Following The Goods Chapter 2

Following The Goods Financial Management for the Young and Ambitious

Adam Goodman, MBA Illustrated by Allyson Stone

Blue Pig Publishing, Toronto

Copyright © 2009 by Adam Robert Goodman All rights reserved. No part of this publication may be reproduced in any form, or by any means, electronic or mechanical, including photocopying, recording or any information storage and retrieval system, without permission in writing from the publisher. Care has been taken to trace ownership of copyright material contained in this book. The Publishers will gladly receive any information that will enable them to rectify any reference or credit line in subsequent editions. Although the author has exhaustively researched all sources to ensure the accuracy and completeness of the information contained in this book, we assume no responsibility for errors, inaccuracies, omissions, or any inconsistency herein. Any slights of people, places, or organizations are unintentional. This publication contains opinions and ideas of the author. They are not presented to provide a basis of action for any particular circumstances without consideration by a competent professional. The author and publisher expressly disclaim any liability or loss, or risk, personal or otherwise which is incurred as a consequence, direct or indirect of the use or application of the contents of this book. Published in 2009 by Blue Pig Publishing 1210 Sheppard Ave E, Suite 203 Toronto, Canada M2K 1E3 First printing December 2008 Canadian Cataloguing in Publication Data Goodman, Adam Robert, 1979             ambitious / Adam Robert Goodman ; editor, Hailey Eisen ; illustrator, Allyson Stone. Includes index. ISBN 978-0-9811260-0-5 1. Finance, Personal. I. Eisen, Hailey, 1981- II. Title. HG179.G66 2008

332.024

C2008-907996-5

ATTENTION CORPORATIONS, UNIVERSITIES, COLLEGES, AND PROFESSIONAL ORGANIZATIONS: Quantity discounts are available on bulk purchases of this book for educational or gift purposes. Special                 Blue Pig Publishing; [email protected] Production Credits: Editor: Hailey Eisen Cover Design: Joe Donnelly Design.com Printed in Canada

Chapter 2:

How Much Money Do You Really Make?

             !  knew why it was important to save money until it was too late. Let’s look at a few examples to see how I could have done things differently. "   #         $%   swimming instructor and I earned $15 an hour. On average, I earned $200 per week, making my monthly salary $800. I worked at this job for two years, earning about $15,000 in total, but when I graduated from high school and went to university I didn’t have any money left. So what happened?

I was living at home; my mom bought all of my clothes and food. So where was my money going? Well, when you’re a teenager making $200 a week and you have no responsibilities, you tend to spend that money! Every week I bought comic books, lottery tickets, candy and whatever else I could afford. I also spent a good portion of my money on going out with friends. Luckily I still hadn’t broken out of my social awkwardness around girls; otherwise I would have spent even more money trying to impress them. By the way, (    (!      don’t impress girls with money. So, by the time the Page 7

Chapter 2: How Much Money Do You Really Make? next pay period would come around my pockets would always be empty. How could I have done things differently while still enjoying my life? I spent every dollar I made; I gave in to my every desire; I thought money would always make its way back to me; I had no plan. Understanding money

 (     !                (     can’t buy what you want. What it does mean is that you have to pace yourself and be smart. You have to understand the big picture of where you want to     

         lifestyle you want to lead. Then you need to do your homework and make a plan of how you are going to get there. Let’s be honest, I never realized that the $200 a week I was making would turn into $15,000 over the course of my swim instructor career. If I did, I probably would have done things differently. Maybe instead of spending $200 per week on things that I would get bored with in a few months, I could have spent half of it on my comic books and candy and put the other half in the bank. Had I done that, I would have had $7,500 in the bank when I graduated high school (we’ll keep things simple for now and assume that there is no such thing as investing your money wisely, a dollar saved equals a dollar earned). It would have been pretty easy for me to spend only $100 a week instead of $200. All I would have had to do was be a little more selective in what I bought (Did I really need to lose more money on lottery tickets? Did I really need all that junk food? Was I having a little too much fun?). It’s easy to look back and say, “Yes, I should have saved more”, but what if you don’t have the luxury of hindsight? The reality is, I didn’t pay attention to where my money was going and I didn’t fully understand why I would need money in the future. I didn’t set myself up for success by asking people with experience for advice.

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Chapter 2: How Much Money Do You Really Make? I have a small exercise for you, which will help you understand where your money goes. First, let’s determine how much money you’re making. If you don’t have a job — don’t worry — the rest of the exercise will still be helpful! If you aren’t currently employed, let’s just assume that you work 10 hours a week making $8 per hour — use this information for the exercise. Write down how much money you make per paycheque (if you aren’t paid every two weeks, determine how much you are paid for every two weeks of work):

$ _________________ Ok, now let’s take that number and multiply it by two, to get your monthly earnings:

$ __________________ x 2 = $ __________________ +   !     (     by taking your monthly earnings and multiplying it by 13 (even though there are only 12 months in each year, there are 26 pay periods, so we need to multiply our monthly earnings by 13):

$ __________________ x 13 = $ __________________

You should have three numbers by now: your bi-weekly earnings, your monthly earnings, and your yearly salary (if you’d like to see an example, check out Appendix A). Now think back to when you started reading this chapter — were you aware of how much money you were making every two weeks or how much money you were making per month? Did you know how much your yearly earnings were? If you did then great, you’re ahead of the game. If not, take this new information and memorize it. Knowing how much money you make in each of

              future! Page 9