Many want to be entrepreneurs and business owners with one, single vision: Getting rich and be able to buy whatever they want; driving fast cars, owning villas, traveling around the world in luxury, buying a boat, etc.
While they are probably still reasonable visions, hear me this: When you DO reach what you are looking for, mis-managing your finances and spending carelessly will destroy your business AND your personal finances faster than a blink.
I love explaining things using case studies – so, here they are…
How bad personal finance planning can turn millionaires into ‘nobodies’: case studies
Britney Spears (the pop star,) Mike Tyson (the ex-boxing superstar,) Antoine Walker (the NBA dropout,) and many other public figures were gone bankrupt for one reason: Bad money management.
While business owners can go bankrupt due to business failure, not bad money management, there are enough proofs to show that no matter how much money you have, spending more money than you make will always gets you in trouble (duh! Unfortunately, many seem don’t get it…) It’s probably only human – when you are successful, along with the increase in income, your expense will increase, too. More needs can be met, more wants can be fulfilled.
Someone I know whose family members seem to live well – all are working in a family business – in fact have a $4.5 million in debt (ouch!) Not only they are all facing the almost-sure-possibility of losing their nice cars and homes AND going to jail. All due to one reason: You spend more when you make more, and unfortunately, when the business struggles, they don’t have the anything left for the rainy days – they spend all the money carelessly.
Again, someone I know is running a profitable small business for 20-plus years only to see his house sold to pay off the ever-increasing business debt. The small business is, indeed, no longer that profitable, but he doesn’t have any reserves to cover the downturn. Not that he spend the money on luxury stuffs and such, but he loves his family so much that he lavishly spend money for their needs – carelessly.
A conclusion and a friendly advice
Here’s a big advice for you: Do you want to be rich? If so, you need to watch your business and personal spending closely – this is what successful entrepreneurs have as their number one rule to financial independence.
No matter how successful your small business is, you need to spend carefully. Why? Because you never really know what will happen in the future. You need to build wealth and secure your hard earned money in the right place – e.g. investing in growing real estates, investing in precious metals, etc.
Delayed gratification should be your business and personal finance endeavour; Prioritises your business and personal financial planning above anything else. Then you’ll see that you will reap what you sow ;)
(Trying hard) to spend wisely