22 Apr ARE YOU CHASING MONEY?!?
Recently, I did a Free Financial Snapshot with a Realtor I met. It was obvious they were not paying attention to their business finances and had no plan for the future – which is quite common. At the end of the session, they stated they agreed with everything I said, but felt if they just focused on Making Money, all would be well. Sound familiar?
Most transactional based professionals (who are paid a commission for deals like Realtors, Agents, Salespeople…) often wind up creating a ‘hamster wheel’ for themselves of always having to chase after the next deal…which in essence is Chasing Money.
The income you require to live off and support your business comes solely from your deals. You often have to do ANOTHER deal just to pay off the expenses from the LAST one…and the cycle repeats. You are always Chasing Money.
This Realtor fell into the trap that I see way too often with most deal-based professionals…they failed to Make Money a Priority, not just Making Money.
It reminds me of the questions that popped into my mind when I first learned about Humming birds. Stay with me…
Humming birds flap their wings faster than any other bird…up to 80 times per second. Yes per second. That’s why they hum because their wings are moving so fast.
This allows Humming birds to hover in front of the flowers they eat nectar from…like mini-helicopters. But here’s the crazy part:
To beat their wings that fast, a Humming bird has to have a crazy fast heart rate, metabolism and energy…which means it has to eat constantly.
Which begs the question…wouldn’t it be easier to just slow down and not have to eat so much??
Which is exactly what I ask Realtors, Agents and Salespeople who constantly chase deals (aka Money) in order to pay for their expenses from the last deal??! (or to pay for all the fancy things they bought after they closed the last big deal)
While I admire Humming birds, I’d want to be the kind of bird that can chill out, relax, hang out in a tree…then go and find some food, then go back to chillin.
I’d want to be Free to choose what I want to do with my time instead of being forced to constantly search for food in order to keep flapping those wings so freakin fast.
Let’s look at some examples to see if you might just be a Humming bird…chasing deals (Money):
- If you have to borrow Money from deals that are in the books but haven’t closed yet in order to survive, you are Chasing Money.
- If you feel anxiety about going on a vacation because you don’t know how you’ll pay for it and can’t stop thinking about the deals you are missing out on while there (and how they would pay for it), you are Chasing Money.
- If you live the Lifestyle of the Rich and Famous during your busy cycle and then like a College student (Kraft dinner and canned tuna anyone??), or worse off your Credit Card and Line of Credit during the rest of the year, you are absolutely Chasing Money.
- And lastly, if like my Realtor friend I mentioned earlier, you are only focused on Making Money and feel this will solve everything…and not paying attention to the rest of your business (Operations, Finance, Brand, Strategy, Structures & Processes…)…then you have fallen into the trap of Chasing Money.
And you are not alone…as the saying goes Misery Loves Company.
Chasing Money will often produce Money, but it does not produce a sustainable, long-term successful business. Many have tried, few have succeeded without addressing the other aspects of being in business.
So what to do about this?
Well first, you have to come to the realization that you must Make Money a Priority, not just Making Money.
Imagine if Humming birds, like Squirrels, spent some of their time and energy gathering that nectar and saving it…instead of just eating it all on the spot. And then imagine if there was some way that the nectar they gathered could produce MORE nectar for them once it was gathered.
Why…it would be like some kind of miracle! And luckily, through Saving and Investing, we have that miracle available to us.
So here’s your Assignment, should you choose to accept it:
If you don’t already know, sit down and calculate the After Tax amount you need to live on (and/or wish to live on in future). Let’s say that is $84,000/year (or $7000/month).
Next calculate the average yearly return you feel you can get through Investing. A conservative number if you are dealing with Common investment options would be 5% (and for the record, I utilize Uncommon investments and therefore my average return is 10%…contact me here if you’d like to hear about those).
Lastly, calculate how much Investment Capital you would need, making your average yearly return (in the form of accessible cash…so the amount in your home doesn’t count unless you re-finance and pull money out of it to use as cash regularly), to produce twice the amount you need to live off (again being conservative as you may not have to pay half of it to taxes but we use this for our calculations).
So…if you need $84,000 to live off. You will need $170,000 per year in cash from your Investments which means you will need $3.4 Million in Capital invested and working for you.
$3.4 Million x .05 (5% return)/2 (for taxes) = $85,000
Now of course there are a lot of variables here that can change these numbers (make a higher return on your Capital; reduce expenses so you don’t require $85,000 to live; continue to work part-time to supplement your income…) but you get the point.
Once you figure out YOUR numbers, the next thing to ask is are you currently on the path to producing the amount of Money you will need to make this a reality in 10, 15 or 20 years?
And if you can’t figure all this out, or you do and your plan is NOT going to allow you to reach this goal, then we need to speak…contact me here now.
You can’t afford to wait on this any longer…