What happens when a young startup founder comes into money
The Six Percent Entrepreneur
What happens when a young startup founder comes into money
June 25, 2021
In this episode, we talk about 'to splurge or not to splurge'.
hat happens when a young startup comes into some new money. So one of the things that's happening in my company right now is, I'm actually really proud of this, my teammate Ana, she's making really good money right now, she's actually making three times the amount that her peers are making. So this is really exciting stuff and for her, it's actually going to only go up, right? So we're projecting up. 

And she's super excited because she's coming into this new money and she's already thinking about how she's going to spend it and she's thinking about all the different things she wants to do. What kind of trips can she take? Where can she go? What can she buy? She's already thinking about spending this money and that's the thing right? When we come into some new resource, we already think about how we are going to exploit that resource and use that resource up. Now, I know the conventional advice might be for Ana, for example, is she's making three times the amount that her friends are making. So she should save a huge portion of that. 

Actually, believe a little bit differently. I really do think that Ana should splurge. She shouldn't, she should enjoy it right? She's young and making mistakes at a young age, you still have a lot of time to recover when you're older. You don't actually have the luxury to make those same kinds of dumb mistakes because you don't have that much time to recover. So when you're young you should splurge a little bit, especially if you have some money, but there's a right way to do it in the wrong way to do it. 

So the wrong way to do it is if you come into some money right away and money in money out, you just spend it. You're not going to be able to get the most benefit from that. So here's, here's what I mean. I actually just recently calculated how much money I spent on software alone just in the past six months and I spent around $12,000 just in software costs alone just because I had this money and I was like, oh I wonder what this shiny software is going to do for me and how this shiny software could help my company grow. So I just spend it. What I'm not doing is or what I wasn't doing, I, I've actually fixed this problem now. But what I wasn't doing was actually allocating all my income in two different budget accounts and when I do it this way or if I had done it this way, I would have been able to grow an account that had $12,000, and then maybe I could have made smarter decisions where I'm not just leaking the money out and now can buy, maybe I can buy a whole new teammate, maybe I can get you know $12,000 is a lot of money, right? So instead of wasting it on the software there definitely could have been better decisions that could have been made. 

So in terms of Ana, here's what I suggested to Ana. I said Ana you definitely should live YOLO. You should splurge when you can. But the trick is to be able to save a little bit and splurge later. So give yourself four times a year to be able to splurge. So what you do is you just live off of the minimum budget that you have or make yourself a budget live off that budget. And anything that's extra, put it into a bank account that you don't even have access to. You can only put money in there but you don't check the account and what you do is at the end of every quarter. So four times a year at the end of every three months you look into that account and you watch a growth. And one month you might have $2,000 in there. So you might take half out, take $1,000 out and you decide you want to go on vacation um somewhere with a $1,000 budget. 

Then the next quarter you look into your account again maybe this time you have $5,000 saved in there. So this time maybe you take out $2,000 and you go on a better budget. But that money is still growing, you still have $3,000 in there and you're not going crazy with it. And then maybe two quarters down the line, you actually have $10-$15 thousand dollars saved in there. And not only can you go on vacation, but now you actually have money to start buying a car or just a much bigger splurge. 

So that's essentially what we're trying to do is we're trying to save enough. So we're not leaking it on useless things by buying shoes, buying the nice purses, buying all these different places where we can spend our money, we're actually budging budgeting this money, and doing it in a way that's smart where we can really benefit and we can really splurge in very meaningful ways instead of just letting this money kind of leak out. 

So this is the same thing with startup founders as well. With startup founders, if you just give a young startup Founder a lot of money, even if you are allocating it, and you're saying, okay, I'm gonna give you $100,000 but you're going to get it over the next 10 months, you're gonna have $10,000. Well, all that money is going to be spent, even if you're helping that person budget that they're gonna be like, okay, I have $10,000 with the resources now, how can I spend all that money within a month? They're not really making these smart choices needed. And I'm actually guilty of this myself. Because the company is doing so well, even myself, I'm thinking about what are all the different ways that I can spend this money. And I'm looking at new podcasting equipment, I'm looking at new microphones, I'm thinking about actually moving out of Tulum and going to Colombia and maybe upgrading. And I'm just thinking all these thoughts. 

And giving this advice to Ana in terms of what she should do with her money is making me kind of take a step back as well and making sure that I budget and allocate it in very smart ways where I'm just not spending it all and splurging at all, but I'm able to keep it in a way that's going to help me sustain and going to help me level up in ways where actually have capital resources to do bigger things and at the same time it's forcing me to innovate and it's forcing me to stay on a path because I'm actually getting stuff done now, right? I'm able to make money with the resources that I have. There's no reason why it cannot continue making money with these resources. So if I am allocating this money and I'm saving it and I'm only dipping it into once every quarter so four times a year, then I could really make some badass moves in my company and start leveling up this way with this kind of capital injection. This is Robin Copernicus. Boom bam. I'm out. 

Continue your journey with me on my other channels:

Follow Me

Instagram:  https://robin.ws/instagram

Facebook:  https://robin.ws/fb-page

YouTube: https://robin.ws/youtube

Visionaries Group: https://robin.ws/group

Clubhouse: @rbn - https://robin.ws/clubhouse 

My Growth Hack Secrets Podcast: https://growthhacksecrets.com

Blog: https://robincopernicus.com 

Book: https://mvmbook.com 

Book a Call: