Show me the money! Finding your way to increasing your income
I’ve been writing about using less energy, saving money, and reducing expenses. It’s time to switch strategies, time to punch the gas, not just tap the brake. From a holistic financial planning perspective reducing expenses is crucial, as it’s the primary place to make an immediate difference in your bottom line. But reducing expenses can only do so much; if you take it too far your quality of life suffers, until you’re wearing frayed sweaters and eating Hamburger Helper.
The time comes when the best strategy is earning more, increasing your bottom line by boosting the top line. It’s time to turn your attention to some “show me the money!”
Remember Cuba Gooding Jr. playing an aspiring athlete in Jerry Maguire, making Tom Cruise shout into the phone “SHOW ME THE MONEY! SHOW ME THE MONEY!” I’m not suggesting that we need more greed, but I’ve been feeling that we are each due for a personal economic rebound. This is good for us, and good for the economy; the macroeconomic downturn will be reversed by a million micro-economic upturns. Asin, let’s punch the gas, let’s start focusing our attention less on reducing expenses and more on adding value and bringing in more money.
How do we do that? I spend more time working with clients around the psychology of money than I do crunching numbers in spreadsheets. Managing your money responsibly requires more than knowing how to find the credit card with the lowest rate or learning how to live on $1000 a month. Those skills are useful, but dramatic progress is made when you locate and remove psychological obstacles. Without reservation, the largest barriers I see orbit around how to make more money. People have few hang-ups around reducing their expenses. They might not be skilled at it, and certainly some have shopping addictions, but there is little resistance to the ‘idea’ of spending less.
Here are my top three strategies for overcoming financial obstacles and bringing in more income. The first is straight out of the 12-step financial program: you have to admit that you have a problem. Here are a few clues that you might have a problem: you’ve already worked hard to reduce your expenses and you’re still living paycheck to paycheck, you have mounting credit card debt, or are experiencing chronic money arguments and stress. They’re all probably obvious.
One common obstacle is a belief that money is evil, that people who make money are morally bankrupt. It is self-defeating to spend your mental and psychological energy in a frustration cycle declaiming the unfairness of struggling teachers and opulent CEOs. Yes, it is unfair. There is no argument about it. But if you want to make a difference in your own life, in the financial well being of your family, you need to set aside the critique and focus on what you can do to make more money. Again, I’m not suggesting that you become Gordon Gecko, but that you find a balance, a way to bring your talents to bear in the marketplace, in a way that people will appreciate, value, and pay for.
The next step would be focus: turn your attention to it. Nothing makes progress like persistent attention over time; perseverance furthers. One thing I’ve learned in the last twenty years, as someone who has many (maybe too many) interests, is that it is very difficult to make major progress in more than one area at a time. It is tough to lose 20 pounds, write a book, do a home remodel, and build your business, all at once. You have to focus. Even if you are focused on your finances, if all you do is think about trimming your spending, all you ever see is the difference between $.79 and $.99 ramen. You’ve got to look up and start focusing on income generation. The challenge is that generating income is slow. It’s tough to make a quick change in your income. It takes time. That’s why the first step is cutting expenses. You can trim expenses today, but making more money takes months. Better start today!
You’ve hopped obstacles. You’re focused. What’s next? Add value. Don’t think about making more money—think about how you can add more value. What will people pay for? In business planning we have a phrase: “build a bridge.” That is, connect your passion and interests with the marketplace. It’s not enough to just do what you love and hope the money will follow. It’s also depressing and soul-less to work solely for money. Spend time looking at what you love to do and where people will pay for help. Add value there. If you start adding more value than you’re currently adding in the work you do, that is the quickest path to greater income.
Earning more is about the psychology of change. How does change happen? How do you change? How have you made change in the past? Study that and apply it to building your income, and success is much more likely! I look forward to any questions and feedback.
This article originally appeared in the Fall 2009 edition of the Natural Investing newsletter
Trackback from your site.