The Affluent Entrepreneur Show

Simple Strategies to Increase Your Income (Without Burning Out)

April 13, 2023 Mel H Abraham, CPA, CVA, ASA Season 2 Episode 134
The Affluent Entrepreneur Show
Simple Strategies to Increase Your Income (Without Burning Out)
Show Notes Transcript Chapter Markers

If you're ready to level up your income game without sacrificing your well-being, then you're in the right place. 

As an entrepreneur or anyone looking to bring in some extra cash, it's easy to fall into the trap of thinking that working harder and longer is the only way to make more money. But guess what? That's not true! In fact, it can be super counterproductive and harm your health in the long run.

So, get ready to take notes as I discuss the 10 practical strategies to boost your income. These strategies are all about maximizing your time, tapping into your strengths, and creating more value in your life. You deserve to live your best life, and with these tips, you can make that happen without sacrificing your well-being.

Don't wait for the "perfect moment" to start building your wealth - the time is now! Tune in and start implementing these strategies today. Let's hustle smarter, not harder, and create the life we deserve!

IN TODAY’S EPISODE, I DISCUSS: 

  • The importance of starting to invest early
  • How to build wealth by investing in your skills and knowledge
  • 10 different ways to increase your income

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Mel Abraham  0:00  
One of the questions I get asked most often is, well, how the heck do I make more money? Well, you know, here's the thing, it's probably the wrong question to ask. Well, it's part li the wrong question. That's what we should be asking is, how do I make more money? So I can keep more money, invest more money, and have more wealth? Well, welcome this episode of the Affluent Entrepreneurs Show this one we're going to talk about, how do you make more money? And what does it have to do with your wealth? I'll see you in the episode. This is the absolute Entrepreneur Show for entrepreneurs that one operate at a high level and achieve financial liberation. I'm your host, Mel Abraham, and I'll be sharing with you what it takes to create success beyond wealth. So you can have a richer, more fulfilling lifestyle. In this show, you'll learn how business and money intersect. So you can scale your business, scale your money, and scale your life, while creating a deeper impact and living with complete freedom. Because that's what it really means to be an affluent entrepreneur.

