Learn VS Earn

In Financial Literacy today we were talking about resumes, jobs and interviews and while talking about where to apply for jobs, a discussion began about Learning V/S Earning. While being young and inexperienced may lead many students into thinking that low wage manual labor jobs are their only option, I showed that there is a whole world (business park) of options.

The Deseret News had an article about the 50 best companies to work for in Utah. Of the top 10, most students had only heard of one company.  My point was that of all of the companies in Utah to work for, why limit your search to the same companies that most other high school students look to. There are great companies in the various Business Parks along the free-way.

Now, can a high school student expect a high paying part-time summer job? No, of course not. But what if that summer job could be leveraged into a high paying post-high school job to help finance additional certification/education?

While your expenses are low (there may never be another time in your life when so much of your costs are being paid by someone else) what wrong with a job that may not even pay? That's right, work for free! Your payment will be experience and networking. These will pay you more in the long run than any minimum wage job ever could.

Go knock on the doors of your local business/technology park, dressed professionally, with copies of your resume in hand and start learning!

But what if you really want to own your own business or there isn't a business/technology park near you? Start a Summer Entrepreneurial venture where you can learn about starting and running a boot-strapped business. It may be small, but your gaining experience, not just doing a task.

DECA & SLC Comi Con Partnership

Below is an affiliate link Salt Lake Comic Con has provided to Utah DECA to share with friends, family, and co-workers. When anyone clicks on the link to purchase tickets, photo ops, autographs, or other event admissions, Utah DECA will receive 10% of of the purchase. We will use money generated for student scholarships.

https://goo.gl/uYGqCu

Salt Lake Comic Con has been an excellent partner for us. They are providing incredible access in addition to almost $20,000 in ticket value. 

Graphic for the 60/20/10/10 Rule

How the 60/20/10/10 Rule Saved my Family Vacation

60/20/10/10  No this is not some type of date or the GPS coordinators to buried treasure. However, given some time it will help you to create your own treasure. The 60/20/10/10 rule outlines your spending behavior and how it can help you create wealth.

60 - This is 60% of your NET income (paycheck = money after taxes) that you can actually spend on living expenses. Housing, Food, Transportation, Insurance, Entertainment must all be covered by this 60%!

20 - This 20% represents your Savings/Investing priority. When you are young or just beginning your budgeting process, this 20% is marked as Savings. However, once your savings goals are achieved this will become the amount you are Investing. Moving this amount from Savings to Investing needs to be done as quickly as possible.

10 - This 10% is opposite of the above 20%. Meaning, that while your first priority is to Save at a rate of 20% of your income, you will be simultaneously Investing 10%. Once your 20% Savings goals are realized you will then add this 10% to the 20% for a total of 30% into Investing.

10 - This other 10% is for charitable contributions as you see fit. This money is used to make the world a better place. You can spend this money on charities, churches, or to cover volunteer expenses. Once into retirement, your efforts to Save and Invest may then enable you to increase this amount well past 30% of your retirement "draw" to help those around you.

Some GREAT Savings Goals.

As mentioned above you will save 20% until your savings goals are achieved. So, what are some Savings goals?

1. $1,000 Emergency Fund. This is your problem solving money. Car and home repairs. This is your fist line of defense for your finances. 
2. 3 Months worth of Expenses (not your usual Net income but your usual monthly expenses. In a serious emergency you should be able to find ways to stretch this money to 4 or even 5 months)
3. 4-6 Months additional worth of Expenses based on job security. Once your initial 3 months savings goal has been reached you may want to consider expanding this to six months. This decision would be made by considering how likely you are to loose your job and how long it would take you to replace that income. If you are self-employed I would highly recommend having six months of income. If you are in the IT industry I recommend it because, while finding  a new job may not take much time, it may require relocation costs. If you are a elementary school teacher with more than three years teaching then I would not recommend extending beyond 3 months. 
4. Periodically you may want to drop from 30% Investing back to 20% Savings and bulk up your Emergency fund or your 3-6 months Expenses as your standard of living increases and the amount you need to sustain your expenses increases. 

