How To Become Financially Successful
Introduction
At Millennial Economics, we believe that with the right education, goal setting, and game plan, anyone can become financially successful. Being financially successful will not only give you the opportunity to do and acquire many of the things you want in life, but it will also provide you with the peace of knowing you are not a victim of your financial situation. You are the captain of your ship, and the peace that can bring is invaluable,
In this article, we will discuss all of the elements you will need to learn and implement to become financially successful. We will be covering a lot of ground here, so grab a coffee or your favorite drink, and let’s get into it.
Education
Education is the building block of everything you will do to become financially successful. Before you begin doing anything you must know what to do. Luckily you are here pursuing knowledge right now! Congratulations!
What Should I Be Learning?
There are a few areas we recommend becoming fluent in before you put a plan in place to become financially successful.
Budgeting
Compound Interest
Beginner Level Investing
Goal Setting and Self Discipline
Increasing Your Income
Some of these things we will cover in the article and some we won’t, however having a grasp of these topics will help you in coming up with a plan. Having a grasp of these points will also help you to analyze your decisions. As you grow your knowledge you will begin to be able to analyze opportunities and decisions that present themselves to you - deciding whether you should take part in them or run far far away. You will also start to realize that many people are not good at this analysis process, which is why so many people find themself in bad financial positions.
Where Can I Find Good Information?
Our access to information is unbelievable. We are a few keystrokes away from being presented with the information we desire. We simply need to intentionally pursue this knowledge and dedicate the time to doing so. Below are a few ways we like to consume content at Millennial Economics, along with a few recommendations for each medium.
Video (YouTube)
As you probably know, YouTube is an amazing resource for good financial content. As with anything, you need to make sure the information you are learning is sound and coming from a well educated source that teaches principles that align with your goals. There are many people out there that have differing opinions about out to manage your finances, invest, and live. It is important to establish what you want your journey to look like and consume content from people who have the same convictions as you. One thing to remember, if it seems too good to be true it most likely is. Being financially successful isn’t always easy. It takes self-discipline, a well thought out strategy, and time. If you find someone that suggests you can do something simple to earn a quick million dollars you should probably move on.
Here are some YouTube Channels we enjoy:
The Dave Ramsey Show - Dave Ramsey is a staple of the finance community. He hosts a radio show where he answers questions from people calling in. If you have not watched any of his videos or read any of his books, I would highly recommend you do so. Learning from Dave Ramsey is highly recommended if you are just starting your financial journey. He is most famous for teaching people how to become debt free, and he has probably had a hand in creating more millionaires than anyone else in the finance community. The methodology he teaches is very conservative. I like that he is honest with his community when he talks about what it takes to be financially successful. His audience is huge, and it is so for good reason.
Graham Stephan - Graham Stephan also has a very large following on YouTube. He is a California based realtor turned investor that speaks on all things finance. He has a wealth of knowledge and speaks on principles he lives himself. He is a proponent of leveraging other people’s money to buy real estate. If you’re looking for a channel covering many topics you may enjoy following Graham Stephan. He also hosts a podcast called “The Iced Coffee Hour” which he also streams the videos for on YouTube.
Andrei Jikh - Andrei Jikh is a young YouTuber who also speaks on a wide variety of financial topics. From budgeting to bitcoin, Andrei adds a magical flair to his YouTube videos. He has become well known for his videos’ high production quality. Andrei is very successful and educates his audience well. He is another great option if you are looking for a channel covering many topics.
Ryan Scribner - Ryan Scribner is a young YouTuber who teaches personal finance. While he also covers a wide range of topics, he produces tutorial and inspirational content that is very valuable. If you are looking to learn about side hustles, how to start thinking about money, and general personal finance topics, Ryan Scribner is a great option.
CNBC Make It - CNBC Make It is a YouTube channel that produces a series called Millennial Money. Millennial Money is a series that analyzes the lives and money habits of millennials across the country. If you are looking to see how others live, work, budget, and invest, this is a series definitely worth giving some time to.
Podcasts
Millennial Economics | A Personal Finance Podcast - Of course, we had to include our podcast on this list. If you are looking for a podcast that discusses a wide range of financial topics in an easy to understand way, this is the podcast for you! From buying real estate to investing in the stock market, we cover it all!
The Dave Ramsey Show - Along with their YouTube channel, Dave publishes a podcast episode daily. He takes calls from listeners and covers a wide range of topics. If you are new to personal finance, this is a great place to start. Simply search “Dave Ramsey” wherever you listen to podcasts.
How to Money - How to Money is hosted by two guys who talk about good money habits. They relate their advice to the things they are doing in their personal lives. They also cover a wide range of topics, and in each episode they try a new craft beer! The hosts are likable and they serve their content up in an easy to understand way.