Mel Abraham 01:03
The reality is, is that we need to make more money, to have money, we need to make more money, to invest more money, we need to make more money to create wealth, we need to make more money in order to make sure that we hit our financial freedom number, and we avoid some of these statistics that that we're seeing right now. And one of the things to really understand is, how is it that people can make more money? But how does that actually contribute to your wealth? And why does it even really matter? Because some people might be looking at and going, Look, man, I'm young, I got time I got time. So I want to start off with just taking a look at the idea of the wealth priority pathway. What do wealthy people do? How do they see investing and wealth first, and that's the first thing. So I'm gonna jump to my iPad, those of you that are listening, we'll make sure we hook everything up in the show notes, you can get a chance to watch the YouTube video also, so so I'm gonna jump to the iPad. This is a wealth priority pathway. And this is something that I think we need to understand is that most people, because we're not trained, we don't talk about money we don't, unless you get a specific education, or you happen to have a good mentor, or you happen to be in a program like ours. We don't know any better, okay? And so what ends up happening is that, you know, that, hey, I'm gonna make money. That's my income, it's my salary, it's my wages, it's my business income isn't that, and then you're gonna say, I'm gonna spend money, I'm building my lifestyle and living, and you see what's left over, and you create your wealth. I want to lower what's left over, you invest? What's left over? Well, think about what you're doing there. What you're really doing is saying, I'm going to spend what I want to spend, and then whatever's leftover, I'm going to use to build my future, you're building your future scraps. I don't want that. See what the wealthy do. They look at it differently. They make investing a priority. And so what ends up happening is they go wait a second, I'm gonna make money. I'm going to invest first. And I'm gonna spend later. And so what they're looking at is they're saying, I'm going to make investing the priority. And ultimately, I will then decide that whatever's leftover gives me the lifestyle. Now, here's the thing you might look at and go, Well, if I did that, because you'll hear me talk about I want you to 20 to 30% of your income going into investments, depending on age and stage of life. But you might go, I can't do that I can't survive. Well, we'll take a look. But the fact of the matter is, is that that the question is, do you want to deal with it today or tomorrow, because it's common, you know, it's common, you can't be in a situation like this statistic, where you have less than 90,000. And you have potentially a $300,000 medical bill, it just, it just the math doesn't work out. And so it becomes important to look at it. Now, here's the beautiful thing. If we know what the numbers are, and you say, Wait a second, I can't live the lifestyle I want today, if I invest first, great, then we need to change our income. We need to change our spending, we need to look at the things that we're doing so we can have both. I'm not saying to sacrifice, I'm saying why not look at it as is not an either or put an ad. And here's why this is important is that there is this idea of understanding the wealth creation curve. And this is the mistake that a lot of people make, including me, I am not exempt. I screw this up big time. So here's what happens with a wealth creation curve is that there's this segment of the curve that's called the wealth flatline. And and what ends up happening is that you are wealth is built over time, but it goes in a curve, like a hockey stick, and there's a segment of the curve where it's flat. Okay, and it stays flat or it feels flat. It's, it's that moment where you're slowly investing in, maybe you've experienced this, you're putting money in the 401k. And they're matching, you're putting money in an IRA, you're putting money in investments, and it's really just kind of languishing. It's not growing, you're sitting back saying this doesn't work. This doesn't work. You know, I'm not really getting ahead, and I keep putting money there. In fact, right now, you're going well, the markets going down and, and it's volatile, I'm actually going backwards. And now No, you know, and so you stop. Or you do worse, like I did, you take the money out, I took the money out of the market, I took the money out of my 401k. Okay, it cost me millions over time. Because I didn't understand the wealth flatline the wealth, the wealth creation curve, there's the there's the wealth flatline, we have to eat the wealth flatline up. And the only way you eat the wealth flatline up is with time to stay in the game. Because here's what I know is that once you eat up the wealth flatline, it's on the other side of the wealth flatline. That you have your your true wealth, because on the other side of that is, when you finally hit the accelerations, it's when the curve starts to accelerate. But here's what happens if you're in the flat zone, because you're not really getting the benefits. And you're just starting out and you do it for three, four or five years, and you go, I'm not getting anywhere, so you stop. Or worse yet, you take the money out, guess what, you have to start at the beginning when to start