As the new decade begins, many people will continue to struggle with employment issues. The economy is showing some signs of recovery, but there are still major underlying problems that have not been dealt with. U.S. debt is one of the big ones, and the country’s effort to move from a consumption state back to one that produces on a competitive basis globally, remains a daunting challenge. Other governments, including Canada’s politicians are following the U.S. policy with jobs being created that don’t matter, money being spent that will disappear forever, and bail-outs for antiquated businesses. The administration and deployment involved with these band-aids creates bigger bureaucracy and adds to the costs.
As individuals we are hard pressed to make a significant difference on our own. Instead our greater effort must be to look after ourselves and our families. We can no longer count on endless, stable employment and uninterrupted personal cash flow. We can’t afford individual liabilities that are beyond reasonable debt/equity ratios, and we must start paying attention to the personal savings account.
While these remedies seem obvious, implementation can be a bit difficult. Often there simply isn’t any money to save. Every penny is needed for daily essentials, payments, or unexpected expenses. Unfortunately, it doesn’t matter to those we owe money to. They want their cash, and we don’t have several million taxpayers tethered to our desk to make up the shortfall.
So one of the things we can do is stop acting like the government. They won’t ever learn, but we can. There are two important things to be concerned with, one being revenue and the other is expense. Our job supplies the revenue, and our intelligence controls the expense. We can start by no longer spending money we don’t have, reduce or eliminate discretionary spending, and one way or another, jam a little from every pay cheque into a savings account. It takes time to add up, but it will. The trick is to develop the habit of doing it, consistently, every payday, without excuses.
Hand in hand with the savings should be a financial plan. It doesn’t need to be complicated, but it helps to write it out. You can call it a budget, or a road map, or even a journal. A written plan creates a picture for you to watch and observe. You begin to notice the relationship between the revenue and the expense. You learn the true meaning of surplus and deficit. You obviously want the former to prevail.
The point is, you control how it looks. You get used to making entries, talking it over with your spouse or partner, making adjustments and changes. Every business that is being run properly does the same thing. The owners stay aware of the revenue and expense on a regular basis, and follow through with whatever is necessary to stay in the black.
You hear lots of talk about balance sheets, equity, earnings per share, and other language connected to the corporate world. It all starts with revenue and expense, or as it’s better known, the income statement. Net income from this statement gets moved over to the balance sheet. No net income, no contribution to the balance sheet. If the revenue stops or drops below the amount of expenses being incurred, a loss is created. Two ways to mitigate a loss are by borrowing money which is debt, or by selling assets off the balance sheet. Neither option is good for long term financial health.
One solution we as individuals can use to avoid this unpleasantness is to diversify our income by creating one or more additional income streams. If you’ve never been self-employed, now is the time to give it serious consideration. Start by analyzing your strengths. What are you good at? What are you passionate about? What has your life time of experience taught you? Somewhere in that process of soul searching you will have a key to your next move. Finding it will open a door to a whole new world. Depending on your personal asset mix, the chances are you will discover the starting point as a home based business idea that will provide a new life of excitement. It will devour your time and energy and supply a completely new range of emotions that you’ve never experienced in your life.
Welcome to the world of self-employment. You will soon find a deep satisfaction in starting and developing your own business. It is a field of dreams, with pot-holes and gullies, low ground and high ground, tears and laughter. The experience will teach you, humble you, try you, and reward you. It is unique to you and your personality and success provides a wall of financial security for you and your family.
Not everyone is going to make it, but that doesn’t mean you shouldn’t try. The journey alone is worth the stories created, and when you consider the alternative, why wouldn’t you?
Best Wishes, and Good Luck.
