As an entrepreneur, it’s normal to see how money comes and goes into your account. And when the amount becomes larger than usual, it feels strange, maybe even a little scary. That feeling is your “financial thermostat” or your comfort zone in money.
Let us say that the number is around $10,000, but when your account dips below that, you panic and work hard to get it back up. When it rises above it, you get nervous and start spending to bring it back down to a “safe” level. You feel like you have to get rid of the extra money, so you don’t. This pattern stops you from ever building wealth.
In another Diamond Life Mentor Uncut episode, Balazs W Kardos is back with his Blueprint clients to answer a question about investing finances and creating generational wealth. His first tip is to adjust your financial thermostat. You need to get comfortable with a higher number, then invest the rest. Instead of your money just sitting in a bank, get an insurance policy. Transfer your savings into life insurance policies and overpay their premiums.
For example, you might put in $40,000 a year. This money grows with interest, uninterrupted. When you need a large sum for something like a home, a car, or even taxes, you borrow against the policy. Your original $40,000 is still in the policy growing, and you use the borrowed money to pay your expenses.
Balazs also wants you to be aware of your internet marketing and online advertising numbers. You need to know your cost per lead, cost per sale, return on ad spend (ROAS), and customer lifetime value, even if you’re outsourcing to an ad agency.
If you spend $3 for each lead and it takes 900 leads to make one sale, your cost per sale amounts to $900. If that sale earns you $6,000, you can see that you have a substantial return on your investment. Additionally, the customer lifetime value, which represents the total revenue generated from an individual customer throughout their journey with your business, should be much higher than your initial commission.
Finally, it’s important to have accountants who can help you manage your finances as you open up life insurance policies for your children as soon as they are born. By consistently contributing a set amount each year, they can reap the rewards from a very early age. This strategy builds generational wealth.
“$20,000 might be your zero, and this is going to feel uncomfortable, but at the same time, it’s going to give you peace of mind. That’s the reason you want to increase this zero over time, because when an opportunity comes up, you know you’ll get some money together.” – Balazs W Kardos
Catch this episode to take control of your money by adjusting your financial thermostat, investing your money strategically, knowing your numbers, and having a professional team with you.
Key Diamond Nuggets In This Episode:
- What are the common financial struggles of successful entrepreneurs when spending money?
- How can you leverage insurance policies to create generational wealth?
- What does it mean by a financial thermostat?
- Why should you learn about return on ad spend, cost per acquisition, cost per lead, and lifetime customer value?
- What books should you read about earning money?
- How can you set financial goals and structure wealth?
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