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The personal finance power move is to make more money and not spend it. We've covered the "don't spend it" part in previous lessons, so let's now move on to the "make more" part.
How to Increase Your Income
There are many ways to earn more money. Most of these ways fall into one of a few categories:
Option 1: Work More
This is the most common approach people take to increasing their income. It's also the worst, for various reasons.
There's only so many work hours you can fit into a day, so there's a hard limit to how much more you can earn, as long as you are just exchanging more time for more money.
Option 2: Start a Business
You can start a business, do gig work/freelancing on the side, be a creator and try to monetize your creative work... all of these fit into the same category. These are all forms of entrepreneurial work.
Starting a business is one of the best opportunities we all have to go from zero to generating a lot of income. But of course, it's not easy to do.
I recommend that you specialize in a business model and find the overlap between your personal strengths and interests and what's economically valuable:
On the flipside of this, I don't recommend being overly concerned about finding "the best" business model. There are thousands of ways to succeed as an entrepreneur. What they all have in common is that they require skill and persistence, so choosing something that has economic value and is aligned with some of your interests is a good bet for most people.
Option 3: Become a Highly Valuable Player
Entrepreneurship is not for everyone. But even without starting a business, you can share in the success of a business by becoming a key player.
Every employer is hungry for highly valuable players to add to their team. It's one of the greatest challenges and sources of frustration for entrepreneurs: it's easy to find decent, even good employees, but it's extremely rare to find excellent employees.
A highly valuable player is someone who "gets it", who sees the big picture, who's engaged... and this type of person usually outperforms a good employee by a factor of 10 or more.
Here's why this is an opportunity: if you can join a small(ish) company with growth potential and become one of their key players, they will be highly motivated to increase your salary and even give you equity in the business.
Why Do Most People Fail?
When it comes to things like building wealth, building a business, and advancing your career... most people fail.
The thing I want to know is why?
I know that I am not an exception. If most businesses fail, I know that if I start a business, it's probably going to fail. So I want to understand what's going on and try to learn from other people's mistakes.
One key factor that I have discovered, that I believe leads to a failure to build wealth both for employees and for entrepreneurs is this:
Unwillingness to Take Responsibility
Most people want permission, instructions, assurances and guarantees, before they do anything. Most people want someone else to tell them what to do and how to do it and they want someone else to be responsible.
And it makes sense. Responsibility is scary. And many of us were (implicitly) taught in school that the most important thing is not to make mistakes. If you do nothing, at least you aren't making mistakes.
People seek social safety. They don't want to be singled out, they don't want to be blamed for failure.
I think this is what keeps most employees stuck at a relatively low level.
They're waiting for someone else to tell them what to do. They never go above and beyond. They never do things that they weren't instructed to do.
Most people are totally invested in making sure that "it wasn't my responsibility/fault".
And it's true for entrepreneurs, too. Many entrepreneurs really want someone else to tell them what to do. They'd like to follow a pre-made recipe with exact steps that guarantee success.
That's one thing that holds most people back.
Another reason for why most people fail is that...
They Are Looking for The Easy Win
As an entrepreneur, this could mean switching niches and business models constantly because "this one is easier and I can make more money here faster."
Also known as the shiny object syndrome.
As an employee, you can be stuck in this "I want" mode where:
- I want a promotion but no extra responsibility
- I want a raise
- I want equity
- I want to be recognized for what I do
From your boss' perspective it's "you want a lot of things and what am I getting out of this?"
This desire to want more (and want it faster) is a trap for both entrepreneurs and employees.
Food for Thought
Most of the people who fail, fail in the same way and for the same reasons.
- 1How do people fail at this?
- 2What are pitfalls and mistakes I need to avoid?