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Everyone always says “Time is Money”
I guess that makes sense if you are thinking like the 99%.
If you are thinking like the 1%, that sentence typically get’s FLIPPED to..
“Money is Time”
That is a huge distinction right there.
Our entire lives we’ve been trained to trade some measure of our time for money.
Doctors and brain surgeons can get away with charging $500-$1,000 an hour for that time.
Basically everyone else?
$10, $50, $100, those are the hourly wages that are more common.
If you are reading “The Kale Letter” though, you need to start to have a different perspective.
Time doesn’t buy you money, money buys you the TIME to do the things you actually love.
Don’t want to waste your time, so here’s a real-world “back of the napkin” example. I’d encourage you to do this calculation when you’re done reading.
I’ll use an Amazon Business as the calculation, because that’s what I know best.
Key Points:
Amazon Businesses are great at generating FREE CASH FLOW (after you’ve scaled to a certain point). That means that money is coming into your bank account, profitably, every single month.
Amazon Businesses are notoriously PASSIVE, which makes them great businesses to one day SELL.
When selling an Amazon Business, it is common to get a 2x-5x MULTIPLIER on EBITA (earnings). That means that if you made 100k profit in a year, you could expect to sell the business for 200k-500k.
How to do the calculation that will change your life.
1) How much money do you spend per month?
Let’s say you’re spending 3k right now, living fairly modestly.
2) How much do you WANT to spend per month (having the things that TRULY make you happy and not stupid stuff like lamborghinis)
I’d say 7k-10k will allow you to do pretty much whatever you want, travel wherever you want, if you are smart about it. Let’s go with 10k to be conservative.
3) Starting the business. Must assume that it will take 1-2 years to achieve the level of scale that you want. This is important, this will require sacrifice and WORK on your part. Are you ready to put that in? Okay great.
4) Necessary scale to achieve time freedom.
Good Amazon businesses net anywhere from 20-30% profit after all expenses.
You need to make 10k/month in order to be entirely free.
Therefore, your business needs to generate about 50k/mth in REVENUE to meet that need
This is not impossible at all, many of our students do it with ONE product.
Here’s a couple examples
5) Great, so your current business is generating enough for you to have insane time freedom, HOWEVER, you still have a BUSINESS to run.
The good news is this
Amazon businesses are crazy passive. Once at scale, you can spend 1-10 hours a week managing it, seriously.
You can then start to think about SELLING it and living off that income forever.
6) The SELLING calculation
Let’s say you want to keep spending 10k/month forever.
But you don’t want to have to run the business anymore…
This can be kind of a complicated calculation based on your goals and needs.
But for ME…
It’s pretty simple.
I just need enough to spend 10k a month every month until I die.
“But what about the kids!!!???” I can hear you now.
Here’s the thing, spending DECREASES in life once you’re old.
You run out of energy.
I’m betting on the fact that I’ll have great health insurance and that I’ll spend less and less as I age, still leaving plenty for the kids.
SOOOOOO…. Here goes.
I’m 27. I did a life expectancy calculator on google (haha)
It literally says I’m going to live to 100! Wow.
(you should do yours it’s helpful).
So I’ve got 73 years left.
If I were to spend 10k/month for 73 years that’s 12x10x73 = $8,760,000 not too shabby!
Here’s the good news though.
It’s not like I’m going to just have that money sitting there collecting dust.
If you know ANYTHING about investing you can expect to get at least 4% back on your money month over month. Which changes the game when compounded over time.
For instance, if I actually had $8,760,000 in the bank.
That would throw off $29,200 PER MONTH in INCOME WITHOUT EVEN TOUCHING THE INITIAL NUMBER.
I hope you’re reading that right now.
Because that’s insane.
That means you could spend almost 30k EVERY MONTH FOREVER. AND STILL GIVE YOUR KIDS ALMOST 9 MILLION DOLLARS.
Ridiculous.
So if you only need 10k per month, how much do you actually need?
Well…
($3,000,000 X .04)/12 = $10,000.
SO YOU ONLY NEED $3,000,000 IN THE BANK TO PAY YOURSELF 10K A MONTH FOREVER AND NEVER TOUCH THE $3,000,000….
All you would have to do is grow your Amazon business to 83k/month in profit and sell it.
Not impossible, at all.
BUT, it gets even better.
Like I said, you won’t actually spend 10k a month forever, when you get old, you really won’t.
So, you can cut into that $3,000,000.
That $3,000,000/10,000 = 25 YEARS
and yes yes I know there is some overlap with the interest and drawing on the principle.
But basically what I’m saying is that you DON’T NEED as much money as you think.
Getting 1M-1.5M should set your time free, FOREVER, if you do it right.
I’m not a mathematician, so don’t comment all my math mistakes.
But what I do know, from experience, is that starting your own business and knowing your numbers is the ONLY way to set yourself FREE, time wise.
You can quite literally get out your cell phone calculator, take 10 minutes, and calculate, with about 95% accuracy, what you need to do to never work another day in your life again.
I’ll let that just sink in for a second.
Go ahead and try it out, let me know what you come up with.
If you have questions throw them in the comments!
Share this with someone who needs to hear it!
Kale
p.s. SUBSCRIBE ALREADY! ARE YOU NOT ENTERTAINED??? :)
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