Building wealth for most people seems like an unattainable goal. In fact, the concept of wealth is so abstract for many of us that we never stop to really think about what it takes to build wealth. We come up with all types of reasons, sometimes excuses, as to why we can’t or are unable to make progress. But it doesn’t have to be this way. When it comes building wealth, the two areas that we focus on here at ITB is creating wealth through investing and entrepreneurship. I’m often asked where it find money to do one or both of these things. Especially during periods of economic downturn. So how or where do you turn when you’re focused on creating long-term wealth but you still have seemingly competing day-to-day priorities? Below are 3 tips for generating the funds necessary for building wealth you can be proud of.
NEGOTIATE A BETTER SALARY
One of the most reliable ways to generate more income is also one that’s often overlooked. Your career is a great starting point for bringing home more money. Whether you’ve been at your job for a long time or, looking for a new job or are considering a new offer, you can make significant progress with your wealth building and generation goals with a 10, 20, or 30% improvement in your salary.
To negotiate a better salary there are a couple of steps you should take. First, do your research to find out what the current market rate is for your role. You can start by speaking with people in your industry that have similar roles. You can also use the web to do some of this research. There are a number of websites you can use, the most popular being Glassdoor. You can get a personalized salary report after you answer a few questions, such as your current salary, your location. Another website you can use is Payscale, you can get custom report as well by answering similar questions, including whether or not you work for a publicly traded company. Second, before you start negotiations with your current employer or a new employer, know the absolute minimum salary you’re willing to accept. Knowing the market rate can help you determine the absolute minimum you’re willing to accept. Make sure your absolute minimum is based on not only the market rate but also your current expenses plus at least 5 to 10%. Lastly, when negotiating a better salary, think in terms of gross-up. Gross-up is just additional money you get that will cover your taxes. For example, if an employer quotes you a base salary of $100k, that is usually the gross-pay but after you take out taxes, you’re net pay will be lower, sometimes much lower. Start thinking in gross-up terms when negotiating your salary. If the gross-up amount is significantly much higher than your net pay, negotiate in increments. Negotiate up in 10% increments, sometimes, this may require a change in employers for you to reach the amount you desire.
REVISIT YOUR EXPENSES
This one is an oldie but goodie. When was the last time you reviewed your monthly expenses? Considering the current economy, now is the perfect time to revisit your expenses and make adjustments. So how do you do it without turning it into a full-day exercise? If you have a pen and paper, write down your income based on how often you get paid. For example, if you’re paid every 2 weeks write down the your take home for the two weeks. Then, create three columns. Label, the first column, “the absolutes.” In this column list all of your expenses for the next 2 weeks that are completely unavoidable (rent, mortgage, utilities, groceries, transportation, childcare, debt payments, etc. In the second column, label it, “comfortable.” These are the nice-to-have items that make your life a bit more comfortable, aka “the wants.” For example, Netflix and the 20,000 streaming services that aren’t exactly necessities. The “comfortable” column will vary from person-to-person depending on interests and tastes. For example, for some people, stopping by the coffee shop every day makes their life a bit more comfortable. For others, it’s taking that money and spending it on the latest gadget. Label, the last column, “luxury.” These are the items that aren’t a necessity and do not fall in the comfortable category either. After you’ve listed your expenses, do you see areas you can cut back 10, 20 or 30%? Don’t forget about hidden subscriptions. There are a couple of apps you can use to find hidden expenses. Truebill will not only find subscriptions for you but will also cancel them (for a fee). place to Evaluating your expenses for additional income can lead to increased savings without a lot of stress.
START OR SCALE YOUR BUSINESS: FIND FUNDING & PAY YOURSELF
As I mentioned above, one of the best ways to build long-lasting wealth is to start your own business. That’s not to say everyone should be a business owner but if you’re willing to work hard and persist you can exponentially grow your wealth. One of the biggest challenges new business owners have is finding funding to either grow or even start their business properly. There are a number of resources you can use to fund your business. You can start with the most obvious choice, your local bank, preferably a Credit Union. Banks are notoriously difficult to obtain loans from as a new business owner but every once in a while, they do lend the necessary funds.
Next, don’t overlook Crowdfunding platforms such as. The key to successfully raising money on these platforms is having a strategy for outreach. Creating a page on the platform is not enough, you must create an outreach campaign for friends, friends of friends, family, strangers and everyone in-between and share the details of your campaign.
There are a number of companies that have competitions for new business owners. For example, every year
FedEx has a small business competition and awards $250,000 to twelve small businesses. Intuit, the same company that owns Turbotax has a small business grant program, “Love Our Local Small Business” competition that awards between $25,000 to $50,000 to small businesses. Check your local library for a business plan competition. For most if not all business plan competitions all you need is an idea and a business plan. You can create a business plan pretty quickly with LivePlan. They have sample plans to guide you through the process.
As you can see there are plenty of resources to help you start & scale your business. Once you’ve established your business and have started make revenue, the first thing you must do is pay yourself. The reason you should do this right from the beginning because it’s very easy to lose sight of your income when all you focus on is putting every single dollar earned right back in to the business. When you do this you end up putting a lot more into the business than you intend and it’s very easy to lose sight of your other financial goals. Your focus should always be on being able to cover your personal monthly expenses first, then set aside at least 10% toward savings (this is how you grow your wealth). Try to be consistent with how much you save regardless of the amount of revenue you’re bringing it.
Building wealth doesn’t have to be an abstract concept for you and reality for other people. It could be for you. It is for you. But it will take some work and planning to make progress. I hope you’ll implement some of the suggestions above to create long-lasting generational wealth.