How I Manage Money Daily For Financial Independence & Stability

Now, I'd like you to walk us through how you steward money once you make it. How are you managing your finances today based off everything you've learned so far?

The number one, maybe one of the top things I've learned is if you don't give when you don't have a lot of money, you'll never have a lot of money to get. Meaning a lot of people think, oh, yeah, when I'm rich, or like, when I have money, I'm gonna be, like, very generous. It's like, no, you're not. Because, again, like, it's. It starts with the mindset of, like, if you're not generous, then you're. You're restrictive. You think, oh, no, no, I have to hold on to this. You know, there's little amount of money that I have, and, like, this is all I'm ever gonna have. So, like, I can't give, but I'm gonna have a lot at the same time. And I just made a video on this and how a lot of people, they want to grow financially or in their business, but then they also have the scarcity mindset. It's a vegetarian who also loves red meat. It doesn't. That's not real. Usually you have to pick one or the other, and most people default to scarcity. So if you give when you don't have a lot, and this could be like, I would, you know, go to. I sold my car. I would ride my bike to Starbucks. So I would work on my laptop seven days a week to again, like, take action, figure this out. So I would get lunch at, like, IHOP Fresh Market, you know, cheap stuff. But sometimes there'd be a nice old lady behind me, and I'd be like. She would have, like, a little, like, piece of cake or something. And I had maybe 100 bucks to my name, but her thing was 5 bucks, so 5% of my net worth, you know? So I'd be like, let me buy that for you. And she'd be like, no, no, no. Like, let me buy yours. And I'm like, I'm feeling good today. Let me buy your little cake or your little snack or whatever. If they had a whole grocery cart, I'd be like, in the future, not right now. I can't afford that. But I'm like, hey, let me give a little something, you know? Or like, a very nice waitress at, like, a little pizza place. Like, just like. And it's not a lot of money, but it was a lot of money to me at the time. And, like, that I'm telling you, looking back, that was a big shift because when I got out of that scarcity mindset of like, oh, no, no, no, I can't give, or like, I can't do that, I can't, I can't. Then that also bleeds into, oh, I can't go grow my business. I might as well get a job. Like, no, no, no, too much risk, too much that. And people think, oh, yeah, when I have a lot of money, then I'm going to think like that. But you have to start thinking that way and act as if. And again, just even if it's giving a little here, a little there, and it's not like you have to then give all your money away or something, but it's just, again, it's something where you're not restrictive and tight around money because, you know, I'll give this because I have more coming my way, things are going to work out. And that's, again, very simplistic. But if you talk to any person that is doing well, they'll say that that's very important. Obviously there's the, the rare person that's always been stingy with money. And yeah, now they have a lot of money, but maybe they're 80 years old and they, yeah, they, and they never really enjoyed life or like, really, you know, had good experiences. And yeah, now they have a lot of money. But I think the growth and abundance versus the scarcity, people need to get over that or any of the logical strategies that we'll discuss where they'll see on YouTube, they'll be meaningless.

I agree. And you also need to, as the viewer watching, you need to look at the strategy someone's presenting to you or the mentality or the way that person's operating. Say, for example, the person that's operating out of scarcity. Even if they end up with a lot of money in the later years in life, you also then need to measure, well, how much time do they have to experience that money or have experience and great memories with that money, how happy is this person? How much joy do they have? How many friends do they have? What are their relationships with their family, their spouse looks like? Because then you start to analyze other things around the money. You're like, I don't know if that's duplicatable. I don't know if that's attractive. I don't even want to be around that person. They just become. People don't want to be around. There's no fun. Even if, yes, they have the money there's just no fun. So there's that element. So on a fundamental level, when it comes to stewardship of your money, before you even get it and when you have it, you have this mentality of giving first. So to try to like illustrate the flow of money for you, a we know you make money via a business. You're not a W2 anymore. You founded your own business, you built it up from scratch, it now produces money. When it comes, when money lands into your business checking account, you've got this give first mentality. From there, what's the next move that occurs when you receive money? Does it for you? Does it go to one business checking? Do you spread it out? How does that work for you?

