We’ve discussed how you can get rich quick around here already. We never actually took some time to discuss saving some of this money once we get rich quick.
If there’s a UFC on during any given Saturday night, please do not disturb me. I love to watch fights on a Saturday night when I can.
One of my favorite fighters is Donald “Cowboy” Cerrone. He fights more frequently than the other fighters and he always puts on a great performance. His performances are so great that he earned himself an extra $200,000 in 2011 from post-fight bonuses alone. This huge figure doesn’t include his base wage for showing up, sponsorship money, and any other training that he does on the side.
You would imagine that some dude in his 20s that’s making enough money to get rich would be well off. Apparently not.
I was surprised to find this quote many months back about his financial situation…
“I bought my sister a brand new Hummer for Christmas,” he said. “It felt good, but now I’m broke. Thanks, sis.”
Then recently he fought again and received an extra $120,00 for his spectacular showing. That’s even more money adding up.
What would he do with the money this time? He was asked about his personal finances at a press conference for some odd reason.
Cerrone responded by saying that he will finally pay his taxes. Oops! Despite making money fast, he hasn’t been able to save any of it. None of it.
The other day I looked at the dark side of chasing the big bucks. Now I want to look at what I would do while getting rich to ensure that I don’t blow every single penny that comes my way.
[Quick note: I’m sure that the Cowboy spends his free time in between fights on Studenomics, so I wanted to share some advice on how to not go completely broke when making the big bucks.]
We all want to know how to get rich quick. What’s more important is to figure out how to actually keep some of the money that you have coming in. Let’s get started…
Pay yourself first.
I’ve shared with you why and how you should pay yourself first. In my experiences the easiest way to save money is to automatically set it aside before you get even one second to access it. You can have the money deducted from your check or you can setup some sort of an auto-deposit with your bank.
All that matters is to you put some of your cash aside in savings.
Save for taxes.
There’s that classic quote out there. It states that the only two guarantees in life are death and taxes. This is true. You’ll always have to pay taxes. When you start freelancing or earning money on your own somehow, it’s important that you remember to take care of your taxes.
There are many entertaining conspiracy theories out there on taxes. The reality is that you need to pay your taxes. If you don’t save for your tax bill, you’ll be shocked to see how much money you owe.
Splurge your extra cash, not all of your cash.
I love to splurge and spoil myself. I just try not spoil myself with all of my money. We all deserve to reward ourselves and buy cool stuff. It’s just not worth going broke because you wanted everything. You can have anything that you want. Not everything that you want.
If you ever happen to start making big money fast, you can re-read this post. I can summarize the advice in here in one sentence: pay yourself first, cover your taxes, and don’t spend every penny. That’s how you can keep some of your money once you get the big bucks rolling.
It still perplexes me why some folks don’t pay their taxes.
It’a no wonder the government withholds! If not, there wouldn’t be enough money for the government to blow on their own waste!
It’s always crazy when you hear that someone that’s making millions or hundreds of thousands of dollars, actually owes money.
I’m just curious, how does it work in the U.S? Do you pay a penalty if you don’t pay your taxes? How much time does one usually have?
I’ve seen what a minefield small business taxes can be. And the IRS is ruthless about collecting. If anything, I’d switch #1 & #2 around. Pay your taxes first, then pay yourself. My credit card is a lot more flexible about my paying it off than the tax man is.
Haha good point Edward. Is it that strict? Have you seen any of the negative consequences with any of your friends?
My boss used to have her own company years ago. Her accountant made an error in a filing, caught it a few weeks later and submitted an updated filing. A month later, an IRS agent showed up with a repo team and started seizing the company assets! The accountant had to prove that he had already fixed the error.
I think paying yourself is key and it’s insurance that you’ll not blow all of your cash. People tend to put their immediate pleasures first and do not think about the future. This leads to trouble, of course, down the road.