So, how did the 60/20/10/10 rule save my vacation? Two days before traveling to Yellowstone this summer with my young family I received a recall notice concerning the power steering of my car. With no time to schedule the repair we ventured off on our family adventure. Just outside of Pocatello Idaho the power steering failed. I called the local dealership and took the car in. Within the hour they determined that the car "could" be driven, but a part needed to be replaced in order to fix the problem. Without that savings our trip would have been over shortly after it started (I would not chance completing a driving trip through Yellowstone with a young family on "iffy" power steering.)

Instead, I called a few car rental places and found a suitable replacement (in truth, an upgrade) for the car and continued the trip. While the car rental basically equaled the cost of the deposits we would have lost if we canceled the trip, it did allow us to enjoy Yellowstone in a more comfortable vehicle and we were able to create great family memories.

Of course the aftermath of dipping into the Emergency Fund is that I have now switched my 20/10 cycle away from 30% investing back to 20% Savings until the Emergency Fund is back up to $1,000 which will only take a couple of months. Then I will switch back to 30% Investing.

I was so grateful that I had access to my $1,000 emergency fund. It kept my family safe and provided a way for us to continue with our trip and get back home without adding much additional stress to the break-down.

ContEnd to the End

Contend: v. To compete for something; engage in a contest; measure oneself against others.
     Dictionary.com

Continue to the End = ContEnd

The Number 1 Reason for Entrepreneurial Success is Perseverance.

You must fight your way through problems. Entrepreneurs are problem solvers by definition. You saw a need in the market and you filled it (See a Need... Fill a Need). Problems are going to arise, are you going to rise to the solution?

I challenge my Entrepreneur and Financial Literacy students to fight for your education. Don't take the easy way out. Don't change the project (goal) because the project (goal) became difficult. When challenges come and the projects seem impossible, reach out, find a mentor (teacher, family, or friend) who can show you a clear path and get you back on track.

Go ahead, do something great with your class projects... you can do it, others can help, and ContEnd with the projects.

Bootstrapping - How to start a business on just your good name.

In Accounting today we were talking about "increasing" your debt. This relates to A.P. (Accounts Payable) and how a Credit to AP "increases" your debt. Thankfully, many of the students took issue with increasing your debt as a bad thing that should be avoided. However, I also noticed this as an opportunity to talk about the power of the A.P. and how it can be leveraged to start or grow your business.

Accounts Payable - A.P.: This is a liability (debt) that you owe a company for products/services. In a sense, its legalized shoplifting because you are leaving with supplies/inventory without paying for it.

Vendor: A Company that your Company buys items from. Most "people' are not familiar with all the companies that act as Vendors. The customers of Vendors are other businesses. Also knows as B2B's (Business to Business).

Credit: Your trustworthiness, and a judgement of your ability, to  pay for something later. (Having a friend buy your lunch today with the promise to pay them back.)

Capital: The money necessary to start and run a business. Usually through a loan or personal savings.

Widgets: Some "thing" that your business sells or uses to make the products or services that you sell.

Terms: In store Credit allowing you to pay for something after receiving it. Usually there is a discount if you pay early.

Bootstrapping: Starting a business with little or no Capital.

For simplification, lets say you are a master-negotiator and are able to secure Terms on your first shipment of Widgets with a Vendor. (In reality, many companies require a credit check or cash up front for new accounts.) Also, for simplification, let say that you are going to sell the widgets for double your costs ($5 = $10).

Step 1: The Vendor is going to extend (give) Credit to you. The Terms of the Credit will allow you 30 days to pay for the widgets. The 30 days begin on the date that the widgets are shipped from the Vendor - NOT from the date that you took delivery.

Lets say shipping took three days. You now have 27 days until you must pay for the widgets.

Step 2: Because you are smart, you have already "pre-sold" some of the widgets. So, once you have the widgets, you deliver and collect payment for the pre-sold widgets (and sold more) and begin selling all of the widgets. Your goal is to sell all of the widgets within the remaining 27 days. The sooner the better.

Step 3: Set aside ALL of the money from the first half of the widgets. Since you have doubled the selling price of the widgets, selling half of the widgets actually pays the Vendor for the whole order! Pay the Vendor early and you may get a discount and become even more profitable.

Step 4: You keep all the money from the second half of the order, or you can use this money for an even larger second order to grow your business! Repeat the above steps each month (or even more often) and next thing you know your hiring employees!