It’s funny how we’ve grown up believing – as a culture – that the more money we make, the more money we should spend.
You’ve probably heard at least some of John’s financial background – how he saved a good chunk of money during his 8 years of duty in the U.S. Army – 4 active, 4 in the reserves.
Also, about how he worked in Corporate Finance, and in doing so, he learned a lot about managing his money the smart way: spend less than you make.
John took it to a whole new level, a very respectable level, when he decided that in order to live the life he wanted to live – which included financial freedom – he would always be smart with his money.
He had a plan, and that plan included a simple lifestyle.
My financial background is very different from John’s.
I remember my first “high-paying job” really well. I was working at a private bank as a Teller/New Accounts Rep making $12/hour, and I was STOKED!
I also remember the day that I got my very first raise.
I don’t think I had been there for more than 3 months when my manager approached me and said he wanted to sit down and give me my 90 day intro review. I knew I had been doing a really good job at work, and so I wasn’t nervous at all.
I said okay, grabbed a pad and pen, and followed him to his office.
I expected him to tell me “good job”, and then send me on my way.
How much money should you be making?
Instead, he asked me how much money I thought I should be making.
I told him that I felt really good about what I was making – $12/hour was almost double what I had been making when I worked at my pervious job, plus, by working at the bank I got to dress up in nice clothes and truly help people – not with tickets to ride a roller coster, but with their finances – with the most important thing in their life.
He smiled, and handed me a 1-page sheet of paper that was confirming I had made it through my first 90-days on the job.
I scanned the letter, and I got about half way down only to find out that I was being give a $3/hour raise. WHAT!? I was a Junior in college, really excited about my important job and my $12/hour wage, and suddenly, that got taken to a whole new level.
$15/hour was incredible!
But I soon found out that, even though a $3/hour raise sounded like a whole lot of money, after several months I still seemed to have about the same amount of money in the bank every month.
It’s pure logistics: before I was making $12/hour, and I had X in the bank, and now I’m making $15/hour, and I still have X in the bank.
Shouldn’t I have more money in the bank now than I did before? Logistically, yes. But somehow our culture has conditioned us to think that if we have extra money – more money – then we should spend it.
And that’s exactly why I never had any more money in the bank.
I spent the next several years of my life struggling financially.
I was living paycheck to paycheck – at times, I was even having trouble paying my rent.
About two years after I received that $3/hour raise, I left the bank to pursue my masters degree. During that time I was taking out student loans to help pay for school and also working two jobs to help pay my bills.
It was at that time I finally snapped out of it.
I found myself in a situation where I literally could not pay my rent.
I stopped and took a look around my apartment. I loved where I lived, and I really didn’t want to leave. But by stopping – and simply looking around – I realized that my rent was twice as much as it needed to be, and that I was spending my hard-earned money on things that I simply didn’t need.
That’s when it hit me.
Just because I was making more money didn’t mean that I had to spend more.
Today, my financial situation is much different than it was six years ago – when all of that happened – for a couple of reasons:
1. Starting six years ago, when I stood in my apartment looking around and wondering how I was going to pay my rent, all the way up to today, my spending habits have changed drastically. I now have a similar financial mindset to John’s: spend less than you make, and live a simple lifestyle.
2. I make more money today than I ever thought possible, making me even more driven to be smart about how I spend it.
In each of our monthly income reports we go into detail not only about the income we’ve received, but also about our expenses. We don’t do this to brag by any stretch; we do it to help share our lessons learned and our failures that we encounter in our business every day with you.
We do it to help share that building a business is not easy – that it takes a ton of hard work, dedication and drive.
We also do it to help share that it is possible.
Why don’t you spend more money?
Since publishing our monthly income reports, we’ve received a lot of questions from our audience on the topic of spending.
Typically, they’re wondering what we’ve done to splurge since we started to earn upwards of $100k in monthly revenue, and in some months, up to $200k.
