It's fun and easy to focus on macro stuff - we read or watch the news and see what's happening in DC and around the world. The media loves to write about such things because it gets readers/clicks and it's something everyone is going to find relevant (as opposed to micro stuff like your local real estate market, which is not important to 99.99% of the world). 

In reality, however, the micro stuff is more important most of the time. Not all the time, of course - sometimes macro events can have such large (usually negative) impacts that they outweigh anything that is happening at the micro level. In these cases, you hopefully have built a strong and resilient existence to weather any storms that may have come your way. 

The micro things are your day-to-day habits and your ways of living in this world - they may include things like

• your savings rate
• how intensely you focus on your career
• whether you're continuing to learn new things about the world every day
• whether your take your mental and physical fitness seriously enough to develop them
• whether you're too risk-averse to invest your money 
• whether you can get out of your own head to make prudent decisions
• whether you can drop your biases long enough to see the world clearly

One would be well-served by focusing on the micro stuff while ensuring they are well-protected from significantly adverse macro events. 

From time to time and quite often, we find ourselves in need of extra money. Maybe we're paying down some credit card debt or maybe we need a few extra grand in order for us to take that vacation or maybe we need $10,000 more to be able to afford the down payment on the house we want.

Whatever it is that we need, we are lucky enough that living in a capitalist society allows for ample opportunities to earn side money. This isn't easy to do and your success will depend on many factors, including your skills, your grit level, your energy level, and the amount of time you have to devote your side hustle. But, if you're lucky enough to be able to take advantage of some opportunities that currently exist to earn side money, you could very quickly change your and your family's financial picture in as little as six months. 

1. Drive for Uber/Lyft or another good ride-sharing service: Not a great job -- more of a gig in today's parlance -- but an excellent way to make extra cash for a short time if you've got the energy and the drive for it. You could put in a ton of hours and, over the course of six months, take major leaps forward in terms of your financial life. You'll need to have a reasonably new car and be able to pass a background/driving record check. 

2. Charge scooters: Mobile electrics scooters like Bird, Jump, and Lime are taking over city centers and downtowns all over the US and the world. These scooters need to be charged and most companies have set up Uber-like/gig-like approaches where people can charge them overnight for a fee. The pay is not going to be great here - you'll earn a bit of money on each scooter. You'll also need cheap transportation, the ability to stay up for hours at night, and cheap electricity to make this worthwhile. But, if you fit the mold for this, you can earn some extra side cash. This is not a sustainable long-term solution to your money problems - the pay is too little, it requires a lot of energy, and the price of electricity makes it prohibitive for some people. 

3. Start a blog, and do it well: You could always start a blog or a website on some niche topic, write amazing SEO-optimized content, and make money from ads. This is incredibly popular, especially in the US. There are a ton of resources available all over the internet on how to do this. This is a path that will take a while and where your patience will be tested - you'll be spending a lot of time, energy, and some money upfront to build out a good online presence. The key is not to get your hopes up too high about what's achievable.

4. Participate in focus groups or other research groups: A great way to make extra money is by participating in focus groups, research groups, or other such types of surveys. The best of these are in-person. You can search online to find some consumer research-type firms in your area and sign-up - most usually have an easy way to sign-up to receive updates. You'll periodically get updates with requirements (eg. age, type of car you drive, gender, preferences, consumer choices, etc.) and you can sign-up for them. The pay can be pretty solid - you can make a few hundred USD in just a couple of hours (sometimes more and sometimes less). 

5. Tutor: If you're intelligent and have some solid knowledge about a particularly challenging topic (eg. organic chemistry, introductory Calculus, or Russian), you can tutor people and possibly build a sustainable side business that has the potential to generate extra money for you and your family. This is something that will take time to build and develop - starting a tutoring business is, in fact, starting a business, but it's not a business that requires much upfront cost. There are tons of websites online that facilitate student-tutor matching, but you can go the old fashioned route and post fliers up at local colleges, community colleges, high schools, churches, your local library, and other community centers

The above aren't the only ways to make extra money with a side gig. There are plenty of opportunities available to earn extra cash on the side for people who are smart, hard-working, and willing to put themselves out there a bit. Of course, the more skills and education you possess, the easier things will be (eg. charging scooters vs. tutoring differential Calculus), but there's no stopping you from taking a few steps forward in your financial life if you're gritty and willing to put in the work.

Too many people read lists like the one above, but never take a single step - a lot of us seem to just feel good enough searching on Google and reading the list; we too often get complacent and self-satisfied too quickly and don't actually pursue any of the above money-making opportunities. Others are eager to make extra money and change their financial picture, but are too timid to pursue anything out of their comfort zone. Avoid these pitfalls and mental traps - keep moving forward, both financially and non-financially, one step at a time.

When thinking about risk and probabilistic outcomes, potential gains and potential losses aren't the same things. Only hyper-academic people who aren't actually engaging with the real world or putting something at risk (eg. money, health, life, friends, family, reputation, dignity, etc.) would argue that downside potential should be regarded in the same way as upside potential. 

Only entities that

1. plan on existing for very long periods of time (or perpetually) and 
2. have an unlimited (or close) capacity for loss 

can think about things in a purely probabilistic fashion without taking special account for downside losses. 

Let's say you're a casino or a major corporation and have a ton of time and a ton of money – in that case, a binary 49% vs. 51% loss-gain distribution (49% chance of total loss; 51% of 2x gain) might make sense because you've got a 2% edge. In the long run, this edge will play itself out so that you come out ahead, assuming you stay around for the long run. 

Most retail investors, small or medium-sized businesses, or other smaller orgs won't be around, however, especially if they keep sustaining losses. They should definitely consider the 49% vs. 51% probabilities, but  they should also consider another key item: whether or not they think they'll survive for long if they keep engaging in these types of bets . Because, even if the odds are in their favor, a small entity has to be around in order to see those odds actually play out. If you're not around, it doesn't matter how good the odds are – to win the game, you've got to survive long enough first. 

​Thinking about risk, therefore, isn't a binary operation where you can simply compare probabilities – it's a far more complex exercise that has to take things such as the following into account:

• time horizon
• ability to withstand losses
• how often each "round" occurs
• the level of uncertainty you have about the probabilities

One of the most significant risks related to house flipping is holding period market risk - it's the risk that during the time in which you're holding the property you intend to "flip," the property value will decline. 

The decline in property value can be caused by a variety of reasons (macro recessions, localized events, etc.), but that's not the point of this short piece. The point being made here is that house flipping exposes the "flippers" to significant market risk. 

Not taking this real estate market risk to which you're exposed to when pursuing a house flipping strategy into proper account and consideration may have some serious negative consequences. The negative consequences are rare - they only arise in market downturns, which happen once every number of years. But, although the chances of the risk coming to fruition are small, the severity of the negative consequences (should there be a real estate market decline) are severe. The consequences can be severe enough to wipe out investors that are not well-capitalized and in positions of strong liquidity. 

This is pretty easy to see if we think about a hypothetical example. Let's say you're doing house flipping and you buy a $200,000 property. The timeline might look something like this:

• January 20XX: Put down payment/earnest money deposit
• February 20XX: Close on the purchase; get keys
• February - April 20XX: Renovation
• May 20XX: Sell the improved property

The risk in the hypothetical example above starts as soon as the earnest money (down payment) is provided, not when the real estate transaction closes. This is because you've physically outlaid your money in January - by the time February comes around, you've already been exposed to real estate market declines for about one month. 

The risk exposure continues until you sell the house. So, in the above example with the relatively rapid renovation and resale (likely in a good real estate market; very unlikely in a real estate downturn), the investor or flipper would be exposed to market risk arising from adverse moves in the real estate market for at least a few months. If the investor is new, inexperienced, or doesn't have a lot of capital/liquidity in reserve, things might be over in one serious real estate or economic downturn. 

If you're holding a property that's worth less than you bought it for -- even with the improvements you made or might make -- you'll have to (1) either accept a loss on this investment or (2) you'll have to continue making mortgage payments on the note until the market recovers. 

In the first case, you'd lose real money - you'd possibly lose your entire down payment and in the worst scenarios you might be so underwater that you'd have to add additional funds to be able to get rid of it. This isn't far-fetched. Many people all across the United States experienced this during the Great Recession that started in 2007/8. 

In the second case, you'd avoid having a severe capital loss, but you'd have to outlay money every month to keep the mortgage note current. This can be costly, especially if this is done for many months or even many years. 

Of course, you might have bought the house in cash - in that case, you still may experience a severe loss (you'll just never be underwater on the mortgage). Renting might also help mitigate the risk - if there's a downturn, you might abandon your initial house flipping strategy and put a tenant(s) in the property for several months or years to help with the mortgage payments. ​

A prudent house flipper or potential house flipper would take these risks into account. Everything is exposed to risk, so this article isn't attempting to say that real estate investing in general, or house flipping specifically, are imprudent investments or that there's undue risk in a house flipping strategy. The article simply attempts to highlight a particular type of risk that house flippers are and will be exposed to. 

In a job you sell your time and your energy for money - you will never become rich this way because of the inherent restrictions the laws of nature and of physics place upon us all. Entrepreneurship (eg. business, ideation, innovation, etc.) has been one of the few consistent and reasonably moral paths to both moderate and extreme wealth since the industrial revolution. 

Of course, other paths such as crime and political corruption have always existed as paths to wealth for those who were willing to walk on them, but we are only concerned with paths that really add value to humanity and can at least be somewhat considered morally permissible. 

No matter how hard you work and no matter how many hours you work, you will be restricted to the number of hours in a day, in a week, in a month, and in a year. With a job, you are selling your time for money. Your time might be worth little or it might be extremely valuable given your human capital, but you still are selling this finite resource for money. 

The richest people in your towns and cities are generally not people who have jobs. Yes, someone in your city might earn $100,000 per year or maybe $250,000 per year working as a highly-paid individuals in a big corporation, but there are also plumbers, electricians, small accountants, small lawyers, dentists, doctors, programmers/coders, restaurant owners, website owners, that earn $500,000 or $1 million (or much more) per year through their entrepreneurial ability to use their human capital in a way that is not restricted by time. In effect, these entrepreneurs are able to expand the audience for whom they create value both in time and in scope - they can reach people even when they are not working (eg. website) and they can reach many more people (possibly millions) all by themselves. In this process, the create value for a lot of people and they are themselves able to extract a portion of that value as remuneration from themselves without having to rely on an intermediary in the form of an employer. ​

There are 8760 hours in one year. Let's say you work like a crazy person and are able to work for 1/2 of that time. This means you work for 4380 hours in a year. 

That 4380, represents about 84 hours per week without taking a single week of vacation. Clearly, we have an unsustainable situation if the work you're doing is in any way physically or mentally rigorous. 

So, you -- a total workaholic per the above -- are making how much money? Well, that depends on your hourly wage. According to the Bureau of Labor Statistics (BLS), the average private sector hourly wage in early 2017 is $26.19. But you're not an average person - you're making a lot more than average in our example. 

According to the BLS, the highest mean hourly in the US is for anesthesiologists who make about $130 per hour - this is even higher than surgeons, lawyers, doctors, and chief executives. But even then, let's say you make even more than that. 

Let's say you can make $500 per hour consistently for every one of your hours. This is a hard thing to do. Lots of people earn $500 per hour for ad-hoc work - think of a graphic designer who bills for two hours after spending two hours securing a client or a lawyer's billable hours that don't take into account time spent on client interaction or business management. Unlike most, you're able to get paid $500 per hour for your entire 84 working hours every single week of the year. 

So, per the above example, you'll make $42,000 per week

This comes out to $2.18 million per year

Clearly $2 million is a very large amount of money to be earning per year, but think of the fact that even with our truly absurd example where you're working like a machine and earning an extremely high hourly wage, you will still only earn about $20 million in 10 years or $100 million in 50 years. Yes, those are a large amount of money, but they are literally nothing when compared to what some top people in business and entrepreneurship make more than $100 million in a single year. Facebook founder and CEO Mark Zuckerberg, for example, has a current net worth that would equate to earning $4 million EVERY DAY OF HIS LIFE! 

Clearly, the gains Zuckerberg and other extremely rich individuals have earned are not based on income - it would be impossible to sell their time to earn such gains. Instead, they have earned money selling other things such-such as ideas that are not restricted the same way time is. The highest paid salaried people are always making less than the highest paid entrepreneurs because the world is created in such a way that time is restricted while ideas are not - with ideas you can be earning multiple streams of income every second of every day or you might have windfall gains by creating immense value for millions (or even billions of people). It's far more difficult to do this at a so-called job. 

The key takeaway here isn't that it's bad to have a job. The key takeaway should be that you have to lift your head up from the current place you’re at and see things in a broader, holistic, and realistic way. By understanding the inherent restriction, a job places on your ability to earn you might be better able to spot opportunities or even better understand the world. 

Entrepreneurship isn't for everyone - many people will do better at a good job in a good firm. Additionally, although the above discussion was about money, money is not the most important thing in work and shouldn't even be the reason anyone forgoes a job to start a business on their own. There must be something else besides money motivating you if you are to have a chance at being successful in any endeavor. 

The only thing we're trying to portray here is that business and entrepreneurship allows you to escape from the paradigm of selling your time for money - you can escape this paradigm and go beyond the limitations of time and space on value creation that a job places on you. ​

As with almost anything that's generally true, there are some caveats and exceptions. Here, the main caveat is that there are in fact a handful of people in the world who do become truly wealthy through their jobs. These people include the likes of:

• athletic stars - LA Lakers star Kobe Bryant earned about $325 million through salaries alone over this storied basketball career
• highly-compensated CEOs - Google's CEO Sundar Pichai received almost $200 million in total compensation (comprised of a small portion of salary and a high portion of stock awards) in 2016

​Additionally, one might argue that in the above absurd example it was unfair to bring in the likes of Mark Zuckerberg - there are plenty of entrepreneurs who earn less and even more who fail and don't earn much at all. This is all true, but the point did do a comparison of high paid jobs vs highly paid entrepreneurs. In that comparison what we attempted to illustrate this that in entrepreneurship there is inherently little restrictions on earnings - earnings can be so great that they become absurd (eg. $4 million a day for every day of Zuckerberg's life) while job earnings are restricted simply by the laws of nature and the laws of physics. 

What is a business? This is a deep question that is rarely asked - possibly never asked. Everyone goes about their lives today talking about businesses, thinking about businesses, and dealing with businesses, but almost know one ever thinks about the definition of a business. 

This likely stems from the fact that we seem to have an inherent understanding of what a business is - we guilty learn it growing up and see no need to ever define the term. Even MBAs in the world's greatest business schools - schools like Wharton, HEC Paris, Booth, or the London School of Economics - never seem to really discuss what business means. They (and everyone involved in any sort of human enterprise that attempts to create value) would be well-served by taking some time to dig deep and understand what business really it - having a workable conception beyond the mere imagery we currently use to understand the concept.

A business is an individual or an organization that is engaged in value-creating activities in order to earn remuneration for the value-creation at least equivalent to the costs of creating the value but attempting to charge enough to earn both a nominal and a real profit. 

Let's dive deeper into our definition in order to flush out the meaning each of the definition's subcomponents:

• individual or organization: clearly a business could be a single person (this is what has occurred throughout most to history) to an enormous firm with hundreds of thousands (and even millions) of firms
  • as of 2017, the business with the largest number of employees is Walmart - with approximate 2.1 million employees
  • another firm in the top 10 firms with the largest number of employees in 2017 is Hon Hai Precision Industry (better known to most of the world as Foxconn) - with approximately 1.3 million employees

 

• engaged in value-creating activities: value creation is the application of energy (either mental or physical) possibly combined with the use of capital resources or capital equipment - to create utility for someone (this can either be you, someone else, or a group)
  • the first value creation was hunting and gathering - when our ancestors hunted for meat or gathered fruits and vegetables thousands of years ago, they were applying their physical energy to create value in the form of food
  • farmers created value for millennia by combing their knowledge of farming, fo the weather, or of livestock with sweat and toil in order to create food
  • carpenters have created value by using knowledge and skills but also combining it with capital equipment (eg. nails, hammers, saws, etc.)
  • a letter reader in Middle Ages created value by spending time and energy learning how to read and then devoting time in the application f that knowledge for the benefit of others
  • Foxconn creates value by combining people, equipment, and technical knowledge and assist firms around the world in the building of their creating
  • Apple creates value by applying time, energy, and intense creative skill to produce amazing ideas which are later implemented by firms such as Foxconn for the benefit of consumers
  • this implies that a business is something facing the world and interfacing with it - a business cannot be closed off from the world but must instead be open to it (or at least parts of it) as a matter of implicit definition

 

• in order to earn remuneration: this means that a business is there to make some kind of profit
  • that profit is mostly denominated in currency today, but it can really be anything - it can be in in-kind payments, gold, silver, favors, etc.
  • this implies that a business has to have some sort of way of collecting its remuneration - it can be done in a very systematic way but it can also be done in an informal way
  • a business isn't a non-profit or an organization that's there to only benefit others - a business is inherently set up in order to exploit some sort of advantage for the profit of the business's owners

Data provides intelligence. It doesn't equal intelligence, but through the proper application of analysis, data can be turned into intelligence. Your business has data - whether you use that data now or not to create business intelligence, that data (assuming it is of reasonable quality) is quite valuable. 

Data such as:

• customer names
• customer info - emails, addresses, phone numbers, Zip codes, etc.
• transaction data
• surveys you've done in the past
• data on where your customers come from

is crucial to your business. Even if you haven't implemented proper methods for turning that data into business intelligence, you can't afford to let your data go away. 

If you're letting the life of your data ride on the functioning of a mechanical hard drive, you are making a big mistake. Big businesses understand the importance of data and invest time and energy in order to preserve it - it's time small and medium sized businesses and managers did the same. It's time that small and medium-sized business owners and managers took a few easy and important steps to add quite a bit of resilience to their business. ​

The first part of creating a robust data resilience strategy is local storage - you have to have a local backup of your data. For most small businesses, data usually resides on one or a handful of computers. For medium sized businesses, data can reside on multiple computers and mobile devices. Wherever your data resides, you must have a robust local storage system set up to back up your data - although this will take a bit more time and effort for medium sized businesses. 

For small businesses, there are two options here:

1. ad-hoc backups of pertinent data - this is where you back up identified relevant data on an ad-hoc basis and this can be as simple as literally dragging and dropping a single folder from your main computer onto a hard drive
2. continuous backups of full system - this is similar to Apple's Time Machine where your computer is continuously backed up in full onto a hard drive that has a persistent connection to the computer

Either one of the above methods would work and should be looked at in light of:

• how much data you have
• how often your data changes - if your data changes constantly you'll lean toward a continuous system but if you rarely update your data an ad-hoc system might suffice
• processes in place - you'll want to consider who you want backing up and accessing the data so the processes and procedures you have in place might dictate which choice you need (eg. if you don't have a manager there all the time to perform ad-hoc backups, a continuous system might be a better option)

Now, for medium sized businesses, things can get a bit more tricky. If a medium sized business doesn't thave many computers, they can approach it from the same way we outlined above. If, however, a medium sized business had data stored on multiple computers or mobile devices, a more thought-out strategy will save money and decrease headaches over the long-term. Hiring a consultant to assist with setting up a high-quality backup system might be a good investment here. 

