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Personal Finance using Management Consulting Hacks

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Personal Finance using Management Consulting Hacks

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What is the aim of this presentation?
No matter how much you earn it’s not easy to build wealth. The money you earn somehow magically disappears although it seems to you that you have been quite frugal. On top of that, it’s difficult to make certain tradeoffs in life where you have to spend money: Should you cook on your own or buy prepared food? Is it better to rent apartment of buy your own? Should you go for MBA or not? We are not taught at school to make rational decisions and manage our money and wealth. Luckily, there are a lot of nice management consulting tools, techniques and frameworks that will help you spend less, be more efficient, earn money and generate additional income. You don’t have to go to top consulting firm to learn them. You can master them by taking my presentation.
This presentation will help you drastically improve your skills in managing money and making more rational choices using management consulting tools, techniques and frameworks. If you have a specific problem just let me know and I will give you tips on how to solve it using the tools presented in this presentation.
The presentation is designed for people who want to become more data driven and less emotional in the way they manage money and make decisions related to money. Thanks to the presentation you will be making better decisions and you will learn techniques that will help you faster build your wealth. In the presentation you will learn 6 main things:
1. How to spend less money
2. How to make sure that you spend money on the right things
3. How to be more productive, work faster and more efficiently
4. How to earn more money
5. How to generate additional revenue streams
6. How to invest wisely your money
You can find more in my course: http://bit.ly/PersonalFinanceHacks

What is the aim of this presentation?
No matter how much you earn it’s not easy to build wealth. The money you earn somehow magically disappears although it seems to you that you have been quite frugal. On top of that, it’s difficult to make certain tradeoffs in life where you have to spend money: Should you cook on your own or buy prepared food? Is it better to rent apartment of buy your own? Should you go for MBA or not? We are not taught at school to make rational decisions and manage our money and wealth. Luckily, there are a lot of nice management consulting tools, techniques and frameworks that will help you spend less, be more efficient, earn money and generate additional income. You don’t have to go to top consulting firm to learn them. You can master them by taking my presentation.
This presentation will help you drastically improve your skills in managing money and making more rational choices using management consulting tools, techniques and frameworks. If you have a specific problem just let me know and I will give you tips on how to solve it using the tools presented in this presentation.
The presentation is designed for people who want to become more data driven and less emotional in the way they manage money and make decisions related to money. Thanks to the presentation you will be making better decisions and you will learn techniques that will help you faster build your wealth. In the presentation you will learn 6 main things:
1. How to spend less money
2. How to make sure that you spend money on the right things
3. How to be more productive, work faster and more efficiently
4. How to earn more money
5. How to generate additional revenue streams
6. How to invest wisely your money
You can find more in my course: http://bit.ly/PersonalFinanceHacks

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Personal Finance using Management Consulting Hacks

  1. 1. 1 Personal Finance using Management Consulting Hacks Practical guide with case studies & real-life examples
  2. 2. 2 A lot of people spend almost everything they earn, live on borrowed money and struggle to make ends meet. This happens regardless of how much you earn.
  3. 3. 3 This situation can be changed. You can start gradually building your wealth by applying simple hacks that will help you spend less, earn more and be more productive
  4. 4. 4 I will show you how to build your wealth gradually using Management Consulting Hacks. Management Consultants are famous for the rational approach and efficiency
  5. 5. 5 In this course I will teach you Management Consulting Hacks using easy to understand useful case studies and real life examples.
  6. 6. 6 In business you have to make a lot of important decisions Thanks to this hacks, techniques and tools it will be much easier for you to spend less, earn more and be much more productive
  7. 7. 7 Personal Finance using Management Consulting Hacks $190 $19 What you will see in this presentation is a part of my online course where you can find case studies showing analyses along with detailed calculations in Excel Click here to check my course
  8. 8. 8 How the presentation is organized
  9. 9. 9 We have divided the course into 7 parts. Each part contains useful Management Consulting Hacks that will help you improve your personal finance
  10. 10. 10 Be more productive – How to do the right things Be more productive – How to work faster How to spend less Additional revenue streams How much money you actually need? How to earn more How to invest wisely your money
  11. 11. 11 General framework for personal finance
  12. 12. 12 Building wealth can be boil down to 3 things Income Expenses Savings=- Savings x # of years = Total savings Total savings x 1 + increase in value in % = Total wealth
  13. 13. 13 Let’s have a look at the general framework that we will use in this course How to build your wealth Earn more Spend less Be more productive Add new revenue streams Invest wisely your money Choose your life partners wisely Manage your kids properly
  14. 14. 14 In every section we will go deeper into things you can do. Below example for ideas how to spend less How to build your wealth Earn more Spend less Be more productive Add new revenue streams Invest wisely your money Choose your life partners wisely Manage your kids properly Reduce usage / frequency of using / purchasing Eliminate some expenses Renegotiate prices & find cheaper provider Calculate Total Cost of Ownership (TCO) Adjust your choices and behavior using TCO & tradeoffs Be healthy & in shape Calculate the value of your time Do make it or buy it analysis using value of your time Measure happiness per 100 USD spent & adjust your choices Reduce expensive liabilities Repurpose assets that don’t generate income Check the end outcome of things and is it worth it
  15. 15. 15 Spend less
  16. 16. 16 Spend less – Introduction
  17. 17. 17 In this section we will discuss useful ways that will help you spend less and save more money General framework for spending less Analysis of your expenses / spending Detailed discussion of methods to spend less Cases studies & examples how to apply them Other useful things that will help you spend less & save money
  18. 18. 18 General framework for spending less
  19. 19. 19 As you may remember we have the following general framework How to build your wealth Earn more Spend less Be more productive Add new revenue streams Invest wisely your money Choose your life partners wisely Manage your kids properly
  20. 20. 20 In this section we will get deeper into ways to spend less How to build your wealth Earn more Spend less Be more productive Add new revenue streams Invest wisely your money Choose your life partners wisely Manage your kids properly Reduce usage / frequency of using / purchasing Eliminate some expenses Renegotiate prices & find cheaper provider Calculate Total Cost of Ownership (TCO) Adjust your choices and behavior using TCO & tradeoffs Be healthy & in shape Calculate the value of your time Do make it or buy it analysis using value of your time Measure happiness per 100 USD spent & adjust your choices Reduce expensive liabilities Repurpose assets that don’t generate income Check the endgame of an action and is it worth it
  21. 21. 21 Why you need data on what you spend your money?
