Your income is the engine of your financial independence vehicle. If you have a small engine, you aren’t going to be going very fast or very far. Before focusing on savings, investments, or any other topic, the first priority is getting your income to a level where you are able to make a significant amount more than you spend. A lot of people complain about how little money they earn or how their salary is limited by forces outside their influence. If you are unhappy with your income, it is easy to make up excuses as to how you arrived to your current situation.
The much harder thing to do is to take responsibility for your current situation, regardless of anything that happened to you in the past. Whatever level income you are currently at right now, there is a high likelihood you have the capabilities of making significantly more money. Below are some fundamental ideas that may seems obvious, but very few people actually apply in real life.
- Sharpen The Saw – Invest In Yourself
“Sharpen the saw” is the 7th piece of advice from the book “7 Habits of Highly Effective People” by Stephen Covey. If you have not read this book (you should go read it, it is a great book), then I will explain this metaphor. The story is about an individual who is in a rush to saw down a tree with a dull saw. Another person sees him struggling and suggests that he should sharpen his saw before cutting down the tree since the job would be completed much faster. The person sawing the tree simply explains, “he doesn’t have any time to sharpen the saw since he is in a rush”.
I hope the irony of this situation is clear. The benefits of “sharpening the saw” are obvious, but so many of us neglect doing what is necessary in order to further our career. We are stuck sawing away at a tree, but don’t take the time out of our schedule to bother sharpening our own saw.
If anyone feels like they are stuck at a job that doesn’t reflect their true capabilities, then it is absolutely necessary to take the time out of their schedule to invest in themselves. This can mean studying for the next level of higher education or the next certification in a specific field. If someone’s current field is limited, then they should make the effort to re-educate (formal or Google/YouTube) themselves to learn a skill more valuable and therefore end up being more highly compensated. More critical, is if the skills people are learning are also in line with their future goals.
It is pointless to spend time investing in yourself if you are uncertain of where you want to be in the future. So, before you “sharpen” your saw, it is absolutely necessary to ask yourself what you want to do in life. If you want to be the next Snapchat CEO and want to run the latest tech startup, then there are plenty of free resources online that teach people how to code. If someone’s desire is to be the next great fashion designer, there is plenty of material on YouTube and Google to keep someone busy for hours. Once you begin investing time in yourself, you will be in a much better position to be able to receive a higher income. Whatever your deepest desires are in life, it is important that you invest time (and maybe money) into achieving those desires. If your goal is to saw down a giant tree, then you need to take the time to sharpen your saw.
- Finding a Job is a Job – Persistence Pays
One of the biggest problems people don’t fully understand is the sheer number of resumes, cover letters, and emails that need to be sent out in order to even hear a response back from an employer. The minute an employer puts up a job posting, they are immediately swarmed with thousands of messages from people desperate for a chance at an interview. The likelihood the employer even gives your resume or email a thorough read is very slim. Personally, when I was asked to find an intern to join my team for the summer of 2016, I was swarmed with thousands of candidates from multiple universities. The sheer number of resumes were just impossible to get through while still being able to conduct my daily responsibilities, and this is most likely the same feeling every employer gets when trying to find the best candidate for a specific job. I ended up interviewing less than 50 of the thousands of applicants, and it is hard to say that the most qualified candidate got the job without ever meeting more than 95% of them.
The phenomenon of having thousands of candidates for a single job opportunity is very similar to that of the online dating space for women and men. Women that use dating apps, like Tinder, get spammed far more than men. That’s why my recommendation may seem crass and totally not in line with modern day thinking, but cut the internet queue of candidates and jump directly to the front of the line by going in person to your potential employer (or future wife). If it is not possible to go directly to your employer in-person, then I recommend differentiating yourself by being incredibly persistent. Calling or emailing the person in charge of hiring incessantly may be the difference between getting a reply or being ignored (do this with the utmost professionalism, obviously). The amount of time dedicated to finding a new job should be similar to a real part-time job. You should be crafting your resume, emails, and cover letters carefully, and be putting real effort into writing something that will convey what value you can bring to their company. Finding the right job can take days, weeks, or even months of your time. The job listings on most popular job sites change daily and require you to diligently monitor these opportunities.
At the end of the day, getting a positive response back from an employer is a numbers game. You can work on things like your resume format, writing style, and LinkedIn profile, but the most important thing you can do is to be persistent and apply to any or all job postings that would be a good fit for you.
- Work Hard! Add Value!
Why is it that the lotteries like “Mega Million”, “Powerball”, and “Scratch-offs” are so popular? I have no idea! I was taught a long time ago that “lottery tickets are a tax on the stupid”. I don’t mean to disparage people that are desperate enough to gamble their hard-earned dollar for the slim chance at freedom. My point is that we need to stop hoping for the winning lottery ticket, for the magic pill that will make us filthy rich, or any other get rich quick schemes. I will be the first to tell you that there is no financial Santa Claus that will make your bank account feel all warm and fuzzy inside. Every penny you earn is something you need to work hard for by negotiating and providing value in some way. If becoming wealthy enough for financial independence was easy, we would all be millionaires by now.
No matter what job you have, you have the ability to do your job really well. Most jobs will give you the opportunity to be rewarded for your hard work. If you work at a job where you are easily replaceable and do not get rewarded for extra effort or responsibilities, then you should focus on the first piece of advice and increase your skills. However, even corporations like McDonald’s or Starbucks have college tuition assistance programs and management training programs that could lead into a high paying career for many people. These programs and other exclusive benefits (bonuses and raises) are usually awarded to the most deserving individuals. If you are not receiving a raise year after year, it is because you are not providing any additional value to your company. Work hard and figure out what you can do in order to add extra value to your company. Once you are able to specify exactly what additional value you contributed, you will be able to better negotiate for a raise.
If you are unable to add value at your current job, then focus on adding value to your own life in different ways. There are an incredibly diverse range of things that you can do with your free time after work and/or on the weekends. You can be a baby-sitter, a dog-sitter (via DogVacay), an AirBnb host, an Uber driver, a part-time TaskRabbit worker, or many other simple value creating jobs. With all the latest tech innovations coming out, there is definitely opportunity to provide value in the world. Also, having a unique skill can pay off immensely over the span of a lifetime. I have a friend that is a mechanic and fixes other people’s cars during his free time for extra income. Sure, none of the examples above are exactly easy or simple to do, and that is the point. Becoming Financially Independent is a difficult task and requires a certain level of willingness to work hard. In my next article, I will explain what I did to increase my income using the 3 principals above.
-Jack