Whatever local storage method you choose, it is key to make sure that the physical storage is safe and secure both physically and electronically:

• physically - make sure it's in a safe place that can only be accessed by appropriate parties and preferably in a waterproof/fireproof box or safe
• electronically - make sure access to the storage is password protected so that only appropriate parties can have read/write access to this data (you can also separate read/write access, giving only those people that need write access the ability to override/change information)

In additional to having your data backed up, you'll want to invest in a supplementary system to both access the data and operate your normal business software (be it MS Excel, MS Word, just accessing the internet, using some sort of CRM software, or using propriety software for your business) - an operational risk even might affect your computers and you'll want to be able to get up and running quickly again. 

You'll need to access the level of your and your business's reliance on computing and software in order to determine how much to invest in supplementary computing. A business that jus needs access to the internet and email might be fine with a simple additional laptop or no supplementary system at all. A business that relies on persistent CRM software and propriety software to run the business might need to invest in maintaining a secondary computing system with up to date software and an ability to connect to a network quickly (eg. a wireless chip that can get online without needing a physical connection). 

Additionally, supplementary batteries might be useful here depending on the business's reliance on mobile battery operated devices and the risk that a power outage poses. 

Resilience is key to succeeding in nature, succeeding in life, and succeeding in business - we'll cover resilience in business here. 

The world has gone a bit soft over the last few decades and discussing resilience in business might even seem strange to individuals who aren't used to the term. Small and medium sized business owners bad managers would find it useful to know, however, that the biggest corporations in the world are deeply concerned about understanding and developing resiliency - it's time that small and medium sized businesses caught up. 

Now, we'll do the customary dictionary definition of the term to start - resilient means:

1. the capability of a strained body to recover its size and shape after deformation caused especially by compressive stress
2. an ability to recover from or adjust easily to misfortune or change

So, from the definition we can see that there are a few things to think about when thinking about resilience. Resilience is more than just strength - ti si the ability to recover after suffering some sort of stress. Resilience is the ability to bounce back from misfortune or adjust to it in an easy way. 

How can this general definition translate to business? Well, it should be easy to understand that a business will likely suffer all sorts of setback over time. These setbacks can include things such as:

• economic downturns
• losses of key employees/managers
• regulatory regime changes
• operational risk losses (eg. theft, data breach, earthquake, etc.)
• exogenous business shocks (eg. dissolution of key supplier)
• counterparty risk

Now, when these occur, the business that is resilient stands a greater chance of surviving these unpleasant events. A business that is capable of withstanding shocks is far more likely to be able to survive the inevitable shocks that life and business send our way from time to time.  

Let's dig a bit deeper into what resilience really means for businesses. Specifically, what characteristics of a business allow it to be able to withstand those shocks we discussed above? Business resilience arises from a few factors:

1. risk management - proper understanding of the risks faced by the business combined with a thoughtful approach to managing the most severe/consequential ones
2. planning - planning for the inevitable shocks such as power outage, earthquakes, bad weather, key person losses, and other negative events
3. data backup - high quality and reliable data backup is key for businesses that rely on data to provide business intelligence 
4. sales pipeline redundancy - the ability to still deal with customers and generate revenue even if the initial sales pipeline fails (eg. having a second website, being able to take cards over the phone, etc.)
5. culture - a culture that promotes openness, communication, and-and understanding of the business' resilience planning or recovery planning
6. diversification of knowledge - knowledge is diversified among employees, managers, and procedures/documents in order allow it to be maintained even with the loss of key employees/managers
7. liquidity - having liquid assets available and accessible

No matter what business you run - whether it be a small ice cream shop or a small bank - resilience planning will provide you with a variety of benefits. The primary benefit is the ability to keep the business running as a going concern in the event of adverse or severely adverse circumstances. In addition to this primary benefit, however, you and your business managers will gain a lot of peace of mind knowing that your business is resilient nad likely able to survive as a going concern in even severely adverse operating conditions. 

The Average Transaction (AT) is the fundamental building block to having an understanding of your business - if you don't currently know the Average Transaction (AT) for the business you own or manage, your level of business intelligence is severely lacking.

In today's works of easy record keeping, storage, and plenty of computerized analytic powers, there is no excuse to not be keenly aware of such basic and fundamental metrics such as your business's AT.

Average Transaction (AT) simply represents the mean transaction over a given period of time. Stayed more appropriately to business, AT is the expected transaction - it is the revenue you can "expect" (in the statistical sense of the term) to receive from the next individual or organization that you do business with.

A key part of calculation your Average Transaction (AT) is to make sure you're using transaction and not customers - it's called Average TRANSACTION after all. The distinction is key because focusing on a transaction will allow granularizing your metrics down the line - you'll be able to not just calculate AT, but you'll be able to calculate multiple ATs for different types of transactions (eg. those arising from Google, those arising from referrals, etc.). More on this is covered below, but let's look at an example to really understand the difference between using transactions instead of customers. 

Imagine you have a customer that comes in once every month for a year. You'll want to count each of the 12 transactions separately instead of counting the customer as a whole. So, you'll sum each transaction and divide by 12. If you have 10 such customers, you'll sum each transaction and divide by 120 (10 x 12) because there are 120 total transactions for the year. 

The benefit of doing this for transactions instead of customers can be explained by doing a thought experiment. Which would you rather have when a customer comes into your business to execute a transaction:

1. You have a central tendency prediction of how much the customer is going to spend on this transaction 
2. You have a central tenancy prediction of how much the customer will spend over the customer's overall relationship with your business - over the customer's lifetime

Clearly, the first one allows you to predict what will happen in the immediate future and put things to a close. The second one, however, only allows you to make a prediction about the overall general future - you really won't know what's going to happen today. What this example illustrates is that it's quite useful to be able to predict what's going to happen today instead of-of having today only fit into a larger long-term prediction. 

You can break down your AT even further to determine you AT for various types of transactions - transactions arising from Google, from Facebook, from referrals, etc. 

This gradual AT is useful because it will allow you to understand where your most valuable transactions come from so that you can channel more money into those pipelines and away from less-profitable transactions.

Referrals Per Customer (RPC) is the correlated rate of referrals per customers over a given period of time. Stated more simply, Referrals Per Customer tells you "how much of an additional customer" each customer brings in. 

Understanding that both the above definitions still might be a bit opaque and obscure to business owners and managers, let's go a bit deeper with an example. A Referrals Per Customer (RPC) rate of 0.25 means that for each unique customer over a given period of time, 0.25 (or one-quarter) of an additional customer is going to come into your business - which means that for every 4 customers, you can expect one additional customer to come in via a referral. 