  22. 22. 22 What gets measured gets managed Peter Drucker
  23. 23. 23 There are plenty of reasons why you have to first see on what you spend currently your money You will know how much money you spend every month You will see what is the structure of your costs You will be able to identify so called one-offs You can set priorities You will know which categories you will have to analyze in details Awareness helps you already spend less You can set daily limits that will help you get quick wins You will know which habits / believes you will have to deal with
  24. 24. 24 How to get data on how you spend your money
  25. 25. 25 Let’s start with the goal. You want to see on what categories you spend money and how much they make in your monthly spending
  26. 26. 26 There are 4 approaches to gather data on how much you spend and on what Fill in data in Excel by categories Fill in data in Excel – every spending a separate entry Use data from your bank account  You create a matrix in Excel – the rows are categories, the columns are months  Manually you put data every time you spend them in the proper cell  You create a table in which you put every spending.  Every spending is a separate row  For every spending you put not only the amount but also the date of the spending and you pick the category  You can use the table to create all sort of reports  You can either do the analysis directly in your banking system by adding to every spending the category of spending  You can also download the data from the banking system and analyze them in Excel Other specialized tools for analyzing your spending  Mobile apps like: Mint, Pocket Guard, YNAB  Other similar tools that aggregate your data from different banking account and the data that you put in manually
  27. 27. 27 There are 4 approaches to gather data on how much you spend and on what Fill in data in Excel by categories Fill in data in Excel – every spending a separate entry Use data from your bank account  You create a matrix in Excel – the rows are categories, the columns are months  Manually you put data every time you spend them in the proper cell  You create a table in which you put every spending.  Every spending is a separate row  For every spending you put not only the amount but also the date of the spending and you pick the category  You can use the table to create all sort of reports  You can either do the analysis directly in your banking system by adding to every spending the category of spending  You can also download the data from the banking system and analyze them in Excel Other specialized tools for analyzing your spending  Mobile apps like: Mint, Pocket Guard, YNAB  Other similar tools that aggregate your data from different banking account and the data that you put in manually
  28. 28. 28 The fist method would look roughly like this in practice
  29. 29. 29 The second method would look roughly like this in practice Date Amount spend In USD Reason Month Category 01/06/2019 400Mortgage 6Flat related expenses 01/06/2019 100 Fees for the appartment 6Flat related expenses 01/06/2019 50Electricity 6Flat related expenses 01/06/2019 12Netflix 6Entertainment 01/06/2019 40Internet + HBO 6Entertainment 01/06/2019 30Phone 6Phone 03/06/2019 15Bachata 6Sport 10/06/2019 15Bachata 6Sport 17/06/2019 15Bachata 6Sport 24/06/2019 15Bachata 6Sport 04/06/2019 80Groceries 6Daily expenses 11/06/2019 60Groceries 6Daily expenses 18/06/2019 70Groceries 6Daily expenses 25/06/2019 90Groceries 6Daily expenses 03/06/2019 25Lunch outside 6Dinning out 04/06/2019 25Lunch outside 6Dinning out 05/06/2019 25Lunch outside 6Dinning out 06/06/2019 25Lunch outside 6Dinning out 07/06/2019 30Lunch outside 6Dinning out 10/06/2019 25Lunch outside 6Dinning out 11/06/2019 25Lunch outside 6Dinning out 12/06/2019 20Lunch outside 6Dinning out 13/06/2019 25Lunch outside 6Dinning out 14/06/2019 25Lunch outside 6Dinning out 17/06/2019 30Lunch outside 6Dinning out 18/06/2019 25Lunch outside 6Dinning out
  30. 30. 30 There are 4 approaches to gather data on how much you spend and on what Fill in data in Excel by categories Fill in data in Excel – every spending a separate entry Use data from your bank account Other specialized tools for analyzing your spending
  31. 31. 31 Reduce usage / frequency of using
  32. 32. 32 Just as reminder reducing usage is one of the ways in which we can spend less. Now we will talk about this in details How to build your wealth Earn more Spend less Be more productive Add new revenue streams Invest wisely your money Choose your life partners wisely Manage your kids properly Reduce usage / frequency of using / purchasing Eliminate some expenses Renegotiate prices & find cheaper provider Calculate Total Cost of Ownership (TCO) Adjust your choices and behavior using TCO & tradeoffs Be healthy & in shape Calculate the value of your time Do make it or buy it analysis using value of your time Measure happiness per 100 USD spent & adjust your choices Reduce expensive liabilities Repurpose assets that don’t generate income Check the end outcome of things and is it worth it
  33. 33. 33 To show you how important this technique is I will do the following 3 things in the next few lectures Cases study showing reduction of frequency of usage Cases study showing reduction of frequency of purchasing How to identify which expenses are worth reducing
  34. 34. 34 Check the details of the cases in my online course Reduce how often you do something per month Reduce how often you replace something Click here to check my course
  35. 35. 35 How to identify which expenses are worth reducing
  36. 36. 36 As we said we have 2 cases Reduce how often you do something per month Reduce how often you replace something  We reduce how often we do something  In this way we reduce the overall all expenses  This techniques is great for things that are cheap, but we do them very often: coffee, parties, Uber / taxi etc.  We reduce the frequency of purchase  In other words we extend the time of usage of specific thing  It’s great for SMCG / items used for longer period: clothes, cars, laptops, smartphones, furniture etc.
  37. 37. 37 Get the low hanging fruits first. By low hanging fruits we mean things with big impact and easy to accomplish
  38. 38. 38 Resources needed Impact SmallBig High Low  Things with big impact that require little work 1  Easy but with low impact 3  Things with big impact yet expensive, time consuming 2 No In low hanging fruits we divide the potential choices in 4 categories
  39. 39. 39 As we said we have 2 cases Reduce how often you do something per month Reduce how often you replace something
  40. 40. 40 Let’s see how the low hanging fruit framework would look for the first category Reduce how often you do something per month Reduce how often you replace something
  41. 41. 41 12 4 3 Frequency of doing something during the month High Low % in total expenses HighLow Lunch outside In the case of the reducing frequency of usage the low hanging fruit method looks like this. Below how it would look for Giuseppe Coffee Mortgage Uber / Taxi / Cab Dinner with Girlfriend Netflix Cinema
  42. 42. 42 Let’s see how the low hanging fruit framework would look for the second category Reduce how often you do something per month Reduce how often you replace something
  43. 43. 43 12 4 3 # of years between purchase Low High How high is the cost / price HighLow Renovating the flat Below how it would look for Maria Clothes Domestic appliances Smartphone & Laptop
  44. 44. 44 Eliminate some expenses
  45. 45. 45 Just as reminder eliminating some expenses is one of the ways in which we can spend less. Now we will talk about this in details How to build your wealth Earn more Spend less Be more productive Add new revenue streams Invest wisely your money Choose your life partners wisely Manage your kids properly Reduce usage / frequency of using / purchasing Eliminate some expenses Renegotiate prices & find cheaper provider Calculate Total Cost of Ownership (TCO) Adjust your choices and behavior using TCO & tradeoffs Be healthy & in shape Calculate the value of your time Do make it or buy it analysis using value of your time Measure happiness per 100 USD spent & adjust your choices Reduce expensive liabilities Repurpose assets that don’t generate income Check the end outcome of things and is it worth it
  46. 46. 46 We will start by discussing how to identify which expenses are worth eliminating. Later on as always we will move on to case studies How to identify which expenses are worth eliminating Cases study showing elimation of some expense
  47. 47. 47 How to identify which expenses that are worth eliminating
  48. 48. 48 There are 3 main reasons why you should eliminate certain expenses Eliminate things you don’t use Eliminate things you don’t enjoy  There is no point in paying for something that you don’t use  There is no point in paying for something that you don’t enjoy  In this category you will have all sorts of products that you buy due to social pressure or to show-off Eliminate things that are harmful  Don’t pay for things that are harming you  It doesn’t make sense to pay for pain or things that will cause a lot of trouble in the future
  49. 49. 49 Renegotiate prices & find cheaper provider
  50. 50. 50 Another great thing that you can use to spend is less is simply to look at the prices you pay and change them How to build your wealth Earn more Spend less Be more productive Add new revenue streams Invest wisely your money Choose your life partners wisely Manage your kids properly Reduce usage / frequency of using / purchasing Eliminate some expenses Renegotiate prices & find cheaper provider Calculate Total Cost of Ownership (TCO) Adjust your choices and behavior using TCO & tradeoffs Be healthy & in shape Calculate the value of your time Do make it or buy it analysis using value of your time Measure happiness per 100 USD spent & adjust your choices Reduce expensive liabilities Repurpose assets that don’t generate income Check the end outcome of things and is it worth it
  51. 51. 51 We will start with a general framework and later I will show you in practice how to deal with this subject Approach to renegotiation of prices & finding cheaper providers Cases study showing how to do it in practice
  52. 52. 52 Renegotiate prices & find cheaper provider
  53. 53. 53 Below a nice approach that is useful when it comes to cutting down on prices paid List categories of costs that you incur Estimate annual expenses for every category Estimate roughly the potential in percentage that you can save Prepare action plan for every saving Act using the action plan you have defined
  54. 54. 54 Total cost of ownership – Introduction
  55. 55. 55 Now we will move to a bit more complicated issue the Total Cost of Ownership How to build your wealth Earn more Spend less Be more productive Add new revenue streams Invest wisely your money Choose your life partners wisely Manage your kids properly Reduce usage / frequency of using / purchasing Eliminate some expenses Renegotiate prices & find cheaper provider Calculate Total Cost of Ownership (TCO) Adjust your choices and behavior using TCO & tradeoffs Be healthy & in shape Calculate the value of your time Do make it or buy it analysis using value of your time Measure happiness per 100 USD spent & adjust your choices Reduce expensive liabilities Repurpose assets that don’t generate income Check the end outcome of things and is it worth it
  56. 56. 56 We will start with a definition and later on I will show you a case study that will use the concept of total cost of ownership Definition of the Total Cost of Ownership Cases study using Total Cost of Ownership
  57. 57. 57 The case study will be devoted to trying to decide whether it’s better to own a flat or rent it Rent or buy a flat
  58. 58. 58 Total cost of ownership
  59. 59. 59  All the cost related to owning or using a specific item / thing  It will also include the cost of lost opportunity i.e. money not earned due to spending time on repairing the thing Total cost of ownership = Let’s start with a short definition
  60. 60. 60  Cost of buying a car  Insurance  Fuel  Cost of maintenance including repairs & parts  Time wasted on maintenance, parking etc.  Other i.e. parking tickets, traffic ticket etc. Let’s compare the cost of owing a car and using a rideshare / taxi / cab service  Cost of rideshares
  61. 61. 61 Rent or buy an apartment / flat – Introduction
  62. 62. 62 Let’s imagine that Peter is considering 2 choice: buying an apartment or renting it. Let’s use the total cost of ownership to see what makes sense.
