I Don’t Need to Save Money Because I Have a Business…..
I love this line… Have you ever seen the Titanic? Think of your business as a cruise ship, boats have lifeboats for a reason. The Titanic was supposed to be unsinkable, so the engineers didn’t think lifeboats were important. But in the end, it hit an iceberg in the middle of the night and there weren’t nearly enough to save everyone.
One way of having lifeboats is investing outside of your business. We all hope that our Titanic, or business, doesn’t hit an iceberg. But realistically, it probably will hit some sort of rough patch at some point. And when it does, I don’t want to see all of your hard work – your blood, sweat, and tears – sink to the bottom of the ocean.
That’s why I’ve always recommended to clients that they consider adopting a ‘productive paranoia’ mindset, where you assume that your business is going to go down one day. Ask yourself, have you built up enough assets outside of your business to cover your financial needs? And could you maintain your lifestyle if something unfortunately shuttered your business?
As a rule of thumb, you should be aiming to invest at least 15% of your profits into long-term wealth creation vehicles. Things like shares, property, and other assets.
Trust me, over time these investments are going to become your form of natural sleeping pills. You’ll be able to rest easy, knowing that even if your business isn’t successful, you’ll be okay regardless.
So to recap:
Think like you will go under one day (I really hope you don’t and I’m sure you won’t but if you do this will keep you afloat).
Aim to invest 15% of profits into long-term wealth creation
Repeat forever