Entrepreneurship_Vs_Day_Job
00:00:00.000 | Mele Kalikimaka everybody, it's Sam from Financial Samurai. I'm recording from Honolulu, Hawaii,
00:00:05.920 | where it's actually kind of rainy and very, very windy. But I'm here at home with my parents,
00:00:12.320 | whom I haven't seen in two years. And I gotta say, it feels so good to see them because
00:00:17.240 | they're in their mid 70s. And you know, you just never know how much time you have left
00:00:21.700 | seeing your parents if they're around, or your friends or family. So let's not take
00:00:26.200 | our time for granted. This pandemic has obviously been a real damper for most of our lives,
00:00:32.600 | including my own. And with the latest Omicron virus spreading throughout the world, this
00:00:38.080 | thing is just going to continue. But as we look at 2022, I think we're all just gonna
00:00:43.160 | have to accept that the virus will be part of our lives, it's going to be endemic. And
00:00:47.920 | we're just going to have to move on and live our lives knowing that there's never going
00:00:51.720 | to be zero risk, just like with investing, except for if you invest in a CD or money
00:00:56.700 | market account up to 250,000 per person, there's always going to be risk, but it's hard to
00:01:01.900 | put our lives on hold forever. In this episode, I want to talk about having a day job and
00:01:07.560 | being an entrepreneur, because I've done both for a while now 13 years each actually on
00:01:13.680 | the dot. And I see the positives of both sides. I highly encourage all of you who have day
00:01:19.680 | jobs, stable income, health care benefits, retirement savings benefits, to look on the
00:01:25.720 | side a side hustle to try to make more money to try to do things that you like that could
00:01:30.360 | make more money. This is something that I did starting in 2009. And about 2.7 years
00:01:37.080 | later, I was able to break free from my corporate job forever. But of course, entrepreneurship
00:01:43.440 | is not that easy. It's a journey of discovery. The hardest things to just start. It is after
00:01:50.520 | you start when you start learning and evolving and pivoting and developing your message,
00:01:57.360 | your product, your brand, and so forth. It really is under the comfort of a stable job,
00:02:03.480 | where you can really experiment, take risks, and explore new subject areas when you don't
00:02:09.600 | need the money. And so as you develop those ideas and that business, over time, you're
00:02:15.720 | going to get more and more confidence where you might think one day, hmm, maybe it's time
00:02:20.560 | to take that leap of faith and do something new. And I think you can think that way, once
00:02:25.200 | you've been able to replicate about a quarter of your annual gross income, and after about
00:02:30.640 | a half a replication of half your annual gross income, I think it's clear that the momentum
00:02:35.960 | is there. And you can really take some risks if you want to. The greatest thing about the
00:02:40.560 | internet technology and being able to work from home is that we can leverage these things
00:02:46.800 | to make more money on the side. And the more money you make, the more you can save and
00:02:51.760 | the more you can invest. Each new income source you develop is like adding another engine
00:02:56.680 | on your jet. And it becomes kind of addicting actually, where you're earning extra income,
00:03:02.680 | and you're saving extra money and investing more and you're seeing your wealth compound.
00:03:07.560 | It's part of the reason why on the one hand, you see some employees only work, let's say
00:03:12.680 | two to four hours a day because they can get away with being more productive at home. And
00:03:17.160 | on the other hand, you're seeing other people who really want to make more and achieve financial
00:03:21.880 | freedom quicker, take on two jobs. I don't know if you guys saw that expose on the Wall
00:03:27.040 | Street Journal. But that person is also a financial samurai reader. And I asked him
00:03:31.120 | to share a guest post about how he's able to get two jobs, make double the money, have
00:03:36.440 | extra benefits, and get away with it. Now, obviously, there's moral dilemmas involved.
00:03:42.200 | But the reality is, employers are being much more flexible with what employees can do today,
00:03:49.320 | than back when I was working. From 1999 to 2012, when I was working in finance, we had
00:03:55.280 | to submit this thing called the outside interest system, where if we were making money outside
00:04:00.860 | of the firm, we had to disclose it. And most of the time, the firm would say no. But nowadays,
00:04:07.040 | I just talked to a person who works at Google, he's got a podcast, he is doing consulting,
00:04:13.240 | he's writing a book, he's making a lot of outside income, six figures worth of outside
00:04:17.880 | income while he's also working at Google, making six figures. And that is pretty attractive.
00:04:23.480 | It's a really good power boost to help you on your way to financial freedom. Now, obviously,
00:04:28.400 | you can only keep this up for too long, because eventually you might burn out or you might
00:04:33.260 | get sick of one thing, as you see something else grow tremendously. I'm not sure most
00:04:38.940 | people have a spending problem. You know, the media talks a lot about how we don't save
00:04:44.100 | enough and we buy stupid things that we don't need on credit card debt with an 18% interest
00:04:50.460 | rate. I'm sure a lot of people do this. However, I think what's more important to focus on
00:04:56.740 | is generating more income. You have a spending problem, which I think can be more easily
00:05:01.160 | fixed or an income problem, which is a bigger challenge, right? Because it takes a lot more
00:05:07.260 | work to generate more income, more creativity, more risk, more action. So before you take
00:05:13.760 | a leap of faith, I want to highlight how much you need to make as a freelancer or as an
00:05:18.860 | entrepreneur to replicate your day job income. So let's say your day job income is $100,000.
