money

Business Lessons from a Paperboy

I was a paperboy when I was a kid and I also mowed some of my neighbors’ lawns. These are two activities that have become extinct in modern times. I was fortunate to learn some good business lessons from these entrepreneurial endeavors.

The value of money : If I worked not only hard, but did a good job then I made more money. I learned the value of money, how to save up for larger purchases, spending money wisely, and also saving for the future. Unfortunately, kids and adults nowadays tend to ignore these basic financial principals and choose impulsive, debt-incurring decisions.

Customers are interesting: Each customer is unique and interesting. Some more than others, but if you take the time to learn about your customers then you will find out about their lives, families, interests, personalities, and unique characteristics. Positive interactions create a wonderful experience and help to make your job or business responsibilities easier to handle, especially on a rainy day.

Responsibility: Take responsibility for your actions. There are many things that are out of your control, but many things that are. Be accountable to yourself and others even when it is the hard thing to do.

Sometimes bad stuff just happens: The owners of the newspaper I delivered newspaper for decided to replace us all with adults. I believe we had some notice of the transition, but we had no control. It was just like a corporate layoff or having your largest customer go bankrupt.

I could probably list another dozen or two lessons from my experience as a paperboy, which have stayed with me through all these years.

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Does Money Really Matter? 3 Different Views

People tend to fall into 3 different categories of how they view money, which ultimately impacts how they manage it. How important should it be to you?

Love of money/materialism: Thus is the most extreme view whereas you practically worship money. Earning more and obtaining more just to earn more and have more. It can be a trap that creates a lack of satisfaction. Although it may at first seem hard to digest, poor people can worship money and wealthy people may not because it is not about the amount that you have.

Don’t care: Another extreme view is not to care at all about money, although this doesn’t seem as common. This can cause problems because you may not use your money wisely and will probably be rather reckless.

Balanced approach: Thus is where you view money for what it is; a resource that has been given to us to use wisely. But what exactly is the wise use of money? It is taking care of your family, the poor, investing and saving wisely, spending within your means, and not being too emotionally wrapped up with money. It may mean owning a 5,000 square foot house or it may mean renting a small apartment; shopping at Wal-Mart or Neiman Marcus. Confusing, isn’t it?

Just realize what the purpose of money is and don’t let anyone tell you how much or how little you need. Learn, seek advice, and try not to get stressed out over it.

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9 Ways to Reduce Your Money Worries

When we lack money it creates a lot of stress and anxiety, and can be a source of tension in relationships. But how can we make our money work for us? Here are several ways we can take more control of our money to reduce our stresses:

  1. Change your thoughts: Reframe the way you think about money from being worried about it to being non-emotional about it. Nothing changes if you are worried about it, but worries may cause you to make worse financial decisions. This doesn’t mean that you should not care about money or be reckless.
  2. Be a good steward: If you think of your money not as your own, then you will manage it differently. It is a resource, no matter how great or how small, that we are given to be responsible with. Don’t be foolish with how you spend your money or the way you invest it.
  3. Save it first: Save your money first before you pay anyone else. Even if you start with saving 1 % of your income, it will create a habit that will last you a lifetime, and over time you can increase the percentage to more meaningful amounts. Although 1% may only amount to $20, $50 or so a week so there is almost no excuse to save this small amount, even if you are struggling. I like percentages because you save more when your income is higher and less when it is lower.
  4. Delay large purchases: Houses and cars are our largest expenses, but usually there is not a lot of thought put into these purchases. More time should be spent discerning larger purchases then small ones.
  5. Minimize useless debts: It seems as though anything can be financed today, from cell phones to plastic surgery. If your cell phone bill is $500 a month because you financed 5 iphones then you probably couldn’t afford the phones in the first place.
  6. Make more money: If your income is not high enough and your spending is not an issue, then figure out ways to make more money. If you need to switch jobs or hire a consultant for your business then do it.
  7. Give it away: I’m not sure if there are studies on this, but anecdotally, people who are more charitable seem to be happier than those who are not.
  8. Be timely: Pay your bills in a timely manner by being more systematic. Late fees and threatening notices are never enjoyable.
  9. Do something different: As with any problem, you need to change what you are doing because obviously it is not working. Yes, we are all stubborn.

By the way, it doesn’t matter if you make $50,000, $500,000 or $5,000,000, as you will have the same issues, with different variations. And, more money doesn’t mean fewer problems.

Be Careful Who You Loan Money To

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A friend is in a pickle and asks you for a loan of $5,000 because they hit some hard times and have some bills to pay. Do you help out your friend and say yes, or simply say no.

If you say no, then your friend may get upset, get behind with bills, but hopefully they will respect your decision. I recommend to never loan money to friends or family, but in case you end up doing so you need to formalize the process. Better yet, give the money as a gift with no strings attached or expectation of being paid back.

If you do say yes, your friend is happy and you are happy to help out a friend. And your friend will pay you back . . . or will they? And when? Here are a few tips to make sure that you do not damage your relationship with your friend, which is probably much more valuable than the money in most cases. You can easily substitute family member or employee in the place of friend, which is a very common situation too. I am big believer in having things written down so there is a mutual understanding between everyone, and here are some important factors to have in writing and to consider:

Loan vs. Gift: Your agreement states that it is a loan, so there are no misunderstandings about this fact.

Amount of Loan: How much are you loaning.

Interest Rate: How much is the interest rate you will charge?

Length of Loan/Payment Schedule: Is the loan for a month, a year, five years? How much will the payments be? What about late fees?

These are some basic items to consider, and the most important is to have it in writing even if it is a very basic agreement. If your friend refuses to sign the agreement, then this is a sure sign that you will most likely not get paid and will lose both your money and your friend.  It is always wise to seek legal guidance when warranted.