeting and saving a bit of money! Are you serious? Surely the general population isn’t that thick. Ridiculous, how big can that book be? “Don’t spend more than you earn, also save a bit of money, THE END.”

What else are you working for? So you can keep working? Forever? Wake-up! Sure, you might only be able to put aside $20, $50, $100 per week, but you can build on that. To get ahead financially, here’s a crazy idea; don’t spend more than your earn?! Once you see where your money is going, realise how much you waste on fast food, junk and getting drunk, you’ll soon tighten up the budget and pour more into your savings. Once your savings account looks impressive, then you move onto investments, alternative income streams and making your savings work for you.

Yeah, and?…

Once you’ve devoured this article and possibly followed onto read about budgeting in the water cycle you can then start looking at your ‘company’ assets (investments, real estate) and Research and Development. Some of you might be a bit confused by R & D, but don’t you think it’s a bit odd how you were never taught about managing your finances, setting up tax structures and trading stock options? There’s never a better time to invest in yourself and learn something new.

So now we’ve got our company structure, hopefully you’ve seen the light and realise that you’ll no longer be surprised by a gas bill or mortgage repayment.