  63. 63. 63 Let’s have a look at the information that Peter has Buying the apartment would require EUR 150 K Renting cost EUR 600 per month Interest rate is 3%, inflation 2%, Wage increase is 5% Peter currently earns EUR 30 per hour
  64. 64. 64 Personal Finance using Management Consulting Hacks $190 $19 For more details and content check my online course where you can find case studies showing analyses along with detailed calculations in Excel Click here to check my course
  65. 65. 65 Adjust your behavior using Total Costs of Ownership & tradeoffs
  66. 66. 66 There are plenty of areas in which you can apply the Total Cost of Ownership framework Choice of flat & the way you finance it Choice of car Holiday house vs paid holidays Own boat vs rented boat Choice of printer or printing service Choice of razors Choice of cosmetic / beauty procedure Choice of smartphone Choice of domestic appliance Car vs Scooter vs Bike Many, many more
  67. 67. 67 Be healthy & stay in shape
  68. 68. 68 Staying in shape can help you drastically reduce your expenses. Here we have both direct as well as indirect impact
  69. 69. 69 Below some of the benefits of staying in shape & healthy You spend less on food You spend less time on buying and preparing food You don’t have to exchange your clothes that often You spend drastically less on health related issues You spend less time with doctors / hospitals You are more productive and have more time to work Your example will impact your kids and they will be less costly for you
  70. 70. 70 To show you how important it is and how to do it in practice we will do 3 case studies and we will talk about 2 useful frameworks Costs comparison How to o lose weight – case study How to get into shape using – case study Low hanging fruit framework SMART goals
  71. 71. 71 How to lose weight – Case Introduction
  72. 72. 72 Imagine that you want to help Kate lose weight. Use the low hanging fruit approach to map all the potential solutions. First list activities
  73. 73. 73 How to lose weight – List of potential activities
  74. 74. 74 Just as a reminder you were supposed to help Kate lose weight. The first step is to list all potential activities that can help her achieve the goal
  75. 75. 75 Let’s first list all potential ideas Cut down on sweets by 50% Buy special meal kit / box diet Run 2 times a week for 30 minutes Walk every day 15 K steps Hire personal trainer / coach Measure calories intake Do intermittent fasting Stop eating carbs / carbohydrates Eat 2 kg of vegetables every day Give up sweet beverages Start drinking green tea Drink 4 liters of water every day 15 minutes of daily exercises Plastic surgery
  76. 76. 76 1 Now try to map all ideas on the low hanging fruit matrix 2 4 3 Impact High Low Difficulty level LowHigh
  77. 77. 77 How to lose weight – Solution
  78. 78. 78 Just as a reminder you were supposed to help Kate lose weight. We have the list let’s try to put the on the map and identify low hanging fruits
  79. 79. 79 Let’s first list all potential ideas Cut down on sweets by 50% Buy special meal kit / box diet Run 2 times a week for 30 minutes Walk every day 15 K steps Hire personal trainer / coach Measure calories intake Do Intermittent fasting Stop eating carbs / carbohydrates Eat 2 kg of vegetables every day Give up sweet beverages Start drinking green tea Drink 4 liters of water every day 15 minutes of daily exercises Plastic surgery
  80. 80. 80 1 Let’s map all ideas on the low hanging fruits matrix 2 4 3 Impact High Low Difficulty level LowHigh Cut down on sweets by 50% Buy special meal kit / box diet Run 2 times a week for 30 minutes Walk every day 15 K steps Eat 2 kg of vegetables every day Start drinking green tea 15 minutes of daily exercises Hire personal trainer / coach Measure calories intake Do Intermittent fasting Stop eating carbs / carbohydrates Give up sweet beverages Drink 4 liters of water every day Plastic surgery
  81. 81. 81 How to get in shape – Introduction
  82. 82. 82 Let’s help Tom get in shape by using the SMART goal framework. Help him achieve his goals in 9 months
  83. 83. 83 Let’s first define the goals in the SMART framework Tom weighs 110 kg. He wants to lose 30 kg in 6 months He can currently lift 30 kg. He wants to reach 60 kg He can currently run for 2 minutes at speed 7 min/km We wants to run for 30 minutes at the speed 5 min/km
  84. 84. 84 Calculate the value of your time
  85. 85. 85 Whether you clean, cook, wait in the line you are effectively using your precious resource that is also limited – the time
  86. 86. 86 Time like money is limited and you can exchange between each other Time Money
  87. 87. 87 Calculating the value of your time is a next step that will help you save money How to build your wealth Earn more Spend less Be more productive Add new revenue streams Invest wisely your money Choose your life partners wisely Manage your kids properly Reduce usage / frequency of using / purchasing Eliminate some expenses Renegotiate prices & find cheaper provider Calculate Total Cost of Ownership (TCO) Adjust your choices and behavior using TCO & tradeoffs Be healthy & in shape Calculate the value of your time Do make it or buy it analysis using value of your time Measure happiness per 100 USD spent & adjust your choices Reduce expensive liabilities Repurpose assets that don’t generate income Check the end outcome of things and is it worth it
  88. 88. 88 Calculating the value of your time is a next step that will help you save money How to build your wealth Earn more Spend less Be more productive Add new revenue streams Invest wisely your money Choose your life partners wisely Manage your kids properly Reduce usage / frequency of using / purchasing Eliminate some expenses Renegotiate prices & find cheaper provider Calculate Total Cost of Ownership (TCO) Adjust your choices and behavior using TCO & tradeoffs Be healthy & in shape Calculate the value of your time Do make it or buy it analysis using value of your time Measure happiness per 100 USD spent & adjust your choices Reduce expensive liabilities Repurpose assets that don’t generate income Check the end outcome of things and is it worth it
  89. 89. 89 Whenever we are looking at a activity there will be 2 components. We calculate the value of time to know the tradeoffs and be able to compare Activity Money Time Preparing a meal $ 5 1 hour $ 5 $ 20 $ 25 Eating a meal at restaurant $ 30 0.5 hour $ 30 $ 10 $ 40
  90. 90. 90 Now let’s see how you calculate the value of time # of hours devoted to activity x Hourly wage / salary net of taxes = Value of 1 hour expressed in money
  91. 91. 91 Calculate the value of time – Case Introduction
  92. 92. 92 Let’s imagine that you want to help Maria use her time wisely. Therefore, you want to show how much she invest in daily things expressed in money
  93. 93. 93 There are a few things that we know about Maria She earns EUR 40 per 1 hour after deducting taxes She cooks every day. It takes 1 hour to prepare a meal She cleans the house every week. It takes 4 hours to clean She shops every second day. It takes her 1.5 hours per 1 visit
  94. 94. 94 How to use the value of your time to make decisions?
