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For the business stuff, I'm a fan of the "low capital, fast revenue" model. Essentially....have a business idea that requires little to no capital and find the quickest way to make money. Example of this: a lemonade stand. It might sound funny but it's true. A 9 year old girl can go on to her sidewalk with her parents, buy $4 worth of lemons and make lemonade all day long for $3 per cup and get 30 customers. That's $90. Turning $4 into $90 in one day. Little capital and earning sales in one day. Boom. The idea of starting a business scares the **** out of most people because of the stigma attached to it. The idea of you need to invest a lot of capital and it will take weeks or even months to make sales frightens people. But in all honesty, it all depends on your business idea and how fast you can find paying customers. $5 to build a website that shows what you can offer. Find a client that will pay you $300 per month for a specific service. Boom....profit in 1 month.
Well, you need to factor in labor cost. In the lemonade stand example, if it took the kid six hours to make and sell the lemonade, she made about $14/hour. It's a good gig for a 9-year-old, but anyone who is old enough to legally work can earn more than that. The business itself is actually showing a loss.
Yes, there are ways to make bank without investing a lot of your own money. We've used a handyman/carpenter to do repairs around our house from time to time. He makes very good money and he's worth it. All he needs for his business are some tools and a vehicle. I'm fairly certain he makes more than he could working for someone else.
If you have an idea which would allow you to make more than you do at your current job, and it's something you would enjoy, by all means go out and do it (of course with your spouse's buy in, haha). We city-data folks have no idea what this business is, which is fine, but that means we can't give much in the way of useful feedback.
One last comment. Note that this sort of business (lemonade stand, handyman, etc) tends to not have any value as a stand-alone entity. The ability to create sales and profit depends on the owner's labor. It will allow you to generate an income, hopefully a very nice income, but it won't fund your retirement since it has no value once you stop working. You'll still need to invest some of your income into stocks, bonds, etc... things that will have value even when you stop working.
I never learned any lessons (my parents would tell you differently). I was raised with the mantra "save money". But where did the money go? What does money do? How does it grow? What is the goal of saving? "save your money" is the thing my parents always told me. The other piece of advice I was told was "invest in mutual and government bonds". I never had a conversation of "Any job you get....take a small chunk of it and put it somewhere where it will grow. here, look at what I did with my money. you can start here and let it compound." The conversations I received was "go to school and get a degree."
I became very passionate about business because it excited me. I liked the idea of solving problems and you don't have to wait 30 years to make a lot of money. You make a lot of money as soon as you figured out how to make sales and grow. It's the "make sales and grow" part that has always been the challenge for me.
Now I'm at the point where yes, I'm still passionate about business but I'm at the age where I'm like....what if I just put in a small amount of money into an account? I've never really done it before. it's something I *should* have done 10 years ago but I'm having a little mid 30s self-reflection moment.
Unfortunately financial education is lacking and how can parents teach kids when they hardly know it themselves.
My parents were the same. They had jobs that offered 401ks. They knew enough to put their percentage in, but needed help picking what it was investing in. When they retired, someone knew who was working with Primerica "helped"then transfer to IRAs. They did transfer them but to some underperforming funds. While my parents were college educated, they were clueless on investing and that left them open to being taken advantage of. Someone at SunTrust Bank signed them up for an annuity that would pay out at 95 years old as an example...
So while they taught me to save and not have debt, I read books at the library about stock investing and real estate investing. Just reading wasn't enough though. I had to actually put that knowledge into action. So I've been investing in 401k since I was 21. Not long after opened a Roth IRA. Then bought my rental property at 29. 37 start my brokerage account so a late start, but better late than never.
At some point you have to take ownership for your life and decisions. Yes maybe no one taught you, but you have to learn for yourself. It's good you're asking questions. You've received some suggestions for books to read. Do yourself a favor and read them and start educating yourself on personal finance and investing.
Well, you need to factor in labor cost. In the lemonade stand example, if it took the kid six hours to make and sell the lemonade, she made about $14/hour. It's a good gig for a 9-year-old, but anyone who is old enough to legally work can earn more than that. The business itself is actually showing a loss.
Yes, there are ways to make bank without investing a lot of your own money. We've used a handyman/carpenter to do repairs around our house from time to time. He makes very good money and he's worth it. All he needs for his business are some tools and a vehicle. I'm fairly certain he makes more than he could working for someone else.
If you have an idea which would allow you to make more than you do at your current job, and it's something you would enjoy, by all means go out and do it (of course with your spouse's buy in, haha). We city-data folks have no idea what this business is, which is fine, but that means we can't give much in the way of useful feedback.
One last comment. Note that this sort of business (lemonade stand, handyman, etc) tends to not have any value as a stand-alone entity. The ability to create sales and profit depends on the owner's labor. It will allow you to generate an income, hopefully a very nice income, but it won't fund your retirement since it has no value once you stop working. You'll still need to invest some of your income into stocks, bonds, etc... things that will have value even when you stop working.
Not sure what you mean by "the business itself is actually showing a loss". You spend $4 and make $90. That's an $86 profit regardless if other people could make more per hour. 86 bucks in profit is 86 bucks in profit.
As for your last paragraph, that's true. Unless you built a business that generates passive income.
Quote:
Originally Posted by oneasterisk
Unfortunately financial education is lacking and how can parents teach kids when they hardly know it themselves.
