2 Ways to Have More Money
"It seems like it's going to take so long to have more money."
I heard this from one of my recurring clients a few weeks ago. We had one of our quarterly meetings where we caught up on her progress. She had already eliminated her debt, set up her Roth IRA, increased her 401k contribution, and established her saving’s goals. From an outsider's perspective, she was doing very well and clearly on the path to financial success.
However, she had been at the same job for a few years, had stalled in the amount of money she was able to make, and stated that she was overspending to compensate for her boredom.
She wanted to accelerate her income but didn’t know how to go about that. We talked extensively about this subject but I told her it really breaks down to two options when you want more money:
Make More Money
Spend Less Money
I explained to her that there is not a magical formula when it comes to having more money. The easiest way to have more money is to make more money. She was spending money out of boredom but could have been spending that time creating a venture of her own, a side hustle, or picking up an extra job. She liked her healthcare, 401k match, and the security of her job. One thing she didn't like is that she had an earning cap for her position.
This is the employee's conundrum.
So, we created a new goal for her. Instead of spending money out of boredom on the weekend, she was going to be earning it. She decided to work in retail and save extra cash she was making towards a fund for buying her first home. She knew that she didn't want to be an entrepreneur, but just wanted to make more money. This was her perfect solution, and she has already saved a few hundred dollars towards her new home!
If you’re struggling to figure out your perfect solution, I recommend viewing the cash flow quadrant and decide where you want to be in it. The cash flow quadrant was featured in Robert Kiyosaki's book "Rich Dad, Poor Dad." It is a controversial personal finance book but it is a staple. The premise of the book is differentiating his real father, who had a poor money mindset, with his friend's father who had a wealthy money mindset. The book highlights the differences between how the rich view money versus how the poor view money. Its conclusion shows that how you think about money can be your greatest asset or your biggest downfall. It teaches you how to think about money differently.
The cash flow quadrant illustrates the different ways that we make money. The cash flow quadrant shows how the rich get richer, and the poor get poorer because the rich are utilizing tools that the poor are not. In the cash flow quadrant, it highlights the four primary ways that individuals earn money; employee, business owner, self-employed, and investor. If you are brilliant, you may take part in all four of these areas! As you can see, 95% of people trade their time for money. Only 5% of people are business owners or investors meaning that they can make money without physically doing something.
Did you know that the average millionaire in America has seven income streams? They don't merely rely on their job; they look for other ways to earn income. Are you making money outside of your job? If you want to make more money like my client, you will have to look for other ways to earn it! I urge you to invest your time in learning how you to start another income stream. A great place would be picking up this book.
In conclusion, passive income is the way to sustain and grow your financial life. You can only save so much money being an employee or being self-employed. If you want to truly accelerate your wealth, you need to look for other ways to earn. Learn how to make money passively instead of working yourself silly for every dime you make.