Let’s do a thought experiment to demonstrate the steps one can take to build financial stability in their life. Imagine that you wake up tomorrow and your net worth is zero.
It’s not an uncommon thought. While it’s not very likely you’ll lose everything, there are many people who live in a perpetual state of anxiety about their careers and finances. And that fear is worse than actually starting over.
If you go to bed and wake up every day with an uneasy feeling in your gut that tells you life is uncertain, I hope the steps in this article will give you a roadmap. The majority of our fears are unwarranted.
One of those fears is, “What if I lose all my money?” I had that fear for many years. This thought experiment helped me to overcome it because I now have a plan. Here it is.
Step 1: Fall back on my training
I remember when I started my master’s degree in 2008 when my friends said, “Dude, why lock yourself up and study? Let’s go out.”
Most people don’t realize that studying, learning, reading books, taking courses, and improving yourself is training for uncertainty. Every piece of knowledge you acquire will increase the odds of survival in this world.
So the first thing I will do if I wake up without a penny is to fall back on what I already know. Obviously, this means you need to prepare in advance. You can’t start reading 500 books the day your life blows up.
I’ve been investing in myself since I was 17 years old when I read my first non-fiction book. At 34, the years of reading books, taking courses, getting degrees, working for free, and learning from my mentors pay off.
I’ve learned that if you have valuable skills in this world, you will be fine. So step 1 is to not freak out. I don’t want to waste one iota of energy the moment I realize I have nothing.
Time to get to work.
Step 2: Utilize my network to get a job
If I have no money, I can’t start a business, get a loan, pay bills, or even buy food. So I’m going to utilize my network so I can slowly increase my net worth. This is another example of investing in something before you actually need it.
Over the years, I’ve formed many good relationships with my customers, students, and business partners. Once I’ve calmed down from the shock of losing my net worth, I would individually reach out to the people I think could help me with a job.
I would start with the business owners I know. I would offer them my most valuable skills: Copywriting and persuasion. I would talk to them about how I’ve helped businesses in the past with attracting new clients. I would also talk to them about how I’ve grown my own business. And I would propose a plan on how I could help them generate more revenue.
I already know at least three people who will probably offer me a job the moment I reach out to them. If you can do the same, you never have to worry about what you will do if you have to start over.
Every business either wants to save money, generate money, or improve its productivity. If you can help people with that, you’ll find a job. You don’t even have to earn top-dollar. Earning a wage that’s average for your specific role is more than enough.
Step 3: Save six months’ worth of expenses
Once I have a job, I would give that job 100% of my attention and energy. When someone takes a chance on you, I think you should be fully engaged and do your best.
So I do my best to actually deliver what I promised. At this stage, I don’t have the energy to work on starting a business or investing. I also don’t mind if my net worth is still low. I just want to learn how I can perform well at the job I have.
I will also save as much money as I can. I want to start building a financial buffer so I have more freedom and peace of mind to eventually work for myself again.
Step 4: Start a side-business
One of the main principles I teach is that it’s important to have more than one income stream. And the right moment to work on a second income stream is the moment you have some savings and you’re doing well at your current work.
Notice I haven’t set any time frames here. I don’t know exactly how long it will take before I save six months’ worth of expenses or when I’m performing well at the job I took.
It could be one or two years. But I’m patient. I have work, I’m saving money—I’m alive.
I want to start working on a side business the moment I have peace of mind. I firmly believe that no one can do good work in a fearful and insecure state of mind.
One must work from a certain state of mind. Otherwise, you risk becoming needy and begging for money. That’s not a good way to operate. Instead, I focus on providing value and doing work I actually enjoy. But I can only do that if I have a safety net. That’s why I take this whole process slowly.
I’ve written an article with 8 ideas for businesses. To be honest, I would probably start teaching online classes again. Learning, teaching, and engaging with students is my favorite type of work.
It’s something I’m good at and other people also value. If you want to start a business, it’s important those two factors are present.
Step 5: Invest in the stock market
As I’m earning money with my primary job and side business, I will slowly invest my money in the stock market. I usually invest in an S&P 500 index fund, but I also bet on individual companies.
I’d start investing again because it’s an important habit. I don’t want to wait until I have more money or when the conditions in the market are perfect.
I take the extra money I earn and invest it in the market. I stay away from day trading, crypto, and other things I’m not interested in. When it comes to investing, everyone has a different risk appetite and different interests.
I know some people are obsessed with crypto and think about it every day. That’s not me. So I don’t spend time on it. And I don’t worry about the money I’m leaving on the table. I focus on the wealth I can create in the stock market.
Step 6: Become a full-time entrepreneur
At some point, probably 3 to 4 years after I woke up without a penny, I will have enough financial stability and opportunities to become a full-time entrepreneur again. By this time, my net worth should be six figures, or close to it.
If I need more time, I’ll take more time to go full-time with my business. The point is that this stuff takes time. I meet people who say, “Oh man, I’ve been working on my business for 3 years and it’s still not taking off!!”
And I get where they’re coming from. Most people never start a business and the people who do usually quit after 1 or 2 years. So if you’re in business for longer than that, you often think you should be successful by then.
I wish that were true. I wish there was some kind of deal with the universe that said, “If you make it to 3 years, you’ll get a million bucks.” The truth is that it takes longer for some people.
The point is that you need to make progress. If your business is stagnant for 3 years, it’s not a good sign. But if you’re growing a little bit, and you feel like you’re learning, it’s a sign that things are getting better.
And that’s all you need. Especially when you start over. You want to see a little bit of improvement. You want to think to yourself, “I’m getting the hang of it.” When you have that feeling, it means you’re moving forward.
And if things don’t work out, you and I can always start from 0 again. As you can see, it’s not that bad. All the best!