00:05:25.280 | I believe you need to make at least 130% to 160% of your day job income to replicate that
00:05:32.900 | income. In other words, if you're an entrepreneur or freelancer, you've got to make $130,000
00:05:37.940 | to $160,000 to replicate the day job income of $100,000. And why is that? Well, as an
00:05:45.120 | employee with $100,000 income, here are some things you might get. Retirement benefits,
00:05:51.460 | subsidized healthcare, paid time off, subsidized life insurance, short term and long term disability,
00:06:00.660 | employee ongoing training, you know, benefits such as going back to school part time. And
00:06:06.460 | also, you'll probably get automatic minimum raises every single year, especially with
00:06:10.920 | inflation so high right now. In addition, here are some things you don't have to pay
00:06:15.400 | as an employee. Social Security, you pay 7.65%. That's your employee portion, whereas the
00:06:23.800 | employer also pays 7.65%. So if you take 7.65% times $100,000, that's $7,650. You don't have
00:06:33.320 | to play as an employee. Then there's state franchise tax. This is in California, you
00:06:39.360 | pay $800 a year for the privilege of having your own business. Then you might have to
00:06:46.000 | hire a business accountant, a bookkeeper, then you might have to have capital expenditure
00:06:50.760 | to grow your business, travel expenses, meals, office expenses, and marketing expenses. All
00:06:57.600 | this stuff adds up to the point where, yeah, you have to make about 30 to 60% more than
00:07:03.800 | your day job income to replicate your day job income. And that just is the way it is.
00:07:10.280 | But in return, you've got a business that is generating cash flow. Further, you can
00:07:15.800 | always sell your business as a multiple of revenue, or operating profits or net profits.
00:07:22.040 | So you have that one two punch that can help you build wealth. And then finally, you get
00:07:26.680 | to be your own boss. But the irony is, and the funny saying is, I quit my nine to five
00:07:31.840 | job to be free to work 24/7. And this thing is so true, as I see here at the end of 2021,
00:07:39.880 | looking ahead into the first quarter of 2022. The first quarter of any calendar year is
00:07:45.160 | generally the biggest quarter of the year, especially in finance. What are the top two
00:07:51.120 | New Year's resolutions everybody has? Make more money, get in better shape. And it's
00:07:56.680 | going to be like that probably for the history of mankind. So as an entrepreneur, you really
00:08:02.440 | can't rest during the winter holidays. Because first quarter is so important. You got to
00:08:08.000 | make it count when it counts the most. For me, I'm thinking, well, what will my predictions
00:08:13.080 | be for the stock market, the real estate market and alternative assets for 2022. I've also
00:08:19.200 | got to come up with new ideas and new topics that I'll talk about beyond just investing,
00:08:24.920 | right? Because personal finance is so much more than just investing in stocks, real estate
00:08:29.120 | and alternative assets. There's what to do with your money, how to raise your family,
00:08:34.760 | education, health care, just like an endless stream of topics that I'm trying to think
00:08:40.160 | about and plan ahead. So all of us can benefit. Then I've got to think about marketing copy
00:08:46.240 | and how to market my new book coming out on June 28 2022 as well. That's going to be a
00:08:52.040 | lot of work. So as an entrepreneur, it's kind of endless. I've already gotten several out
00:08:57.960 | of office responses that said, hey, we'll be gone for the next two weeks. We'll be back
00:09:02.600 | in the new year. And that is something you really have to be able to appreciate as an
00:09:08.080 | employee. Don't take for granted the ability to make money while on vacation. But perhaps
00:09:13.840 | more powerful and more beneficial for employees is the ability to switch off. Just turn that
00:09:20.000 | switch off of always go, go, go. So you can spend time with your friends and family and
00:09:25.640 | relax. This is frankly something I've had a lot of trouble doing since I started Financial
00:09:31.280 | Samurai so long ago, and especially during the pandemic where I've got a family to support.
00:09:36.940 | So bottom line is there are positives to both sides of being an employee and as an entrepreneur.
00:09:43.520 | And let us not take what we have for granted. I hope all of you all have a wonderful, wonderful
00:09:48.840 | holiday. Hopefully you're spending time with friends and family and really reflect on this
00:09:54.280 | incredible year 2021. I'm gonna do a lot of reflecting over the next several weeks. And
00:09:59.640 | I just realized this is officially the 100th episode that I've published on this podcast
00:10:05.480 | channel. So thanks for sticking with me all this time. Refuse to quit. That's been my
00:10:10.340 | motto in 2020 and in 2021. No matter how difficult things get, refuse to quit. Thanks so much
00:10:18.200 | everyone. Happy holidays. And if you enjoyed this episode, I always love a positive review.