  95. 95. 95 You can use the value of time for 3 things Make-or-buy analysis Spend less  You can use the value of time to do the so called make it or buy it analysis  In make-or-buy analysis you try to see what makes sense: to do something on your own (i.e. cleaning) or to delegate this to somebody else, buy the service or product  In some cases you may decide to do something on your own even though the price of buying it is lower than the value of time you devote to it  You do it when you are stranded for cash, but you have time that you can use to do some tasks to save cash Earn more  In cases when you can turn your time into more money you can use the result of the make-or-buy analysis and decide to delegate some things to other people / firms  The saved time you should put to working more / earning more to be able to pay to the supplier of services / products that you decided not to do
  96. 96. 96 In a sense you can use the following criteria to decide what to do Make-or-buy analysis Is the price lower than the value of your time? Do you need the cash Can you turn additional time into additional money YES Do the thing on your own NO YES Buy the thing and start working more Do the thing on your own YES NO Decide using other criteria i.e. happiness NO
  97. 97. 97 Do make it or buy it analysis using value of your time
  98. 98. 98 As we have suggested you should use the value of your time to decide whether you should do something personally or you should buy it /delegate it How to build your wealth Earn more Spend less Be more productive Add new revenue streams Invest wisely your money Choose your life partners wisely Manage your kids properly Reduce usage / frequency of using / purchasing Eliminate some expenses Renegotiate prices & find cheaper provider Calculate Total Cost of Ownership (TCO) Adjust your choices and behavior using TCO & tradeoffs Be healthy & in shape Calculate the value of your time Do make it or buy it analysis using value of your time Measure happiness per 100 USD spent & adjust your choices Reduce expensive liabilities Repurpose assets that don’t generate income Check the end outcome of things and is it worth it
  99. 99. 99 I have mentioned that you should follow an easy rule to decide what you do and what you don’t do yourself Make-or-buy analysis Is the price lower than the value of your time Do you need the cash Can you turn additional time into additional money YES Do the thing on your own NO YES Buy the thing and start working more Do the thing on your own YES NO Decide using other criteria i.e. happiness NO
  100. 100. 100 Check my online course for details on the case studies Should Maria delegate some of her everyday work? Car vs Uber Click here to check my course
  101. 101. 101 Car vs Uber – Introduction
  102. 102. 102 Let’s imagine that you were to decided whether it makes more sense to buy a car or to use Uber
  103. 103. 103 We will consider 3 scenarios Consider 3 scenarios In scenario 1 you use the car just to get to work In scenario 2 you use it also for buying and visiting friends In scenario 3 you also travel on weekends
  104. 104. 104 Let’s see what is the difference for # of days during which you use the car during the month Scenario 1 - just to get to work  20 Average # of km per day covered  50 Scenario 2 - work, shopping, friends  26  70 Scenario 3 - work, shopping, friends, weekends  30  90 % probability of scenario  50%  30%  20%
  105. 105. 105 A few hints on what costs you should take into consideration for the own car option Purchasing of the car & financing Maintenance Insurance Fuel Parking Other costs i.e. traffic tickets
  106. 106. 106 Measure happiness per 100 USD spent & adjust your choices
  107. 107. 107 Now we will move to spending efficiency. This time the efficiency we will measure in happiness level per 100 USD spent How to build your wealth Earn more Spend less Be more productive Add new revenue streams Invest wisely your money Choose your life partners wisely Manage your kids properly Reduce usage / frequency of using / purchasing Eliminate some expenses Renegotiate prices & find cheaper provider Calculate Total Cost of Ownership (TCO) Adjust your choices and behavior using TCO & tradeoffs Be healthy & in shape Calculate the value of your time Do make it or buy it analysis using value of your time Measure happiness per 100 USD spent & adjust your choices Reduce expensive liabilities Repurpose assets that don’t generate income Check the end outcome of things and is it worth it
  108. 108. 108 Let’s have a look at a short example that will exemplify what we have in mind Activity Cost Duration Happiness Book $ 10 5 hour Cinema $ 10 2 hour Happiness level for 100 USD $ 100 50 hour $ 100 20 hour
  109. 109. 109 You should group the activities and pick rather things that give you more happiness per 100 USD spend Entertainment Sport Your relations with friends Your relations with your girlfriend Your relations with family Food
  110. 110. 110 Reduce Liabilities / Debts / Loans
  111. 111. 111 Many people are stacked with expensive debts. You have to deal with them to reduce your overall expenses How to build your wealth Earn more Spend less Be more productive Add new revenue streams Invest wisely your money Choose your life partners wisely Manage your kids properly Reduce usage / frequency of using / purchasing Eliminate some expenses Renegotiate prices & find cheaper provider Calculate Total Cost of Ownership (TCO) Adjust your choices and behavior using TCO & tradeoffs Be healthy & in shape Calculate the value of your time Do make it or buy it analysis using value of your time Measure happiness per 100 USD spent & adjust your choices Reduce expensive liabilities Repurpose assets that don’t generate income Check the end outcome of things and is it worth it
  112. 112. 112 There are some golden rules that you should follow when it comes to debt reduction Pay first the most expensive debts Pay the expensive loans / debt as soon as possible Don’t loose liquidity. Be able to cover your payments in every period Increase the amount on the cheapest debt to pay off the more expensive debts Play with the length of the loan to be liquid in every period Play with the size of the loan to be liquid in every period
  113. 113. 113 Below a nice approach that is the most useful when it comes to reducing debts List all debts and interest paid on them Model each debt / loan in a separate sheet Check what is the cash gap and what you have to do it to cover it Check how much you can save by paying off the most expensive debt first Act using the action plan you have defined
  114. 114. 114 Reduce Liabilities – Case Introduction
  115. 115. 115 Let’s imagine that you have to help Adam and Eva deal with their debts. They want to lower the amount they spend on interest paid. Have a look at their debts
  116. 116. 116 A few information about Adam and Eva They earn in total EUR 6 000 They can save up to 20% They have 3 loans: mortgage, credit card and car loan Try to help them restructure their debt
  117. 117. 117 Repurpose assets that don't generate income
  118. 118. 118 Another step you can take is to repurpose assets that don’t generate income How to build your wealth Earn more Spend less Be more productive Add new revenue streams Invest wisely your money Choose your life partners wisely Manage your kids properly Reduce usage / frequency of using / purchasing Eliminate some expenses Renegotiate prices & find cheaper provider Calculate Total Cost of Ownership (TCO) Adjust your choices and behavior using TCO & tradeoffs Be healthy & in shape Calculate the value of your time Do make it or buy it analysis using value of your time Measure happiness per 100 USD spent & adjust your choices Reduce expensive liabilities Repurpose assets that don’t generate income Check the end outcome of things and is it worth it
  119. 119. 119 Let’s first start by dividing our assets into 4 groups YES Do we use the assets currently? Useful & valuable  You use them currently – so they don’t generate cash.  This asset value will increase with the time so don’t sell it – keep it!  Try to make this group as small as possible Potential investment that can generate cash today  Keep them provided you don’t have to repay your debts  Try to generate cash from them Not used & losing value  Sell them  If selling is not possible rent them to generate some cash Useful & losing value  Don’t buy too much of those  Use them as much as possible  Try to make this group as small as possible NO Not-used Used Does its value increase with time?
  120. 120. 120 Let’s have a look at some examples YES Do we use the assets currently? Useful & valuable  Our first flat / apartment that is located in the center Potential investment that can generate cash today  Second flat / apartment located in the center  Summer house  Books that are no-longer printed  Jewelry Not used & losing value  Clothes that we hardly ever wear  Second laptop or second iPhone  Second flat located in a town which population is decreasing  Car we hardly every use Useful & losing value  Car that we use to go to work  Clothes we wear  Our smartphone that we use daily NO Not-used Used Does its value increase with time?
