LESSEN 5-3 REMINDER: PROFITABILITY
Video transcript: Your wealth of the future is built on your profitability today. What is profitability? It the ability to earn profit. And it requires your ongoing focus and discipline.
Your household, whether it’s just you or it’s a family, is a virtual business. And you are the CFO––the chief financial officer––of this business.
As the CFO, you require profitability. Your job then is to control your cashflow, to improve your income, and to continually trim expenses.
“He who will not economize,” Confucius said, “will have to agonize.”
The easiest way to achieve profitability in your home business is to create a forced savings plan. Set up your savings on autopilot, and have a portion of your pay sent to an untouchable account. Save first and spend what’s left.
The reason it works is because it imposes an artificial constraint for spending. With less money to spend, you’ll choose your needs—not your wants. And somehow, you’ll manage to get along just fine while saving money.
At the same time, profitability may require more income.
Accumulation requires sacrifice—working smarter, harder, and longer—and this explains its rarity. More income may require working two jobs, taking courses to increase earning capacity, or starting a side business.
Most people like to say they don’t mind hard work. But what most people mean is that that don’t mind hard work as long as it’s easy.
But you’re not like most people, are you? You’re not afraid of work––you’re afraid of mediocrity. And because you’re willing to work more and spend less, to maintain your profitability, your future wealth is assured.
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