3 Ways for Entrepreneurs to KEEP More of Their Money
If you are an entrepreneur working hard to create your dream life and increase your wealth but are tired of paying high taxes, I have some key advice to help you achieve your goals faster and enjoy your dream life sooner than you think.
I was recently in Morija, Lesotho, and it’s in countries like this that I’m reminded of three ways entrepreneurs can keep more of their money and really live their dreams.
As I arrived in the town on a Friday afternoon, I saw a scene that’s common for this type of emerging country. It’s kind of cool: groups of guys sitting around on different street corners playing cards or other games and drinking beers. When you’re faced with a scene like this you automatically think, “Hey, these are work hours, right?”
And yet, these guys are relaxing and just kicking back.
If you’re an entrepreneur like I am, I’m sure there will have been a time when you’ve worked incredibly hard in your life, working 24 hours a day, slaving away at the “grind” because that’s what you figure you have to do. Right?
And, although you and I probably don’t want to sit around drinking beers on a stoop at 3 p.m. like the people I saw, there is a way to apply these relaxed principles to create the lifestyle of your dreams.
Three Big Takeaways
Water seeks its own level. This is especially true when it comes to living in your home country. For most people, it seems that no matter how much you earn, you’re left with zero. By the time you’ve paid for the house, all the different bills, and then your tax bill, so many people wind up with zero or very little leftover.
In my situation, I managed to save some money when I lived in the U.S., but as soon as I got out of that system I was able to save so much more, do so much more, and grow my wealth so much faster.
Being in a place like Lesotho where people are more relaxed really made me think about these key takeaways I’ve been alluding to:
- Cutting your cost of living
- Reducing your tax burden
- Getting away from the Joneses
In order to tell you about these big takeaways, let’s examine a few examples from my personal experience and from the stories of some friends of mine.
1. Cutting Your Cost of Living
So many new entrepreneurs head to places like Southeast Asia because it’s so much cheaper to set up a business, live, hire people, and to build out a company.
What successful people learn as their business grows is that Southeast Asia is also one of the places in the world where you can live a relatively tax friendly life without the trappings of the life you left behind.
If you have a runway for starting your business, or if you’re just looking to reduce costs, then places like Southeast Asia, South America, or Southeast Europe are great places to start your business.
These are not necessarily great places to incorporate, but if you can leave your home country, set up shop there, and incorporate your business somewhere else entirely in a great offshore jurisdiction, then you’ll benefit from a much lower cost of living.
When I started Nomad Capitalist, I sold all my businesses in the US and had a pile of money that I could have used to go and live somewhere expensive, like maybe London. But, I didn’t have money coming in, so the idea of living somewhere more affordable sounded very attractive.
Personally, I was drawn to Southeast Asia.
Not only were there all kinds of opportunities to network in the region but I also discovered in my first six months of traveling Southeast Asia that I could live a life of luxury there for a fraction of the price I’d pay basically anywhere else.
When you look at folks in the United States, for example, you find that it’s very hard for many people to save even 10% of their income. Almost nobody does that. People can’t even pay themselves first because, by the time they’re done with a car payment, rent, and food, there’s just not much to go around.
When an emergency rolls around, two-thirds of Americans don’t even have $500 to cover costs.
Now I’m reading that the numbers aren’t that much different even if you’re earning right up to low six-figure salaries. If you’re making millions, you probably do have a couple of spare bucks lying around, but the point is this: Even if you’re making $100,000 a year, you probably don’t have much spare for emergencies.
Because water seeks its own level, the cost of living prohibits most people from saving what they should.
Moving you, your business, and your income to another country with a lower cost of living can help put you in a situation where you’re not only more able to provide for your own needs and wants, but also where you’ll have more money to put into your business.
2. Reducing Your Tax Burden
Here at Nomad Capitalist, we recently worked with an Australian guy. He was earning $400,000 a year with his online business but paying almost $200,000 a year in taxes on that income!
Even so, he had a nice standard of living and wanted for nothing. He had a great apartment, was visiting clubs and bars whenever he wanted to and was saving around $50,000 a year.
That’s not bad.
But he wanted to become a multimillionaire and be able to retire early, support his family, and enjoy the rest of his life. So he came to me and asked how he could make this happen.
The first thing we did was get him to move out of Australia — i.e., leave his home country. He moved to Asia, where he could have the same lifestyle or better but without the huge tax bill.
Now he has a better lifestyle and he’s putting away over $250,000 a year. He’s also investing his money with much better rates of return so he will hit his goal of being a multimillionaire much faster.
If you can get out from under your tax burden and move to a place where you can set up a very tax-friendly regime, you’ll be able to keep substantially more of your money. My Australian friend was not an extraordinary example of this; in many cases, people who come to me are saving 80% or 90% on their taxes.
