Plant Those Seeds!
What the heck am I talking about, you ask?
The other night at dinner, I was
trying to explain to my 20-year-old son why he never has any money. I said, "If
you keep eating your seeds, you will never have any crops!"
My wife and the kids just looked
at me as if I had two heads. I could almost hear my kids thinking, this is just another one of dad's weird
sayings. I couldn't believe they didn't know what seed money was all
about... especially my wife Pattie who watched these principles in action over
the last 25 years in our lives.
I realized that even the people closest to me didn't fully
understand this concept. Wow! Given the state of our country's economy, I felt compelled
to explain it to them and to anyone else who might benefit.
My understanding of "seed money" came from my dad. He began
teaching me the basics of money management when I was about the same age as my
kids are now. (And I was about as interested in what he was trying to teach me
then as my kids are now. Not very!) Nonetheless, this information did
sink in-and when I decided to apply it to my life, it was profound. Dad always
said, "It's not what you earn, it's what you KEEP that counts."
In order to accumulate wealth, you will need to apply the
Law of Sowing and Reaping to your money. Here
is my spin on this: once you have a small amount of money saved (seeds),
start investing it immediately. As your money grows, reinvest your gains (your
new seeds) into another commodity. Think about it...if you continue to
consume all of your money (seeds) every week, and leave none for saving
(planting), how can you expect any growth-or in this case, wealth?
It sounds so simple, yet few people ever start planting the
seeds that will grow into the wealth they desire. As you begin to do so,
remember diversity is key. You don't want to plant only corn; what if it's a
lousy year for corn? investing in a variety of "crops" makes more sense. I have
planted seeds in real estate, the stock market and several businesses of my
own. All of them have paid handsome dividends over the years. Some crops do
better than others, but as long as you keep planting those seeds in a variety
of places and reinvesting the growth, you will be far ahead of the pack!
Many well-educated people believe that wealth is a result of having a higher
income. This is absolutely not the case.
If you want to stop having to work for money and have your
money start working for you, remember:Wealth is created by
investment, not income! So... where do you start to acquire your seeds?
There are only two tried-and-true ways that I know of:
1. Save
your money.
Pay yourself first; the typical millionaire savesat
least 10% to 20% of his/her income. Start setting aside a min. of 10% of your
income and put it into a "seed" savings account. As soon as you have enough to
start investing, do so. No waiting, no excuses, no withdrawing money for any
other reason-invest it! Time can either be your enemy or your friend... meaning
that, over time, you will either live beyond your means (see #2 below) and dig
your hole deeper, or you will learn how to make your money earn you more money.
Here is a great quote from one of the richest
entrepreneurs of his time:
"I have found the Midas Touch. Pay
yourself first. Save 10% before making your budget, instead of after, as I used
to do. I never had anything left after making my budget."~ Andrew Carnegie
- Spend
less than you make.
No one likes to think about doing
without certain luxuries or giving up things they enjoy, but if you want to
thrive-not just survive-during uncertain economic times, Accept a little
short-term pain (discomfort)
in order reap huge long term gains. Take a serious look at every single one of
your personal expenditures and then make a decision to free up some cash to put into
your seed account so it can start growing. The truth is that most self-made
millionaires are very frugal and only spend money on what is necessary and of
value to them. That is why they are able to accumulate and multiply their
wealth so much faster. For instance, I refuse to buy a first class plane ticket
or pay $300 for a pair of shoes or purchase brand new cars because I think that
it is a complete waste of good seed money. However, I will happily pay $15,000 a year to send my daughter to private high school to prepare her for
college, because that is an investment in her future and well worth the price
to me.
Reducing your expenses and buying
fewer things does not send out the message that you don't have enough
money. On the contrary, I believe it paints a picture of someone who is
fiscally responsible and likely to have even more money to manage with each
passing year.
Cutting expenses is often an easier way to save
than trying to earn more money. Taking into account your time, work related
costs, and paying more taxes on that money, every three dollars you earn
as income only really nets you about one dollar to invest. In other words, for every
dollar you can cut in expenses is worth three dollars in income!
The principles behind seed money are easy, but the application, for most, is
anything but. Many people think they don't need to learn more about money management
until they have more money. The truth is, if you don't learn to manage the
money you have now, chances are you'll never have more money to manage.
I encourage you to think about putting together some seed
money, keeping in mind the basic Law of Sowing and Reaping: it's not what you earn,
it's what you keep and invest that counts. You will be well
on your way to having multiple crops yielding enough wealth to enjoy life on
your own terms.
Tip: In spite of the daunting headlines, there could
not be a better time to invest your seeds.The notion that you
should always buy low and sell high is one most would agree with, but
unfortunately that's not what people tend to do when they are
scared. Be proactive. Learn
the ins and outs of investing so you don't have to rely on advice from others. Choose investments you are comfortable with, and soon you will see those seeds
grow. Good luck to all you new farmers!
Want to learn
more about how these same principles can work for you in your
business?
Go to: www.winningthegameofbusiness.com/products
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