Profit Parasites: Not Managing What You Earn

* Intuit is providing a series of articles for the Biznik community during the month of April. Laura and I will be pulling together the best articles we can find from across the company, ones we think might help you. * By Anita Campbell A decade ago a book came out called the <a href="http://en.wikipedia.org/wiki/The_Millionaire_Next_Door">Millionaire Next Door</a>. The book profiled America’s millionaires. It turns out that they are not flashy big spenders. On the contrary, most millionaires are accumulators. They accumulate assets and make them work for them. A few years later another book came out, by Robert Kiyosaki called <a href="http://en.wikipedia.org/wiki/Rich_Dad,_Poor_Dad">Rich Dad, Poor Dad</a>. This book is very different from the Millionaire Next Door, but it reached one similar conclusion: Millionaires accumulate assets. They focus on preserving and growing their hard-earned dollars, not on spending them. Which brings me around to the point of this article: take a step toward financial independence by carefully managing your hard-earned money and making it work for you. If I had to give three tips to all you millionaires-in-the-making, they would be: (1) Stay close to your finances. Since I’m on a book theme, let me mention another: A Woman of Substance. Barbara Taylor Bradford’s book is about a housemaid turned tycoon who used to review her ledger books each evening. I’m not suggesting that you have to spend every evening poring over your QuickBooks – that’s a little too obsessive. But still, consider the role model of a character who was in touch with the money coming from the fruits of her labor. You can’t manage your business if you don’t intimately know your books. And you can’t know your books unless you dig into them regularly. (2) Keep good tax records. Good tax records are the only way to have a shot at getting every legitimate tax break you are entitled to. No one wants to be in a situation where you have to pass up tax deductions or credits because its tax time and your receipts are stuffed into shoe boxes, you can’t find your bank statements, and you have to try to catch up on a year’s worth of recordkeeping in one weekend. (3) Establish business savings. I know this is hard to think about when you are just starting out. You think you can’t worry about setting something aside for a rainy day, because every day is a rainy day when starting out. But having some of your money working for you as early as possible gets you a feeling of security. You can sleep easier if you have a cushion set aside to smooth out the rough patches (and there will be rough patches, trust me). Most importantly that money can be working for you, earning interest and growing. It becomes your own private working line of credit. I know one entrepreneur whose hobby was the stock market. He made $100,000 in the stock market during the heady boom days of 1998 - 2000, and was able to expand his business with the money he made. He recently sold that business for a high seven-figure number. We don’t all have a golden thumb for the stock market, but we can choose a certificate of deposit, mutual fund, even that old standby, the savings account. Pick what you feel comfortable with. Article from www.jump.com: JumpUp is a free website and community from Intuit that helps new businesses get up and running successfully. 2008-04-04T07:16:52Z

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2008-04-04T13:15:00Z

3 Simple Tips for Managing your Money—whether you want to be a millionaire or just stay on top during tough times.

Profit Parasites: Not Managing What You Earn

2009-02-24T09:43:41Z