MM 304 - ‘How I Made $20k In One Night'

0:00Generate is supporting my vision to improve the financial literacy of 100,000 Kiwis by sponsoring Keep the Change. Cheers, Generate. Head to generatekeyweesaver.co.nz forward slash change to find out more. We're talking all that talk I ain't seen nothing yet I'd rather take a chance then look back and regret. Oh, yeah, I guess I'm the exception trying to crack it now ain't banking on that pension let the music speak don't really need attention damn nickel this you, huh? That a question. Yeah, you can keep the change like Luke, man, I'll make it back in interest just compounding that. Welcome back you were listening to another episode of Get the Change.co.nz moneymail and we are up to week number 300 and four we're certainly in the game.

1:03And lessons recently have been performing quite well, especially from the written version open rate really high, which is good to see. And I think a lot of the content resonating with people. So I've been batch writing a lot of different ideas and stuff that I had over the over the summer. And then just sort of flesh in them out as I get closer to the Friday or needing to finish them. But a couple around taxes and business and understanding some of those things because it's obviously a space that I'm in day in day out. But I know that for a lot of us, we just have no real exposure to this and something that I see popping up quite a lot is social media content around how people are making a lot of money. And using the sales amount as sort of the headline grabber. And it's really, really prevalent on YouTube and TikTok and people just creating testimonials or things that they are talking about. But forgetting that there is a lot more to the sale than just the sale price because of course everything has a cost.

2:11So I thought I could use this as a bit of an example to warn you just to be mindful of that too. But also what a profit and loss statement is in accounting. So I titled this one, how I made 20k in one night in quotation marks. Now in accounting, one of the most important reports is called a profit and loss statement. This report shows you the total sales, less your expenses, which equals to profit. Now if you buy a rental property, for instance, you will need to learn this as well because a rental property will have a profit and loss. Because remember that if you make profit on your rental income, then you will need to pay tax on that. Even if you're ear being being out your place or you're renting it periodically, you should be running a profit and loss of the total rental income or short stay accommodation income. Minus the expenses incurred and doing that and that's your profit or your loss. The loss carries forward the profit is taxed. So I'm Mr. Pedro in the week and they've been recently learning about some of the content here and we talk about this and realize that they've been renting out their place for the last five years and had no idea.

3:17And I would say that there'd be a lot of people all around the country that are non-compliant on the reading of their home or even having a tenant in their living with them. For instance, that who might not be considered to be a border, there's a different tax rules, border versus a tenant and then even ear being being the place out occasionally. But I think we've spoken about that at length before. But before we carry on down that rental rabbit hole, which I'll come back to later on, the key point for you to understand is that sales less expenses equals your profit. So that's a profit and loss statement in accounting. In a world of $1 million a year, people typically mean that they have sold $1 million worth of something. A lot of these social media clips and these YouTube videos and even articles that are often talking about revenue and there's obviously a lot more to it than just the revenue. But this is where you're seeing things like how I made a million dollars in 2025. It's probably a million dollars with the sales. How I did 700K on Black Friday in the e-commerce space, for instance, is probably sales.

4:18We do 100 million annually. There's probably sales. There are always expenses to create these sales. So for e-commerce, for instance, if someone's doing 700K over Black Friday, let's just say, and that's their sales. Well, of course, there's still got expenses to do that. So I've got to buy the inventory or the stock. That's two words for the same thing. And they have purchases right to buy that stuff and then on sell it. So then they're selling it at a margin. A lot of construction companies say I'll do 10 million. But realistically, they'll have a stack of costs to do that. So they're buying materials. And then they on sell that. So their turnover is inflated. But they've had to buy things to then resell it to then be able to do it right. Plus, obviously, the subcontractors and the wages, those are all expenses as well. So if you're looking at a construction business's profit and loss statement, you would have the sales and then the costs. So manufacturing purchases, whatever, however they're doing it. Wages, subcontractors, then that'd probably loosely give you what's called a gross profit.

