There is a temptation as you move up the belts, and start making more money to rockstar your lifestyle. To get the sports car or the yacht or the mansion or whatever your version is. Don’t.
I was talking to Sean Richardson about this the week before we ran the Million Dollar Expert program. I said to him that I had hit red belt, but I wasn’t going out to buy a Porsche. He agreed that was the right move but also said “by the same token you’re not driving a 1980-something Honda Civic.” Of all the cars in the world he could have picked to make his point … I actually drive a 1990-something Honda Civic, although I’m starting to feel a bit more self conscious about it now.
I actually like my car, it’s cheap to run, cheap to fix, and always gets me where I want to go. So I’ll still be driving it for a while.
But I also like my car because it’s not hindering me from one of main priorities – to become financially independent from my practice as soon as possible. One of the criticisms of a practice over a business is that you can’t sell a practice and retire of the money you get. It’s a valid criticism (although having been a business coach for the last 10 years I also know how few businesses are successfully sold).
It means that when you are running your practice you need to keep your expenses in both the practice and in your lifestyle down, and be investing significantly in appreciating assets outside your practice.
If you get to black belt in 3 years, and then run your practice at black belt and above for 7 years (so ten years all together) and invest wisely along the way you should have at least $5 million invested, and you can live off the interest and returns from that for the rest of your life.
I’m aiming to invest as much of my income as possible to get to financial independence as quickly as possible. For example if at red belt the practice makes $50k, and our expenses are $15k, there is $35k that is my income. After tax that will be closer to $20k - so I’ll live off less than half of that and invest the rest. In other words I keep driving my Honda, and don’t rockstar my lifestyle.
I recommend having that mindset from the start rather than trying to scale things down and catch up down the road.
I'd love to hear your thoughts, you can leave them below.