As an entrepreneur, you’re typically independent. A lot of businesses started with people saying they wanted to work for themselves, build a team, and cultivate and create successful products. However, sometimes people find themselves being controlled by finances and money.
Learn how Justin Donald, a recent guest on Making Bank, got out of this cycle. With an entrepreneur background of wanting to work for himself, Justin realized that his finances that were being managed by banks weren’t totally on his side. After learning a lot about investments, he made changes to his life to allow his finances to match his lifestyle.
Learn how Justin started in investing and managing finances, along with how entrepreneurs can get started in finances to be successful in a different way they might be used to.
Managing Finances
When thinking about where his investments started, Justin reflected on the start of his career. “You know, I’ve always been pretty aggressive with what I have saved and invested from what I earned, you know, when I had a job and when I had a business…And it’s funny cause I could have saved more then because I didn’t have as many expenses, just no one talked to me. I never thought about it. I should have saved more. Like my cost of living was so low back then.”
Sometimes, without breaking things down, you don’t realize how much extra you’re spending on life. Justin refers back to this when he thinks about the beginning of his working life. He saved a lot – but he could’ve saved more if he broke it down and realized the necessary amount of spending per month. It’s also easy to grow accustomed to spending money on a lifestyle without actually knowing it.
Justin found himself spending money on things that he didn’t even realize. “Often, you can become a slave to income that you make or slave to the business that you built.” And with that, it becomes even harder if you don’t discipline yourself with money early. It’s important to get some sort of security and income saved. If you don’t save from the get-go, then it’s hard to form that habit later.
When he realized this, Justin took it a step further and thought about what it costed him to live his daily life. What are his lifestyle habits every month? Breaking things down every month help bring out the expenses that constantly occur, but also allows you to look at your salary and the money you make more realistically. Simply by looking at your yearly salary, that number can seem big. But when you break it down into monthly payments and calculate your expenses, it’s easier to digest your finances.
Justin takes what he learned through his life to his investment life. “Before investing in something, I think it’s more important to figure out what it costs you to live. So, step one isn’t let’s invest money in me. Step one is, hey, what does it cost me to survive?” When investing, Justin keeps in mind what he needs to sustain his life. This is reflecting on the mortgage, utilities, car payments, etc. He focuses on what he needs, the essential cost he pays to get by – not including the quality of life.
Entrepreneur to Investor
When investing, Justin emphasizes figuring out cashflow opportunities. Justin says that real estate is a great first investment opportunity. With debt deals, you generally going to get some consistent cash flow, but often, you don’t have equity unless you negotiate it. Investing in syndication that’s doing a multifamily deal could be another great start.
Justin says your first step can be anything, though. “I just think you want to get out there and take a step forward in some way, shape or form, but run it by professionals, run I by people that you know are smart and that you trust if you are not experienced in investing because I find that entrepreneurs have a hard time making the leap to be an investor.”
Usually, entrepreneurs have such great skillsets. Because they might be used to trying new things and working to be successful, being directly in charge of their business. When it comes to investing, though, they fall flat on their faces 99% of the time. It’s a tough transition that requires different skillsets and ways of thinking.
Justin advises that entrepreneurs get help from advisors, smart professionals, and those that have experience around them. Investments are a lot like starting businesses, you’re taking a chance. But with Justin’s advice, you can successfully lower the risks and find success in the world of finance.
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