You are running two virtual businesses: a temporary labor management business and an asset management business. Viewing life in that context is critical to your wealth and success.
The financial objective of your temporary labor business is to convert your labor into financial assets as efficiently as possible.
I count this book and the Kiyosaki books as foundational books for financial success. Read Family, Inc., Rich Dad Poor Dad, and Cashflow Quadrant and you’ll be off to a great start.
All these books have the same philosophy of understanding that your ultimate financial success will depend upon the assets that you are able to acquire over your lifetime. And how you get them and manage them is really important.
Your Temporary Labor Business
I love the naming of the initial business: temporary labor business. Of course, it’s not a real business, but it’s what we all do first. We trade our time for money. And in our early days, we trade our very unskilled time for not much money.
Because time is finite, the obvious strategy is to make that time more valuable in trade by acquiring higher-value skills. But also, it’s not time alone, it’s health and energy that serves as limiters to this strategy. Get it while you can…and while you are willing.
In my opinion, a lot of folks miss the boat on this. They are just living an unintentional life from paycheck to paycheck. Probably miserable. Probably heading for an austere retirement.
In my corporate experience, I have seen people resist making and pursuing goals. It’s a flawed strategy and mindset that has down-the-line consequences. As someone who is older, all I can say is, time moves pretty fast. Yes, Ferris Bueller at least had that part right.
Your Asset Management Business
Here’s a quote straight from the book:
Your objective in your asset management business is twofold: (1) manage and enlarge your portfolio of assets; and (2) produce adequate cash flow to support both your consumption needs—everything from groceries, clothes, and car expenses to recreation—and investments to further your labor business, such as my return to graduate school for further education that enhanced my earning power.
At some point, your energy, health, and desire are going to run out, but you’ll still have consumption needs. For most people, the only asset they’re counting on is Social Security. Sorry if this offends you, but any plan that relies on the government seems risky and potentially not durable to me.
My opinion is that people need to acquire assets beyond the usual ones like 401(k), Social Security, and so on. The premise of this site is that the Internet provides an opportunity to rapidly create cash-flowing assets and so I’m trying to give you some possibilities.
There’s much more in the book than the concepts I’ve chosen to focus on and I would encourage you to give it a thorough read. If you are just beginning your career, please prioritize this highly.
In the book, the authors use their own experiences as family and business owners to provide practical advice and strategies for families to better manage their finances, communication, and decision-making. They emphasize the importance of creating a family mission statement, setting clear goals and expectations, and establishing a system for managing family finances. They even suggest a family should have a sort of Chief Financial Officer—there’s your promotion, if you haven’t had one in a while.
The book also includes case studies of other families who have successfully implemented these principles, as well as exercises and tools for readers to use in their own families. Overall, “Family, Inc.” presents a unique perspective on family dynamics and offers practical tips and strategies for families to improve their relationships, communication, and financial management.
I hope that you enjoy and apply the concepts from this book.
I referenced this book in the Starting You, Inc. newsletter.