- I think it doesn't matter what you do to earn money,
even you earn money as an employee,
you earn money as a self-employ,
as an entrepreneur, as a business owner.
I think we all need to be in one business,
you and I, we need to be in one business
and that is the money management business.
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Doesn't matter how you earn your money,
you must treat your business, what you do, like a business.
How do you manage your money?
Because most people,
when we go to school we learn how to get a job
or as an entrepreneur we learn how to build business,
we learn to make money,
but very few us know how to manage money well.
How do you actually manage money?
You see, I believe there are two types
of people you need to study.
The first type is the people who have,
become successful, and they have stayed successful
for a long period of time.
Don't go study people that only have,
they have succeeded, but only last a short period of time
instead of like say, Warren Buffett or Bill Gates
or some of those successful people
where they have succeeded, but they have stayed successful.
And the second type of people that you want to study
depends on what your goal is,
is to study people who have succeeded at a young age.
So, yes, it's perfectly fine,
you can learn something from everybody,
where if they succeeded when they are,
let's say, 60 years old, 65 years old, 70 years old,
that's nice, we can all learn something
from those examples and stories,
but it would be nice to study what did people do
to study at the age of 30 years old?
35 years old?
It didn't take them 30 years,
it took them maybe three years, five years,
or maybe only seven years or eight years.
What did they do?
Because I could tell you that they way
that they think about money,
they way they think about wealth
or success is a different perspective.
So in order for you to manage your money
and when it comes to financial planning,
I believe there are four stages that you go through.
I talk about this in another one of my videos,
about that in life you go through four stages
and when it comes to these four stages,
you also need a financial plan for all these stages.
So number one: and that is a financial plan for survival.
And most of time, people at a survival stage financially,
they have no fucking financial plan.
Their plan is: spend whatever I earn, that's it.
That's their financial plan.
And if they're lucky, they're not in debt,
but most of them, they are in debt, right?
The financial plan for survival,
what you focus on is simply making enough money
that your income exceeds your expense
instead of your expense exceeds your income,
which actually, believe it or not,
it's a big part of the population.
That most people, they actually,
they spend more than what they earn every single month
and that's why they rack up their credit card debts
and all these things, especially in the United States,
very, very common.
So, financial plan for survival.
Earn more than what you spend.
That's all you need.
Let's just get to that point first
and then you get to the second stage,
which is you need financial plan for security.
For security.
I'm talking about putting away,
depends on what your situation is,
three months or six months of cash away.
Right?
For the rainy day emergency fund.
The way you budget, the way you,
how you maybe are saving and investing 10% of your money,
just putting some money aside.
At this stage, you're focused more on the saving aspect.
Not only now, you are earning more than what you spend,
but now you're actually saving some of that money.
That's a financial plan for security.
Now, then the next stage,
you need financial planning for success.
This is different.
Now you are setting yourself up for comfort, for abundance.
Now, at this stage, most people,
Now you're thinking about, as an entrepreneur,
let me give you an example,
as entrepreneur now, it's your profit, your tax planning,
or your insurance policy, right?
Maybe you will have one or even multiple insurance policies
or now you are what I call a passive investor,
meaning you're putting money aside,
you're putting into, for some people,
it could be a retirement plan account,
it could also be your stock portfolio,
your mutual fund porfolio,
which I'm not an advocate of that,
but for most people, it is better than nothing.
It's better than nothing.
Some plan is better than no plan.
And they're putting some money aside,
you're setting yourself up for,
hopefully, a comfortable retirement, right?
That's a financial planning for success
and there are different levels when it comes to that.
At a higher level, where in the beginning of my career,
I had, of course, like, nothing, right?
Then I make a little bit of money,
I put some money aside, go through this stage,
financial planning for comfort, for security.
Put some money aside, put some savings aside
and then once you've accumulate enough money
then you can put into some kind of, you would say,
more modest or conservative kind of investments
and then once you do enough of that,
once you have more money coming in, the game changes
because when you become an accredit investor,
when you become a more sophisticated investor,
the investment world opens up to you
where now you're not investing in things
that most people invest in.
You have access to investments
that most people don't have access to, right?
So, if I am having,
and then you also would start putting together
a team, which evolves into more now the fourth stage
which is financial planning for significance.
That's legacy, that's when you have so much money
that, how are you gonna allocate some of that to charity?
How are you gonna allocate that to pass on to your,
the next generation, right?
A legacy.
How are you gonna make sure that after you pass away,
how are you going to minimize the tax that you pay?
It gets more complex because, example,
personally, in my life, for financial planning,
where it's not so much just I talk to my accountant,
so I have my financial planner,
now your financial planner, most of the time,
they are experts in their own field,
they can give you a lot of technical advice
but most of the time, they're not wealthy, right?
So you can take their advice
but you still need to process it and filter out,
does that make sense?
Just because they tell you: do A, B, C, and D
doesn't mean you have to do A, B, B, and D.
Maybe just do B or maybe just do A, that's perfectly fine.
But as you are the CEO of your money management business,
you have to know how your money works
and how you want to allocate
your money, resources and capital.
So, in my case, I could have a meeting with a group of them
where I have the accountant, I have the bookkeeper,
but then I also have my tax strategist and expert
and then maybe talk to my real estate broker
about what investments to make next, right?
How the money will flow through.
At the same time, with my financial planner,
with my insurance person, how that would work,
maybe I need to buy more insurance
to have revenue flow through that to minimize my tax.
Everything is much more complex
because everything has to kind of work together,
it's not so linear about this.
They need to talk to each other,
that's a very different level of financial planning,
you may not be there yet,
but I would say start somewhere.
Depends on which stage you're at.
Maybe you're just at a survival stage,
make more money, develop your high income skill.
You're now making more money?
Well, save some money.
You've gotta save some money so you can invest.
Not saving money just for the sake of saving it, right?
You save the money and then you can invest
and move on to stage three.
So you have some kind of financial plan.
Now, one of the things I don't like to do
is to give you certain tips about,
oh, you should invest in this and shouldn't invest in that
because what you invest in depends on your risk tolerance
also depends on what you like,
also depends on what's your expertise.
Most importantly, it also depends on what's your goal.
What kind of return are you looking for?
How much more capital are you going to have
or this is all the money that you have
or are you, like, an entrepreneur, you're a successful CEO
that you have money coming in constantly,
then you need to think about how the revenue
or how the income would flow.
Does that make sense?
That's the answer.
That's financial planning
and that's how you can retire comfortably,
how you can retire young and retire rich.
Any other questions, comment below.
Until next time, I'll see you in my Bentley.