We measure the Referrals Per Customer (RPC) rate in terms of a single customer because it will be easier to use downstream - although it might be easier to say "you get 1 referral for every 4 customers" saying instead that "each customer brings in an additional 1/4 of a customer" is the best ay to approach and to understand RPC because it will allow you to apply an understanding of RPC to each customer and because it will be easier to use the RPC concept downstream in the calculation of things such as the Lifetime Customer Value (LCV). 

To calculate your business's Referrals Per Customer (RPC) metric you simply need two numbers:

1. the number of non-referral customers over a given time period
2. the number of referral customers over the same time period

Using these two numbers, you can simply divide the number of referrals by the number of non-referrals to get your RPC metric. For example, if in 2016 you had 800 non-referral customers and 200 referrals, you would simply divide 200 by 800 to get 1/4 OR 0.25 - your RPC would be 0.25, meaning it's as if each customer brings in an additional one-quarter of a customer with him/her every time they come in. 

Now that we've given you a brief overview, we'll discuss why this is an important thing to know, then we'll dive into some important conceptual pieces of Referrals Per Customer (RPC) and then follow up with an example of how to implement this new and valuable understanding. ​

Now that we've covered the basics, we'll dive deeper into RPC in order to flush out some of the important details and get a good understand fo the concepts and it's potential weaknesses. First, we'll note that the way we calculate RPC is a bit flawed - RPC looks at how referrals are correlated with overall customer volume and NOT at the actual amount of referrals that a certain number of customers bring. 

What this flaw means is better illustrated via a generic expamle using the same numbers we used in the brief example above. Let's say you have an ice cream shop and 800 new customer visit in 2016 with 200 referrals. Per our RPC calculation, you would look at be looking only at numbers in 2016. That means a referral could have come in on the very morning of January 1, 2016, but you would still count it as part of your RPC. This doesn't make sense because clearly, no customer in 2016 referred that customer - it was almost surely someone in 2015. So, you're not really looking at the causes of the referrals, but only at how your referrals are correlated with (eg. compare with) your non-referrals. 

This is a flaw, but it should remain a minor flaw for the vast majority of businesses. You should be aware of it, but that is all - you can safely assume the flaw away because the error that will be introduced will be very small and due to the fact that the greatest error occurs in the first year. In subsequent years, although the very small error will persist within each year, the error will be normalized away via a comparison of years with each other - 2016 and 2017 could be compared with each other and both will have that error in it. ​

It is important when calculating your RPC metric, as stated above, to use customers and not transactions - customers might engage in multiple transactions but you only want to track the individual customers in order to accurately calculate RPC.

It's easy to see why we want to focus on customers and not transactions. Imagine a customer who refers one friend but comes to your coffee shop every single day for a year. Intuitively, how do we understand the relationship between the customer and the referrals that come from him/her? We clearly would say that the one customer refers one person - we wouldn't say 365 customers refer one person. If we count transactions, we would in effect be saying that it takes 365 of this customer to get a preferred customer - a meaningless and inaccurate statement. Clearly, we can see that it only took us one customer to get that referral - the more accurate approach is to count only customers. 

Does the same apply to referrals? Do we count transactions or customers when counting the number of referrals? Clearly, we also count the number of customers - counting transactions would possibly overstate a number of referrals and thereby overstate the RPC metric incorrectly. Again, image one customer refers another and that referred customer comes into your coffees spot every day for a year. Would it be more appropriate to say that one customer was referred or would we say that 365 customers were referred? Clearly, it is more meaningful and correct to note that one customer refers another, not that one customer referred 365 customers. ​

Once you know your businesses RPC, you'll have a far better picture of how referrals factor into your business. You will literally be able to understand what percentage of customers are referrals and, thereby, understand what each customer (on average) brings into your business in terms of referrals.

You'll effectively be able to both understand and quantify the additional benefit that is derived from each customer above just the transaction - you'll knw that the transaction amount is only one part of the gain your business receives from each customer. By knowing this, you'll be able to better evaluate marketing - both towards new customers and to existing customers. You'll also be able to better evaluate different approaches to growing sales and revenue - a common dilemma many business owners and managers face is whether to market towards new customers or to focus on getting more referrals. 

Additionally, by knowing your RPC, you'll now be able to track your RPC over time - this is incredibly valuable and will allow you to monitor the performance of different strategies and tactics. For example, if you implement a referral bonus where customers get a certain discount for each referral, you'll actually know how effective that program was. You might think that you would already know how effective that program was without knowing you RPC - wouldn't tracking sales and revenue be sufficient? The answer is NO - revenue clearly depends on many thigns (eg. season, tastes, unemployment rate, economic growth, randomness, better salespeople, etc.). By knowing your RPC, you'll be easily able to measure one time period's RPC against another and really know how a new strategy affected the level of referrals derived from each customer. 

Most importantly, you'll be able to use your RPC metric in important downstream uses that will further create business intelligence for you - critically useful metrics such as Lifetime Customer Value (LCV) rely on the RCP metric as an input. 

​Lifetime Customer Value (LCV) is the present value of all gains derived from a customer relationship. LCV is a key metric that big businesses understand (for the most part) and attempt to use in their decision-making process. However, too many small and medium-sized business owners and managers fail to either understand this concept or implement it in their decision making. 

Here we'll briefly take you through what Lifetime Customer Value (LCV) means and then walk you through a basic step-by-step guide on how the metric is derived so that you can fully understand how deeply profound and eye-opening the concept can be. 

As stated above, Lifetime Customer Value is the present value fo all gains derived from a customer relationship. This sounds simple, but it's not quite as simple as you might think. To really understand what LCV mean's let's break the definition down into its sub-components.

By obtaining good quality data (and turning that data into high-quality intelligence), you can learn so much about your business. You can learn things like:

• where most of your customers come from in terms of location (eg. which zip code do they come from, which city do they come from, etc.)
• how much your customers spend on average
• how many times your customers return
• lifetime customer value (LCV)
• the cost of customer acquisition (CCA)
• general market sentiment pertaining to your business
• revenue drivers for your business
• how you get your customers (eg. Google, Yelp, Facebook, referrals, etc.)
• conversion rates
• return rates
• things that can improve your overall processes/systems

Now, it's easy to argue for the importance of tracking data - but it's a bit difficult to do ti properly. the key is to set up a consistent and quality data obtainment system soon - don't wait until everything is perfect. A lot of business owners and managers procrastinate on this - they feel they don't have the time, the size, the money, etc. to do this now and they postpone it into the future until some "right time" comes along. This is ludicrous on many levels. 

