Entrepreneurship demands a specific mindset about money.

Ask a friend this question—“what would you do with $1 million?”

Your friend will pause, look at the ceiling for a moment, repeat the question to themselves, and then say something like…

“Well, the first thing I would do is plan a trip to Europe. I’ve always wanted to go, but I’ve never been able to afford it.”

Or…

“Down payment on a new house. Definitely. We’ve outgrown our place and we’re ready for the forever home.”

Or, if they’re really savvy…

“First, I’d knock out all my debt. Then, I’d use half of what’s left to generate compound interest. Then, I’d see about a condo down in Florida.”

These responses are well and good. But they show that your friend is no entrepreneur.

An entrepreneur would instantly respond…

“I’d use it for the business.”

Translation—they’d use the money to make more money.

Maybe they’d use the money to hire an ad agency to run a marketing campaign, driving revenue through the roof.

Maybe they’d use the money to hire more workers, exponentially increasing their ability to serve clients.

Maybe they’d use the money to purchase software or hire a third party to streamline their workflow, boosting their efficiency.

Everyone views money as a tool. It solves problems. Living in a house that’s too small? That’s a big problem. And money can easily solve it.

But entrepreneurs see money as a tool to earn even more money.

To start thinking like an entrepreneur, ask yourself this question—how can I use my money to start making more money? There are only a few answers to that question, and the right one will lead you down the path of starting your own business.

Every entrepreneur needs a problem to solve.

It’s more important than a business plan (though you need a business plan).

It’s more important than mentorship (though you DEFINITELY need mentorship).

It’s more critical to success than killer products, funding, or even skill.

All of those things are important pieces of the puzzle—but without a problem to solve, none of them matter.

Why? Because if there is no demand for your product or service, you’re guaranteed to fail.

In order to have demand, someone has to have a need that’s not being met. That’s why you need a problem.

Even the most outlandish luxury items solve problems—they make customers feel a certain way about themselves. They make people laugh, or feel successful, or feel wanted. And for many, they’ll pay a premium to achieve that.

Some businesses solve problems that people don’t even know they have. Did anyone before July 1994 think that going to a bookstore was a massive hassle? No! Well, except one person—Jeff Bezos. But it turns out his hunch was right. He solved a problem that no one was aware of, and has profited handsomely for it!

It doesn’t matter if you’re starting a side hustle on the weekends or launching a million dollar startup. You must solve a problem. And the more demand your solution creates, the higher likelihood of success you’ll have.

So what should an entrepreneur do first? Find a problem! Ask yourself—or better yet, ask people around you—what kind of problems they have. What kind of pain in their lives do they wish would just go away? Is there a way to solve that problem with your skills and talents?

If so, congratulations—you’ve found a viable business opportunity.

Money comes from solving problems.

Think about any business. It could be a lemonade stand. It could be Amazon.

Each of those businesses solves a problem.

The lemonade stand solves the problem of feeling dehydrated on a hot summer day. How? With a refreshing mix of sugar, citrus, and cold water. One sip, and you’re a new person. It’s a feeling people will pay 50 cents, or even a dollar, to achieve.

Amazon solved a problem people didn’t even realize existed—the inconvenience of shopping in brick-and-mortar stores. It turns out that driving from location to location was a time-consuming hassle, and there was no guarantee the store would have what you needed. Amazon eliminated those problems entirely with an all-encompassing online marketplace. And they’ve been richly rewarded—just look at Jeff Bezos’s net worth!

Your current job is likely solving a problem for your boss. You have skills that your boss needs for their business to run, but that they don’t have the time to develop or apply themselves. And in return for solving that problem for 40 hours per week, they give you a salary.

The takeaway? Don’t just develop skills—identify problems. Once you see obstacles, you can leverage your skills to overcome them. That’s where money comes from.

Need an income boost, but not sure where to start? Then you need to encounter the Cash Flow Quadrant.

It’s a concept pioneered by Robert Kiyosaki of Rich Dad Poor Dad fame. And it’s one of the best explanations of creating income around.

The employee and freelancer trade their time for money.