  121. 121. 121 Below the approach we propose to handling the assets Divide the assets into 4 groups Sell assets that you are not using and that are losing value Rent the rest of assets that you are not using Try to minimize the assets you use Rent bigger part of the assets you are not using
  122. 122. 122 Repurpose assets – Case Introduction
  123. 123. 123 Tomasz & Monika married 5 years ago and they have decided with his wife to go through their assets and put them to use. Help them with this task
  124. 124. 124 A few things we know about Tomasz & his wife Monika They have has 2 cars. Monika uses her car once every 2 weeks They have 2 small apartments and 1 big apartment. One of the small apartment is filled with their old clothes In the second apartment they rent just 1 room out of 2
  125. 125. 125 Below a detailed list of their main assets Old clothes Tomasz’s car Monika’s car Small Apartment 1 2 toaster 3 vacuum cleaners Books from the beginning of 20th century 2 old laptops Small Apartment 2 4 old smartphones Big Apartment Land in the village with one of the highest unemployment rate in Poland
  126. 126. 126 YESNO Not- used Used Do we use the assets currently? Does its value increase with time? Useful & valuable Potential investment that can generate cash today Not used & losing value Useful & losing value Try to map them using our framework. Divided them in 4 groups
  127. 127. 127 Repurpose assets – Assets mapping
  128. 128. 128 Just as a reminder you were supposed to help Tomasz and his wife to go through their assets and put them to use. First you had to divide into 4 groups
  129. 129. 129 A few things we know about Tomasz & his wife Monika They have has 2 cars. Monika uses her car once every 2 weeks They have 2 small apartments and 1 big apartment. One of the small apartment is filled with their old clothes In the second apartment they rent just 1 room out of 2
  130. 130. 130 Below all detailed list of their main assets we got from them Old clothes Tomasz’s car Monika’s car Small Apartment 1 2 toaster 3 vacuum cleaners Books from the beginning of 20th century 2 old laptops Small Apartment 2 4 old smartphones Big Apartment Land in the village with one of the highest unemployment rate in Poland
  131. 131. 131 YESNO Not- used Used Do we use the assets for currently Does its value increase with time? Useful & valuable Potential investment that can generate cash todayNot used & losing value Useful & losing value We can divide their assets in the following way Old clothes Tomasz’s car Monika’s car Small Apartment 1 Small Apartment 2 Big Apartment 1 toaster 1 vacuum cleaners Books from the beginning of 20th century 1 toaster 2 vacuum cleaners 2 old laptops 4 old smartphones Land in the village
  132. 132. 132 Check the endgame
  133. 133. 133 The last thing worth considering that will help you spend less is to check the end outcome before investing How to build your wealth Earn more Spend less Be more productive Add new revenue streams Invest wisely your money Choose your life partners wisely Manage your kids properly Reduce usage / frequency of using / purchasing Eliminate some expenses Renegotiate prices & find cheaper provider Calculate Total Cost of Ownership (TCO) Adjust your choices and behavior using TCO & tradeoffs Be healthy & in shape Calculate the value of your time Do make it or buy it analysis using value of your time Measure happiness per 100 USD spent & adjust your choices Reduce expensive liabilities Repurpose assets that don’t generate income Check the endgame of something and whether it is worth it
  134. 134. 134 In those situation usually you must spend significant amount of money in advance. The outcome may be small.. Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
  135. 135. 135 …medium… Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
  136. 136. 136 …or great. Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
  137. 137. 137 There are plenty of situation that this approach is extremely important Education Buying a car Buying a flat / house Investing in a certificate Startup investment Stock investment Moving to a new place Changing your career path
  138. 138. 138 Check the online course for details on the case study and calculation in Excel Should George do the MBA? Click here to check my course
  139. 139. 139 Personal Finance using Management Consulting Hacks $190 $19 For more details and content check my online course where you can find case studies showing analyses along with detailed calculations in Excel Click here to check my course
  140. 140. 140 Be more productive
  141. 141. 141 Be more productive – Introduction
  142. 142. 142 The key to growing your wealth is to be more productive. In other words to do more valuable output, more efficiently and most of all do the right things
  143. 143. 143 We have covered methods to spend less. Now it’s time to have a look at productivity How to build your wealth Earn more Spend less Be more productive Add new revenue streams Invest wisely your money Choose your life partners wisely Manage your kids properly
  144. 144. 144 Check our presentation on productivity hacks to learn how to 10x your efficiency Management consultant productivity hacks How to be lazy and still get things done presentation
  145. 145. 145 Earn more
  146. 146. 146 General framework for earning more
  147. 147. 147 In this section we will get deeper into ways to earn more How to build your wealth Earn more Spend less Be more productive Add new revenue streams Invest wisely your money Choose your life partners wisely Manage your kids properly Be more productive Acquire new skills & knowledge Deliver value Demonstrate that you have delivered the value Ask for a raise Change the way you are getting your money Befriend people within the firm Network outside the firm Get promoted Move from one firm to another Get more hours Change your career path to a more promising one
  148. 148. 148 Be more productive
  149. 149. 149 The first step to earning more is simply to be more productive. This is the cornerstone for all other moves. First take care of that
  150. 150. 150 When it comes to the most useful personal productivity hacks they can be divided into 2 groups Select (do the right things) Work faster
  151. 151. 151 When it comes to doing the right things are few simple rules / tools that you can use 80/20 rule Go from general to specific Use simple math Go for low hanging fruit Right down issue trees Use benchmarksSet priorities
  152. 152. 152 Working faster requires you to do some changes in the way you work Create to-do lists Set SMART goals Use the right tools and master them Remove bottlenecks Talk and write in a simple way Create universal structure for folders Avoid emailsAvoid multitasking Standardize everything Create templates and modules Avoid iterations Guess and prepare ahead
  153. 153. 153 Acquire new skills & knowledge
  154. 154. 154 New skills & knowledge are extremely important for variety of reasons Can help you do you work faster / do more or better work You can be able to do more valuable things for the firm Signaling effect of new skills & knowledge New skills can help you change the rules of the game i.e. automate work Thanks to new skills / knowledge you may be able to better cooperate with other departments If the skills / knowledge you have just acquired does not exist in the firm you became the main expert Some skills are required on a specific position
  155. 155. 155 Check the following case studies in the course Compound effect Case study – Ann improving her reading speed Click here to check my course
  156. 156. 156 Deliver value
  157. 157. 157 Delivering value is extremely important and unfortunately difficult You The firm Value Money
  158. 158. 158 The value may have different forms. No matter what it is make sure you are delivering it Physical product (i.e. produce part of the finished product, tool, building, machine) Digital product (i.e. create post, video, manual, tool, software) Service (i.e. analyze something, count, transport, give advice, train people) Generate sales Status / Show off effect Other (i.e. provide a different point of view) Bring new customers
  159. 159. 159 Deliver value – the Process
  160. 160. 160 Below the approach to deliver value Figure out who decides about the value Define with him what value for him and the firm is Define the KPIs to measure the output & quality of the value Learn how often and how the value will be measured Define what to do to deliver more value
  161. 161. 161 Let’s have a look at an example of a sales representative Figure out who decides about the value Define with him what value for him and the firm is Define the KPIs to measure the output & quality of the value Learn how often and how the value will be measured Define what to do to deliver more value  Sales Director  Revenue generated by the customers assigned to the specific sales rep  Gross Margin generated by the customers assigned to the specific sales rep  Gross Margin value expressed in thousands of EUR  % Plan execution of Gross margin  Payment terms expressed in days  Monthly  Measured by the Finance department  Improve the acquisition of new customers  Create tools that would shorten the visit at the customers  Organized the routes in a more optimal way
  162. 162. 162 Demonstrate that you have delivered the value
  163. 163. 163 Famous philosopher Kierkegaard wondered what sound makes the tree when it falls in an empty forest.
  164. 164. 164 He came to the conclusion that it doesn’t matter. If there is no observer, the tree doesn’t matter. It doesn’t exist
  165. 165. 165 Only the presence of the observer makes something real. The same goes for the value you deliver. If nobody knows about it – it does not exist
  166. 166. 166 A few tips what to do to demonstrate the value Pick the right boss Define with your boss the value that you have to deliver Define & track the KPIs for the value Make yourself and the value you create visible (i.e. participate in rankings) Participate in projects that will help you highlight the value you create Create things that will be used by a large number of people in the firm Discuss your progress in value creation with your boss Create things that will be used by the most important decision makers
  167. 167. 167 Ask for a raise
  168. 168. 168 One day the lion – the king of all animals have gathered them in the forest and told them that he is very annoyed with the current situation.
  169. 169. 169 Therefore, he has prepared a list of animals that he will eat.
  170. 170. 170 The rabbit came and asked him if he was on the list. The lion confirmed that and told him to say goodbye to his family
  171. 171. 171 Next came the dear and got the same answer. Animals came and went and almost all of them got the same answer from the king. Prepare to die – you will be eaten.
  172. 172. 172 At some point came the Fox. He asked the Lion the same question. The Lion told him that he is also on the list.
  173. 173. 173 At this point the Fox did something no other animal dared to do
  174. 174. 174 He asked the Lion: ”Can you cross me off the list”. The Lion surprising said YES and cross him off the list. In this way the fox survived.