But regardless of how much money we make, I refuse to fall back into that trap I was caught in for several years, where the belief is that the more money you make, the more you should spend.
Instead of going out and spending money on things we don’t need just because we can, we’ve chosen to reinvest the money that we’re making both in ourselves, in organizations that matter to us, and in our business to help it continue to grow.
Why is this important to us?
Well, we know that in order to continue to stay focused and grow the business, we have to be smart with our spending habits.
Does that mean we never go out and do anything fun?
Absolutely not – we go out and have fun all the time, but for us, that’s not a $300 dinner, or a $1,000 night out on the town.
Plus, John and I have plans that go way beyond ourselves when it comes to the money we’ve earned.
What about business expenses?
So the personal stuff aside, what about our actual business expenses?
If you continue to increase your income, how do you keep your expenses so low?
Great question, and the answer to this really goes way back to the beginning.
John built EntrepreneurOnFire with a very strong foundation beneath it. Before he launched, he had invested over $10k in the business with absolutely no guarantee of earning any of it back.
Big risk for a big return?
Only time would tell.
But while building that foundation, John started creating systems, learning about when to outsource and when to figure it out himself, and also how to most efficiently and effectively leverage his own time and skills as a part of that equation.
We continue to follow this model today, and through that model we’ve learned how to put systems in place, build a strong team and scale the products and services we have to offer in a major way.
The systems John created for the podcast have been refined over time. Today, it’s 8 interviews in a row every Tuesday, and then 1 day per month he uploads 30 episodes to Libsyn and schedules them out over the following month.
That’s 5 days a month that John spends on the podcast.
Since coming on board, I’ve also created systems for both content creation and community management.
Our products and services?
Those all have systems around them as well. For example, WebinarOnFire was built by myself and John over 2 days of 100% focused work on creating video tutorials, setting up the site and creating a buyers campaign.
Instead of approaching it with no organization, we sat down, walked through the process of creating and presenting a Webinar, and then listed out every step of the way. By the end of that conversation, we had our membership site wireframe.
By having systems in place, you can ensure that your time is maximized and that you’re running your business as efficiently as possible.
Knowing when to outsource
When you’re an entrepreneur, it’s easy to want to do everything yourself. Even when you really don’t want to do something yourself, you still try to find ways to do it.
It’s important to learn how to let go because it’s the only way you’re going to grow your business.
Knowing what types of tasks to outsource and which ones to wrestle with until you figure them out on your own is the key to the next part: efficiently and effectively leveraging your time and skills.
Leveraging time and skills
John and I run EntrepreneurOnFire with a very lean mindset. We leverage our time and skills to the best of our ability not sometimes, but all the time.
An example? If all it takes is me and John both waking up 1 hour earlier every day to give us an additional 60 hours a month, then that’s a lot of time for a very small sacrifice.
Educating ourselves is another example: we could pay someone to create opt in pages for us every time we need one, but why not watch a handful of video tutorials and learn how to do it ourselves? The time we’ll exchange here is well worth our ability to take care of this task ourselves (or delegate it to one of our VA’s) whenever we need it.
If you figure it takes you 4 hours to learn how to create a page using Optimize Press, and it costs you a one-time fee of $300 to purchase the pro plugin, then isn’t that a lot more efficient than emailing someone else every time you want a page, waiting for them to get back to you, spending time communicating what you’re looking for, and paying them an hourly rate that is probably upwards of $100 to do it for you?
Setting up a model that works for you is an important step when you’re building and growing your business. What you spend your money on, and how you spend it, can be the difference between increasing revenue and losing out on revenue.
And this goes both ways: if you check out our income reports, then you’ll see that our expenses definitely increase as our income increases. The more products and services we create, the more support and resources we need to ensure they continue to be top notch.
Keeping focus on your WHY – on what matters most – has been our goal since the very beginning, and our WHY is not to make and spend money, it’s to inspire others to create the life they want to be living.
This post was written by Kate Erickson, Content Creator and Implementer at EOFire. Follow Kate on Social: