Do you want to earn more than a million dollars during your working life? According to the US Census Bureau Report, you can if you complete high school and work for 40 years. For the same lifetime of working, you can increase your earnings above $4 million, which is more than three times the amount earned with just a high school diploma, by earning a professional degree. In our society, these statistics reveal a unique relationship between education and training and personal income growth. Although not expressed in the above statistics, any relevant education and training opportunities, whether offered on the job, at special seminars, in workshops, and during apprenticeships that expand knowledge, develop new skills, and increase productivity, are related to increases in personal income.
I’m sure you’re familiar with many great success stories of people who have beaten the average by earning larger sums of money in a much shorter period of time than 40 years. I met with a business owner to introduce him to certain financial products that will allow him to expand and improve his business. He promptly informed me that he has never had a loan. He proudly shared with me that he is debt free and currently owns a personal residence, rental apartments, barbershops and Bar-BQ restaurants. His business transactions are all in cash as he buys and sells assets. His model for business expansion or entering a new company is to first buy the necessary equipment and facilities for the company and then open the business without debt. He firmly stated that “a person who needs a loan to start a business does not need to be in business.”
Many may disagree with this business philosophy and speculate that perhaps he could have generated more income and accumulated greater wealth using the concept of leverage, but this businessman has defined his success. He has debt-free cash-generating assets in excess of $1 million in value, and has cash set aside for each of his children should they decide to embark on an entrepreneurial path. This gentleman is in his early sixties, does not have a high school diploma, and cannot read or write.
Bill Gates dropped out of Harvard University in his junior year to pursue his vision and became a billionaire in less than 40 years. I am truly impressed with each of these stories and many others that inspire many of us in various areas of our lives. I am also particularly impressed with US Census data which suggests that in this society the masses can also reach an impressive financial milestone. So whether you fit the profile of the aforementioned business people or you’re a representative of US Census data, the wisdom is that being prepared and having the right attitude and courage to act enables greater opportunity to fully realize your earning potential when opportunities present themselves. here.
Now, just as you expect to have growing income during a lifetime working period, at the same time, you want to be keenly aware of how to avoid an erosion of your income, any reduction in your accumulations, and a decline in your standard of living resulting in less money. to buy the family home, educate the children, take family vacations, and plan for retirement.
Therefore, whatever amount of money is earned during a lifetime working period, you need to be aware of how to spend and manage it wisely to achieve and maintain a high standard of living. Recognizing that each personal situation varies and may require a different approach to care, there are six areas where some effort should be made to preserve earnings and allow for future growth.
First, poor health, engaging in high-risk behaviors, and neglecting known preventative health and medical advice increase the occurrence of disease, strain personal finances, and reduce income. According to data from the California Health Interview Survey that was collected during a period of economic growth (2007), almost one in 13 Californians had some type of medical debt, and those with debt were twice as likely as the who had no debts to report delays in medical care. obtain necessary medical care. The cost of medical care has threatened the finances of many families and has become one of the most common causes of personal bankruptcy in our country.
Being physically active, eating a nutrient-rich diet and reducing caloric intake, avoiding tobacco and alcohol consumption, adapting appropriately to stress, wearing a seat belt, and practicing proper infection prevention and control procedures are all good health habits that will reduce personal risk. for chronic conditions such as heart disease, hypertension, diabetes, obesity, accidents and injuries, and infectious diseases. These conditions can create a huge hole in your finances and deplete your life’s earnings. Good personal health habits can reduce the risk of these acute and chronic conditions and offer effective disease prevention or control, if present.
Why not practice good health habits and start as soon as possible?
Second, not taking advantage of education and training opportunities can leave you unprepared when opportunity knocks. As a result, the opportunity for an increase in income, promotion or a move to a higher level, a new job or a new company opportunity is lost. Since the cost of goods and services often rises at rates that exceed the income of many households, it is essential that you stay alert and be prepared when an opportunity presents itself that will improve your income, lifestyle or standard of living.
You can be prepared for the changes that are taking place in the market by taking a course, seeking additional training, and having the courage to explore new opportunities for advancement. To our surprise, cost-of-living increases often don’t keep up with the cost of goods and services. You may need to adapt by seeking promotions, new career opportunities, gaining new skills and creating multiple streams of income now emerging as a wise strategy in the 21st century.
Third, you pay too much in interest on expensive personal loans and mortgages. Banks are very effective at accelerating money after encouraging consumers to make deposits and receive a small interest income in return. Banks are aggressive in investing deposits to make money through loans and other financial instruments that produce returns substantially higher than what depositors receive as interest income. For short-term loans, interest rates can exceed 20%. Paying high interest on credit card debt reduces your cash on hand or available for other family or personal needs. For a long-term loan of $200,000 at a fixed interest rate of 5.32%, the borrower will pay slightly more than the amount borrowed in interest payments alone over a 30-year period. ($400,714 total repayment with $200,714 interest) The amount of interest, which is the cost of the loan, is a significant subtraction from personal earnings even after adjusting for taxes. You, the borrower, should be aware of this significant cost and plan to reduce or offset this significant drain on lifetime earnings.
Fourth, each person must pay their fair share of taxes and we must continue to fight for good tax legislation that helps support the responsibilities as determined by the constitution. On the other hand, many pay unnecessary taxes due to a lack of knowledge of tax laws and the innovative effort that makes it possible to take full advantage of tax incentives. The government uses tax incentives and allows tax deductions to stimulate or direct activity in certain areas of our society, such as community service, national and international programs, starting a business, local development, locating in certain communities, providing job opportunities, charitable donations and certain investment programs. In some of these areas, you may find that opportunity to partner with the government for the benefit of yourself and others.
Fifth, failure to establish legal entities such as businesses, trusts, retirement programs, asset gifts, and other deferral programs can result in a loss of tax incentives, deductions, deferrals, additional income streams, and increased income. The Internet offers an excellent opportunity to start a business in the 21st century way and paves the way for many home-based operations.
Sixth, inappropriate spending: Our economy depends on two fundamentals: consumer confidence and consumer spending. During a recession, consumer spending decreases compared to a growing economy where consumer spending increases. Our available money is used to cover expenses, and the rest, if any, is usually left in banks in checking and savings accounts, or other types of bank financial instruments.
The common understanding is that money used to cover expenses or purchases is considered an act of spending, and money left over or deposited in the bank and not used for expenses, is considered savings. On the contrary, your deposit or money in the bank is also an act of spending. You have purchased banking services consisting of checking and storage privileges, agreed access, principal security, and a modest interest income. As clients, we need to rearrange our thinking and view all outlays of money and resources, including investments, as an act of spending.
In a rising or falling economy, you, the consumer, should focus on spending for value rather than buying or spending on impulse, or simply accumulating money (savings) in bank accounts. Spending for value achieves efficiency and engages self-responsibility by asking obvious reality check questions like: Is it wise for me to spend this money now? Do I get the best value for my dollar? Does this expense contribute to achieving my goal? Answering these questions is the beginning of control and the first defense against overspending. A great lesson to learn is how to safely invest my available cash similar to banks by applying Irving Fisher’s (1930s) concept of “The Velocity of Money”.
These six areas, if addressed, will allow you to retain more of your income, add additional growth income throughout your working life, and help you support and maintain a healthy standard of living.