  175. 175. 175 Below the approach we propose to negotiating the raise Do you research Prepare you pitch – why you deserve the raise Prepare the ground for the discussion about the raise Meet with your boss and be persistent Don’t overdo it  Check what is the level of salaries in your department, the firm on similar positions and on the market  Check your performance against others  Check what is the financial situation of the whole firm  Prepare on the basis of the research the reasons why you should get the raise  Such reasons include: your much higher performance, your salary is much lower than on similar positions, you are delivering new value to the firm  Don’t ambush the boss  Ask him for a special meeting to discuss your salary  Make sure that around the point of discussion you are creating a lot of value and your boss is aware of that  Meet with the boss and present your pitch – why you should get a raise and what amount of money you have in mind  Make it clear that you are happy with the work regardless of your salary  Make sure that he agrees that you are delivering high value and you are relatively underpaid  If he doesn’t agree for a raise ask under what conditions and when you can get it  Don’t try to get too big a raise – this may put you in danger if your performance is a little bit lower or the firm has problems  Don’t ask for a raise too often. Once a year, especially around the performance review is a good rule of thumb
  176. 176. 176 Change the way you are getting your money
  177. 177. 177 Another way to earn more is simply to change the way you earn money. Let’s consider 2 employees that are creating content 5 000 Peter John Base salary 5 000 168# hours they work a month 168 10# of posts they create a month 10 How they are paid By the hour By the # of posts
  178. 178. 178 Now let’s imagine that both of them increase their productivity by 50%. As you can see John earns much more 5 000 Peter John Base salary 7 500 168# hours they work a month 168 15# of posts they create a month 15 How they are paid By the hour By the # of posts 0% 50% 50% 50%
  179. 179. 179 Now let’s think when it makes sense to move from charging by the hour (effort) to charging by the output You can be much more productive than the average employee You enjoy working You don’t need that much socializing at the work place The output is easily observable by you and your employee The output is relatively standardized – there is little variance You are healthy and hardly ever experience things that can harm your output
  180. 180. 180 Befriend people within the firm
  181. 181. 181 Let’s see why it makes sense to befriend people at your firm People give more willingly raises to people that they like You are more likely to get a help from colleagues if they like you People talk & share information with colleagues that they like If they like you will have higher chances to participate in interesting projects Being likeable increases your chances of getting promoted If you are liked a decrease in your performance will be treated more lightly If you have more information & earlier you see the threats & opportunities
  182. 182. 182 Once we know why it is important to be liked let’s talk about how to achieve it Real work – delivering value Inefficiencies Before Real work – delivering value Inefficiencies After Help others
  183. 183. 183 Below the approach to befriending your colleagues Define how to help other and deliver value Allocate time for this activity Be proactive – ask to help people Help your colleagues As for help when you need it
  184. 184. 184 Network outside the firm
  185. 185. 185 Networking within your firm is not enough. You have to reach out to outside network as well. Below a few reasons why it is so important You can get new opportunities not available within your firm You can catch new, interesting trends earlier You can bring those trends to your firm and be perceived as an authority in this area You can learn new things They may offer you to participate in events, projects that will improve your personal brand You may get new interesting job offers
  186. 186. 186 Below the approach to networking outside your firm Pick the form of networking that is comfortable for you Allocate time for this activity Plan where to go and what to do Define KPIs for you networking activities Execute & track efficiency of you networking
  187. 187. 187 Get promoted
  188. 188. 188 Another way to earn more is simply to be promoted to a higher position Higher position in most cases means higher salary Higher position means more influence on the firm Higher position means more exposure to Board Members and the outside world At certain level you will be entitled to bonus schemes At higher positions you will benefit more from productivity gains If you change the company at higher position your salary gain will be usually bigger
  189. 189. 189 Below the approach to getting promoted Understand the career paths that exists in the firm Learn the requirements for getting promoted Understand the limitations Define with your boss what you have to do get promoted Execute & track your progress towards promotion  In many firms you have very limited number of positions directly above you that you can fill in  In many cases the promotion have to be done by moving to a different department or region  Not all firms have defined career paths  In many cases there are some informal rules i.e. director has to have at least certain number of years experience in specific department  Your promotion will depend on the gatekeepers  The most important of them is usually your direct boss or his boss  Huge importance in some firms play the HR Manager
  190. 190. 190 Get more hours
  191. 191. 191 As you may remember we said that you can work more by improving productivity. You can gain a lot also by eliminating chores at home Real work – delivering value Inefficiencies 168 hours Before Time spend on other chores at home Real work – delivering value Inefficiencies After Help others Time spend on other chores at home 40-60 hours
  192. 192. 192 In this way we can drastically increase the time for work Real work – delivering value Inefficiencies 168 hours Real work – delivering value Inefficiencies After Help others Before Time spend on other chores at home 40-60 hours Time spend on other chores at home Real work – delivering value Inefficiencies Remodel your life Help others Real work – delivering value
  193. 193. 193 Such drastic remodeling of your life makes sense for many reasons Specialization leads usually to efficiency jump You reach faster excellence level – the 10 thousand hours rule You can generate more cash You can deliver 2x-3x more output than your colleagues / competitors You reach the critical mass much faster You progress becomes more visible
  194. 194. 194 Change your career path to more promising
  195. 195. 195 In many cases you have the choice to stay on your career path….. Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
  196. 196. 196 ….or to change it to a more promising one Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
  197. 197. 197 Below some reasons why you should do it Your current job may stop existing You can gain much more if you change the career path You can apply part of your current experience on the new path You are bored with your current career path You find the new career path stimulating You want more flexibility that current career path does not offer
  198. 198. 198 Change your career path to a more promising one – Case Introduction
  199. 199. 199 Julia has finished History and currently works as a barista in a coffee shop. Help her decide whether it makes sense to change her career path.
  200. 200. 200 Below a few information about Julia She currently earns EUR 800 per month She can become a programmer and earn 50% more Requalifying would cost her EUR 4 000 As a programmer she would get 5% salary increase every year above what she can get now
  201. 201. 201 Personal Finance using Management Consulting Hacks $190 $19 For more details and content check my online course where you can find case studies showing analyses along with detailed calculations in Excel Click here to check my course
  202. 202. 202 Additional revenue streams
  203. 203. 203 Additional revenue streams – Introduction
  204. 204. 204 In this section we will discuss useful ways that will help you generate additional revenue streams General framework for additional revenue streams Detailed discussion of methods Cases studies & examples how to apply them in practice
  205. 205. 205 General framework for additional revenue streams
  206. 206. 206 In this section we will get deeper into ways to earn more How to build your wealth Earn more Spend less Be more productive Add new revenue streams Invest wisely your money Choose your life partners wisely Manage your kids properly Sell your services Exchange your time for something else (i.e. shares) Create assets & tools Sell or rent your assets & tools Create new revenue streams using your assets & tools Other (i.e. create new business)
  207. 207. 207 Sell your services
  208. 208. 208 In previous sections we said that thanks to better work and by doing make- or-buy analysis we can gain a lot of time Real work – delivering value Inefficiencies 168 hours Real work – delivering value Inefficiencies After Help others Before Time spend on other chores at home 40-60 hours Time spend on other chores at home Real work – delivering value Inefficiencies Remodel your life Help others Real work – delivering value
  209. 209. 209 You can also do with this time a lot of other things that will help you earn more money Real work – delivering value Inefficiencies 168 hours Real work – delivering value Inefficiencies After Help others Before Time spend on other chores at home 40-60 hours Time spend on other chores at home Real work – delivering value Inefficiencies Remodel your life Help others ?
  210. 210. 210 The additional time that we have gained by outsourcing some of the chores & improving productivity we can apply to the following areas Additional time Work more for the current employer Sell services to other firms Learn new things that will help you earn more Create Assets & Tools that you can sell / rent Create your own startup Work for other startups Other options i.e. network
  211. 211. 211 As you can see selling services is one of the alternatives to working more for the current employer Additional time Work more for the current employer Sell services to other firms Learn new things that will help me earn more Create Assets & Tools that I can sell / rent Create my own startup Work for other startups Other options i.e. network
  212. 212. 212 Let’s see when it may make sense to sell your services to other firms There is no conflict of interest There are no other legal barriers You have / you can acquire the skills needed There is an easy way to get customers Preferably there is a marketplace for those services The services can be delivered flexibly The service will not impact negatively you primary job You have necessary assets, tools to do the service You can earn more from the service The customer will pay you
  213. 213. 213 Sell your services – Examples
  214. 214. 214 Let’s have a look at some services that you can provide Transportation and related  Uber / Lyft  DoorDash / Postmates / Uber Eats  Lime / Bird  Instacart Requiring design / graphical skills  99designs  Fiverr  Dribbble  Guru Data gathering / inputting  UpWork  Freelancer Programming / Coding  UpWork  Freelancer  GitHub Jobs  People Per Hour  Toptal  Hired  Dice  Guru Other  TaskRabbit  Amazon Mechanical Turk
  215. 215. 215 Assets & Tools
  216. 216. 216 By Assets we mean things that you can create and later monetize in some way Physical assets i.e. house, garage Blog, posts, presentations Emailing List Movies YouTube channel with subscribers Online courses Books Patents Tools Others i.e. short music, photos
  217. 217. 217 Tools are special class of assets that needs more details. Let’s start with a short definition  Tools are assets that can solve a problem that the user has yet it requires certain input from the user  Tools can either automate some work done previously by the user or do work that previously the user couldn’t do by himself Tools =
  218. 218. 218 We have the following main groups of assets Provides internal data to users  Data on the rents in the city provided by Airbnb  Open Baremetrics showing internal KPIs & metrics to external users Automates work Calculates something for the user Combines information from different sources Other  Emailing software  Zapier  Macro / VBA in Excel  Calculators of mortgage related data  Calculator of net income depending on the taxes  Offers from different banks  Macro data reported by different institution  Data on the sales prices of real estates  Check lists  Templates  Standard documents
  219. 219. 219 Assets & Tools – Examples
  220. 220. 220 Tools can start from a very simple form. Below some examples Excel based sheets Google Sheet Power Point or PDF documents Airtable based tools Mobile app created with a builder Chatbot created with a builder Questionnaire created using Jot- form Calculator created using Calculoid WordPress based theme Others
  221. 221. 221 Sell or rent your Assets & Tools
  222. 222. 222 If you wan to monetize your assets or tools you have 3 main channels Marketplaces  Amazon  Udemy / Skillshare  Eloquens  YouTube  Shutterstock / Adobe Stock / Envato Direct sales Own e-commerce  You personally  Your sales force  WordPress plugins  Shopify  GumRoad
  223. 223. 223 To support them you can consider 3 main marketing techniques Content Marketing  You create a content that will support your sales, creating traffic for your sales channels  The most popular forms are posts (blog on WordPress), presentations (SlideShare), movies (YouTube)  Many build additional distribution channels for the content: Instagram page, Facebook page, LinkedIn account, twitter account Freemium or Free Trial Model Affiliate Marketing & Referral programs  In Freemium you offer part of the product for ever for free  In Free trial you offer the whole product for a limited time i.e. 30 days  In Affiliate marketing you offer part of your revenues for bringing customers to independent Partners  Affiliate marketing is done usually via affiliate platforms that already have a lot of potential partners for you  In referral programs you offer usually some gifts (i.e. your tool, assets for free for some time) for bringing a user or a customer  One of the most famous referral program was run by Dropbox – you got additional free space for some actions including bringing new users
  224. 224. 224 Assets & Tools – Where to find ideas
  225. 225. 225 There are 5 main sources of ideas for creating Assets & Tools Marketplaces  Books: Amazon, SlideShare  Online courses: Udemy, Skillshare, Coursera, Lynda  Excel based tools: Eloquens  Mobile Apps: App Store, Google Play, Amazon Appstore  Movies: YouTube, Shutterstock, Adobe Stock,  Music: YouTube,  Photos: Shutterstock, Adobe Stock, Podcasts News about startups that got funding Forums Other  Smart Passive Income  The Foundation  Chris Ducker  The Foundation  Indie Hackers  Entrepreneurs On Fire  Crunchbase  Reddit  Local copies of Reddit  Forums devoted to specific topic  Facebook Groups  Product Hunt  Your own needs  The needs of your current customers or a group you know well
  226. 226. 226 Sell or rent your Assets & Tools – Case Introduction
  227. 227. 227 Let’s imagine that you have to help Jorge estimate what Assets & Tools he should build to use to the fullest potential the time he has gained by improving his productivity.
  228. 228. 228 A few information about Jorge. Try to estimate how much he can earn and what option is better Jorge earns 30 EUR per hour He has managed to save 40 hours a month He can create online course or Excel based tools
  229. 229. 229 Below additional information on the online course 1 online course with 60 lecture requires 240 hours of work He can earn EUR 90 per month from 1 course He has to pay additionally EUR 30 per lecture for editing
  230. 230. 230 Below additional information on Excel based tools 1 Excel based tool will take him 15 hours to create He can earn EUR 10 per month from 1 Excel based tool
  231. 231. 231 Create new revenue streams using your Assets & Tools – Introduction
  232. 232. 232 In some cases you can create on the basis of assets and tools new additional revenue streams. Below example of what you can do using Excel based tools Excel based tool SaaS based tool Consulting firm  You help the customers use or implement the tool  You gain fees from the consulting hours sold to the customer  You can up-sell him new services and find ideas for new products  You earn one-off payment from the sales of the tool  You have no contact with the end customer  You earn subscription fee from the customer  You have direct access to your customers via emailing list and in- product communication  You can up-sell him new products or upgrades (better plans)
  233. 233. 233 Below another example of a evolution from a small YouTuber to something entirely different and a bit unexpected 1 YouTube channel Multiple YouTube channels Content Production Firm  You have not only YouTube channels but also blogs, podcasts  Content is produced by many teams  You have multiple revenue streams  You earn from ads, branded content, sponsorships  You earn only from you own production  You earn from ads, branded content, sponsorships  Most of the channels have content produced by your employees Content Production Firm & e-commerce firm  You have not only YouTube channels but also blogs, podcasts  Content is produced by many teams  You have multiple revenue streams  You add to your revenue streams income from sales of physical or digital products Content Production Firm & Brand Owner  You use your channels to produce content & create brands  Content is produced by many teams  You have multiple revenue streams  Majority of your revenues comes from licensing the brands you have created and cooperation with other brands
  234. 234. 234 Create new revenue streams using your Assets & Tools – When it makes sense
  235. 235. 235 Creating additional revenue stream using the Assets & Tools makes sense under certain conditions You can’t gain more by allocating the time to building new assets You can gain more from new revenue streams than assets building You can gain more from new revenue streams than current works Current assets may stop to exist or stop to being unique You expect a decrease in revenues from assets You want to build independent business using the assets
  236. 236. 236 Personal Finance using Management Consulting Hacks $190 $19 For more details and content check my online course where you can find case studies showing analyses along with detailed calculations in Excel Click here to check my course
  237. 237. 237 How much money you need
  238. 238. 238 How much money you need – Introduction
  239. 239. 239 It is always a good idea to calculate how much money you actually need to live the life you want. We will discuss this issue in this short section
  240. 240. 240 We will discuss in this section the following issue Backward logic Retirement age if you have no passive income – case study Retirement age if you have passive income – case study
  241. 241. 241 Invest wisely your money
  242. 242. 242 Invest wisely your money – Introduction
  243. 243. 243 In this section we will discuss useful ways that will help you invest wisely General framework for investing wisely Overview of some methods and assets you can invest into
  244. 244. 244 General framework for investing wisely your money
  245. 245. 245 As you may remember we have the following general framework How to build your wealth Earn more Spend less Be more productive Add new revenue streams Invest wisely your money Choose your life partners wisely Manage your kids properly
  246. 246. 246 In this section we will get a little bit deeper into how to invest wisely your money How to build your wealth Earn more Spend less Be more productive Add new revenue streams Invest wisely your money Choose your life partners wisely Manage your kids properly Understand different types of investment assets Diversify Understand the timing Be rationale not emotional Automate investment Adjust your investments to your age
  247. 247. 247 Different types of assets in which you can invest
  248. 248. 248 You have 6 main groups of investment assets Cash Bonds Mutual funds (active management) ETFs (passive management) Others i.e. startups, commodity Returns Real Estates  Low Risk Required knowledge  Low  Medium  Long term below ETFs  Medium  Medium  Low - High  Low within certain limit  Close to zero for some bonds  Big  Big  Medium  Huge  Low  Medium  Medium  Medium  Big  Huge Stocks  Medium  Huge  Big
  249. 249. 249 You have 5 main groups of investment assets Cash Bonds Mutual funds (active management) ETFs (passive management) Others i.e. startups, commodity Returns Real Estates  Low  1% Risk Required knowledge  Low  ≈ 0-3%  Medium  Below ETF  Medium  ≈ 5-10%  Medium  ≈ 4%  Sky is the limit  Low within certain limit  Close to zero for some bonds  Big  Big  Medium  Huge  Low  Low  Medium  Medium  Big  Huge Stocks  Medium  ≈ 5-10%  Huge  Big
  250. 250. 250 Basic rules of investing
  251. 251. 251 Below a few golden rules worth applying Don’t loose the money Check the timing Invest small portion of your wealth in risky assets Invest at minimal constant pace no matter what Invest more in bad times Invest less in good times Avoid debt for majority of investments Adjust your investments to your age
  252. 252. 252 Things that will influence your returns
  253. 253. 253 There are 3 factors that will impact your investment results Knowledge  How much you know about a class of assets  How much you know about the general investment landscape  How much you understand unit economics of the business assets  How much you know about specific asset you have bought Timing Luck  In what part of the economical cycle you are  Usually, when you invest at the top of the cycle you buy assets at too high prices  Usually, when you invest at the bottom of the cycle you buy assets at much lower price than the fair value  The random things that you are not able to account for – the government suddenly passed the law in your favor, the weather was much hotter or colder than expected, etc.