My parents were the same. They had jobs that offered 401ks. They knew enough to put their percentage in, but needed help picking what it was investing in. When they retired, someone knew who was working with Primerica "helped"then transfer to IRAs. They did transfer them but to some underperforming funds. While my parents were college educated, they were clueless on investing and that left them open to being taken advantage of. Someone at SunTrust Bank signed them up for an annuity that would pay out at 95 years old as an example...
So while they taught me to save and not have debt, I read books at the library about stock investing and real estate investing. Just reading wasn't enough though. I had to actually put that knowledge into action. So I've been investing in 401k since I was 21. Not long after opened a Roth IRA. Then bought my rental property at 29. 37 start my brokerage account so a late start, but better late than never.
At some point you have to take ownership for your life and decisions. Yes maybe no one taught you, but you have to learn for yourself. It's good you're asking questions. You've received some suggestions for books to read. Do yourself a favor and read them and start educating yourself on personal finance and investing.
My dad is what I would call "very smart with money" but he doesn't talk about his finances very much. He was very frugal and all he would do is say "save money. invest in bonds. make sure you have a 401k and IRA". I would talk about making money as a freelancer and creating a business and he would say "get a real job" so I never really learned much. He had knowledge. He was just a never good teacher with the knowledge that he had. I invested a lot into my startup because like I said, business excites me. It challenges my mind. But I'm at a point where I'm self-reflecting and thinking if I should start doing other things like real estate investing or putting a small amount of money into an account. Real estate has always been enticing. I've heard a lot of people talk about how real estate was the one investment they made that good them really good returns.
A major reason for saving and investing is the psychological value (vanity!) of having money. It's not there to be spent, whether for a rainy day, or an indulgent splurge, or a comfortable retirement. It's just... there. So, reaching an older age, when body and mind are frail, and being unable to "enjoy" one's money, isn't a concern... because the money isn't there for the enjoyment of spending. It's there for the enjoyment of the having.
However, as we grow wealthier, we also grow more skittish and timorous. It's easy(ish) to replace a $100K portfolio with additional earnings and savings. It's hard to replace $1M. It's even harder to replace $10M. Money begets money, but it also begets a dependency on the markets, as opposed to personal verve or dedication or thrift.
We often mention high-earners with low savings. There's a pithy acronym for that: HENRY - High Earner, Not Rich Yet. HENRYs might be bid spenders, or saddled with college-debt, or something like a brand-new MD just out of residency, finally earning $400K but having done so only for a few months. The trick from graduating from HENRY to the more respectable position of having a large portfolio commensurate with one's earnings, has already been discussed in this thread... steady and indomitable dedication, self-denial, thrift,... and putting that money into slow-and-steady investments, such as S&P 500 index funds.
All well and good, but what if one becomes an anti-HENRY, with a decent portfolio but modest W2 earnings? That's a different sort of unsettlement, where one remains obsessed with the money, but unable to do much about it, apart from where the market (stocks, bonds, maybe real estate) goes.
So, we have to face the psychology of money. What's it for? Is it for comfort later in life? Is it for a higher material standard of living - maybe now, maybe always, maybe only later? Or, is it a project in its own right, an end in itself?
Not sure what you mean by "the business itself is actually showing a loss". You spend $4 and make $90. That's an $86 profit regardless if other people could make more per hour. 86 bucks in profit is 86 bucks in profit.
My point is you're not counting labor as an expense. The lemonade isn't going to sell itself. If you can't afford to pay an employee and still make a profit, it's not a viable business in the usual sense of the word.
If you're just looking for something to do in your free time to make a few bucks, that's fine. Sounds like this is your thinking?
My point is you're not counting labor as an expense. The lemonade isn't going to sell itself. If you can't afford to pay an employee and still make a profit, it's not a viable business in the usual sense of the word.
If you're just looking for something to do in your free time to make a few bucks, that's fine. Sounds like this is your thinking?
I'm sorry, but nearly every succesful business lost money in the beginning. That OP is currently only profitable if his time isn't counted doesn't mean this isn't a viable business. It means it's not profitable, but that's not the same thing. Almost every business started out like this.
My point is you're not counting labor as an expense. The lemonade isn't going to sell itself. If you can't afford to pay an employee and still make a profit, it's not a viable business in the usual sense of the word.
If you're just looking for something to do in your free time to make a few bucks, that's fine. Sounds like this is your thinking?
How do you define a "viable business"? You don't need to count labor as an expense unless you actually hire someone. Another problem that scares people in business is people tend to create rules of how a business should run. The definition of a business in simple terms: receiving money in exchange for offering a product or service that gives value. Correct me if I am wrong.
If I can invest $100 into something and sell it for $600 and repeat it multiple times, that is a repeated $500 in profit. No hiring any employees (unless I need to). Doesn't matter how much time I spend on it whether it be 10 minutes or 10 hours.
I'm sorry, but nearly every succesful business lost money in the beginning. That OP is currently only profitable if his time isn't counted doesn't mean this isn't a viable business. It means it's not profitable, but that's not the same thing. Almost every business started out like this.
Of course, lots of businesses are not profitable in the beginning, but they can't operate in that mode forever unless perhaps the owner is willing to work for nothing, or nearly nothing. That's not the sort of business I'd want to own, though.
Most of the things I enjoy don't cost huge amounts of money. But I'm able to enjoy them because I'm not spending five days a week working. The time to do things is more important than money, but it seems some amount of money is essential to have the time. My only regret about retiring is not having the resources to have done it sooner.
Of course, lots of businesses are not profitable in the beginning, but they can't operate in that mode forever unless perhaps the owner is willing to work for nothing, or nearly nothing. That's not the sort of business I'd want to own, though.
Then there's almost no new business you'd want to own.
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