Yeah, so I think the biggest thing for me is I always pay my credit cards and I like credit cards because especially business credit cards. You know, you get the points and then you get to use it on stuff. So I like using credit cards, but that's probably a pet peeve and like an OCD thing where like if I every morning when I wake up, I, you know, take care of the dogs, make my wife a coffee, feed them, make my own coffee. And then I'm in the office usually by like 8 o' clock on the dot, 8 to 8:30, I'm managing my finances. Because nobody in life, this is true, nobody will care about your finances more than you do. Right? I think sometimes people, they like to say, well, I'm not an expert, so I'm gonna. I have a cpa, I have a financial advisor, I have a consultant consultant. I have this and that. Even with somebody's business, my clients, I tell them, hey, like, nobody's going to care more about your business than you. So like, you need to have things, you need to be able to manage things and have them like on tap, ready to go, whatever it may be, your marketing, your sales, like you need to manage it. So I manage my finances. 8 to 8:30. The key number is cash. So I look at how much cash, like how much liquid assets do I have, especially in business, right? If I had a job, maybe what doesn't matter as much. But as a business, you're not guaranteed anything. You're not guaranteed a certain income or profit or whatever the case may be. So before I even look at what I'm making, I look at how much money do I have. Because anybody, if you look at a real estate mogul, business mogul, entrepreneur mogul, the number one common thing you'll hear is you need dry powder, you need cash. People love to say, no, no, no, but. But it's. It's only earning 4%. You could earn 8% in the market. Maybe, maybe you lose 50%, I don't know. But I, again, as a business owner, cash equals Runway and life. Because if you're running a business, if you have a great business plan, you're talented, you're hardworking, you have the drive, but you run out of money, you're out of business. Which seems simple, but sometimes people love to think about everything else, may plan for the future, but they don't look at, okay, well, how much cash do I have? What do I need to pull back on? Or do I need to now use some of this cash to, like, reinvest back in the business? You're like, what do I need to do? So I look at the cash I have, and then again, I usually pay off my credit cards, like, every day. I know it's. I. It's OCD without. That's essentially what I do every day.

Without giving, like, a number. Is there a standard of certain amount of months of business operational costs that you keep in cash on hand? Is there a. Yeah, I would say.

12 months is over. Overly safe quote, unquote. But again, like, I've never heard of somebody complain I have too much cash in the bank. Oh, this sucks. You know, I've never heard that. But people, again, they like to think, oh, cash is trash, and all this stuff to a certain extent. I mean, if you have your net worth, if a third of your net worth is in cash, you can withstand almost asterisk. Almost any life or business explosion or issue. If you have. Even if your net worth is 100 grand, you got your house, maybe you have a car, and you got 30 grand in cash. I mean, that's. Again, it's relative. So I would say a third of your net worth in cash. That's. That's what I do. Everybody's different. Not financial advice, but I would recommend, you know, anybody that's a friend or family member of mine, hey, keep a year of savings. And that helps you also take risk.

Yeah. And you just build upon that. Correct. Like, you just keep building upon that.

Like, well, if. If, if it goes like where I have a lot, then I might, you know, depending on where somebody's situation is at, I may, you know, pay down my mortgage a little bit. Got you, you know, maybe, maybe. Maybe look to invest it, you know, of course. But I think that's what I'm saying, like, I'm talking about if, if you're at minimum what I'm saying, anything over that, it gives you room to take more risk, invest in your business or you know, defer some of your income and again like lower your profits. You can hire more people, but like having cash and liquidity because a lot of talented people, they went out of business because they just ran out of money, which you'd be surprised. A lot of entrepreneurs don't. They don't look at their numbers often.

They do not. They do not. It's, it's actually quite scary because I deal with some of those business owners. I'm like, what? Okay, interesting. So let's, let's keep, let's keep opening this up so people can see this. So in your case, money comes in, lands in a business checking for you, the cash on hand category, does that go in a separate account or does that stay in a, in a main business checking? How do you actually structure that for yourself?

It depends. You know, some of it's business, some of it's personal. I do my best to put as much in a high yield savings account. It's not going to make me rich. It's 4% but gotcha. You know, after paying the taxes on, might keep up with 3% inflation maybe. So at least I'm not like actively losing 3% on it, you know.

But yeah, but in essence, savings account, gotcha. But technically it's going to a separate account. Like you got your main business account where money comes in, lands in that checking. That checking is not earning the high yield. That's like your operations account. And then you have this give first mentality of whatever comes in. Then you've got a safety net that you create. 12 months cash on hand. Then when it comes to operations, basically anything that could be paid with a credit card, you're running it on business and, or personal credit cards and you're getting your cash back rewards and your points because that's essentially free money. And then you immediately pay that. Like you don't even create the possibility of being late or paying any kind of interest whatsoever. You settle that almost immediately, pretty much every day. And if we continue along, when it comes to, okay, you solve for give first, then you have your emergency money and that's earning, you know, high yield, 3, 4%, whatever it earns, you're not really concerned about it. It's just fixed money that needs to be liquid and available that allows you to perform better, I would say, in your business and take more risk because you have this, this safety cushion from, from there as a Business owner, do you set yourself up with a paycheck, a salary to your personal? How do you operate that?