The entrepreneur and investor create or purchase income generating assets.

Think about what an employee does. They show up, punch in, and work for a set number of hours. In exchange, they either get paid by the hour or a set annual salary.

If they’re extra conscientious and prove their worth to their employer, they may get a raise or bonus as a reward. But their income is entirely dependent on the good graces and success of their boss. They never directly enjoy the fruits of their labor.

The same is true for the freelancer. Sure, they may enjoy greater independence than an employee, but they’re still trading their time for money. Think of them as a mercenary rather than a soldier.

Compare that with the entrepreneur. The difference is that the entrepreneur creates a system for delivering a service that’s duplicatable.

Let’s say you start a lemonade stand. You put up a few bucks to buy some lemons, sugar, cups, a cooler, and stand. It’s a risk—there’s no guarantee you’ll have any customers.

Fortunately, it’s a hit—the neighbors line up to enjoy your refreshing beverage!

After a few days, you’re swimming in cash. In fact, you earn enough to open another lemonade stand. So you buy the same supplies, and hire a friend to run the new location. Just like that, you’ve scaled your lemonade business.

Eventually, you have so many lemonade stands that you don’t have to manage one yourself. Instead, through initiative and upfront commitment, you’ve created an income stream. That’s how entrepreneurship works.

But now suppose that a friend comes along. She’s been eyeing your success and wants in. She’ll put up the cash to open another ten lemonade stands across the neighborhood (it’s a BIG neighborhood).

In exchange, she gets a slice of the profits from all the stands. She takes on some risk by giving you money in exchange for some income. In other words, she’s an investor. She’s using her money to earn more money.

There are two critical points to notice about the entrepreneur and the investor.

1. They take risks. Being an employee is relatively predictable—if your employer continues to do well, you’ll give X amount of time, and you’ll get X amount of money. But starting a business is a risk. Giving money to an entrepreneur is a risk. Entrepreneurs and investors commit resources to projects with no guarantee of success.

2. They have far greater potential. There are only so many hours you can trade for money. When successful, entrepreneurs and investors have far more resources at their disposal to trade for money.

Simply put, entrepreneurs and investors face greater risks, and greater potential rewards.

Which quadrant generates most of your income? Is there a quadrant you would like to explore further?

So you want to start a business.

You’re done with the 9-to-5, and ready to transition from employee to entrepreneur.

But there’s one last hurdle—how will you pay for it?

Starting a business requires resources. Whether it’s a laptop, store front, circular saw, or musical instrument, you’ll need tools to ply your trade. You’ll also need to consider the cost of hiring employees as your business grows!

There are three common strategies entrepreneurs leverage to raise money for starting a business…

1. Raise capital. Trade ownership of your business for money.

2. Borrow money. Pay interest for money.

3. Self-fund. Cover business expenses yourself.

There’s no right way to fund your business. But there are clear pros and cons to each approach. Let’s explore them further so you can have a better idea of which may be best for you!

1. Raise capital. This strategy involves scouting out wealthy individuals and institutions to give you money to fund your business. But it’s no free lunch. In exchange for funding, investors want a slice of your company. As your business grows, so does their profit.

That gives them a powerful say in the management of your business. If you raise capital this way, you may find these stakeholders calling the shots and pulling the strings instead of you.

Plus, raising capital simply is out of reach for most entrepreneurs. Unless you’re disrupting a major industry and have extensive experience, the risk-reward situation may not make sense for potential investors.

2. Borrow money. It’s straightforward—you ask a lending institution or friend for money that you’ll pay back with interest. Both parties take a calculated risk that your business will increase its value enough to repay the loan. It’s a simple, time-tested strategy for funding a new business.

The advantage of getting a business loan is that it keeps you in full control of your business. No board of directors or controlling shareholders!

But business loans require planning to manage. Your business will need to consistently make payments, meaning you’ll need to consistently earn profit. That’s rarely a surefire proposition when you’re first starting out.

So while debt can help your business expand and hire new talent, it’s typically wise to hold off on borrowing until later.

3. Self-fund. This is far and away the most realistic strategy for most entrepreneurs. It’s exactly what it sounds like—pay the upfront costs of starting a business yourself.

