Two lessons I am reminded of every time I play or teach Rich Dad’s Cashflow 101 game are as follows:
It is ALMOST impossible for a woman (or a man) to do it by herself (or himself). In 2016 it takes two to earn enough to run a household and maintain an even keel on your expenses sufficient to run a surplus which you can save and then invest to get you out of the rat race.
Note: I said ALMOST. By which I mean it is much, much harder on your own. My own life experience bears this out and even in hindsight there is nothing I could have done to have improved that. Except be half of a couple.
Conclusion: Independence comes at one helluva a fiscal price too.
Qualifier: This wasn’t true in my parents’ day. But then… they were a couple! Times have changed. And, interestingly, they are changing just at the point when more and more people are choosing singledom. Check the stats.
What follows is the main point of this article, #1 was just an aside.
The single best learning you get from the Cashflow 101 game is How Low Can You Go? The lower your monthly expenses are the easier it is to replace that by unearned income, or passive income, and be liberated from having to earn it.
I always keep my outgoings under review with an eye on saving money wherever possible. This wasn’t always the case. For the first few decades of self-employment I always found it easier to earn more, rather than to spend less. But these days, the less I spend the less I have to earn, unless I want to. And that is a way to build a surplus.
The costs of running my business can be less than £150 a month. There have been times when it has been a lot more than that. As I write £150 covers:
- The mini sim in my iPad so I can always be online when away from my home office without having to track down a wifi hotspot. Recently I saved £10 per month on this when I noticed I was paying for more GB than I needed or ever used. They didn’t volunteer that info, I had to go looking for it.
- The hosting costs for my websites. I am talking to them about whether I can come down from Pro level to Basic, and save money there too. Doing my accounts once a month points up areas for saving money on outgoings if I make time for review. Note: Just heard they are dropping my plan to Basic so another ten bucks a month saved. Yee ha!
- Webex is the VOIP platform I use for my group calls. This yo-yos between £36 pcm and £58.80 pcm depending on how many clients I have on my calls. The threshold is 25 clients and the good thing about this is that if the number of my clients goes up, I am happy to pay more for Webex. The more the merrier!
- I use Dropbox to back up all my data and where the backups of my websites are also stored. I am really happy I have this; it is a phenomenal bargain at less than £9 a month.
- Bank charges. Less happy about this, especially since I do all my banking online. But hey… although we all resent bank charges, I’m not sure why we should since they do provide a service (of sorts).
- Landline telephone, mobile telephone and broadband. Recently reduced BT from £60 to £40 pcm. My broadband is unlimited and I almost NEVER use either phone. Skype for me.
To this list I also need to add in annual company secretarial expenses and accounting fees.
How low can you go? And do you make time for regular reviews?
I know this will be second nature to the thrifty amongst my readers and clients so this article is aimed at the generous nay profligate, comme moi!