Yeah, no, so I do take a salary. And yeah, there's a whole bunch of. Even with what you're saying with like the business checking and the personal, that's where a CPA is necessary. Because if you have an S Corp, you can only take so many distributions, so that's where you get down the rabbit hole. But yeah, I have a small salary. Nothing crazy or anything like that. But yeah, that's where a CPA can help you maximize. How much salary do you pay yourself when you time that out? And all that very detailed stuff. So again, I'm very numbers driven, so I naturally like researching that stuff and still consulting with the cpa. But that's where I think a lot of people, as they start making money, they need to get a cpa. Because if you're not a numbers guy or gal, just not let them handle it. But like, learn from them. Don't just like, kind of be like, I'll think about it later, you know, like, think about it now. Because a lot of people leave so much tax savings on the table just because they could do the same thing they're doing. They just don't know how to structure it. And they, they don't know what they don't know.

Correct? No, I mean the, the tax law or the tax code is bigger than the Bible, I believe, or it has more.

Oh really itself.

So it's. If not, it's competing for sure. So we are talking about a massive tax code is very complicated, very complex, that requires just another set of eyes to challenge ideas, to brainstorm ideas. And when you can work with a strategist, and this is what's, I think trending more now is not just working with a CPA that files your taxes, but actually working with a financial strategist. A tax strategist, I would say, that is specializing in tax strategy, tax saving to help you optimize your business profits. Because it's one thing to make a lot of money. It's a whole nother ball game when we talk stewardship of it. So that's why I'm really diving real deep with Alex here on like the stewardship of the finances. So he's already injected the give first as a foundation. Another foundation is cash on hand. He has a certain level of it, pays himself a salary that is reasonable according to the tax laws, all that good stuff. He's leveraging credit cards for points, cash back, both on personal and business. And then he just injected a tax planner. Right. So having tax planning and I'll jump.

In and mention something else. Denzel. Yep, go ahead. And I think people, and I'm sure you deal with this, people should get lines of credit, get liquidity, get access to money when you don't need it. I wouldn't say I've made the mistake. I like learned from an early because again, I didn't have somebody funding my business or like a safety net. So I had to be proactive with this. And I've even taken on business loans that like I didn't need, but it gave me like cash in the bank liquidity to take risks so that if it didn't work right away, like, I would still be able to weather the storm. So I think people should, again, it's personal, you know, opinion, but I think people should look into just accessing liquidity when they don't need it. Because that's when banks want to give it. Whereas when you need the money, they're like, actually you're like the last person we want to work with because you kind of need the money right now or you can like even use. So it's just about getting access to money, especially I'm talking mainly for business owners too. Getting access when you don't actively need it. Right now, maybe you might in a year, but get it asap because it's not also an instant process. Like, I just got a HELOC on another property. It took like two months. So much back and forth paperwork, like a lot of this stuff isn't, isn't easy or fast. So you want to do it ideally when you don't need the money. So again, that's also something. It could be a business line of credit heloc, like whatever the case may be. But that's one thing people don't. They don't look at the future and think, how can I protect my business from a capital structure? What you would think is, oh, like Alex, isn't that scarcity? Like you're always going to make more. I believe that 100%. But I mean, what if you don't for the next three months and then what if the next nine months could be the best in your career, but you're out of business because you didn't make any money this month and next month, so you miss out on all that growth. So sometimes it's just, you got to figure out, how can I protect myself to weather the eventual ups and downs of business cycles that you or I, as human beings and nobody can predict, but you can. You can predict that it's going to happen at some point. Look at 2020, look at 2008. Like things happen. So you want to be prepared no matter, best case, worst case scenario.

Absolutely. You're now my audience. Their ears perked up when you started saying HELOC and credit and access. So they like that. So you're talking to the right audience that is all about, you know, access to capital. They're many are in a position where they need it. And then I walk them through on the coaching side how we can set ourselves up properly. So having a great credit score in advance, setting yourself up, even little things for those that don't have a business yet, little things that you can be doing. Like if you have credit cards that you're not using too often, that every three, six months I call all my different credit cards that I have, the ones that I use the most honestly, and every three to six months I'm requesting a credit line increase and I'll get 2,000, 4,000, $5,000 increases. You do that over a decade, you can have credit cards that end up being around 50 plus thousand dollars in no time. And it didn't require you to make more money necessarily. It just required you to make the call. Like they're not just going to give it to you. So you've got to take that proactive approach and manage your credit to just have the access. And then when it comes to the business side, it's even more complex, but absolutely worth it because it really, it doesn't cost a whole lot to just build a credit score while simultaneously building a successful business. And to your point, having access to capital when you don't need it, I think that's huge because you get the best rates, you get the best offers, you build relationships with banks, and then when there's an opportunity, you're the first that is in line in a sense. So I like that.