No debt. No working for someone else. You’re completely free to run your business. You’re also completely financially responsible for the outcome.

Will you be able to buy a storefront outright? Or start a competitive car manufacturer? Probably not. But there are dozens, if not hundreds, of opportunities that require far less capital.

Look around. You may have the tools you need to start a business at your fingertips! In fact, if you’re reading this article on a laptop or desktop, you’re positioned to start an online business right now. All you need is a service to provide clients.

The takeaway? The funding your business needs will depend on your situation. Challenging an established industry with a revolutionary approach? Then you may need outside funding. But if you’re like many, you have all the tools and resources you need to start your business.

BEEP BEEP BEEP…

That’s not just your morning alarm, set for 6:15am each and every darn weekday.

It’s a starter’s pistol. The rat race has begun.

The rat race is a behavior experiment. Scientists condition rats to run races, solve puzzles, complete mazes, do tricks, reproduce, not reproduce, and a host of other feats.

How? By dangling a treat in front of them. Perform the tasks. Get the reward.

Sound familiar?

Many are caught in a human rat race. They’re told that to be an adult they need a credit card, a car, a mortgage, and a 9 to 5 job.

So they jump through the hoops, solve the puzzles, and perform the tasks to get that treat—their paycheck.

That paycheck gets consumed by their basic needs, their payment plans, and their lifestyle.

And the cycle continues. Jump through hoops. Get paid. Spend. Jump through more hoops. Ad infinitum.

Bigger “treats” help—like a bonus or a raise—but only for a little while. Eventually, they get consumed by increasingly extravagant spending. It’s why people with high incomes stay trapped in the rat race.

The result? You keep running a pointless and repetitive race that leads nowhere.

Is it any surprise, then, that there’s a “great resignation” happening? Or that businesses can’t find employees?

Maybe it’s because people are finally waking up to the truth—they’ve been playing someone else’s game. They’ve been making someone else rich. And now they’re ready for a new and better opportunity.

Successful businesses are good at solving problems.

The larger the problem to solve, the more rewards you will reap. We instinctively know this is true, even if we can’t articulate it. Just look at our spending habits.

Our favorite coffee shop solves our lack-of-energy-in-the-morning problem.

Music streaming soothes our rush hour stress with our favorite tunes.

A food delivery app removes the hassle of driving to a restaurant.

Your brands of choice provide you value by solving your problems. The more they fix, the more you love them!

So, imitate your favorites. Explore the problem you’ve identified until you’re an expert. Next, develop a solution that crushes the problem.

Training your sights on providing value won’t magically make you successful. But it can serve as a guiding light when you feel directionless and unsure of your next steps.

Can’t find your target market? Brainstorm which companies or agents would gain the most from implementing your solution. Be as specific as possible in explaining the benefits.

Struggling to discover a niche in a saturated market? Look for issues that competitors and industries have ignored or missed. It might be something they’ve accepted as cost of business.

Trying to scale up? Diligently research the obstacles your new clients face and tailor your solutions to their specific needs.

Let me know if you’re hungry to start a business. We can talk about the problems facing some of the largest industries in the world and how you can provide much needed solutions.

Failure is the greatest teacher.

There’s nothing else like it to seize your attention. It’s hard to look away from a trainwreck. It’s even harder when you’re the one driving the train.

Failure leaves you reeling. It forces you to ask a critical question—”what went wrong?”

The answer can reveal some powerful truths.

It reveals truths about your process. Maybe your strategy for carrying out business is flawed and needs to be retooled.

It reveals truths about your assumptions. Flawed strategies stem from faulty assumptions. What are you assuming about people or the world that led to your failure?

It reveals truths about your character. Assumptions don’t appear from nowhere. They’re shaped by experiences and core beliefs about what’s right, wrong, and how the world works. Failure exposes those character forming beliefs like nothing else.

Simply put, failure cuts right to the core of who you are. And that can be a powerful and positive experience, if you’ll listen to it.

So get out there. Drop the ball. Spill some milk. Botch something.