eating up that timeline or the wealth flatline. And now you're back to ground zero, we have to stay in the game, get in the game, and with whatever we have, there are four things that actually drive your your wealth for things, that's what we need to manage. And only one of them you can't manage. But But here's here's the four things that that that we need to think about. It's the four wealth drivers matrix that I've talked about before. But the first thing is this is that we need to figure out our income. And we'll talk about what is income? Because it's not, it may not be what you think. But it's not just the income that matter. It's, it's the next piece of this. And that's your savings rate. How much of the income are you putting towards your future? How much of your income are you putting into savings into investing into growing wealth to create the money machine that's going to give you the flexibility and the freedom you deserve? To create the legacy that you want? It's that percentage. And so so it really becomes important for us to figure out, how much are you going to save. And I'll tell you that actually, these two elements income and savings rates are by far, one of the most important things that you can take and manage is understanding how your income and your savings rate impacts your wealth. And eating up that well flatline and getting you to a point where you have financial freedom, we're going to look at some numbers, you'll see what it takes. Now there are two other things that come into play when doing this. And then that this the third thing is that the investment returns. What kind of investments are you in? What kind of investments? Are you in? You know, are you in index funds? ETFs? Are you in real estate? Are you in Kryptos? If you're, you know, are you in speculative commodities, are you doing other things in there? Because here's what people need to understand is typically, the higher the return on the investment, the higher the risk in the investment. It's just economics. So if you're, if someone's promising you 20% returns, you're probably taking on a substantial amount of risk, which may be fine for you. Okay, but we had a whole nother episode on risk tolerance, risk capacity, and, and, and all of that, that dig into this, you need to be really clear on this. If you take on too much risk too late, or too much risk too early. You can destroy yourself financially. And so it's about investment returns, and then the fourth piece of this is time. Get in early. See, this isn't about you saying Well, now, when is now a good time to invest? And my answers my question to you is is this and I know you don't answer a question with a question, but I do sometimes. So that is are you investing now? No. Then today is the best time to invest. Okay, I'm not telling you what to invest in right now. But the fact of the matter is, is that your wealth creation is about your habits, your decisions and your behaviors. And if you don't have an investing wealth creation behavior, it's time we started and it might start with only $5 but we're exercising the wealth creation muscles to make that happen. The best time the end a certain time is always Now, now. Because the sooner we get in the game, now we have something called the wealth priority ladder. So if you have debt and you have certain things, you got to have some certain things in place to do it. But the bottom line is, our mindset has to be in the investing game now. Because the sooner we get in that game, we start eating up the wealth flatline. And we get us to the acceleration zone. So time is typically now and reality is that, so our focus has to be on how do we push up our income? How do we push up our savings rate? How do we get more investment returns without taking on an audit risk? That's the key. Okay. And you might look at it and say, well, now I want to earn more, I'll make more you know, and I'll do more. That's not the way to do it. Because this is truly a behavior. Like I said, it's how do we how do we make this
a habit. And so I'm going to get to some key things to do. But I want to run through some numbers for you. So you can see the dynamics of it. But before I do understand this, as you know, I'm going to tell tell you about, I get my hair cut by a young kid, he's probably 29. He's 23 years old. So he knows what I do. So we talk money all the time. And I get in there the last time I was in, and he says to me, Hey, like my friend just bought a $5,000 watch. And I said, really? I said, does he make a lot of money? Because no, he's, he's, he's my age. He's 23. I said, So he spent $5,000. And watch, why did he spend $5,000 on a watch? He said, because his friends thought it was a cool watch. I said, All right. So can I do some math for you? You know, didn't matter what his answer was, I was going to do the math anyways. I said, Sure. So, as I said, every dollar that you invest in your 20s, will range somewhere between 70 and $80, by the time you're 60. So him spending $5,000 on a watch, to impress some friends that may not be friends with him in a couple years, really wasn't a $5,000 watch. If we assume eight times at times $5,000. That and at times, by the time he's 60, he wiped out the potential of $400,000 in wealth by the time he's 60. So to me, it was a foreign $1,000 decision, I I am totally game with him doing it if he totally understands that. But my guess is he doesn't understand that. And if he doesn't understand that you make these