It's totally inappropriate to postpone the implementation of data obtainments systems even if you know that you'll have to update and improve them over time. The main reason it's not acceptable is that you're wasting valuable data. Data is food for your business knowledge - without it, you can't have a lot of business intelligence. If you're interacting with leads, potential customers, or actual customers, you are capable of immediate obtaining at least some data. This data can be used relatively quickly (once you've gathered enough) provide you and your business with some insights. You can always improve the entire process later, but the data you gather today (as long as it meets the 3 criteria above) will be able to still be used in the future. For example, if you only gather emails and zip codes today but implement a much better data gathering process in the future that includes addresses, customer acquisition methods, and transactions, you can still use the data you have - you can use it now and you can use it to add to your larger/better future data. In essence, this is not something you have to get right on the first try - an iterative approach that adds and builds works very well as long as you make sure to follow the general guidelines we discussed above. 

Here are just a few examples of the kinds of data creation that take place every day - that takes place very second every second:

• customer registration forms (online and paper)
• sales data (things like transaction IDs, items sold, prices, customer acquisition methods, discounts applied, and time of sale)
• call logs
• Facebook posts
• public transportation ridership levels
• user statistics for apps
• blog comments
• Tweets
• customer surveys
• Google AdWords clicks
• time spent on a website
• geospatial data
• stock market data
• health data (things like blood pressure, weight, blood sugar, etc.)
• gym check-ins

The list above is meant to be broad in order to demonstrate the broad swath of things from which data is created today. Data can be created by governments or big corporations, but data can just as easily be created by small businesses and individuals during their everyday tasks and processes. 

The above list is just a tiny example - almost anything remotely automated or electronic creates some sort of data today. ​

If we have an exponentially larger amount of data today than in the past, why aren't we exponentially smarter today as a society? Sure, the size of our economy as measured by GDP or GNP is much larger than at any point in history, but we can still see that we haven't moved that far way from past societies and civilizations in terms of the things that are most important to humanity. 

Going further, why aren't businesses incredibly smart if we have so many data available? So many small and medium sized businesses today still operate under the same paradigms as businesses of the past. The problem is that even though there are tremendous amounts of data (and easy ways to collect more), the data isn't being productively used. The data is just sitting there. It's easy to collect data - it's hard to use it effectively. 

What you really need isn't data - it's intelligence. You don't need a data dump on your hard drive or a stream of data flowing in at many GBs a second - you need to know how to turn whatever data you do have (hopefully it's quality data) into intelligence. This is what the human mind does - it turns raw data from sensory inputs into intelligence via the brain. 

To better illustrate the importance of intelligence and the inadequacy fo data alone, let's imagine a fictional scenario. Imagine giving an ancient hunter-gatherer tribe all of the data available today on a giant supercomputer. Of course, they won't be able to access that data, but let's ignore that for a second and imagine that SOMEHOW that ancient tribe could in fact access all of this vast data. Do you think that things would really change for that tribe? It is likely that the tribe would be incapable of utilizing the data in any way and creating any actionable intelligence from it - they wouldn't have either the mathematical/statistical sophistication to extract much meaning from it and they wouldn't have the background landscape required to absorb and process the data in appropriate and meaningful contexts. ​

Intelligence, in the sense we're discussing here, is the use of data in effective ways to achieve valuable (whatever that means) goals and objectives in the real world. 

What sort of goals are we talking about? They can be any goal that is worthwhile:

• increasing customer retention
• increasing revenue
• increasing customer satisfaction
• getting more Facebook likes
• getting more website clicks
• losing weight
• making better decisions
• launching a rocket into space
• performing a heart transplant
• navigating from Santa Monica to Downtown LA
• taking an exam 
• deciding when to buy or sell a stock
• deciding whether to provide someone a home loan
• deciding which bank to open a savings account with
• building a 3D model of a city
• deciding when to reorder certain products
• deciding when the best time to ship a product is

Most worthwhile goals are achieved through a combination of effort and intelligence - effort alone is not always enough because you need to put your effort int he right direction. Of course, intelligence alone is useless without the effort to use it also - but intelligence s the seed from which our goals can be productively and effectively achieved. 

Intelligence is what sets humans apart in some ways from the other beings that inhabit the world we find ourselves in. Although lots of animals are intelligent in some ways, they're not as intelligent as us. We can use complex models of the world to make decisions - this is why we are the dominant species. 

Intelligence is the stuff that builds bridges, building, and apps. Intelligence is what wins battles in war and battles in the boardroom. Intelligence is what allows you to outperform in life and in business - it's what can set you apart in the battlefield of business and make that customer come through your doors or visit your website or download your app instead of your opponents'. ​

Data and intelligence are two different but interrelated things. Data is used in order to obtain intelligence. Or, stated another way, you need data if you're going to have some sort of intelligence. 

Intelligence doesn't just arise out of nowhere. The kind of intelligence that is useful (the productive kind of intelligence that helps with making effective decisions int the real world) is based on data. Therefore, intelligence and data are not two different but similar things, they are two very different things with one being required fro the other. It's like water and oxygen - you need oxygen atoms to make water, but water and oxygen are far from the same thing. Just as with oxygen and water, you need data to have intelligence, but intelligence is far more than just data - it's using data to create an understanding of the world. 

Intelligence can exist in many forms. It can mean knowing your:

• lifetime customer value
• average customer transaction
• cost of customer acquisition
• return rate
• referral rate
• shrinkage rate
• time when you are most likely to reach the most Facebook followers
• time when it's best to launch your rocket into space
• time when it's best to leave your house for work
• day when it's best to book your flight
• the store where the ingredients you need are cheapest
• the keyword that is most likely to perform the best 

Intelligence can also mean knowing things there aren't specific numbers, but are more comparative in nature - things such as:

• the general sentiment in the market regarding a product, a brand, etc.
• knowing what's more important to you
• knowing what matters most to your boss or your employees

Intelligence can also be binary - it can include things like:

• whether a machine is working or not
• whether the air conditioning system malfunctioned or not
• whether your AdWords ads are still showing up online
• whether or not you've run out critical supplies

The cost of customer acquisition (CCA) is the average price of acquiring a new customer, and is a fundamental piece of business information. The cost of customer acquisition is a fundamentally important metric for a business of any size. It is vital to know your or your organization's cost of customer acquisition in order to effectively execute. ​

To calculate the CCA you only need two ingredients:

1. Total promotional spend over a period of time (PS) - This is the total amount spent on all marketing, advertising, and branding activities related to acquiring new business. 
2. Total number of new customers over a period of time (NC) - This is the total number of customers that you acquired during the time. It's not the number of potential customers, leads, or people in the sales pipelines - it's actual customers who have paid money for your product or service. 