And don’t be afraid to call it like it is—when it’s clear that you’re failing, acknowledge it and jump ship.

Then, ask yourself “what went wrong?” Be brutally honest. Take notes. Adjust as needed. And then get back out there.

You’ll find that you’re far stronger than you’ve been led to believe, and that you grow more resilient the more you attempt.

So here’s to failure. May you have enough that it paves the way to your greatest success.

Let’s face it—a side gig sounds like a dream come true. What’s not to love about being your own boss?

But if working for yourself is so awesome, why do so few take the plunge?

The reason is simple—uncertainty.

It makes sense. School taught you how to scribble notes and pass tests, not start a business.

And that uncertainty creates anxiety.

Picture yourself as a business owner. What would it look like?

If you’re like many, you saw flashes of expensive cars, meetings, and… nothing. Entrepreneurship is such a foreign experience that you don’t even know how to process it.

And that leads to the ultimate uncertainty—what if you fail?

What will others think if your business goes under? How will you feel about yourself? Will you be able to pay the bills?

In short, entrepreneurship feels like a black box of something that’s best left alone.

Sound familiar? There are two antidotes to the uncertainty of entrepreneurship…

Embrace uncertainty.

The next time you feel a twinge of fear, pause. What are you afraid of happening? What could go wrong? Maybe it’s something valid. Or likely, it’s something you can overcome. Train yourself to observe and question your fear. You’ll grow more and more confident taking calculated risks. You may even find yourself ready to start a part-time side hustle!

Find support.

Facing uncertainty is far easier when you’re surrounded by support. Friends, family, and mentors can provide an emotional safety net should things go south. They can also offer wisdom and counsel that can mean the difference between success and failure.

Where do you stand on entrepreneurship? Do you want to start a business, but can’t see what it would look like?

If so, let’s chat. Consider me your sounding board for your anxieties about the transition from employee to entrepreneur. I can help you process your fears and flesh out a vision for your business.

Starting your own business can be a challenge.

It will test your talents, your mental toughness, and your ability to adapt. And those tests—if you pass them—can spark extraordinary growth.

Here are four ways entrepreneurship will change you.

You’ll develop self reliance. Entrepreneurs need to learn to solve their own problems, or fail. They don’t have a team to handle the daily grind of running a business.

Instead, new entrepreneurs handle everything from product development to accounting. It’s a stressful and high stakes juggling game.

But it can teach you a critical lesson: You’re far more resourceful than you thought. You’ll learn to stop waiting for help and start looking for solutions.

You’ll discover loyal friends. One of the downsides of entrepreneurship is that it may expose toxic people in your circle. They’re the ones who might…

• Mock your new career
• Feel threatened by your success
• Try to one-up you when you share struggles

As you and your business grow, you may need to limit your interactions with them. They might be too draining on your emotional resources to justify long-term relationships.

Rather, your circle should reflect values like positivity, encouragement, and inspiration. Those new friends will support you through the highs and lows of entrepreneurship.

You’ll learn how to manage stress. Late nights, hard deadlines, and high stakes are the realities for entrepreneurs.

To cope, you must build a toolkit of skills that can carry you through the hardest times. Otherwise, you may crack under the pressure and lose any progress you’ve made.

It comes down to one key question: Why do you want to be an entrepreneur?

Are you driven by insecurity? Or by vision?

If you’re trying to prove a point to yourself or others with your business, you may fall apart at the first hint of failure.

If you’re driven by vision, you’ll see failure as part of the process.

Examine your motivations. Over time, you’ll grow more aware of your insecurities. Talk about them with your friends, families, and mentors. As you bring them into the light, you may find they have less and less power.

Entrepreneurship can spark an explosion of professional personal growth. You’ll grow up. You may start with an employee mindset, but you’ll mature into a leader. That’s how entrepreneurship will change you.

P.S. If this seems daunting, start with a side hustle. It can ease you into the role of entrepreneurship without throwing you into the deep end too soon!

It’s simple—workers are quitting because they feel taken advantage of. And it’s no wonder why.

