Imagine a high earning business that you know a little about, this business runs 24/7 all year around and earns a very decent amount of gross profit every year. The owner of the business started small and has worked their way up putting their sweat and tears and dedication into their business. When they started out everyone was saying ‘to make it in business you have to have all the proper decorations’ and so now the business owner invested some of their own money in a LTD description and a competitive name to grab people’s attentions.
Only that wasn’t enough, their business friends all looked the part! They had their fancy suits and business dresses with their perfect hair and co-ordinating ties. They had big cars and even bigger office spaces for their company to be located and all enthusiastically chimed that THIS is what you need to be successful. The business owner believes them -because surely these successful and happy people know what they’re talking about! They also buy a big new car and a new wardrobe and a big fancy office space to allow others to know that they have ‘made it’.
Now the office space needed filling, other people get to this stage of success and start taking on employees and providing jobs for the economy like a real professional business should do, the work for them to do could come later but you can’t have a big fancy office with no buzz and hubbub piercing the atmosphere!
As the business grows, the business owner’s network of business Jones’ tell them about how they have taken out large loans to help them invest in assets that are sure to pay off in the long run- taking big shareholders out to luxurious meals and to meetings in Hawaii, big charity events and generally expensive and elite events that will boost their status and make it more likely for them to earn money in the future! Despite the fact that the business owner is still not making enough of a profit to pay all of their employees and is therefore taking home nothing for themselves.
In order to keep up with bills the owner takes out a big loan that their business friends assure them will pay itself off threefold in profits once that big business deal comes through! The monthly payments look pretty large but hey, nothing comes easy in life and they need money to keep this expensive car, office and company going! This is just what they have to do to get ahead.
After the business owner takes out this huge loan their employees start asking for raises and the business owner starts losing these big deals with clients they’ve been flying out to Hawaii. The promised income isn’t coming in and now the debts need paying. The business owner has no deals set up for the future and no logistical way of paying these debts but the bank doesn’t care. They sell the car, the office and all the business assets in order to repay the loans the business has accrued and now the business owner has no way to make any more money and nothing to show for their work!
Surprised? Likely not. You likely saw that coming from the very first paragraph, but this is what people are doing all over the world only with something far more important.
You see, your life is your business.
Think about this business for a minute and consider how ludicrous it is for a business to spend money on things that aren’t directly related to making more money, merely linked to a better appearance. Compare that to some choices that people make in their daily lives in relation to looking the part and you’ll see we’ve all been duped. If you make enough money to buy a new car then Goddamn it you make enough money to be financially independent and that is far more valuable.
In order to reach financial independence you have to treat your income as a business, to streamline the expenses you take on and choose very carefully what moves you make. Your savings are your profits and they are what’s going to make your life successful. Your new car and fancy clothes, big weddings and holidays are liabilities that you have to be very selective about allowing into your life. Pick the good ones!
It’s the same for your friends! You have to surround yourself with people who also want to grow and improve themselves in ways that aren’t fully superficial. People who will help you grow yourself and not just people who want to go to Hawaii with you and drain your bank accounts! Great friends are rare and have to be nurtured but they will teach you things about yourself and inspire you to do more than consume.
If you run your business well, it will support you for the rest of your life. You’ll have a reliable income and all of your tiny £/$ employees will be doing the work for you in investments, they will pay you the dividends you need to enjoy your life for real. When you have 25x your annual expenses in savings then your business will run itself for you and you can live comfortably off of the proceeds. The less you spend, the easier that goal is to reach and the sooner you can retire.
That’s my plan!