Over the years of my practice and subsequent success/failures I have grown to appreciate the multifaceted reality associated with conducting business well. I have found that everyone puts their own spin on creating wealth or has a bias that bleeds through their approach to business. This isn’t bad it simply illustrates that there are many ways to think about and build enterprises. In some ways this is exciting and shouldn’t be a surprise. If business is fundamentally relational why wouldn’t personality weave its way through all aspects of it?
So, here is our perspective of the stages one goes though as they break out of their business shell and begin their journey. Some people don’t mature very far or fast while others likely have matured well beyond what we propose.
Maturing is not a scholastic or purely cerebral occurrence. One matures as they put the reps in and flexes the related muscles/mind sets to grow past their comfort levels. You can’t learn to swim by reading a blog and you won’t master business without practice.
This site exists to help anyone on their entrepreneurial journey no matter where they are. To do that we have put together a four-piece framework to outlines what you can expect. These stages embody the natural progression towards financial freedom. This isn’t to say that all people “aught” to mature further down the path but for those that want to here is what you can expect.
The four stages are:
- Earn to spend
- Earn to save
- Earn to invest
- Invest to earn
Earn to Spend (Awareness)
When we get started in our free market journey, we are clueless but quickly realize that nothing is free. This little thing called money is needed to exchange for products and services. If you want a roof over your head, you will need to pay rent. For food on your plate, you will need to buy groceries. If you want warm food, you will need to procure fuel or electricity for the needed energy. In this consuming culture people earn to spend. Want more? Then you need to spend more. In order to spend more, you need to earn more.
This seems straight forward but many people fall victim to the idea that if they don’t have the money, they can simply borrow from tomorrow to pay for something today. This idea has been written about a ton, so I won’t belabor it her. What I will say is that not only is this model a bad one to follow but the opposite of it is a great model to follow.
Borrow from today to spend on something tomorrow.
Wait,… what? In its essence the first step to wealth is simply putting off an expense now for the purpose of covering an expense latter. In a word: save.
Earn to Save (Intention)
When a person realizes that they either don’t earn enough to buy the things they want or that their earning ability may not always exist they begin to establish an earning buffer in the form of savings. Dave Ramsey’s popular first step in his plan is to save one thousand dollars. If you listen to him long, you will find that he is preaching to the idea that an emotional switch needs to be flipped and a self-control muscle needs to be flexed. It’s not fun, it’s not easy, but it is essential to move on down the path of wealth creation.
As one’s savings grows so does their financial reach and ability to weather life’s storms. The monetary pressures of life don’t carry the weight they once did. Proverbs 13:11, and Proverbs 28:20 speak to this. Proverbs 21:20 illustrate the folly of the foolish and consequence of consumption. Saving is essential. Not spending is essential.
Earn to Invest (Strategy)
Once you have mastered the ability to not spend and are sitting on a pile of cash you will find yourself with the burden of stewarding your accumulated resources well. Extra money is an extra recourse that can be poorly managed. What do I mean by this? On the assumption that you started saving for the end goal of wealth creation what you do with the money you earn is key.
What you do with your money will depend on many factors. Often spoken of in terms of risk and reward you will find there are many investment opportunities on a spectrum between putting your money under your mattress and heading down to your local casino. To be clear we don’t view gambling as investing, these are examples given in a spirit of levity. The point is you don’t want to sit on your finds and have them do nothing, and you don’t want to piss them away playing against bad odds.
Invest to Earn (Wealth Building)
At some point in your journey, you will find that your investments create taxable income and as such increase your tax burden. When this happens, you will begin to think differently about income, expenses, and taxes. Where money comes from, how it is accounted for, and what it is spent on all have financial consequences.
The goal becomes controlling assets not merely owning assets. Your vehicles, phones, and other necessities will become the property of business entities which you establish. How you route business will be an art that you can spend the rest of your days leaning. Expenses that once were simply dollars out the window take a new light and become legitimate write offs or depreciable events. This is the land in which you will learn the secrets of building your net worth and refining your skills as a capitalist.
Each of these stages offers many rabbit holes to go down and gobs of information to get caught up in. we will unfold these niches through the site from different angles. Some of it you may already know and other bits of it will be new. The beauty of it all is that no matter where you are you will be able to find something that will help you take your next step. You won’t find a golden ticket or get rich quick solution, but you will find tried and true principles, examples, and illustrations.
- Earn to spend (awareness)
- Earn to save (intention)
- How Saving Money Works and What it Will Afford You
- Budgeting Personal Finances For Freedom, Flexibility, and Peace of Mind
- Live within your means
- Cut costs/increase income
- Earn to invest (Strategy)
- Invest to earn (Wealth building)
- Starting a business in 2023
- Purchasing through your entities.
- Never ending journey of finding wealth channels