By going where you’re treated best, you’ve cut down your expenses drastically.
3. Getting Away from the Joneses
Denmark has one of the top ten highest GDPs in the world and offers a high standard of living, high levels of safety, and a quality education system. Many have highlighted Denmark as a model country that others aspire to emulate.
However, I spoke to my Danish friend the other day about what happens in Copenhagen with people he knows who work in the big accounting firms. Some are partners in those firms and earning upwards of €300,000 to €400,000 a year.
But, as my friend pointed out, by the time they’ve paid for their fancy car, a house in the right neighbourhood, splashed out on entertaining friends, bought their wife a designer handbag, and paid their tax bill, they too are left with zero.
Keeping up with the Joneses means that, no matter the income, somehow even the successful end up with little to put away for the future. One solution is to simply get away from the Joneses and rewrite your expectations based on what you actually want and not on what the society that surrounds you dictates.
There’s a behavioral change that happens when people leave their home country that is so interesting to watch.
When you’re living in one of these emerging countries and you’ve cut your cost of living, you have the chance to raise that standard of living. Maybe you’ll buy nicer clothing, take better trips, go to the club more often, even just buy better food. You’ll watch your cost of living fall and then slowly rise a little bit.
But, here’s generally what you won’t be doing.
You won’t go out and get that new Beemer with a car payment you’ll have to keep up with. You won’t spend your weekends doing all the things your friends do just because they want to do them.
The modern immigrants, the digital nomads who descend on these emerging countries, are perhaps going to spend their money on other things. I know people who love collecting Gucci loafers or who spend their money on expensive, business-class trips. The reality for these people is that they’ve begun spending money the way they want.
They don’t even try to “keep up with the Joneses” anymore because they’re nowhere near the Joneses.
They’ve left the trap of needing to drive a certain car, to live in a certain neighborhood, or to spend their weekend doing the “in” thing. They’ve broken free of the system that pushed them to do what others expected them to do with their money and they’ll see a huge improvement in their quality of life.
Instead of drinking craft beers on friday night with their nine-to-five friends who hate their job, they’ve started spending their money intentionally. That intentionality is incredibly important when it comes to keeping more of your money.
And intentionality often means going where the Joneses aren’t so that you can live life how you want.
Imagine the Life You Could Have
Imagine how much you could accumulate and how much more relaxed you could be if you applied these principles to your life.
For example, let’s look back at the guys from Copenhagen. Imagine if they lived in Malaysia. They might not need the Range Rover anymore and they might not care if they live in the “right neighborhood.” They would just want a nice house that they could enjoy, rather than having to constantly show off. The biggest thing, though, is that they’d no longer have to pay 50% to 60% of their earnings in tax.
It’s the same with the Australian guy that I mentioned earlier. He decided to move to Thailand. He chose an area of Bangkok that wasn’t the sexiest, but he liked it. And now he has a bigger and better house than the one he had in Sydney.
He’s enjoying himself and, importantly, he’s no longer paying $200,000 a year in tax. He’s reduced his tax burden, he’s saving a lot of money, he lives where he wants, and he doesn’t need to show off to anybody. He’s doing what he wants.
Our three key elements have improved his life and taken him from saving $50,000, if that, to $250,000 a year!
Furthermore, now that he’s opened his mind to living outside of Australia, he’s no longer just keeping his money in the bank, earning 1% interest. He’s growing his money faster and will become a multimillionaire many years faster, too.
The Freedom of Keeping More Money
In many parts of the world, people are not plagued by the things that keep many modern-day entrepreneurs from experiencing the success they want – whether that is the mentality of keeping up with the Joneses, the high cost of living, or the requirement to hand over almost half of their income.
The culture I witnessed in Lesotho where people are more relaxed and don’t take things too seriously is, in part, due to a different view of life. You don’t need to pull up a seat and join this group of men to adopt that perspective.
The idea is to make more time to enjoy your life by taking the necessary steps to relieve the burdens that are keeping you from success. Doing the three things we have discussed here can make a big difference in your life, not just because they will help you keep more of your money but because that will, in turn, allow you to intentionally create the life you want.
Maybe you want to be in the Four Seasons or in the business class lounge. Maybe you want to give more to charity. Maybe you just want more time to spend with family. Whatever it is, you can do it all and a lot more with a lot less effort when you cut out your tax burden, lower your cost of living, and stop trying to “keep up with the Joneses.”
When you decide to leave your home country and no longer pay taxes there, you can live somewhere with a lower cost of living, get more for your money, and afford a more luxurious life.
Learn how to crack the code and legally pay zero tax while traveling the world.
Watch our Nomad Capitalist Crash Course.
Nomad Capitalist is all about helping people like you “go where you’re treated best”. If you want to learn more about what exactly that means, and why I believe so strongly in it, I made this video that is worth watching: