Question #
What is the importance of having financial reserves in business and personal life?
Answer #
I have made a lot of mistakes over my business career and done a few things right.
Fortunately, it only takes a few good decisions and some grace from the universe to be successful.
But if there is one lesson I wish I had learned early in my career, it is this:
Always have reserves to fall back on.
Another way to say this is to save money from the start.
I had the mindset early on that I would start saving, or setting aside reserves, once I was making enough money to do so.
That is not the best way to think.
It is valid, but more often than not, it pushes setting aside reserves or saving in one’s personal life into the future.
I developed this habit early, and it has haunted me for most of my career.
I have learned the hard way: pay yourself first, in the form of savings.
Fortunately, in the self-storage business, the reserves needed are not that great.
I developed the practice there of setting aside each month 1/12th of, let’s say, 0.15 cents per square foot per year, and it was very powerful.
Capital expenditures and insurance deductibles were never paid with operating cash flow.
I sure wish I had done this as powerfully in all my other businesses and in my personal life as well.
I am certainly better at it than I was earlier in my career, but I can still improve.
The reason I am sharing this is because I learned by watching someone I have a coaching relationship with.
Source: The One Habit I Wish I Had Started Early in My Career