5:19So what did it cost us to generate those sales? Okay, let's say it cost us 9 million. And then we've got $10 million a sales. So we go around saying I would do $10 million. Really our gross profit is a million dollars. By the time we do all of that. And then we've got a million dollars left to then pay the rent. Pay depreciation, pay interest on any debt. Entertainment, staff expenses. Insurancees, if I didn't mention those. All those sorts of expenses as well. Still have to be paid. Then we'll be left with our net profit. So sales, less expense, less. Your cost to good sold gives you gross profit minus overhead costs or operating costs equals your net profit. It's a little bit technical, but again, it's not actually that hard. And it's something that you may not have come across nor you may not have to be too involved in it. But if you progress further into your career or get closer, like every business runs a profit and loss. And every inventory, every good or every service, there'll be, you know, there's effectively a profit and loss for it. So even if you strip right back to, now so I'm building one house,

6:20for instance, they would then look at what's the profit and loss of doing that at a project level. So it's a really, really important thing to try and understand. And again, something that a lot of people don't. And also partly why we probably have a lot of business liquidations in New Zealand too. Because people get into business and they don't learn this stuff. And so then you learn the hard way. So you think that maybe you're doing well, but you may be pricing things wrong. And eventually, you know, you run into trouble. So as an example, you might be selling muffins, for instance, for $5, but that includes GST. And so you're selling those and you're thinking, okay, well, it costs me, you know, $3 for the ingredients. And then we've got some other, we've got some wages and whatnot to pay for to, you know, be able to sell them often. And then there's some transaction fees that are going to be charged to me when I use the FOS machine or whatever it is that we're using to sell it. And people don't think about either GST component of the sale to start with. So it's sometimes, you know, do those sales include GST or do they not?

7:21A profit loss would show them exclusive of GST. So the GST is not our money. However, what can happen for a lot of businesses is they don't put the GST aside and how they're continuing to carry on is that they're actually getting into debt to the IID where they can't then pay the GST or even sometimes their PAYE. And that's eventually the ID come along and say, no, you can't be doing this. We need to be paid. Your business isn't sustainable the way you're going. You're going to have to liquidate that and we've done a podcast on liquidations before as well if you want to go dig that out and learn more about that. But this is some of the education that's needed for business owners but for individuals as well just so we can understand what's happening in a better context because you might have a favorite KFA or a restaurant that you go to but it could well be that it's not actually that profitable and the profit loss is showing a loss. And eventually someone has to pay for that loss, that loss. So, you know, the thing is in society we glamorize the sales figure but don't talk about the ugly stuff that I've just tried to explain there

8:23probably because it can then get quite hard, right? So even if you think about it most awards in the business space are often focused on what sales did you do, what sales growth did you have and it's all about revenue. So sales and revenue are the internal, those are three words but they're the same thing. So we're keen, this is confusing space, right? Why do we have three names for the same thing? Sales, turnover, revenue, usually mean, top line, another name, and it's all the same thing. So people love revenue but there's a lot more to it than just that. And if we think about it we pay tax on profit and we eat our groceries from the after tax profit as well. So side note, just to get even more complicated for you, profit isn't cash either. But I don't want to confuse you too much. However, you can't, you can make a profit on paper but maybe you haven't turned it into physical cash in your bank or why not? Well, it might be tied up and buying more stock for the business if you're an e-commerce say. Or it might be tied up in debtors so you've done the work for someone down the road but they haven't paid you yet.

9:24So we've got the profit from doing the work and made the money on paper but we haven't got it in our bank account because we haven't been paid for it. Or we've cleared down debt throughout the year. That's what we've used our profit for. So instead of us having it in our bank, we're paying it down on debt for things that were brought in the business. Or we've drawn out the money and gone to Vegas or something like that. So for a real life example to help you understand this, I did run through the profit and loss for kept the change unplugged and did a bit more of a deep dive into the night. But I could technically say, you know, if I was making one of those videos, how I made 20k in one night. Now some of you probably think I'm flash hiring a venue in December 2025 to host kept the change unplugged but the reality is that I lost money on that. But also it was buggerable. It was like 34 bucks or something. I think the profit loss was showing as a loss. So I would call that break even. Now it's break even. It's basically when your costs match your sales. But what I'm trying to highlight for you without giving you an accounting degree

10:25in 30 minutes is that I always say visibility is a fake metric for success. So when you're looking at social media and you're seeing these people make this content or doing things just, you know, don't, don't assume that they are killing it or making a stack of money because very little content gets made about the costs that go into putting on events or running a business. I've even had somebody respond to my email from Friday about this saying, yeah, you know, your downright loop. And I am having to close my business down because it's just not profitable. And basically saying how the work that they were doing, this would have been asked to do it at a very low rate. And it's just not sustainable. And that's the reality of business. You know, if you can't get it to be profitable, normally it stops because someone has to fund that loss. And that person still has to put food on their table and provide for their children and put a roof over their head. And that's where, you know, I think there is a real fear around starting

11:26and getting into business in New Zealand because we worry, am I going to be able to pay all of the bills that I have in my personal life, which they're not cheap because running a household profit and loss is not cheap anymore, is it? You know, you've got a lot of costs and I've got to make back from Germany at the moment I was catching up with him during the weekend that's been and he was saying, wow, just the cost of living is just everywhere. There's just so much talk about this. And he was saying how in the supermarket he was, you know, surprised just how much things had gone up after I think a couple of years of being away but just how many people were keen to engage in a chat about it at the supermarket. And then everywhere he goes, he sort of notices that that's just the theme. But the main thing that everyone is talking about. So, you know, I think where the focus goes, our attention goes as well. One of those say something like that, but I think we are. Like we're really dialed in on that. And again, how many times have we talked about increasing income

12:28and how come we weren't being honest with Kiwis and saying, how you're going to have to find ways to do that? Because the cost just seemed to have kept going up here. And it's something that we've faced. So, it's obviously really in our faces and I think it's one of the key issues that'll be deciding the election as well. So, there'll be constantly more content about it. So, you know, just be mindful of that too. And what you can do to control that, or whether that's helping you or hindering you. Because ultimately none of those articles tell you what to do. But they all point to the problem being somebody else's and somebody needs to do an inquiry into this or that. And there's probably a lot of truth to that. But the speed at which that stuff happens. So, Mike, you nailed this a year ago on the party. He said, you know, watch it. It'll be fuel inquiries. It'll be bank inquiries. It'll be supermarket inquiries. It'll be insurance inquiries, et cetera. But, you know, some of that stuff's come and gone too. Well, you know, we even got like a banking commissioner or something, didn't we? Some sort of no grocery commissioner. Yeah. But did it help you with the cost of living? Like maybe, maybe at the margins.

13:29But I can't specifically point do anything and go, okay, well, that's, I know that that's now cheaper. So, yeah, just be careful, you know, consuming yourself was so much of that stuff. But back to the point that we're here for. These days on social media, the lights, the filtered photos, the quick cut content can often master the true financial reality of a business, of a project, or your favorite social media influences actual bank balance. So, don't, you know, be caught up in this. Oh, they must be absolutely killing it. There's always more than meets the eye. Being in a council, I get to see this all the time. Because for decades now, I lift the lid on a business and have a look at the numbers that are underneath that. So, I'm not specifically saying that, you know, people online are full of shit. But what I'm saying is just, like, be weary. You know, when the content is all driven around, I'm revving you. And how I made $20,000 one night, you know, for instance, for keep the change unplugged.

14:29Yeah, but what's the cost? You know, what are the costs? And to be fair, I've done some podcasts recently with people talking about making money. And people have rightly pointed out, well, what's the, you know, what are the costs involved in this? But the people on the podcast have actually unpacked that and I'm asking that because I'm thinking from this lens rather than just, wow, I'm fascinated by the sales that you've done. But that probably haven't listened to the entire podcast to actually hear them breaking down the numbers. So a very easy or quick look at another profit and loss view. So if we think about, if I keep the change unplugged again, I had gross sales of $19,474. So it's classic as well. You round it up to 20k, don't you? In this 2026 way of living. But 20 grams worth of sales roughly, at ticketing charges of $1,573. So that equals $17,901. That's kind of my gross profit. Now you could argue, well, you had to hire the venue as well. That could be a cost of good luck without that you couldn't have done it. So yeah, technically, this is where accounting becomes subjective and people measure things in different ways as well. But I had $17,900 left to pay for the rest of my costs for the night, right?

15:31So the venue is $9,764. Now, yeah, let's not get into that. But people have told me, that's crazy. You shouldn't have been paying that. And I'm like, well, that's what the venue costs. Like I don't know, maybe I'm specifically go shade it down. But it was what it was. But it's a fantastic venue, the Brisbane Center, actually. I think next to get the change unplugged, we'll do it there again. And then try and sell it out. And then we'll move on from there. Anyway, insurance, $500. So they did insurance for the night, booklets. So I got some booklets for people to work through. And they were $3,471. My insurance was $500. I had some travel costs of $1,000. I had some social media content created. People couldn't make it. So we put up some of the replays on YouTube, for instance. And it's podcasts that all cost money. You've got to have time, people there to do that. And then ads to promote the vent as well. So it was around $3,200. So my profit was negative $34. So yeah, I made $20,000 to one night. Well, did you? You lost $34,000 mate. So yes, nearly $20,000 to sales. But that's definitely not money kept, is it? So again, I think I'm using this to highlight, you know,

16:33be careful of the stuff that people are saying on social media and the way that they're conveying it without just unpacking or understanding what other costs people would have. Even, you know, they talk about like big businesses doing billions of dollars with the sales and all this sort of stuff. It's even like people, you know, that are worth a lot of money on paper. Yeah, but I don't think they could liquidate that. Like I don't think that's actually available to them. It's like it's sitting in their bank account. What we think, right? When we see these top line numbers. Obviously, keep the change in play was a huge success. The goal for me was to break even. That's not lose money. And I basically nailed that. So the real output for the night was brand deeper connection with listeners, incredible messages and clarity on how to run the next one better as well. So not everything is about a profit for people. You know, there are actually a lot of vintage startups and startup businesses that run as a loss to start with, but are funded by other people via investment or even bank finance, but very rarely, probably more other people tipping money in so that they can get to the profit eventually because not every business

17:33is profitable straight off the back. Like it depends what it is that you are doing. And the key there though is that you can't just run a business out of loss if you don't have someone funding it. So even if people get in behind to the AIRD, the AIRD are effectively funding their business. Whether people have invested into a business or business, they are probably going to be the people who are carrying the losses in the early days before the revenue starts to exceed the expenses. And then, you know, why are they doing that? Well, they're hoping that it's going to be profitable in the future, the business may be worth something, and it could be sold at a tax-free capital gain or it becomes profitable and they have a right to a dividend from the profits of that business as well. So some key lessons for you, you now know what a profit loss statement is and looks like. Now, it's very different to cash flow. A cash flow is what I teach you to do for month-end, right? And that is money in, money out, which kind of sounds like a profit and loss. However, cash flow has all the money going out. So in business, a loan repayment, for instance,

18:33or even when you're paying for a mortgage on a rental property, that's not actually an expense that hits the profit and loss statement, okay? Because it's a clearing of the debt. So it's building equity. Now, equity is the difference between assets minus liabilities. So when you're doing that, it still comes out as cash, it comes out of the bank. But it wouldn't show up on your profit and loss because the debt repayment is not a tax-deductible expense. So the interest on the debt is. So to illustrate, to keep it simple for you, if you're thinking about a rental property, this is what people forget. They think, well, I'm renting my property out at XYZ amount per month and I'm not making any money on it. But what they're saying normally is, I don't have any money left over in my bank account, but you're still clearing debt down on that mortgage. So the debt repayments are not a tax-deductible expense. So you would have your rental income, minus property management, some repairs maybe, some accounting fees, some bank fees, for instance,

19:34and maybe you're going there to do the inspections every quarter or whatever that may be, and then your interest cost on the debt, okay? Not the debt repayment, the interest cost on the debt. Now this was the piece that Labor changed and they said, okay, we're going to change the amount that you can claim as a percentage and they scaled that down. And that's when rental property started to become more profitable because one of the main costs of a rental property is typically the interest cost. And a lot of people buy rental properties interest only using the equity in their current home because the tax rules effectively are most tax-efficient to do it that way. So what does that mean? Well, you would have your debt as high as you can under the rental property because that interest is a tax-deductible expense where it's not in your personal life. So you would want more debt sitting against the rental. Now when Labor changed those rules, that's why a lot of landlords weren't too happy about it and I'm not going to get into that debate if whether that's right or not. But that's something that the rental owners are currently thinking about

