Six figures and still poor. That’s how Masa and I were many years ago. Our business was making six figures per year but we didn’t feel like we had a lot of money at the end of the month, if you know what I mean. We felt like despite us making multiple six figures a year, we didn’t feel like we had that much money left to invest or to do things that were going to give us more money?
That’s a lesson that we had to learn the hard way, because one of the biggest mistakes that most of the people do, including us, obviously, is that as your income grows, sometimes we make the mistake of, let’s say growing our lifestyle and growing our expenses. For example, very simple example, you know, when you don’t have money you basically, it’s a no-brainer for you to always book an economy class ticket, right? Wherever you’re flying. But, as your business grows and you’re making more money, you always have this idea of flying business class. Right? As an example.
What happens most of the time with business class, apart from, yes, you can get the upgrades and you can get all that, but let’s say that you’re not able to get an upgrade and your business is making more money. What do you think you do? “Oh, I deserve to fly business class. I’m working really hard.” You know? “And I think I deserve to fly business class.” There’s nothing wrong with it, by the way. But this is a lesson that we had to learn.
The lesson that we had to learn is that instead of spending that money on that business class ticket, this time, was probably a better investment of our money to fly economy, right, this time, and put the difference between the economy ticket and the business class ticket, and take that money and invest it into something that was going to give us a better return, to increase that money.
I think those are sometimes the two biggest mistakes that people make, and that we did make. The first one is to start spending more money as our income grew, so that means that basically you’re always in the same rat race, no matter how much money you make, you’re still going to spend everything you have. Right? That was the one thing. The second thing was to start spending money on things that were not going to return more money to us.
If I was to give myself the advice based on what I know today, looking back to when we were in the six figure mark and we were still trying to make the ends meet, sometimes, believe it or not, so we wouldn’t feel so poor, what I would say to myself, five, six, seven years ago, to that Miguel, at that time, is, “Miguel, follow these basic principles. First of all, invest money in something that is going to give you long term returns. So something that if you put $10 today, in a year’s time you’re going to have $15, and in two years’ time you’re going to have $50. So something that compounds the money that you have and that you can invest.”
That’s one thing. The second thing is reinvest part of the money you’re making into your business, so you can grow that business faster, better, and it can actually give you a bigger return. So that’s the second thing.
The third thing is, obviously, invest your money in yourself. Invest your money in yourself, in your personal development, your professional development, so you can acquire the skills that you can then apply into your business so you can grow that business again, further, faster, at the same time, acquire investor skills. That means that you get very clear on how you’re going to invest your money, that money that you are earning, hardly earning, very hardworking money that you get, and that is sometimes very easy to then spend.
So those are the three things that I would say to myself before you go and enjoy, quote, unquote, enjoy. Yes I would get a little bit of a percentage of that money and put it into play money, and there are so many things that you can do, obviously, but if I was to just sum it up into three things : invest in yourself, personal, professional development, educate yourself as a long term investor. Have a goal on the kind of lifestyle that you want to have and make sure that you don’t overspend past that lifestyle. So, everything that you do after that, you save it and you invest it into something long term so that you can actually have a retirement plan. The third thing, invest back in your business. Get a percentage of that income and invest it back into your business, so you can grow it faster and better.
Sound principles