THE 5 STAGES OF PERSONAL WEALTH: MASTERING MONEY AS A BUSINESS OWNER

Brian Will, Serial Entrepreneur & Industry Leading Business & Sales Management Consultant

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In this blog based on the The Dropout Multi-Millionaire Podcast, we’re tackling a topic that often dominates our thoughts and ambitions, whether personally or in the context of running a business: money. For most of us, the reasons we venture into the world of entrepreneurship revolve around money. We want to secure our financial future, live a comfortable life, and enjoy the luxuries that come with it. Read on to discover the five stages of personal wealth, explore vital money rules, and examine how to ensure you always come out on top with your finances.

The Five Stages of Personal Wealth

Embarking on the path to personal wealth is a journey filled with distinct phases, each with its own set of goals and challenges, from the initial struggle to cover basic expenses to the later stages of securing your own future, giving back to society, and planning for your heirs. Which stage are you currently in?

1. Pay the Bills Phase: This is where the journey begins. Your primary focus is to make enough money to meet your basic needs. You're starting a business or working hard to sustain one, and your objective is to ensure that you can cover your expenses. At this point, other luxuries are a goal for the future, not a current reality.

2. Accumulation Phase: Once you've successfully navigated the "pay the bills" phase, you enter the accumulation phase. At this stage, your income starts to grow, and you might be tempted to accumulate material possessions and indulge in some luxuries. This phase can be a thrilling ride, but it's important not to go overboard and put yourself back into stage 1.

3. Savings Phase: As your wealth continues to grow, it's wise to enter the savings phase. This is the phase where you’re building a financial safety net. You’re also building up your resources of passive income to allow you to earn more but work less. Your financial focus here is having enough passive income to maintain your current lifestyle if your primary income source disappears.

4. Charity Phase: Once you've secured your own financial future and your passive income is set in place, it's time to think about giving back to the world. The charity phase is all about using your excess income to make a positive impact, supporting causes you care about, and contributing to society.

5. Inheritance Phase: This last stage involves considering what you'll leave behind for your loved ones. Whether it's a comfortable nest egg, valuable assets, or a legacy, planning for your heirs is a crucial part of financial success.

Money Rules for Business Success

Now that you understand the five stages of your personal wealth, let’s get into the rules when it comes to wealth in business. These three rules are essential to handling finances for your business:

• Cash Is King: In both personal and business finances, having cash reserves is essential. It's the ultimate safety net. Whether you're running a business or managing personal finances, having cash on hand can save you from unexpected financial shocks.
• The Golden Rule: "He who holds the gold, rules." Don't part with your money until you're absolutely sure of the outcome. In business, this rule applies when dealing with contractors, partners, or vendors. It's all about preserving leverage.
• Pay Yourself: When running a business, don't forget to pay yourself. It's essential for maintaining mental and financial well-being. If you can't cover your personal expenses, the stress and desperation can lead to poor business decisions. Don't let that happen to you.

Conclusion

Money, in both personal and business contexts, is a complex yet vital part of our lives. By understanding the five stages of personal wealth, you can make well-informed decisions about your finances. Embracing the money rules for business success, such as keeping cash reserves, preserving leverage, and paying yourself, will lead to a more secure and prosperous future. Protect yourself, build your financial safety net, and never become a financial statistic. Your financial well-being and the success of your business are closely intertwined. Remember these principles, and you'll be better equipped to master money in all aspects of your life.

If you’re ready to break free from the status quo and join the ranks of the mavericks, the rebels, and the renegades who refuse to conform and instead build multi-million dollar businesses, subscribe to The Dropout Multi-Millionaire Podcast wherever you choose to listen!