20:34as we get into this next selection because it really does impact them. If all of a sudden you can only claim a half of the interest cost as a tax-deductible expense. I mean, we learned about this last week, hence you can sort of see these episodes flowing together. Now, if you can only claim half or that's going to mean that you've got more of a profit in their four tax to pay. And this is what was happening for people. So when we have higher interest rates and full tax deductibility, there's not a lot of profit for a lot of rental properties because often they've got them structured in a way where the interest costs are high and that's not to be said that that's how everybody does it. But it takes a lot of time to clear down a rental properties debt, doesn't it? Or even just any debt because the home loans spread out over such a long period. So that's how it works at that level. But the key there is that the mortgage repayment is not a tax deductible expense. However, that loan repayment still has to come out of your bank accounts. That's what people think. Well, I don't have any money to show for it. But you may have made a profit

21:37because you may have used your profits to clear down that debt. And that's the same in business as well. So that's where a profit loss is different to a cash fund. And very quickly on that rental property, you have to think too that if you do clear down the debt, then you're not going to have an interest cost. So then your largest cost of running a rental property is typically the repairs. If it's a genuine repair, not by improving it and spending a heap of money doing that. So repairing things that keep broken. And then the interest cost on that. The interest cost would all, it would definitely be higher. But if you were to clear down your debt, then just say you won a lot and you're like, I can't get it clear, the debt on my rental property is you would have your rental income minus the expenses equals a profit and you'd have to pay tax on them. Probably at your marginal tax rate, depending on the ownership structure you have of that rental property. Back to our key lessons, sales is not profit all money kept. Just as we've just outlined in that example, right? Yes, we might get all of the rental income in. But that's not profit. Same with the person selling the muffins, they might sell them for $5, but they're still cost involved to do that.

22:37They don't get to keep their whole $5. Don't assume people on social media are killing it when they cite sales and sales only. Of my two decades studying accounting in business, most of the successful people doing well are spending money to do it. There's nothing wrong with that. But sales is not profit. And yeah, I'm not saying that, you know, people shouldn't be talking about what their sales are but I think if you don't understand a profit loss you're watching or hearing these people say about how they're making a lot of money, but not thinking about, okay, you know, what is one of the costs that sit underneath that? So even if someone's saying, well, yeah, my rental property, I get $600 a week for it. Yeah, but that's $3,200 of income for the year. What are your costs? But we just love to talk about sales and bigger numbers in this country. And I think it's just habit, but it's worth knowing what sits underneath all the costs of putting something on. Just like, if I keep the change, I'm plugged event. And like I said before, without a profit, typically things stop working.

23:38You know, I probably, let's say that that kept the change, I'm plugged event, I did way more marketing for it and couldn't keep people there. And I spent more money putting it on and paid for speakers and that sort of thing. I would have a bigger loss than that negative $34. So how would I fund that? Like, where would that money come from? I would have to pay for it. Because money doesn't just, you know, come from nowhere. So a loss still has to be funded. And that's why, like I said before, you know, probably while we're seeing more liquidations as well, because as businesses got harder, not all businesses are going to make it through. And that's just the key thing that I also want you to take away from this is that if something is running at a loss, like someone is funding that, including that rental property, someone's topping it up. And again, I think we fail to talk about that side of it. Or, you know, you're in Zealand, made a loss recently. And everyone's on the CEO asking, well, when's it going to be profitable again?

24:38And how are you guys not profitable when, quite a sour, something like that, I didn't get to into the weeds of it. But, something somehow, some way that loss is being funded. You know, it's not just like, oh, that's a cool, you know, some words on a piece of paper. There's literally, they've lost money. It's cost the money to run that. So, that could come from cash reserves that they have built up, or it may be debt they haven't to go into. But I don't know the finances of, you know, I haven't read their profit loss. But all the businesses that you guys are investing into, if you're investing, they will be running a profit and loss. And some of those large businesses, they can get very tricky to understand because there are accounting rules around different expenses that go on to the profit and loss. And providing for people who may not pay in all these sorts of things and backing out and come from revenue received in advance. And all that, you know, you think about how many people are probably sitting with credit with Ian New Zealand. I think they recently said a lot of those were going to expire.

