If you’re just tuning in, I’m in the middle of a paint-by-numbers series on how more Americans can reach financial independence.
I’ll cover all the important topics, from saving and investing to diversification, asset allocation, stock selection and the advantages of “asymmetrical risk.” (That’s higher returns with less downside.)
I began this series with a basic truism: There can be no significant investment without savings.
How do you save more? By maximizing your income and living beneath your means.
Spending decisions are highly personal, of course. No one knows more than you do about the needless waste or excess in your budget.
These decisions aren’t easy but are an essential first step in the lifelong process of investing and compounding your money.
However, you can reduce the pressure to cut costs by maximizing your income.
So let’s spend a moment talking about that…
In today’s knowledge-based economy, your earned income is generally determined by nine factors:
- Your educational attainment or specialized skills
- Your chosen profession (and specialization)
- Your years of experience
- Your hours worked
- Your work ethic
- Your social skills
- Your competence and proficiency
- Your ability to cooperate with, inspire and lead your co-workers
- Your ambition to rise in your organization.
The lesson is clear. If you want to earn more, make yourself indispensable to someone.
Yes, some people are born with greater genetic gifts than others. You and I were not born with the looks of Cary Grant, the athleticism of LeBron James or the intellect of Isaac Newton.
Nature deals some people better hands than others. But we each have a responsibility to play the one we’re dealt as well as possible.
From an economic standpoint, that means attaining education or marketable skills; showing competence, reliability and integrity at work; and doing whatever is required to advance in our organizations. (Or seeking out other employers who offer that opportunity.)
This is about way more than money…
As someone who spent his youth doing maintenance on a truck terminal, working the night shift in an auto parts warehouse and waiting tables in a tavern, I can assure you that life is far more enjoyable when you have mentally challenging work that brings out the best in you.
Indeed, polls show that high net worth individuals often describe their greatest satisfaction as “a feeling of earned success.”
Beyond advancing your own personal development and self-actualization, generating a higher income also allows you to save more without living like a miser or passing up everyday luxuries like dining out or traveling to new and interesting places. (Or assisting friends and family members who might need a helping hand.)
The U.S. economy is growing at the fastest pace in three decades. The Labor Department recently reported that U.S. employers have a record number of job openings.
Businesses nationwide want smart, ethical, self-motivated employees – Black or white, male or female – who are willing to learn and eager to take on responsibilities.
If you’re in the workforce today, make sure you fit that description.
Yes, you’ll enjoy a higher income and standard of living today.
But you’ll also assure yourself a more comfortable retirement tomorrow.