We left out one thing above - the time period. Over what time period should you get the above two metrics? The most obvious and safe answer is 1 year - it's not too long and not too short and will generally allow for seasonal cyclicality to not skew the numbers up and down. You don't want to use a timeframe that's too short - doing this for one month (let's say December) could cause miscalculation due to cyclical changes that might have an impact on how easy or difficult it is to attract customers in December. For example, a retail location might find it far cheaper to attract customers during the holiday season because foot traffic increases in malls and shopping boulevards. If this is the case, using numbers from only December would cause the CCA to be lower than it really is over a longer period of time. 

However, you know your business and you should be the final judge of the timeframe. You might feel that a 2 or 3 year timeframe is more appropriate do due longer run cyclical aspects to your business that might affect customer acquisition.

It is important to remember that the times must match above - if you are using the total spend for 1 year you must make sure that you are also using the total number of new customers for that year as well. 

So, we now have two metrics - PS and NC, representing the total promotional spend and the total number of new customers respectively. In order to calculate the cost of customer acquisition, we simply divide PS by NC in order to get the total money spent per customer:

CCA = PS/NC 

It seems quite simple - just divide PS by NC - but the CCA calculation can be quite a bit more complex than simple division if you want to calculate your CCA properly. ​

Your next steps are based on the amount of information you currently have:

• Have all the needed information in the proper granularity: If you have the above information in the proper granularity (eg. separate customer retention and customer acquisition cost tracking, separate new customer vs. repeat customer tracking, etc.) you can easily proceed by applying the above CCA formula 
• Have a lot of information but not at the needed granularity: If you've already been tracking how much you spend overall on promotion-related activities and how many customers you have, you're well on your way to properly being able to calculate your cost of customer acquisition. The next step is to examine your data and see if you can separate things out to have the proper granularity. Can you separate out new customers from repeat customer? Can you separate out customer retention expenses from expenses related to obtaining new customers?
• No good information: If you don't even have the right information to begin calculating your CCA, don't use bad or incomplete information to do it. You'll need to set up a system in order to track things properly. You're lucky - you can set up a great system now that will allow you to track things properly instead of having to go back and try to make due with information collected from a poorly implemented or poorly designed tracking system. You'll want to make sure that:
  • You can track new vs. repeat customers
  • You separate out as best as you can customer retention vs. customer acquisition costs
  • Make sure that your system is implemented throughout your organization to capture all costs and all customers
  • Make sure it's easy to use - if you have employees that will need to enter things (eg. whether the customer is repeat) or if you'll need customers to fill out forms themselves (eg. a typical "How did you hear about us?" question) make sure it's easy to use so that the users fill things out quickly and accurately 

​Every journey begins with a single step. Have you heard of that saying? You’ve probably heard of it and although it might sound cliche, it is extremely insightful. If you don’t have at least $1000 put away you have not taken your first step on the path to financial freedom - it’s time to take it with the help of Pennies and Pounds in this in-depth guide. The first step on your path to financial freedom and wealth is putting $1000 away as a starter emergency fund - that fund will stand between you and the financial emergencies that will come your way in the future. Without even $1000 saved, you are exposed to extreme risk because even a slight financial emergency has the potential to wipe you out financially or put you into debt. Read the piece below for a comprehensive guide on getting to your first $1000 and you’ll be well on your way to financial success and financial freedom. 

Whether you are 18 or 80, if you don’t even have $1000 in your pocket in the developed world, you’re in a dangerous situation and you must immediately do the things below to build up at least a basic $1000 rainy day fund. 

A rainy day fund or an emergency fund is a required part for most financial plans because it protects you in various ways. You can read more about why you need an emergency fund in this very comprehensive article that will surely make you look at your finical life in a different way (check this article our immediately after reading this article): 
​
However, if you don’t even have $1000 saved, we can’t yet be concerned with a real emergency fund because you don’t even have a tiny buffer between you and life’s uncertainties and financial storms. An emergency fund will almost always be more than $1000 if you’re an adult with living expenses (and will definitely be more than $1000 if you are running a household), but we must take the first small step, moving you from the absolute nakedness of not even having $1000 saved to putting a $1000 financial blanket over you.

Without any money saved in a rainy day fund or emergency fund, you will have trouble handling the following possible financial emergencies:

• flat tire
• car repairs
• medical bills
• loss of income (even for a short period of time)
• appliance repair or replacement
• sick pet
• parking and traffic tickets
• repairs around the house or the apartment

Additionally, without even a bare minimum of $1000 saved, you will likely find it very difficult and stressful to deal with expenses that aren’t emergencies, but that are rare (eg. those that occur once every few months, once every few years, etc.) - expenses such as:

• yearly car registration
• new clothes for the winter
• new clothes for interviews
• new clothes for children before school starts
• birthday, wedding, and Christmas (and other holidays) gifts
• membership fees and dues

If you don’t have $1000 saved, you probably know the above already and you probably already know how stressful life can be without some sort of financial cushion, but we must reiterate it in order to really demonstrate how important it is that you act now and act quickly to put $1000 away. 

Once you have your $1000 saved, you will feel much better. Although $1000 isn’t a proper emergency fund for most people, you’ll still have some breathing room in your life once you are able to put away your first $1000 - you’ll have some cash put aside for when life comes knocking on the door. You’ll know that you can handle small financial emergencies easily because you have the money put aside for them. You’ll also feel proud for doing it because getting to your first $1000 (regardless of your age) isn’t an easy task. If you can get to $1000, you can move forward to building up a full emergency fund and then building some wealth for you and your family.

Pizza Delivery: This is a slightly old-school recommendation for a part time gig but it can still work in the right situations and for the right people. It doesn’t pay very well hourly, but you have the potential to earn a decent amount in tips if you work in a good area and are personable. 

Drive for Uber or Lyft: This seems like the 21st-century version of the pizza delivery job. It’s becoming common knowledge that Uber, Lyft, and other firms are attempting to move away from human-based transportation, so the opportunity to earn money with Uber and Lyft might not exist a decade from now, but you can definitely take advantage of it today as long as your car meets their requirements. 

Cashier: This works best for seasonal work - times of the year (usually the holidays) when business picks up and extra workers are temporarily needed. There are a few disadvantages with this type of job, however. You can’t set your own ours and you can’t work extra hours. Freelancing or driving for Uber, for example, you can decide to have an intense two weeks and drive a lot of hours to earn some extra cash quickly - with a typical cashier (or similar) job you just can’t do that and you’ll have to be ok with the money trickling in slowly. Additionally, the pay is likely to be low with few or no opportunities to earn tips. 

