2/27/2017 1 Comment Your 911 Fund"Why am I having the same financial problems year after year? What happened to all of that money I had last year? Why does it feel like every step I take forward, I take two back?"
These are the questions I asked myself year after year. I felt cursed throughout college and my first couple of years in my career, until I realized I was the problem. I was not retaining my income, because I was spending without care... I was spending without caution. Rather it was an income tax refund, bonus from work, scholarship from school, my windfall was gone within a few months. Normally, these funds would be spent on material items (expenses) and rarely ever invested in my growth (assets). I missed every single opportunity to invest in my future, because I was dazed by a materialistic mindset. This is not where the story ends, unfortunately. After this money was depleted, something unexpected would occur. My car would break down, an unexpected tax bill would show up in the mail, or a bill collector would catch up with me. As a result, I had to depend on scraping up the residuals of my paycheck to satisfy these unexpected financial responsibilities. Then BOOM! I was back to living paycheck to paycheck and waiting on the next windfall to fall out of the sky. This happened YEAR after YEAR! Now while TAX REFUNDS and BONUSES are in full effect... I encourage you to save for RAINY DAYS! According to statistics, 60% of Americans do not have an emergency fund to cover unexpected expenses. Let's not be apart of the 60%. Save money that you believe you can blow in order to cover yourself from the unintended consequences of unexpected expenses. As a result, you will GROW...your net worth! You will have less FINANCIAL STRESS, and by the time August rolls around you will be financially free. I know this seems simple, but I have countless examples where financial goals were not attainable simply from not having a 911 FUND! But the good news, you still have time to change your mindset (grow)! You can start adding assets to your balance sheet simply from creating a 911 fund. Once you have started this fund, I suggest you keep adding to it whenever you can. This is more important than you think, because this fund will eventually allow you to invest in your entrepreneurial goals. *Suggested amounts for building your 911 Fund: 1. Start your fund with at least $1,000 ($500, if $1,000 is not possible). 2. Next try growing it to 3 months and then 6 months worth of your expenses. 3. Eventually try 12 months. 4. Any extra funds after 12 months can definitely be invested. Invest in your own business or invest in capital investments (Stocks, Roth IRAs, Low Index funds, etc.). For my entrepreneurs....this applies to you as well. However, I will flip the focus from "911 Funds" to "Retained Earnings". According to Bloomberg, 8 out of 10 businesses fail within a 18 months. Reasons noted include customer interactions, marketing, and the lack of a profitable business model (Wagner). Contrary to your belief, an investment of capital is needed to be successful at all of these. If you are not setting money aside from our profits to roll into the next year (Retained Earnings), you could easily become one of the 8. Simply put, don't spend all profits from business activity. I know it can be difficult when you first start your journey because you still have bills.....as your profit may be your only source of income, but WALK WITH ME for a second! If you sell T-shirts, treat yourself like a manufacturing company. It cost $5 dollars to purchase the materials for your t-shirt, and you sold the T-shirt for $25. This is a $20 profit. Don't spend the entire profit on dinner...put away $10. Retain these earnings to be able to purchase a new T-shirt pressing machine in a couple of years. If your retained earnings fund grow, you will have more capital to invest in the growth of your business. Creative minds have creative ideas, but remember that your business may not grow at the same rate year over year. Why? The economy, supply & demand, etc. I could keep going, but this is a different conversation. Leaving you with "Manage your personal funds like you would manage your business funds, and manage your business as a billion dollar business from day one!" Join me tomorrow live on Periscope, March 1st at 9pm Est/8pm Cen, as I discuss why a 911 fund is your first step to financial freedom and why retaining profit can help you grow your business fast!
1 Comment
Maurice Stone
3/1/2017 01:51:18 pm
I love this blog. Thank you for taking your time out to share this information with the world. It was very enlightening.
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AuthorI am Jasmine Collier, the founder of Walk With Me Financially and the CEO of Collier Professional Services. ArchivesCategories |