• Matt Morizio

You can't budget your way to becoming a millionaire

I was in the third row, locked in and ready to roll.

Addie, my wife, was home with all five kids for five days. I hated to put that on her, but she encouraged me to go to Fort Lauderdale.

We both knew the 10X Business Bootcamp had the potential to blow up my practice.

The first four hours of Grant Cardone’s talk was about personal financial literacy. “This is right in my wheelhouse,” I thought to myself. I give people financial advice all the time. That’s my job. This section, I assumed, would be an easy primer for the rest of the weekend.

Then he said, “You can’t expense your way to becoming a millionaire,” and it hit me right between the eyes.

“You want to expand your business or your income? Spend 95% of your time focusing on how to grow your top line. Forget about the expenses.”

Wait, what? Forget about the expenses? What about budgets? What about cash flow management? What about designating separate accounts for bills, vacation, investing, spending, etc? What about all of the financial planning we do for people?

I’m not throwing the baby out with the bathwater here - it’s all important, and it’s all relevant, but none of it is as important as growing that top line. He was exactly right.

Try this exercise: Add one more 0 to your annual income or your business’ top line revenue. Make $100k? Now you make $1M. Make $1M? Now you make $10M. Make $10M? Now you make $100M.

Now think about your monthly cash flow management. Think about your budget. Think about the stress it causes. It disappears if you add a 0, doesn’t it?

Now look at the sample personal income statement below (It works for your business’ income statement, too).

Many of the expenses can’t change - you need a roof, need a car, need to eat, etc, but let’s say you decide to cut your own lawn, get rid of cable, and brew your own coffee, bringing annual expenses down by $5000/year. Over 30 years, that means you saved $150,000.

$150,000 in 30 years.

Does that $150k over 30 years bring you financial freedom? No chance.

But it DOES require a lot of mental energy to keep your budget in check over that 30 year period, and that extra effort distracts from what can bring you financial freedom - increasing your top line!

I’m not dismissing the need for managing expenses, but I realize now I’m doing those who ask for financial advice a disservice if I don’t address the top line and creatively figure out ways to grow it.

Then we can address whether or not you need that pumpkin spice latte every morning.

source: people.com

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Investment advice offered through Beck Bode, LLC, a fee-only Registered Investment Advisor in the Greater Boston area.