This is the second part of my three-part series, How to Get Rich (And Stay that Way). Part 1 covers four principles to avoid wealth-destruction. Here in Part 2 we discuss how to make more money. In the final part, we talk about why you might want to have a philosophy of zero debt.
Here’s how to make more money now and how to shore up the other side of the equation, spending less.
First, start a business.
You can start a business with $0 creating content (such as a blog on a topic you’re interested in or writing for other businesses).
You can also spend a few thousand dollars and launch an ecommerce business. If you’re interested, you can check out our Amazing Selling Machine program which shows you our model for ecommerce success.
There are a ton of resources online for business ideas to start. The most important thing is to jump in and give whatever you find a try.
Equally as important, however, is reducing your risk.
There’s a good chance whatever you try first won’t work. So don’t risk all your money on your first business.
I’d recommend not risking more than 10-20% of your total savings on any new business.
If you only have a few thousand dollars in savings, start a business that requires time, but little to no money (such as content writing).
If you have $100,000 or more in savings, I think you can comfortably risk $10K-$20K to launch a business as long as you’re committed to making it successful and learning from the process.
Do this a few times and your likelihood of creating a profitable business is quite high in my opinion.
A second way to make more money is to ask for a raise. More specifically, ask to get paid for what you produce.
This also applies to entrepreneurs. If you can create a service or product in which you get paid in proportion to the results you deliver, you’ll never have a hard time producing sales because there’s no risk for the buyer.
If you make $70,000 a year at a job and can find a way to make your company $300,000 (on top of your normal responsibilities), they’d be crazy not to pay you at least $50,000 more than what you’re making now.
You may have to prove your ability to produce over time, but if you can consistently make (or save) the company you work for lots of money, one of two things will happen: (1) they will pay you more or (2) one of their competitors will.
What is less likely to work is asking for a raise for no reason.
Every employee wants to make more for doing less, every business owner wants to pay employees less for doing more.
So you have to make it a win-win.
Third, become more valuable.
Ask a few business owners, especially in hot, fast-growing markets (like ecommerce) what job is hardest for them to find great people to do, then learn it and provide it as a service.
For example, finding really good conversion rate specialists who can increase the performance of landing pages and sales funnels is hard for most ecommerce businesses.
You either get overpriced agencies or marketers who don’t know what they’re doing.
Fortunately, there are thousands of blogs, tons of books, lots of courses, and thousands of videos you can go through to learn this exact skill.
Fourth, sell stuff (yes, your stuff).
If you own a boat, a motorcycle, a second home, or more than one gun (I’m talking to you, Texans), and you don’t have at least a million dollars in savings, start selling.
First, you get the cash from the sale of those items.
Second, you now need less space to store all your stuff. If you pay for a storage unit, you can cancel it and save that money. If you store the stuff in your house or apartment, you can downsize.
At one point, I thought I wanted to be Jason Bourne.
I took shooting classes, learned evasive driving, took knife fighting classes, did years of Krav Maga, and even learned to fly a helicopter.
I also learned to shoot a target the size of a grapefruit at 1,000 yards with a sniper rifle.
Later, when I realized I was in-fact not going to become Jason Bourne, I still had a $7,000 sniper rifle sitting in my closet collecting dust.
My Texan friends and family thought I was crazy when I sold this amazing piece of machinery online and pocketed the $4,000 in cash.
But when the heck was I going to use it? I had to drive an hour to the range to shoot it and for what? It took time, money in ammo, and pulled me away from more important, more meaningful pursuits.
But the expensive rifle was sitting there unused, so I felt the need to use it. So I sold it. Zero regrets.
As said in the movie Fight Club, “The things you own end up owning you.”
Your stuff takes up space, both physical and mental, and causes you to spend more money and time on storage, maintenance, and shuffling those things around than you might realize.
So get rid of it.
You could immediately end up with an extra $5,000 to $10,000 to invest in a business that might make you a millionaire in a few years.
The Other Side of the Equation: Spending Less
I don’t advocate being a miser, living in a single bedroom apartment with a spouse and two kids, eating ramen noodles, if your financial situation doesn’t require it.
By all means, live well. Live in a house you love. Drive a car you love to drive. Go on nice vacations. Buy great gifts for people you care about.
But make sure you (1) spend less than you make (at least 30% less) and (2) stop spending money on stuff that doesn’t make you happier.
The cost of your house, car, and other things should be in direct proportion to the amount of your wealth. You’re not entitled to the most expensive things in life if you haven’t earned the money to pay for them.
Wait. Delayed gratification is essential to building wealth. (See my comments on zero debt in Part 3.)
The book Happy Money goes into quite a bit of detail on how to spend money in a way that improves happiness based on research experiments and studies.
One of the major lessons is that buying stuff doesn’t make you happier. Happiness does not usually increase after buying a new house, for example. You get used to the new place fast.
You’re much better off setting that money aside and buying an experience, such as a vacation to a new place with friends or family. The memories provide long-lasting happiness dividends.
The biggest material purchases, which don’t make us any happier, such as homes, cars, boats, expensive toys, and jewelry are usually purchased with debt. Even a significant portion of iPhones are bought with debt. These purchases increase our living costs due to debt, maintenance, accessories, and storage. We have to keep working harder and longer just to cover the cost of these items which don’t provide any boost to happiness.
Here are a few ways to spend less so you can free up more cash, reduce debt, and become financially free sooner:
- Downsize your house or apartment (less space = less stuff = more money)
- Sell your car if you don’t absolutely need it
- Cut subscriptions (we don’t need six movie streaming options)
- Always ask for a discount on anything over $1,000 (for every Airbnb we rent, we always ask for a discount and save at least 10% most of the time)
Speaking of debt, what’s the right amount? I think it might be zero. Read the final part of this three-part series, The Justification for Zero Debt, here >>