Some days I remember high school like it was yesterday – hanging out with friends every day, playing sport after school and on weekends and the occasional assignment and test. I wasn’t very good at school so the academic stuff came last.
There’s one thing that I certainly can’t remember from school, and that’s personal finance studies. We learned everything from biology to literature to maths to art to languages, but never how to manage money.
Hours were spent ensuring we knew how to evaluate a book and understand periodic tables and complex maths equations, but never the power of positive cash flow in business and life or the massive benefits of compound interest.
We never learned the importance of taking a long-term approach to investing and certainly never learned how to use business as a great leverage tool to create financial freedom.
Why is this?
We also see the BRW Rich Lists every year. We see those people who are successful beyond our imaginations. The majority of them have created wealth using their business.
Why is it so?
Why is it that some people fail in business and put huge stress on their personal finances while others create amazingly successful business and use this as the launching pad to achieve financial freedom?
Let me share with you a story that stuck with me for years and that explains the power of learning good personal finance strategies early in life.
The late Kerry Packer – best known for owning Channel 9 TV station and starting World Series Cricket, among many other business and life accomplishments – was said to have instilled in his son James some early life lessons. One of these involved developing an understanding of how business, investments and share markets operate.
The story goes, one day after school, after seeing a school report card, Kerry summoned James to his office. He said, ‘Son, you need to learn how the real world works. These teachers have never lived a day out there – it’s a jungle. For the next month, you are going to learn how real business works out there. Follow me’.
And with that Kerry took James down to his offices in the city and told him James would follow one of his senior staff for the next month. ‘Where he
goes, you go’, boomed Kerry.
So off James went. Into meetings, negotiations, listening in on telephone calls, attending shareholder briefings – the lot. He saw the good, the bad and the ugly of business. It’s an experience that taught him well. You could almost say it’s an education only money could buy.
While you may not be able to learn money and business lessons from a rich media mogul father like Kerry Packer, the importance of understanding the principals James learned in those days cannot be undervalued.
Running any business is hard. Having a successful business is even harder. But if you can be successful in your business there are some principles you can apply to take that success and apply it to your personal financial situation.
It starts with knowing your Financial Freedom Gap.
There are 3 steps that you can take to start closing your Financial Freedom Gap.
The 3 steps are:
1. Know what you can invest in
2. Understand how much money you need
3. Accept that a goal without a plan is just a dream
I will go into detail with these steps in future articles.
For now, go out into the jungle that is the world of small business and learn what they didn’t teach you at school.