Why more income WON'T make you RICH

[TrustedOne]

Hi All, If you're on this forum, I assume you're here to make money via the Internet. Fantastic. What if I said more income won't make you any richer? Huh?

In my experience people have what I'll call money habits which are ingrained and lifelong in the making. Our current financial results in life are a direct result of these money habits which in turn come from our money mindset (beliefs about money). You may ask "What does this have to do with IM?" and my answer is "Everything!" If our current money results aren't flash (= financial foundations for money are faulty), then building a big IM building on those foundations only means a bigger crash... sooner or later. Poor money habits always seem to find a way to undo all our hard work.

So just as we are upskilling our IT skills to build our IM businesses on this forum, it's also critical to upskill our money habits to stop our money working against us.

Easy money habit red flag test: Is there too much month left at the end of my money? lol

Next check: What percentage of my income do I consume (including loan repayments) versus the percentage I invest? Ouch

Here's the catch: Unfortunately despite all our best intentions, earning more money doesn't change our money consumption percentage. So if we are consuming a high percent of our income now, no matter how much more IM income we generate we'll continue to have too much month at the end of our money. Dang!

Part of building a successful life from our IM business is developing our money habits. Here's some quick money pointers:

1. Invest 10% of all your income into something other than your current business venture. 2. Use another 10% of your income to retire debt, once the debt is gone, increase 1 above to 20%. 3. Build reciprocity into your life, give 10% of your income to charity. 4. No more personal debt (this includes no car loans). 5. Spend the rest (after putting aside whatever you need to for the taxman).

If you can't make the 10% targets, start at a lower percentage and increase it by 1% every two months.

What other financial IQ ideas are out there? This is not about investment products or insurances, I am asking for healthy money habits so our IM businesses are built on solid financial foundations.

What's your view on what I've just said? Do you have any questions?

To your success.

[Talinn]

I don't know why but my brain hurt trying to understand your post

[TrustedOne]

Which part doesn't make sense?

[jame58rown]

The bit after "Hi All,"

[Talinn]

Originally Posted by TrustedOne

Which part doesn't make sense?

Well I can't say that it doesn't make sense since I couldn't understand much of what you are saying.

[AndrewCavanagh]

In simple language:

# If you spend more than you earn then you're screwed financially regardless of your income.

# Learn to spend LESS than you earn and invest at least 10% of your income (I'd actually recommend 30% to 50%...that WILL make you rich over time).


The biggest mistake most people make is they think that making more money will solve their problems instead of realizing that their core problem is they're just spending too much.

That habit will kill you regardless of what income you make. That's how people win millions of dollars and manage to waste it all...back being broke again in a few years.

On the other hand there are PLENTY of millionaires who never made more than the average annual salary.

Becoming wealthy is really about how you manage your money more than how much you make.

The good news is if you make a LOT of money AND you're a good money manager you're going to get wealthy very fast.

Kindest regards,
Andrew Cavanagh

[Toots]

Originally Posted by Talinn

I don't know why but my brain hurt trying to understand your post

It's people like this that need the most financial help. This post has a very real message but some people just aren't getting it. We all need to change our spending habits.

[kf]

Originally Posted by AndrewCavanagh

Becoming wealthy is really about how you manage your money more than how much you make.

Absolutely. It doesn't take a big win to get wealthy .... it takes consistent, small efforts. You can fill a glass with a blast of water - notice some will splash out because of the force, AND the same glass will fill and overflow left under a dripping tap.

The good news is if you make a LOT of money AND you're a good money manager you're going to get wealthy very fast.

Amen to that. That's where getting on the right track starting out can set you up for major success when the money really starts coming in.

~ Kate

[TrustedOne]

OK. Clearly the communication issue is my problem (as so far I've got 2 votes against and none for).

Let me try again. The amount of $ we have right now and the way $ flows around us (in and out) is a result of how we have behaved to date eg if lots of our income is going out on loan payments, we've been trying to get ahead (or get cool stuff etc) by borrowing $.

What causes us to get into debt is our beliefs (often we're not even aware of these) around money. Eg some of the types of beliefs attached to this borrowing behaviour are "The only way to get ahead is to borrow and worry about paying for things later" "I need XYZ now" "Stuff will make me happy" etc

The challenge is, if our $ belief has formed a habit of spending every last cent we make, or borrowing so every last cent is needed to make the payments, then there is nothing left over to build wealth with.

So when our IM income goes up, so does our spending/borrowing and we never get any surplus. We're not building any wealth, we're not saving for a rainy day, and we won't get financially free because we now need both our job income and our IM income to cover our greatly increased expenses.

How am I doing with the explanation so far? What else is missing?

[Pat Ordenes]

So, to break it down...
If your input is larger than your output, ITs ALL GOOD!

[AndrewCavanagh]

In written communication it's far easier to understand people who use words instead of signs like % and $.

In my opinion abberviations and jargons are just the signs of a lazy writer...someone not willing to put in the effort to write words fully and use plain language so they can be understood more easily.

That's just my opinion though.

Your original post gave me a headache too.

Kindest regards,
Andrew Cavanagh

[emjei]

So stop spending money on unuseful things buy only those who are necessary...

[TrustedOne]

Sorry about the abbreviations. Was trying to limit the length of the post. Have now taken them out.

It is true that "If your outgo is greater than your income then your upkeep will be your downfall"

I'm trying to shift our thinking a bit past this. If we're in business to become financially free (ie drop the day job) then have we actually calculated how much we need coming in the front door to achieve this?

Secondly, if we're aiming for financial freedom, we need to NOT SPEND any of the income coming off our IM business. It needs to be parked (create a rainy day fund) whilst the IM business grows to the necessary volume. Then when we shift from one to the other, we can actually afford to do it.

[Intrepreneur]

Change the formula

$ into to pocket, $ out to business investment instead of sweets at the shop!

Instead of

$ into pocket, $ out to sweets in the shop!

[TrustedOne]

Originally Posted by Paul McQuillan

This thread will change lives, I'm sure of it.....

Thanks for the kind words.

[Mukul Verma]

I 100% agree with the original post. How you manage is 80% of the battle when it comes to money.

Too add for me the most important number is net worth (Assets - Liabilities). Check this each month and if its not going up, ask why? If it does not go up 2 months in a row, figure out why and change it. If this is going up, I personally think I am good.

Now one more thing on net worth, which I am experiencing. If you are planning on taking trips that will hit for for a sum of money or anything like buying a car etc.. that will not give you a asset. Make sure each month prior that the amount you saved for it, you balance that out, so you will not see a 10K or whatever hit in that month.

Mukul