Thinking of Yourself as a Corporation

A corporation is an entity that has cash inflows and outflows. It can have assets, liabilities, and engage in business deals. That is kind of like you.

If a company goes bankrupt, it is pretty much screwed for a while. It can rebuild, but it will be a while. That is kind of like you.

You should think of yourself as a company. You even have stockholders. They are you, your significant other, your kids, your pets. If your net income goes down, your shareholders will be negatively impacted. If your income goes up, your shareholders will be positively impacted.

Like a company, you should assume that most money you have goes back into the you company. Operating expenses (housing, food, clothes, transportation) must be kept to a minimum to ensure higher net income. You should also maximize income to ensure that goes up.

When you buy things for fun, think of it as taking a dividend. You could have put that money back into the company (invest) to try to increase future returns. It is a decision that CEOs and CFOs make every day.

I am the Eric Company. I have a major income source (work) and several subsidiaries (blogs and other endeavors) to increase my gross income. I have several operating expenses (living, car, etc) that offset my gross income to find my net income. I also invest (education, stock market) with the hope of building future returns. I even take an occasional dividend (vacation, DVDs, dinner with the girlfriend) to make my shareholders happy.

If you think of yourself like this, how can you waste money or waste opportunity? You can’t. Work to build your net income today and in the future. Maybe you will build up enough that you can live off of dividends for the rest of your life. (That means retire).

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