348: Mike Michalowicz | Profit First

science

science / science 10 years ago 785 Views comments

Be a boss and automate your savings.

"Money amplifies our true self."-Mike Michalowicz

The Cheat Sheet:
  • What is Parkinson's Theory?
  • ____ makes us lazy, Mike fills in the blank.
  • Money has now become a mechanism for what?
  • What is The Wedge and how do you apply it for a better life?
  • How to and why to start saving money, no matter how much or how little you make.
  • And so much more...

Do you always tell yourself you'll save more when you make more money? Or maybe you did say that in the past but now you actually make more and still don't feel like you have enough to start saving. Here with solutions to both situations is the author of several books including Profit First, Mr. Mike Michalowicz.

Mike has written extensively about profits, making money and entrepreneurship. But even if you don't have a business or you don't consider yourself an entrepreneur, this show is for you. Today we talk about putting profit first and expenses second, whatever your financial situation. Listen in for all of that and so much more on episode 348 of The Art of Charm.

More About This Show:

By the time he was 35 Mike Michalowicz was a millionaire. He had sold his second business for mucho dinero and he was awfully proud of himself. Too proud in fact, something he readily admits caused his next missteps. After finding himself with boatloads of cash he decided to be an angel investor.

He thought that's what everyone does after they make a million - they invest in other businesses, show those businesses how to make millions and then earn billions as a result of their investment.

That was his plan, and it completely backfired. He didn't use common sense regarding the companies he chose and he paid the price for it. He paid the FULL price for it. Between his bad investments and his need to flash his money around with expensive cars, toys, etc, he lost all of his earnings.

So after a "Come to Jesus" moment, he went back to the drawing board of entrepreneurship with a different mindset. Instead of asking how he could make money and how much, he asked himself what was the right thing to do? His answer was to write The Toilet Paper Entrepreneur. Today it is a cult classic in the entrepreneurial and business worlds.

From there he went on to write The Pumpkin Plan, another insta-classic and then his latest best-seller Profit First. His most recent book is what we spend a great deal of the show talking about today. He gives us a quick overview of what the book is about and how to incorporate the topic into our own finances.

The nitty-gritty of Profit First is this: businesses who set aside a portion of their cashflow first as profits will be more profitable and lucrative in the long run than those who wait and see if there's anything left at the end of the fiscal year. It's all based around an idea called Parkinson's Theory, which (highly simplified) says you'll use up whatever is there no matter how great or small the amount.

Whether it's toothpaste, toilet paper or money, you're going to use whatever amount you give yourself and make available to be consumed. So Mike's contention is that businesses and people alike should be taking a portion of funds out first (ie putting profit first) and dispensing them into accounts they cannot touch.

If you are an entrepreneur, when you get paid set up your account to automatically withdraw a percentage and put it into a retirement fund. If you're employed talk to your employer about your 401(k); get it set up so it automatically deducts money before you even see your paycheck. Based on Parkinson's Theory you'll learn to live off the amount that's leftover. But if you don't automate this you won't do it, you'll end up spending all the money that's available to you.

Even if it seems like you can't afford to set aside any money right now Mike says to start with 1% of your paycheck. If you make $1k a week, then have 1% taken out. It's only $10, you won't even notice. But over time that money will start to add up in your retirement fund and soon you'll have far more wealth than you thought you could accrue.

This is a fairly watered-down version of Mike's teachings so tune in to hear the full details straight from the source! And after you do, thank Mike for being here and gracing us with his priceless knowledge. And thank yourselves for being here (I do) and we'll see you next time.

THANKS MIKE MICHALOWICZ!

If you enjoyed this session of The Art of Charm Podcast, let Mike know by clicking on the link below and sending him a quick shout out on Twitter:

Click here to thank Mike on Twitter!

Resources from this episode:

Mike Michalowicz's web siteMike Michalowicz on TwitterProfit First, Mike Michalowicz' latest bookThe Toilet Paper Entrepreneur, Mike Michalowicz' first book The Pumpkin Plan, Mike Michalowicz' second book

 

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