types of choices that are affecting you down the road. This is why we say that it's important to have that wealth, priority pathway and play, we say investing is the priority before lifestyle, and we wouldn't make some of those decisions. Now I'm not saying not to get nice stuff. I'm just saying to be intentional, to be informed to be aware and make the decision. We have nice stuff, I buy nice stuff. And I totally understand what it's doing. Now, the other question that I asked is the pay for cash. So what made this worse is he didn't pay for cash, he put on a credit card. So now he's got $5,000 in credit card, and in a time where you got rising interest rates, and now he's going to be paying 20 plus percent on that $5,000. So this watch is going to cost them a bundle. Okay. And that's the thing that I think we need to understand is the dynamics of our choices. So let's look at some numbers of what this can do for you, and why it's important to just incrementally ratchet up your income when we do this, what it can, what it can mean for you in the future. So I'm going to I'm going to just show you really quickly that. For instance, if you had an extra $200 a month, an extra $200 a month, invested over 30 years will turn into about $300,000 If it's invested in an 8% rate and we can get 8% I know people will argue look, I can get over 4% in a high yield savings account. The market has returned 10 to 12% over the long term. So and real estate's out there, there's you just got to find the right. Investments. Okay. So 8% 300,000 Let's say you have $800 a month to invest. Okay, in 30 years, $1.2 million. You said Well, now I don't want three years, okay. 20 years is half a million. Let's say you're great go great guns and you say 1500 bucks a month. $1,500 a month gives you half a million dollars in 15 years. It gives you 2.2 million in 30 years and a million and a half almost in 25 years. point being is that it doesn't take a lot to make a lot. It takes getting in the game, and allowing the game to work for you getting in the game and staying in the game and allowing it to work for you. I'm not asking you to put a lot of money away, I'm simply asking you to get in the habit of putting money away. We'll talk a little more about that. But I want you to see something so you can understand the impact of time and the impact of consistency. So I'm going to give you four different people on this chart we're going to walk through. And so we have, Tom, we have Justin, we have Sally and we have Angela now all of them are going to say $5,000 a year. Okay, so a little over four 400 bucks a month, $5,000 a year, Tom is only going to invest for 10 years, he's going to invest from 25 to 35. Okay, so he starts at 25, he stops investing at 35. Justin's going to invest from 35 to 45. So he's going to invest for 10 years, just like Tom but he's going to start 10 years later, Sally, she's going to invest at 35 to 65. She's going to invest at the same time that Justin started, but she's going to stay invested longer. Angela, she's going to start when Tom started at 25 and she's gonna stay investing all the way up to 65. Let's see what happens. So Tom, investing from 25 to 235 is going to invest $55,000, Justin is going to invest the same $55,000. Sally is going to invest more she's going to invest $150,000. So she's investing almost three times that of Tom and Justin. Angela, she's going to invest the most she's going to invest $200,000 Okay, so 50,000 More than Sally, then about four times more than Tom Justin, what will they have at age 65? Well, here's what they have aged 65. Tom, who invested for 10 years from 25 to 35 would have $900,000. Justin who invested the exact same amount as Tom but started 10 years later, we'll have less than half a million just over $400,000 because of time, because he didn't get in the game because he didn't start the wealth flatline. And then Sally, she got in the game the same time as Justin but stayed in longer, she has a little more she ended up with $660,000. There's Angela, Angela got in the game early, she stayed in the game and she stayed consistent. She ends up with 1,500,000. Now here's where this is so crazy. Sally invested 150,000 ended up with 600,000 660,000 Angela invested 200,000 just $50,000 more. That's it, but ends up with 1,000,005 She ends up with almost a million dollars more than Sally for $50,000 more the power of time. The power of getting in the game, the power of eating that wealth flatline up becomes really important. Let me give it to one other way before we turn around and give you some of the things to do to increase your income. And that is this is what I call the magic million factor. How much this answers the question, how much do you need to put away every month to make sure that you hit a million dollars by the time you're age 65? Okay, so we're what is it going to take to be a millionaire by age 65 to $1 million. Okay. So, at age 25, at age 25, you have to invest 158 bucks a month. That's it. Okay. And here's the crazy thing. That means by the time you're age 65, you will have invested around $76,000. But you end up with a million, which means that 90 92% Okay. 92%, enter and $24,000 is from is from earnings. In other words, time did the work for you? Well, what happens if you wait 10 years to 35? Well, at 35 it's going to cost you $600 a month, $596 a month, and you do pretty good. You know, you've got about $200,000 that was put in and $800,000 that was built by time.

