We’ve all heard it before “save your money for a rainy day.” People love saying this! There’s even a lot of truth to it. But for the budding entrepreneur it’s important to know exactly what’s valuable and misleading about this statement (and all the other “save your money” sayings).
In Thomas Anderson’s famous book The Value of Debt in Building Wealth, he says some great things about saving that I agree with. He speaks on saving anywhere from 3-6 months in BOTH checking and savings for the salaried employee. This is tremendously valuable advice. He even talks on saving more as a commissioned employee; 6-12 months in both checking and savings! I’d agree. The commissioned employee and the “budding entrepreneur” in this case are analogous.
This is great advice because it protects you from the vicious emergencies of life.
We never know when we’ll get hit with an emergency, so it’s best to be prepared.
So to reiterate, it’s extremely important to save money but there is a limit when savings becomes a waste.
What do I mean?
Money is a resource to be used to pay for life’s necessities and to be used to create more of itself. I recommend the budding entrepreneur to begin thinking about using additional capital to “buy or build cash flowing assets.” This is famously illustrated in a Robert Kiyosaki’s Rich Dad Poor Dad.
He used the story of his rich dad and poor dad to illustrate the differences in mindset between the two. Roberts poor dad went hard working for money while his rich dad made money work for him.
This simple story illustrates the different paradigms people can be in about money. Changing from the employee mindset to the Entreprenuer mindset is a necessary shift for anyone reading this blog.
The Budding Entrepreneur uses additional money to create significant ROI.
As a budding entrepreneur it’s important to understand that money is a weapon to be used to make more of itself. There are a million ways to skin a cat (or make money) but the budding entrepreneur sticks to what he likes, what works, and where the future is heading.
I recommend the budding entrepreneur begin to use excess capital to FIRST invest in herself! You may be thinking…
“Why invest in myself when I can buy stocks, gold, real estate, or (insert another investment vehicle)”
My answer will always be that someone’s first investments are in their own education because of the tremendous ROI (return on investment) that occurs from getting the right info in your mind.
If you can buy 5-10 books for $75-$150 bucks that are in your passion and well diversified, so they give an overall scope of that business, this saves so much pain by learning from others before making mistakes.
Future articles will speak more on this subject. Share this post with the buttons below if it was of value to you.