Research from Cengage Group revealed the top three reasons behind the Great Resignation…¹

1. They want to make more money.

2. They’re burned out and they feel unsupported.

3. They feel they’re no longer growing in their position.

Simply put—workers feel underpaid, overworked, and unvalued.

In a word, exploited.

Is it surprising that workers are quitting in droves? Of course not! The real miracle is that people didn’t quit sooner.

So what are workers looking for? Again, it’s no surprise…

They want opportunities where their earnings scale with their effort. The more they work, the more they can earn.

They want flexibility in how long and where they work. No more being tied to toxic workplace environments.

They want mentorship to help them reach the next level with their abilities.

Translation—workers want to be valued, rewarded, and nurtured.

In short, they want to be treated like humans, not just cogs in a giant machine.

Like it or not, this Great Resignation is just the tip of the iceberg. Until employers realize the obvious, expect more and more dissatisfaction, and more and more resignations.

Imagine this—you’re running. Your breathing is heavy. Your heart is racing.

But you look around and your heart sinks. You haven’t moved an inch! You’re exactly where you started.

That’s what happens to Alice in Through the Looking-Glass. The Red Queen, who’s dragging Alice by the hand, delivers this infamous line: “Now, here, you see, it takes all the running you can do, to keep in the same place.”

Sound familiar? That’s because there is an effect called The Red Queen Problem. And it can mean the difference between success and failure for your business.

The Red Queen Problem originated in evolutionary biology. It’s the hypothesis that evolution in one species pressures other species to evolve.

Think about a peaceful savannah. All the creatures are in equilibrium—half the time the cheetahs catch the gazelles, half the time the gazelle escapes.

But imagine that one day, a cheetah shows up that’s built a little differently—she can outrun every gazelle on the plain. So can her kids, and her grandkids, and her nieces and nephews.

Suddenly, there’s dramatic pressure on the gazelles. The theory is that they have to literally pick up the pace or face extinction. If the fastest gazelles survive, they’ll have fast children, and balance will be restored.

But now an arms race has begun. All the other predators—and their prey—face the exact same pressure to speed up or die.

The same is true in business.

There’s a constant evolutionary arms race of reinvention. One business develops a groundbreaking process or product, and all their competitors must adapt or face extinction.

In short, stagnation is destruction. Innovation is keeping up. Your growth and evolution is likely the result of growth and evolution among your competitors. As the Red Queen said, “it takes all the running you can do, to keep in the same place.”

But make no mistake—the sooner you reinvent, the greater the rewards. That faster cheetah on the plain? She instantly shoots up the food chain, securing her species’ place.

Again, the same is true in business. The first businesses to mass produce personal computers, or create cloud software, or redefine socialization have had massive advantages.

The goal is to be the one in the lead, the one who dictates how others adapt.

So are you leading? Or are you adapting?

There is no denying that COVID-19 has changed what can be considered “normal”.

We didn’t think how fragile chatting around the water cooler at work, having a meal in your favorite restaurant whenever you wanted, or going to the movies on the weekend really were. But months of shutdowns, social distancing, and required mask-wearing have made us feel it. Life is definitely different from what it was in February 2020.

And that’s where your opportunity lies.

Despite the negative ramifications, COVID-19 has created the chance you’ve been waiting for to live life on your own terms. Here’s how you bounce back from the pandemic stronger than ever and poised to pursue your dreams.

Decide Where You Want To Live. You’ve seen the headlines; people are fleeing cities like New York and Los Angeles for suburbs or even totally new states¹⁺². Those trends aren’t necessarily new, but there’s no doubt that COVID-19 has accelerated the process. And it makes sense when you think about it. Cities are convenient. People are willing to live there and often pay absurd rent because it places them near job opportunities. But months of lockdowns and surging unemployment have either shattered traditional career dreams or shown workers they can function anywhere with an internet connection. Why live somewhere expensive that you don’t like with no jobs?

