One of the biggest problems in today’s world is the general populations inability to maintain a budget. While this blog doesn’t tend to shift into matters like this, learning to control your own budget will help you to control your companies budget no matter how big or small, and it will help you reduce your stress.
To start off with, I’ll quote a line from The Richest Man in Babylon, “part of all I earn is mine to keep.” If you haven’t read it, then I recommend doing it. I will say though, that it is based off of Babylon, which has slavery, and several chapters get somewhat graphic. I recommend at least the first 3 chapters, as the books starts off lighter. (The book is short, and to the point, using stories/Babylonian parables to visually explain the idea, making it easy to follow, and see why it works)
“Part of all I earn is mine to keep.”: seems a little off, isn’t ALL I earn mine to keep? The answer is no, of course not. Part of it belongs to the grocery store. Part of it belongs to video rentals. Part of it belongs to the gas station. Part of it belongs to rent. Etc… The point is, is that you don’t keep what doesn’t come back to you. Get away from the Monkey See, Monkey Buy stage.
What is recommended in the book, is to take 10% of everything you make, as soon as you get paid, and put it aside. Then, if you are in debt, take the next 20% and apply it only to pay off debt. Then don’t let your living expenses exceed what is left. It seems obvious enough yet difficult. We each get the idea that we need to save, and not spend so much, but we still do.
The problem is, that we do not do anything stable. We tend to just eyeball our bank accounts, paychecks, and really important bills. And then just pay out money as we make up off the top of our heads. While 10%, as the book recommends, is not so important as a specific number, it is somewhere to start. It gives you a very specific, very attainable goal. The reason it works is because it requires you to limit yourself. To pay more attention to your finances.
But there is more. That 10% you paid yourself with, you spend it only on things that will pay you back with interest. Gambling is NOT a good place. Your friends often are not either. More often than not, the loaning of more than pocket change between friends is a cause of great stress, and will eventually separate, particularly if the friend who required the loan doesn’t have means to correct the situation that caused the need in the first place.
What you need is to talk with people who have experience in investing. People who have experience in making money become more money. NO Get rich quick schemes. You’ll find that the most successful people don’t use get rich quick schemes. You want to find sources to pay out to that have a high probability of paying you back, with interest.
Then, all the money that the 10% budget spent on an investment, you put right back into that 10% budget. Then, take 10% of the profit, and put it into your account, and 90% of the profit goes back into the 10% account. This way, your money to make money keeps growing, and eventually will become quite large, and supply you with enough income to live off of, and eventually make you wealthy.
Imagine how your days will be when the stress of not having enough money are gone?
Now, back to your game. You have a budget to spend. Imagine everything you put into it, and ask yourself is it needed, and will it improve the rate of return on this investment? Sometimes something isn’t needed at all, but by spending a little extra on it, it will improve chances of return. In business, every dollar you spend is part of your investment on the product.
Lets say you got money from an investor. Angel or VC. You should never look at finances in the sense of whether or not something will fit into your budget, but is it needed for the business, and why. Depending on its effect on your budget, you should always look at alternatives. If you’re going to rent space, then you should question if you really need retail space, and how much? You should question how important the location is, because 2 miles away, you could get space for half the cost.
If you want your game to succeed, you have to have a financially viable plan to get a return on it. Learning to control your own finances is just a part of it. Anything that doesn’t help you with your goals, only takes away from it. How important are they to you?
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