Upwork: If you have some advanced and in-demand skills, check out Upwork, an excellent way to freelance online. It might take some time to build up your profile so you’ll have to be a bit patient compared to other jobs (you don’t start earning much immediately) but you have the potential to earn a very good hourly wage and you can work from anywhere. 

Fiverr: Similar to Upwork, but paying less, Fiverr allows you to freelance and take jobs from anywhere if you have in-demand skills. 

If you can get a side job (or two - and possibly three), even temporarily, you should be able to put enough money away every week or every month to build up your first small rainy day fund of $1000. If you’re in this camp, however, you need to make sure to stay vigilant and forward-looking because you don’t want to:

• waste all of the extra money you are earning - the goal is to put it aside
• look up in a year or a few years and still be in these side jobs
• neglect your health or your loved ones - don’t forget to put people over money ​

The ideal situation is you working now and putting money aside while developing some sort of gameplan to earn more in the future - earn more not just by working more hours but by earning a higher hourly wage. To earn more per hour, you’ll need to improve yourself - you’ll need to improve your technical or job-related skills, your professional skills, and your overall personality. Think about where you want to be in a year and in a few years and move in that direction, getting the necessary skills and experiences so that you can end up in the job you want (and can realistically obtain). ​

If you’re in the camp of people who earn a decent income but who overspend, you’re in the toughest camp because some deep changes will need to be made in order to make financial progress - changes that might take less time than a side job but that are more mentally and spiritually difficult to accomplish and changes that you’ll have to stick with for the long run if you are to permanently improve your financial situation. ​

If you’re making a reasonable income and you still don’t have $1000 saved, you must likely cut down on your spending. It’s very difficult to write general statements for a general audience, but it is likely that most readers who earn an income 75% of the median in their communities (or more) and are unable to put away $1000 likely have a problem with overspending and understanding the difference between necessities and luxuries.

It is very difficult to move from a lifestyle of reckless wastefulness to lifestyle of frugality and discipline. Many people try for a little while but then return to their old ways of overspending. It seems that there are underlying reasons for many people’s dysfunctional financial habits that cause them to behave in irrational and self-destructive ways. We won’t go into them here in any depth, but here are a few possible psychological issues or neuroses that potentially cause people to behave recklessly with their money (and overspending is definitely reckless financial behavior):

• Spoiled: Had everything growing up and now finds it difficult to say no to himself or herself
• Raised from Poverty: Grew up in poverty and now with an average income attempts to fill in some sort of internal missing piece by buying “stuff” - interestingly enough coming from poverty also occasionally causes people to behave in the exact opposite way, acting as misers and penny pinchers out of fear of returning to a state of poverty
• Lack of Self-confidence: Low self-esteem and self-confidence surprisingly manifest themselves in people’s finances all of the time through overspending (both on yourself and on others) and an inability to say no with dignity
• Fear of Finances: This is slightly related to the self-esteem issues above, but it’s more about people who don’t feel they can handle their finances well - they mistakenly think they are too dumb to do it or that it’s just not for them

Now, we all feel bad about ourselves at times. We all doubt ourselves at times. We all have occasional fears of being in poverty and many people have been spoiled in certain ways. However, many of these people are still able to live financially responsible lives because they do not allow their internal psychological issues and neuroses to influence their pocketbooks, their bank accounts, and their wealth building programs - they understand that the cost is just too great and that nothing will be improved by mishandling finances. However, handling your finances properly and spending less then you make (living in financial dignity) will allow you to improve both your financial life, your personal life, your professional life, and your internal life - it will make you into a happier and stronger individual.

I know the above is easy to say but hard to do - it’s very hard to overcome yourself and stop misbehaving financially. However, if you are to ever build wealth and live a financially stable and successful life you must begin to improve your interactions with money and your ability to handle it properly. You must begin by saving your first $1000 so that you may go on to amass $10,000 and $100,000 and hopefully much more than that in time. But, you’ll never be able to amass any  real and lasting wealth if you are governed by your own psychological neuroses and your momentary whims and desires to spend money on frivolous things when you don’t even have $1000 put away for yourself. ​

If you put in a concentrated effort into building up your wealth, you’ll be able to save your $1000 in less than a year (and possibly in less than 3 months if you can save more). 

Don’t save every month - do it every single week. If you attempt to save every month you might end up at the end of the month with not enough to put away. You will run the risk of not having the needed amount if you do it every single month. However, if you save a bit of money every week, it will be both painless and it will assure that you actually are able to put enough money away. Weekly savings will be relatively painless. Weekly saving doesn’t even require receiving a weekly income - you can be paid biweekly or once a month and still successfully save every week because you can save a very small amount every week (an amount possibly less than the cost of a single skipped restaurant meal). 

Take a look at the graph below to see how long it will take you to reach $1000 by saving either $25 per week, $50 per week, $75 per week, or $100 per week. Obviously saving more is better, but even if you can put away $25 a month, you will have your $1000 in less than one year - you will transform your financial house from a desolate and empty lot to a lot with a slowly building solid foundation (a foundation on which you will continue to build upon). ​

Additionally, you will want to create a monthly budget. This is tough and you can expect that you’ll be way off on your budget for the first couple of months, but things should get easier if you keep at it. In creating a budget, plan on where each dollar will go to next month and do your best to stick to it. Next month, before creating another budget, evaluate the success and failures from the previous month. If you’re married or financially intertwined with a partner, make sure to create the budget together. Not both of you have to put in equal effort (some people are more financially savvy or more interested in personal finance than others) but both of you should have a seat at the table and both of you should have a say into how the budget is determined if you are to do this in a proper and overall healthy way.

If you don’t have $1000 saved up, you’re in a dangerous situation because you are exposed to both financial emergencies and one-off expenses (those expenses that are not monthly but that instead occur yearly, every few years, or once in a lifetime). Without having even a very basic $1000 rainy day fund, you are in a very precarious situation which will prevent your from building wealth - if you can’t even save $1000, how will you save $10,000 or $100,000 or build lasting wealth. This should motivate you to put in the work and make the necessary sacrifices to get to your first $1000. The good thing is that $1000 isn’t very hard to save up - as the above graph demonstrates, even putting away an extra $25 per week will get you to your $1000 in a lot less than a year. 

Depending on your current situation (not earning enough vs. big spender), you will have to approach things as described above. Be aware that the problem with your current financial situation isn’t just the numbers, but it is with your heart and your soul also - never forget that who we are inside will manifest itself in our finical life also. Be courageous as you make the necessary external (getting an extra job or building a budget) and internal (understanding why you overspend if you’re in the second category) changes to start on the path to financial success and finical freedom. ​