But the mass urban exodus is also the opportunity of a lifetime. First, remember that you can work anywhere in the world that has an internet connection. You’re no longer tied to the eastern seaboard or California if you want a high paying job. Second, those ex-city dwellers have gotten used to services and amenities. Meeting those demands in a smaller city where property can be cheaper and taxes can be lower has huge upside potential. All you have to do is identify where you want to live and determine the opportunity level. Love mountains and fast internet? Check out Chattanooga, the “Gig City” of the south! Durham, North Carolina has a low population density paired with a huge demand for college degrees.³ And Iowa, once thought to be a cornfield disguised as a state, has a booming economy and awesome culture.⁴ The point isn’t that you should move to a remote part of the midwest and flee civilization (though that’s always an option). It’s that opportunity is more accessible than ever from anywhere in the country and is only limited by your imagination and courage. So why not investigate that small town or mid-sized city you may have never considered before? Now is the time to explore your options!

Build A Business. You’ve always wanted to build a business. And the COVID-19 pandemic has created the perfect opportunity to become an entrepreneur. Before you think it, let me just say—I know it sounds crazy. Starting a business is risky in the best of times, much less after economic shutdowns and a massive market decline. Plus, the pandemic has shot our collective anxiety levels through the roof!⁵ It can feel like there are uncountable roadblocks between you and pursuing your dream of being a business owner.

That’s why you have to be strategic about what type of business you start. Remember, the key to making money is problem solving. The larger the problem you solve, the more money you can potentially make. You probably won’t have to think too long and hard to come up with a list of ways you can help people for a dollar. Real estate agents, for instance, are helping families relocate outside the big city. Food delivery services are helping people stranded at home satisfy their pizza cravings. Do some research into a problem you’re passionate about solving and try some brainstorming for solutions. And because of the economic climate, you might be one of the few people taking action to fix things instead of living in fear!

In short, there’s opportunity hidden in this pandemic. You can bounce back from this season of COVID-19 in a place you love with a business you’re passionate about. If you’re interested in starting a business, let me know! We can talk about some big problems that are facing Americans and how you can help solve them.

Your first lesson isn’t actually one of the six.

It can be found in the title of this article. The best time to start teaching your children about financial decisions is when they’re children! Adults don’t typically take advice well from other adults (especially when they’re your parents and you’re trying to prove to them how smart and independent you are).

Heed this advice: Involve your kids in your family’s financial decisions and challenge them with game-like scenarios from as early as their grade school years.

Starting your kids’ education young can help give them a respect for money, remove financial mysteries, and establish deep-rooted beliefs about saving money, being cautious regarding risk, and avoiding debt.

Here are 6 critical financially-related lessons EVERY parent should foster in the minds of their kids:

1. Co-signing a loan

The Mistake: ‘I’m in a good financial position now. I want to be helpful. They said they’ll get me off the loan in 6 months or so.’

The Realities: If the person you’re co-signing for defaults on their payments, you’re required to make their payments, which can turn a good financial situation bad, fast. Also, lenders are not incentivized to remove co-signers – they’re motivated to lower risk (hence having a co-signer in the first place). This can make it hard to get your name off a loan, regardless of promises or good intentions. Keep in mind that if a family member or friend has a rough credit history – or no credit history – that requires them to have a co-signer, what might that tell you about the wisdom of being their co-signer? And finally, a co-signing situation that goes bad may ruin your credit reputation, and more tragically, may ruin your relationship.

The Lesson: ‘Never, ever, EVER, co-sign a loan.’

2. Taking on a mortgage payment that pushes the budget

The Mistake: ‘It’s our dream house. If we really budget tight and cut back here and there, we can afford it. The bank said we’re pre-approved…We’ll be sooo happy!’

The Realities: A house is one of the biggest purchases couples will ever make. Though emotion and excitement are impossible to remove from the decision, they should not be the driving forces. Just because you can afford the mortgage at the moment, doesn’t mean you’ll be able to in 5 or 10 years. Situations can change. What would happen if either partner lost their job for any length of time? Would you have to tap into savings? Also, many buyers dramatically underestimate the ongoing expenses tied to maintenance and additional services needed when owning a home. It’s a general rule of thumb that home owners will have to spend about 1% of the total cost of the home every year in upkeep. That means a $250,000 home would require an annual maintenance investment of $2,500 in the property. Will you resent the budgetary restrictions of the monthly mortgage payments once the novelty of your new house wears off?

