Thinking about yourself as a business
The only way to escape wage slavery is to purchase the key to your shackles by becoming an owner. You can own a wide variety of things, and you can pick and choose your categories, but in order for your ownership to be beneficial to your balance sheet, the things you must own all share a common trait: they shower you with cash.
What do you own that showers you with cash?
You can own ETF’s, bonds, mutual funds, or individual stocks. If you’re a serious DIY type, whether your handiness comes in the form of financial dexterity or carpentry, you can own rental houses. If you’re adventurous and creative, you can own microbusinesses like vending machines, laundry mats, parking lots, and car washes. You can own royalties to Christmas songs that are guaranteed to be played in department stores every year around this time. With a pretty face and a unique personality, you can own a wildly successful YouTube channel. Is crafting your thing? Etsy might be a growth segment of Your Company LLC. Wanna get away? Own a yoga retreat in Bali.
You can build your business around your passions and lifestyle priorities
When you’re pondering your finances, think of yourself as a corporation with different lines of business. Your core asset is the skill and discipline you apply to your full time employment. Enhance and protect this asset, and along the way, attempt to acquire other assets that work while you sleep.
Every asset you own is generating cash that will eventually work its way into your coffers. The velocity, availability, tax treatment, reliability, and volume of those monies varies depending on the source. Does YourCorp sell healthcare? Food? Oil? Sock puppets on Etsy? Used furniture on Craigslist?
Managing your asset base and income streams
Optimize your assets by determining the best type of ownership structure, account type, and holding period to fit your lifestyle. Focus your efforts on increasing your stake in your most productive and personally rewarding assets. Have the courage to launch new money-making ventures, and be mentally and emotionally prepared to accept failure so that you’re free to seize opportunities to deploy your capital and sweat equity into new investments.
With every small asset that you plop with gusto on top of your pile of shares and side-hustles, you take one step closer to freedom from the paycheck. Mitt Romney might’ve ruined his election chances by stating that the poor should “buy more money,” and I’m no fan of the man himself, but I’m a firm believer in arguing the idea instead of the person. In this case, Romney was right. With whatever extra cash a person can muster, it’s imperative that he or she put this surplus into assets that generate cash.
A mental model for your personal income statement
Today’s post is about mentality. There’s no magic checklist, just a thought pattern that we find handy to apply to our daily decisions. As savers and investors, we’re building microbusinesses. You, Inc. My Freedom Machine, LLC. The International Bank of Moi. How you envision and manage your income streams will, in large part, determine your success in achieving financial milestones that are important to you.