Finances are finances. Whether you are a global corporation with assets in the billions of dollars or an itinerant busker living from gig to gig, the way you use the money you have is a comparable process. To make money, in business or personal life, using the assets you already have is the key.
Large corporations all started out with one person who was willing to invest his time to make money. There are no exceptions to this. No company started out fully built and funded, ready to take on even bigger challenges. Your personal life is similar.
Note: If you did start out with plenty of money and time, through inheritance or pure luck, this article could introduce you to some concepts that might have been skipped, like working for a living.
Investing time or money is still investing
Investments can be either time or money. When we work, we are investing our time in expectation of getting compensated for it. You clock in, do your job and get paid. Businesses invest their money in expectation of being rewarded by making even more.
Successful businesses invest their assets wisely. They are constantly looking for the most efficient, least expensive way to make or sell a product to make them money. Look at Apple, for example. They don’t manufacture their iPhones in China to increase the standard of living in that country. They manufacture them there because it is much cheaper. The bottom line for Apple (and many other companies) is that keeping the cost of their products down means they have more profit in the company coffers.
Delayed gratification can reap benefits
By keeping costs down, you have more money to invest in your future. Working hard while young means that your quality of life should improve through your career. As we go from minimum wage jobs to careers that give us a living wage, maintaining a lower quality of living allows us to invest more money into our future.
Adapting that philosophy to your personal life means that you should look for the most cost-effective way to do everything. Balancing cost vs standard of living gives us reason to strive to succeed. It is cheaper to eat Ramen noodles than a Porterhouse steak, but our standard of living should eventually rise high enough where we can choose the steak.
Keeping your reputation pristine
A business that pays its bills slowly or sporadically gets a reputation. They have difficulty finding sources for stock and have trouble keeping employees. They have allowed the needs of the moment to override long-term advantages.
We see the same problem with people who get into trouble living above their means. A corporation may have a line of credit for account receivable that gets overdue, while a person may have overextended their credit, but the result is the same. In the short term, you will have trouble getting credit to cover your expenses and in the long term, you will have trouble buying the more expensive things – such as houses or cars – that most people cannot pay for out of pocket.
Protect your credit rating like your life depends on it. Having less-than-good credit makes it much more difficult to increase your quality of life when you reach the point where that becomes an overriding concern.
There are fundamental differences between people and corporations, but there is a great deal of overlap in the importance of fiscal discipline and wise investments. For most of us, the one thing we have to invest is our time. Unlike money, time is finite. Once you have used it, it’s gone with no way to get it back.