One of the biggest problems with our school systems today is they do not train kids to be entrepreneurs but rather cogs in the machine.
Very few people, even though who go to college for business, really understand what it requires to start your own business.
And one of the pieces I see overlooked more than any other is the actual financial number it takes to be self sufficient.
For years, I’ve seen the majority of people tell me that they can make it on $100 per day.
And I can relate because even though I made quite a bit more than that at my last job I had convinced myself with some sacrifices I could also make it on $100 per day.
The reality is so much different though.
Its very easy to overlook things like the cost of an accountant, the cost of taxes, health insurance, etc.
What I found out in reality was I have to make closer to $400 per day just to keep my head above water.
Now, you might be thinking..James, sounds like you need to cut back but I have to tell you I live a pretty modest lifestyle.
My wife and I keep our discretionary spending to under $400 per month.
We have one car that we paid roughly $30,000 for and we live in a ~ 2000 sq ft 3 bedroom 2 1/2 bathroom house that we bought back in 2008 when I still had a regular ole job.
There are no fancy Ferrari’s or McMansions over here nor do I have any desire for those things (I’d much rather let my money work for me than spend it on “luxury” items)
It’s actually things like health care and taxes that put a huge dent in our budget, both of which cost us far more than even our mortgage!
Now, this all may sound like I’m unhappy with my decision to become self employed but nothing could be further from the truth.
I’m absolutely grateful for everything being self employed allows me to do with my life.
But I don’t want you to have to go through the same pain I went through in figuring all of this out the hard way.
Trust me, the last thing you want is to find out you owe the government tens of thousands of dollars more than you thought you did or to find out you can’t afford access to basic medical care.
I’ve been in both of those positions in the past and wouldn’t wish them on my worst enemy (well, maybe the first one on my worst enemy lol).
So do yourself a favor TODAY.
Contact an accountant and find out what their fees will be for your area and what kind of taxes you can expect to pay.
Talk to an attorney and find out what it costs to set up an LLC or similar company.
Shop around for health insurance that fits your family’s needs.
After you’ve done all of that, sit down and make a budget of exactly what you need to earn every month. (I recommend adding in at least 20% extra for savings/investments.)
If you need a great tool for this, I have used Mint.com for close to 10 years and its free.
After you do all of this, you’ll know exactly how much you need to earn every single month and I believe that once you have that data your brain can go to work figuring out a path to get there..
but too many people are chasing a financial goal that they’ve never actually defined.
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