25:39So, if you've got some of those, it might be too late, but you might want to check from back in the COVID days. But, you know, all of that stuff has to be accounted for in some way, and there's a specific treatment around that. And that's the same for every business. There are rules that will be specific to that. So, those big profit losses can be quite hard to understand at that level. But, the crux of it is salesless expenses equals your profit. Now, if my event, Ian New Zealand, or a rental run at a loss, someone has to pay for it. And it's typically the owners who pay for it. I would have paid for a further loss of that event. That's the risk that I put on trying to do something like that. But just be mindful when you go to a lot of free events or cheap things, just think shit, like a wonder how this is sustainable. Anybody can be involved in clubs or activities. And if they are really cheap, then yeah, like who's funding this? It might even be that it's not sustainable. I think recently I saw that there was a light show

26:41or something like that in Auckland, and people were complaining or lying that it wasn't as good as the year before. And I'm thinking, well, I've got my county head on thinking, it's free to go to. You don't pay anything to go to it. So, in your surprise that went backwards, you know, like where do you think the money was coming from to do that? If it's not, then it's probably lacking fuel, you know? So, I think again, like a lot of people just don't have a good understanding of the stuff and just expect things to just grow and be bigger every year and better, because that's naturally how we talk. You know, we want to see growth in GDP growth, and improvements in innovation. But if things aren't profitable, like it's very hard to reinvest money back into something when the money isn't there to start with. And I think you'll find that, you know, a lot of people who are sending kids to sports and schools and stuff, all those costs are going up because everything is just getting more expensive.

27:42And inflation has been out of, well, I would say, out of control, like it's out of where we want it. You know, it's noticeably high. It has to be. You know, there's a target band between one to three percent, right? But the fact that so many of us are still obsessed with the cost of living, and we're still talking about those words, regularly and weekly, and it's popping up, it's like a main election issue, shows us that inflation is still impacting us, and it has impacted us. So maybe just have some grace when your club that you're involved with, or sports team, or organization is saying, oh, we're going to need to charge more words. It's not always about squeezing every last dollar out of you and profiteering and all the stuff that you hear about. Sometimes, someone in the background is figuring out, oh, holy shit, you know, this isn't sustainable. We need to solve the financial piece and all that's going to happen is if they run into a loss, then you're going to get,

28:42oh, now it needs to be bowed out. Well, who's going to bow on that out? And that can be a scary place to be at. So all of those costs, they still have to be paid, don't they? You know, and that is what is better to understand than just, okay, I did 20 grand of sales in one nice, or I did 700K for recombuers over Black Friday, or such and such company does a billion dollars worth of sales. Yeah, but what are the costs? What are the costs? Right now, we go through in only 30 minutes today. I finally took one off at 30. Did you know around 15% of businesses in New Zealand turn over? So remember, again, two over sales revenue, three names, one thing, one million dollars or more. That's it. So 15% of businesses in New Zealand turn over over a million dollars. So 85% turn over less than one million dollars. So two never being sales. It's a big psychological number for a lot of people, but it's not easy to do. I think it's only about five to seven% of businesses do two million dollars plus.

29:43So we are a nation of smaller businesses doing smaller numbers, but it is very easy to go on social media these days. Especially see international content. And that's where I've sort of pulled some of these examples from, because I know some people are seeing this stuff online around how these people are doing hundreds of thousands or millions or hundreds of millions of dollars. But that's talking about sales and they're not revealing what the costs are. But can we people are probably going on there? And hey, like it's not say it can't be done, but it's just worth understanding what's underneath the hood, just like I have to as an accountant. Now, it's very common to see these bigger numbers with international content creators and clips, because they live in bigger countries and they have bigger markets. And it's not to say again that we can't do it, and that we can't access those markets too from New Zealand and scale. But just be mindful of what they're really saying. They're probably talking about sales in most instances, and there are always costs involved in creating those sales.

30:43Hope you're doing well. We'll see you next week. Love the journey. Yeah. Stay sharp like Gillette. I'm putting in that work. Still never break a sweat. You talking all that talk ain't seen nothing yet. I'd rather take a chance than look back and regret. Yeah. I guess I'm the exception. Trying to crack it now, ain't banking on that pension. Let the music speak. Don't really need attention. Damn, Nico, this you, huh? That a question. Yeah, you can keep the change like Luke. Man, I'll make it back in interest, just compounding that Luke. I have a goal to help 100,000 Kiwis improve their financial literacy. Generate Kiwis' savings scheme has sponsored Kiwis' change to help me reach more people and make this a reality. Cheers to Generate. Hit the Generate kiwisaver.co.nz forward slash change to find out more.