Want to Be Rich? Don't Start A Business... Do THIS Instead

Summary

In this video, the speaker challenges viewers to think of their personal finances as a business. Instead of focusing on starting a side hustle or business, they emphasize managing household finances using the same principles businesses use: an income statement (budgeting), a balance sheet (net worth), and profit (discretionary income). The speaker explains how tracking these financial aspects regularly can lead to better financial health, offering a path to financial freedom without necessarily becoming an entrepreneur. The key is to control spending, monitor income and expenses, and reinvest savings wisely.

Takeaways

• 😀 You are already in business, managing your personal finances at home is your first and most important business.
• 😀 You don't have to start a business or side hustle to be rich; managing your personal finances can lead to wealth.
• 😀 Treat your personal finances like a business by tracking your income, expenses, and profits.
• 😀 An income statement (or budget) is essential for tracking your income and expenses to ensure you're living within your means.
• 😀 Regularly track your budget to ensure you stay disciplined with your spending, just like a business tracks its financials.
• 😀 A balance sheet (or net worth statement) allows you to evaluate your assets and liabilities, helping you monitor your overall financial health.
• 😀 Knowing your net worth is crucial for understanding your financial situation and making informed decisions about your money.
• 😀 Profit in personal finance is like discretionary income – the money you have left after all expenses, which you can reinvest.
• 😀 Use your discretionary income (profit) to reinvest in your financial health, such as paying down debt, saving, or investing.
• 😀 Just as a business reinvests profits to grow, you should reinvest your personal profits to build wealth and secure financial freedom.
• 😀 Organizing your personal finances helps you avoid financial disorganization, which could negatively affect any side hustles or businesses you attempt to run.

Q & A

What is the main message of the video script?

The main message of the video is about managing personal finances as if they were a business. The speaker emphasizes that before starting a business or side hustle, individuals should first take care of their own financial health by treating their personal finances like a business, using tools such as an income statement, balance sheet, and profit analysis.

Why does the speaker argue that everyone is already in business?

The speaker argues that everyone is already in business because each person earns money and must manage it. Personal finances, including income, expenses, and savings, require careful management, similar to how a business operates.

How does the speaker suggest you view your personal finances?

The speaker suggests that individuals should view their personal finances as their first and most important business. By doing so, they can assess their financial health using tools typically used by businesses, such as income statements, balance sheets, and profit assessments.

What are the three key tools every business uses to measure its health?

The three key tools every business uses are: 1) Income statement (or profit and loss statement), 2) Balance sheet, and 3) Profit. The speaker suggests using these same tools to track personal finances.

How can an income statement be applied to personal finances?

An income statement for personal finances is essentially a budget. It involves tracking all the income coming in and all the expenses going out. This helps individuals evaluate whether they are living within their means and staying disciplined in their spending.

What is a balance sheet, and how does it relate to personal finances?

A balance sheet for a business shows assets and liabilities, and the same concept applies to personal finances in the form of a personal net worth statement. This document tracks assets on one side and liabilities on the other to determine an individual's net worth.

What does the speaker mean by 'profit' in personal finances?

In personal finances, 'profit' refers to discretionary income—the money left over after all expenses are paid. This is equivalent to the profit a business makes after covering its costs, and it can be used for reinvestment or saving.

Why is tracking profit important in personal finances?

Tracking profit (or discretionary income) is important because it allows individuals to reinvest in their personal finances, pay down debt, or build wealth. Just like businesses use profit to grow, personal profit can be used to improve financial health.

How can someone use their discretionary income to improve their financial situation?

Discretionary income can be used to pay down debt, add to savings, or invest in opportunities such as stocks or real estate. Reinvesting this money helps build wealth and secure long-term financial stability.

What is the connection between personal financial organization and business success?

The speaker highlights that personal financial organization is directly linked to business success. If an individual's personal finances are disorganized, it can affect their ability to manage a business effectively. Therefore, taking care of personal finances first is crucial for long-term financial success, both personally and professionally.