The Lesson: ‘Never take on a mortgage payment that’s more than 25% of your income. Some say 30%, but 25% or less may be a safer financial position.’

3. Financing for a new car loan

The Mistake: ‘Used cars are unreliable. A new car will work great for a long time. I need a car to get to work and the bank was willing to work with me to lower the payments. After test driving it, I just have to have it.’

The Realities: First of all, no one ‘has to have’ a new car they need to finance. You’ve probably heard the expression, ‘a new car starts losing its value the moment you drive it off the lot.’ Well, it’s true. According to CARFAX, a car loses 10% of its value the moment you drive away from the dealership and another 10% by the end of the first year. That’s 20% of value lost in 12 months. After 5 years, that new car will have lost 60% of its value. Poof! The value that remains constant is your monthly payment, which can feel like a ball and chain once that new car smell fades.

The Lesson: ‘Buy a used car you can easily afford and get excited about. Then one day when you have saved enough money, you might be able to buy your dream car with cash.’

4. Financial retail purchases

The Mistake: ‘Our refrigerator is old and gross – we need a new one with a touch screen – the guy at the store said it will save us hundreds every year. It’s zero down – ZERO DOWN!’

The Realities: Many of these ‘buy on credit, zero down’ offers from appliance stores and other retail outlets count on naive shoppers fueled by the need for instant gratification. ‘Zero down, no payments until after the first year’ sounds good, but accrued or waived interest may often bite back in the end. Credit agreements can include stipulations that if a single payment is missed, the card holder can be required to pay interest dating back to the original purchase date! Shoppers who fall for these deals don’t always read the fine print before signing. Retail store credit cards may be enticing to shoppers who are offered an immediate 10% off their first purchase when they sign up. They might think, ‘I’ll use it to establish credit.’ But that store card can have a high interest rate. Best to think of these cards as putting a tiny little ticking time bomb in your wallet or purse.

The Lesson: ‘Don’t buy on credit what you think you can afford. If you want a ‘smart fridge,’ consider saving up and paying for it in cash. Make your mortgage and car payments on time, every time, if you want to help build your credit.’

5. Going into business with a friend

The Mistake: ‘Why work for a paycheck with people I don’t know? Why not start a business with a friend so I can have fun every day with people I like building something meaningful?’

The Realities: “This trap actually can sound really good at first glance. The truth is, starting a business with a friend can work. Many great companies have been started by two or more chums with a shared vision and an effective combination of skills. If either of the partners isn’t prepared to handle the challenges of entrepreneurship, the outcome might be disastrous, both from a personal and professional standpoint. It can help if inexperienced entrepreneurs are prepared to:

• Lose whatever money is contributed as start-up capital
• Agree at the outset how conflicts will be resolved
• Avoid talking about business while in the company of family and friends
• Clearly define roles and responsibilities
• Develop a well-thought out operating agreement

The Lesson: ‘Understand that the money, pressures, successes, and failures of business have ruined many great friendships. Consider going into business individually and working together as partners, rather than co-owners.’

6. Signing up for a credit card

The Mistake: ‘I need to build credit and this particular card offers great points and a low annual fee! It will only be used in case of emergency.’

The Reality: There are other ways to establish credit, like paying your rent and car loan payments on time. The average American household carries a credit card balance averaging over $16,000, and the average Canadian owes $22,081 in consumer debt. Credit cards can lead to debt that may take years (or decades) to pay off, especially for young people who are inexperienced with budgeting and managing money. The point programs of credit cards are enticing – kind of like when your grocer congratulates you for saving five bucks for using your VIP shopper card. So how exactly did you save money by spending money?

The Lesson: ‘Learn to discipline yourself to save for things you want to buy and then pay for them with cash. Focus on paying off debt – like student loans and car loans – not going further into the hole. And when you have to get a credit card, make sure to pay it off every month, and look for cards with rewards points. They are, in essence, paying you! But be sure to keep Lesson 5 in mind!’