  254. 254. 254 Let’s see how important & timing is for different type of assets Cash Bonds Stocks Mutual funds & ETFS Luck Real Estates  10% Timing Knowledge  20%  30%  20%  10%  0%  10%  30%  60%  50%  90%  70%  40%  20%  40%
  255. 255. 255 Stocks
  256. 256. 256 When it comes to stocks there 2 ways in which you can earn money from them Dividends  A part of the profit paid out to shareholders Increase in value of the stocks  The price of the share may change after you bought them. If it goes up, you in theory gain. If it goes down in theory, you lose
  257. 257. 257 Let’s see what drives the dividends and the increase in the value of stocks / shares Dividends Increase in value of the stocks Net profit / EBITDA Cash from other sources Increase in expected profits Buy Backs
  258. 258. 258 The problem with stocks is that you don’t know whether you have bought a winner Dow Jones 30 1999, 2000, 2010, 2019
  259. 259. 259 Now let’s have a look what kind of returns you can expect % Dividend and % Total Return Rate
  260. 260. 260 Bonds
  261. 261. 261 Also with bonds you have to be very careful. Some consider them safer, yet you must know that they differ greatly. We can divide them in 3 categories Bonds issued by countries  Countries issue bonds to finance mainly their public debt  They can be nominated in different currencies  Some have fixed interest rate some have variable interest rate  You can lose part o the invested money or everything (100%) – if the country goes bankrupt – happened to many of them: Argentina, Mexico, Brasil, Poland Bonds issued by states, regions  Also regions and state can issue debts to finance projects or refinance their public debt  Usually those bonds are less safe than the bonds of the country of which they are a part  You can lose part o the invested money or everything (100%) Bonds issued by firms  Some firms instead of taking loans from banks issue bonds to finance their growth.  The bonds can be backed up with some collateral or have no collateral at all  Usually they have offer higher interest rate than the country in which they are located  They are in most cases less safe than the bonds issued by their countries  You can lose part o the invested money or everything (100%)
  262. 262. 262 Let’s see at some examples Bonds issued by countries  USA  Eurozone  Switzerland Bonds issued by states, regions Bonds issued by firms Good Potentially Bad  Emerging Markets  EU members that are not part of Eurozone  States / regions with good financial standing that are part of stable countries Good Potentially Bad  States / regions with bad financial standing  Firms with great ability to produce cash flow no matter what i.e. Amazon  Firms with high profitability and almost a monopoly Good Potentially Bad  Others i.e. Toys R us
  263. 263. 263 Now let’s have a look what kind of returns you can expect % Dividend and % Total Return Rate
  264. 264. 264 Real Estates
  265. 265. 265 When it comes to real estates, we have 3 main groups. Majority invest in residential real estates Residential  Flats, apartments, houses Commercial  Shopping malls  Offices  Warehouses  Hotels  Others Land
  266. 266. 266 There are many ways in which you can earn money on residential real estates Buy & rent the whole apartment Buy & rent rooms Light flip Extensive flip Daily renting (Airbnb, Booking.com) Subletting (Renting of apartments that don’t belong to you) Buy to keep
  267. 267. 267 The great thing about real estates is that you can leverage it (take a lot of debt. Below short example Stocks  300 Real estate  300Amount invested In thousands of USD  300  1 500Value of the assets you can buy In thousands of USD  3%  5%Yield / Interest rate / Dividend rate In %  9  75Cash flow generated from the assets In thousands of USD
  268. 268. 268 Real Estates – the Risks
  269. 269. 269 Of course real estates have their risk factors as well Timing Change in the status of the district Legal changes Maintenance costs Political changes Infrastructure changes Interest rate Too big supply
  270. 270. 270 What is a portfolio management
  271. 271. 271 Create new revenue streams using your Assets & Tools – Case Introduction
  272. 272. 272 First let’s think about what kind of cost positions you have Food & Drinks Hotel Clothes (bride and the groom) The band The place / venue Flowers Entertainers for the kids Church costs Other costs
  273. 273. 273 First let’s divide the cost into 2 groups: fixed and depending on the number of guests Food & Drinks Hotel Clothes (bride and the groom) The band The place / venue Flowers Entertainers for the kids Church costs Other costs
  274. 274. 274 Let’s see how we can estimate the costs of food & drinks, hotel, place / venue # guests Cost of food & drinks per 1 guest Food & drinks costs Hotel costs x # of rooms needed Cost per 1 room x# of guests per 1 room # of guest requiring hotel % of guest requiring hotel ÷x # sq m (space) Cost per 1 sq m Place venue costs xSpace per 1 guest x
  275. 275. 275 Let’s see how we can estimate the costs of entertainment and flower costs # guests Cost of food & drinks per 1 guest Food & drinks costs Entertainment costs x # of kids Cost per 1 kid x# of kids per 1 guest # of guests with kids % of guests with kids xx # of vases Cost per 1 vase Flower costs x # of guests per 1 vase ÷
  276. 276. 276 After we have calculated every cost position we have to sum them up to get the total cost of the wedding Food & drinks costs Hotel costs Cost depending on the # of guests Entertainment costs Flower Costs Place / venue costs + Clothes (bride and the groom) The band Other costs Church costs Fixed costs Total cost of the wedding + +
  277. 277. 277 Create Issue tree
  278. 278. 278 Issue tree - general Area of analysis Area 1 Problem 1 Problem 2 Possible Reason 1 Possible Reason 2 Possible Reason 3 Possible Reason 4 Possible reasonsSuspected problems Analysis to be performed Analysis 1 Analysis 2 Analysis 3 Analysis 4
  279. 279. 279 Issue tree for John's flat – Introduction
  280. 280. 280 Imagine that you would have to create an issue tree for John’s flat. What kind of problem he has and what could be the reasons for that
  281. 281. 281 Low hanging fruits
  282. 282. 282 Opportunity tree
  283. 283. 283 Opportunity tree Gross Margin Sales % Gross Margin % Front Margin % Back Margin # of transactions ATV Traffic % conversion  YouTube  Ads on instagram  Affiliation with bloggers  Guest blogging Opportunities  Long form / Short form  Reduction of delivery methods  No account  Emailing for people abandoning cart  Upselling and Cross selling  Free delivery for higher tickets  Introduction of new categories  Reducing number of suppliers  Finding new suppliers  Renegotiation
  284. 284. 284 Cost drivers
  285. 285. 285 Cost drivers are causing the cost to go or down Cost of a Udemy course Slide preparation Recording and editing # of slides Cost of 1 hour # of hours per 1 slide # of lectures Cost of 1 hour # of minutes per 1 lecture
  286. 286. 286 Personal KPIs – Introduction
  287. 287. 287 Let’s imagine that you have to define the personal KPIs for Giuseppe that will help him make sure that he is increasing his chances of being happy
  288. 288. 288 A few information about Giuseppe Giuseppe has a girlfriend He works as a business analyst His family, health and friends are important to him He also wants to get more financially sound
  289. 289. 289 To define KPIs I would recommend following a very simple sequence of actions Define what areas matter for you Identify drivers Define output KPIs Define input KPIs Set targets for KPIs
  290. 290. 290 Let’s look how we can define KPIS for the financial well-being Financial well-being His net value Area Drivers Output KPI Input KPI Generate positive CF  Net value in EUR  % of his salary not spent during the month  Additional money invested  Additional income generated  Cash flow generated during the month  Positive cash flow generated during the month as % of his salary  % of his salary not spent during the month  Additional income generated
  291. 291. 291 Personal Finance using Management Consulting Hacks $190 $19 For more details and content check my online course where you can find case studies showing analyses along with detailed calculations in Excel Click here to check my course
  292. 292. 292 Badass Consultants Blog Subscribe to our channels:

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