Mel Abraham 19:43
Now when we start to get age 45 it starts to get a little more challenging because at age 45 You actually have to put in $1,700 a month to be able to hit that million and you're almost about the 5050 mark you're you're gonna have $400,000 hours that you're putting in and the other 600 is coming from earnings and time. And when you hit 55, and 65, it becomes even more difficult. So at 55, you need to put in about $5,800, to have a million dollars. And so you're putting in the lion's share almost $700,000, and you're going to earn 300,000, which is great. And at age 60, you only have five years left, so you have to put big numbers in, and you're talking about, you know, 14,000 or $14,000 a month to make it happen. And the majority of it is your contribution, because you didn't give time, and you didn't eat up the flatline. So, hopefully, between all of these kinds of examples, you start to see why it's so important to get in the game. Now stay in the game for a long term, and allow time to do the heavy lifting. So in order to do this, how do we increase our income? Well, let's look at 10 different ways that I think you can look at for your income. Okay, and the first thing is to understand this income and cash are not the same. What I want you to do is, is start to look at cash flow. In other words, what do you have left? What's the net? Okay? It's not how much you make, it's how much you keep it's not, it's what you end up with, it's, so we got to, in order to do that, we need to understand that there may be money coming in and money going out. And what we have the ability to do anything with is the money that's left over. And so it requires you to do this other piece, and that is this, review your expenses. I want you to sit down with your credit cards, with your bank statements with your checking account with all of it and start looking at your expenses. Because the more we can reduce our expenses. Now you cannot cut your way to wealth, but you can manage yourself to to wealth. By managing your expenses, if we have things that we don't need things that we don't want things that we're not using, let's cut those out. And let's use those to contribute to our wealth. But we need to stay vigilant and diligent on that to make that happen. So so the first thing is to understand that it's what we keep that matters. So look at what's coming in what's going out, review our expenses, cut the things that we aren't using, but when we cut them, we move them to a high yield cash account, and we start investing it. Now number three, make sure that you have what we call a cash resource plan. In other words, you got to have a plan to move through. You can't just arbitrarily and and just kind of by the seat of your pants, go do things you'll make $5,000 Watch purchases, okay, what we need to do is sit down when we sit with our clients, we start to create a plan, we say, if we want to hit these numbers, these milestones over the next couple of years, we got to hit this for the income this for the investing this for the returns, and we we plan it out and we keep planning it and now we start to look at it from that perspective. Okay. So these are foundational elements that are foundational to, to how you can start to increase your income. Because if we increase income, but we don't have the foundations in place, it's like putting water into a bucket with holes in and it's just going to leak out. So I want to fix it first. Number four, which might be seem seem odd for some of you is that your ability to increase your income is about creating more value in the world. In your world, the community, your work your business, we live truly in a value exchange economy. That means that I'm going to give you something of value because I believe I'm going to get something of value in return. But not only do I think I'm going to get something in value, a value in return, I think I'm getting something worth more than what I am giving. So that's the thing we need to think about, is I want you to have a mentality of how can I increase my value so I can increase my income? Because it isn't about time served. It isn't about entitlement isn't about any of that. I mean, you can try and bring that in. It won't. It doesn't work in the walls of my business. But because I think the idea really is that the more I can bring value skill up, learn something new, do something bigger, do something different. Okay. Which leads me to number five. Number five is earn a raise or a bonus. Now, let's be clear. The key word here is earn I didn't say ask for a raise. I didn't say ask for a bonus. Because it goes back to number four. earn it by being more valuable to the car When you're working for, well, what does that look like? You might take on a project, you might one of the things that I did when I was working for the big consulting firm in downtown Los Angeles when I left, when I finished college, I literally took on every project but no one else wanted. They basically treated me like Mike give it to Mikey, he'll, he he'd liked everything you know. So it's like, they gave me every project said, Mel, we'll figure it out. It created a reputation. It allowed me to get get paid more and allowed me to get more bonuses and allowed me to to elevate myself or accelerate my son my success at the firm. And it allowed me to learn more, I got more skills. So what I want you to do is that if you're in a job and you want more money, instead of going in asking for a raise, I want you to earn the raise. In other words, you're going to have a conversation around and say, I have ideas that I think I can bring value to the company more so you bring those ideas in and or you sit back and have the conversation where you co create something, Listen, I I would like to make more money, but I don't, I'm not asking for a raise, I want to earn the race. So I want to come up with with some things that I can do here that provide more value to the company, more value to the customers more value to you. Can we work on something to earn a raise or a bonus? It is asking for it. Unless you're below market and you're you know, you're and you're performing? Well, that's a different game. But I want you to earn it. Because if we come from a value proposition and an earning perspective, we will always use that skill over and over again to see how can I earn it? How can I earn it? Number six, may not like it. But if we need more income, you might need to get a think about a part time job. Is there something that I can do part time that might be able to bring in some additional income to give me remember, we're not looking for a lot of money to start to build a lot of wealth. It's just being consistent with it. Okay, which leads me to this number seven, which is a side hustle. One of the things that you might look at is, is Is there something on the side that I can do? You know, I was just at the farmers market, we go to the farmers market almost every Saturday here. And and there's a gal there who had these really healthy cooking mixes, there's no no grains, no sugars, you know, no processed sugars and all that stuff. And I find out that she's she's actually a dietitian and a nutritionist, so that's her main, her main gig. But she would make these things for her daughter who was a competitive athlete. And she decided, Oh, wow. And so she created this side gig and everything. So there might be a side hustle that that you can generate 100 A couple $100 500 1000 $1,500 a month doing something on the side. Number eight, number eight, Okay, this one can be tough, but you know what? Look, sell stuff. I bet. Well, let's take me first. If I if I was on honest, and walked around, and look just behind me, where I store all of my technology. And in the storage, there's probably a lot of stuff that I'm not using lights and cameras and, and things like that, that I could probably get rid of. So no, don't tell my wife, she might tell me to do it. She wants closet space. So but my point is, is that we all have stuff that we're probably not getting enjoyment out of that probably doesn't mean anything that we're not using, that we could sell on Facebook marketplace, or we could sell on on eBay, we could sell on craigslist, you know, deuce be it smart. Okay, and be careful. But, but we could sell stuff. Now, it isn't an ongoing thing. But it's something that can jumpstart you can get you out of debt, it can do some things for you to to move you forward. And so maybe this is the Jumpstart you need. Because you're saying, Well, I got some credit card debt. Well, let's get out of it. And maybe there's some things around the house that you can get rid of to sell. Number nine. Number nine, monetize your strengths and hobbies.

Mel Abraham 29:31
Here's the thing. This is first off, I think in today's world, the the barriers to entry to starting a business are lower than they've ever been lower than they've ever been. If you want to create an online business, you want to sell stuff, you want to sell information, those kinds of things. It's pretty straightforward to do it now. I'm not saying it's like easy and all of a sudden you know, the cash registers ringing you know that that's not what I'm saying. But I'm saying that you can get access to it. So Question is, what are your strengths? What are you really good at? Maybe you're you're good at at writing or you're good at proofreading or you're good at tutoring and teaching that you can monetize it. You can do side tutoring, you can side side proofing, side copywriting those kinds of things. What are your hobbies? The things you love to do? You know, is it cooking? Can you sell recipes, all those things? monetize your strengths or hobbies? You're doing them anyways? How do we monetize them and and give them to the world and get paid for it? Okay, and number 10. And I love this one. Affiliate for brands you like, okay, that and why I like this one is you're not taking inventory, you're not creating something, you're simply you're simply letting other people know about something you like. So it could be a training program. It could be beauty products, it could be fashion, it could be any of those things that that you're looking at, say, Hey, this is what I use on my face. Clearly, I don't use anything on my face. All right, but could be on my, on my hair. And clearly I don't use any that my hair regiment in the morning is fine. The hair, glue the hair. That's it? I'm done. Get on way. All right. But point being is that y'all use products, y'all use services, is there a possibility to create an affiliate relationship. So when someone buys through a link that you have, you get paid a commission, you get a percentage of it. Because now you're just out there telling people about stuff you love and stuff you use, and you get paid to do it. And you probably would tell them about it anyways, without getting paid, why not get paid for it. I love affiliating for brands that you like, because it's simpler. You don't have to create anything, you don't have to run a business, you don't have to do any of that stuff. You just have to inform and educate. Alright, those are the 10 things that I would do. Right now to really start to look at ways to increase my income, figure out what what you can keep review expenses and cut what you need. What you're not using doesn't matter. Make sure you have a cash resource plan, give every dollar a job, and a job description to do the things that that it's they're meant to do. create value, look at how to create value, earn a raise or a bonus by creating more value, part time jobs side hustles sell stuff, monetize strengths and hobbies, and affiliate for brands that you like, I hope this helps. Listen, I'm trying to give you tools I'm trying to give you tactics and strategies. Some of them you might go well, I don't want to do it. Great. That's fine, it's choice. But here's what I know, the sooner we get you into the financial game, the sooner we get you to build on those muscles, the sooner we get you making those behaviors commonplace. The sooner we move you through the wealth flatline into the acceleration zone, and your pathway to financial freedom. So I hope that you go back and you go through some of these things and say what can I do to bring in just a little bit to develop the muscle to do the things that that will help to make the money that that I can make to be able to accelerate my Path to Wealth. And if you have questions or if you have comments or anything that comes up please let me know. In fact, I have a question how hotline that you can go to that's called Ask Mel now.com You can leave me your questions there. You can record it, you can send it you can text it and we'll make sure we get them answered on on one of my shows. So stay in the game. Stay patient, stay discipline, know you're not alone. Because I'm here and the community is here to support your financial journey. And as always say on the road. Always, always strive to live a life that outlives you. I'll see you in the next episode. Cheers. Thank you for listening to the affluent entrepreneur show with me your host Mel Abraham. If you want to achieve financial liberation to create an affluent lifestyle, join me in the affluent entrepreneur Facebook group now by going to melabraham.com/group and I'll see you there.

Introduction
What do wealthy people do to create wealth?
Wealth Priority Pathway
The four wealth drivers
How much of your income are you putting into savings?
The best time to invest
The impact of time and consistency on investing
How to become a millionaire by age 65: the monthly savings goal
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