Books
The Total Money Makeover by Dave Ramsey - This is Dave Ramsey’s flagship book. In it he teaches his baby steps and gives many case studies on people who have had success with it. If you are new to the personal finance space I highly recommend giving this a read. Dave Ramsey has had a profound impact on many people’s lives. This book will give you a good understanding of his teachings.
MONEY Master The Game: 7 Simple Steps to Financial Freedom by Tony Robbins- MONEY Master the Game is a great book if you are wanting to learn the key principles you need to master to become financially free. This is a large book and it’s brimming with good content. In the book, Tony Robbins talks about the psychology around money along with investing and budgeting principles. He consults some of the most successful people in the world and shares their advice with you on these topics. If you aren’t afraid of a big book this is a great read.
Rich Dad Poor Dad by Robert Kiyosaki - I have personally given this book to more people than any other book on personal finance. This is a foundational book for anyone looking to be successful with their money and develop a good money mindset. In the book, Robert details his relationship with his Poor Dad (his biological father) and his Rich Dad (his friend’s father). The book is an easy read and is presented in a storytelling way, which keeps it engaging. The biggest takeaway is the principle of Assets vs. Liabilities. I would recommend this book to anyone.
Extreme Ownership by Jocko Willink & Leif Babin- Extreme Ownership is the only book on this list that is not a book on finance. Extreme Ownership is written by two Navy Seals. In the book, Jocko and Leif talk about leadership, accountability, and mindset. At Millennial Economics we believe a large part of financial success has to do with mastering your mindset and emotions. This book will not only show you how to be a great leader in life but also with your money.
The Millionaire Next Door: The Surprising Secrets of America’s Wealthy by Thomas J. Stanley - This is a fascinating read. In this book, Thomas provides a wealth of data showing how America’s millionaires live. He details their spending habits, the careers they have, and even provides details on the cars they drive. The biggest takeaway from this book is that millionaires are not mythical beings. Oftentimes, they look just like you and me. If you are looking for an interesting read this is the book for you.
Establish Your Goals
Establishing what your goals are is an important part of your journey to becoming financially successful. If you don’t know where you are going you will have a hard time getting there. Starting your financial journey without establishing your goals would be like heading out on a road trip without a destination, hoping you show up at the correct place.
Your financial goals should include things that are very important and personal to you. Things like leaving an inheritance for your children or being able to pay for your kids’ college are things that can keep you headed in the right direction when you are tempted to fall off course. Some of your goals might also be more emotional in nature. Maybe you have felt the pressure of living paycheck to paycheck and you don’t want to feel that way any longer. Maybe you dream of becoming financially independent so you can pursue the career you have always dreamed of.
It is important to have a strong “why” to motivate you on your journey to financial success. These goals will serve as a guiding light when things aren’t easy. The pain of staying the same has to be greater than the pain of change, and I can promise you that you will encounter obstacles on your journey that will make you want to compromise and give up. Being prepared for this will help you overcome them.
Create A Budget
Creating a budget is one of the most important parts of becoming financially successful in 2021. This is something you should spend a good deal of time and energy establishing and mastering. Creating a budget isn’t hard, but adhering to your budget every month can be challenging. As we have said before, financial success isn’t all about math, it is about mastering your actions and emotions so they align with the goals you have for yourself.
Listen to this Millennial Economics podcast episode on budgeting:
Building Your Budget
Building your budget is not hard. You can create one yourself and reference it throughout the year. There are also many budgeting apps and pre-made budgeting spreadsheets you can access. If you are interested in one of these options I would encourage you to do a bit of research to find one that is a good fit for you. In this article, we will discuss the steps you will need to take to build a budget for yourself.
Step 1 - Calculate Your After-Tax Monthly Income
The first step in creating your budget is to calculate your after-tax income, and it is important to remember to calculate your after tax income. This is the amount of money you have to work with each month. If you don’t know this number you can look at your bank statements if your paychecks are direct deposited, or you can contact your company’s HR department to get your most recent paystub.
Step 2 - Make a List of All Your Expenses
The second step of making a thorough monthly budget is calculating all of your monthly expenses. I can not emphasize this enough, you need to be very thorough here and calculate all of your expenses. Take some time to sit down and calculate how much you pay for things like this (Feel free to copy and paste this into your budget spreadsheet):
HOUSING
Mortgage / Rent
Home / Rental Insurance
Electricity
Gas / Oil
Water / Sewer / Trash
Phone
Cable / Satellite
Internet
Furnishing / Appliances
Lawn / Garden
Maintenance / Improvements
TRANSPORTATION
Car Payments
Auto Insurance
Fuel
Public Transporation
Repairs / Maintenance
Registration / License
FOOD
Groceries
Eating Out
ENTERTAINMENT
Video / DVD / Movies
Concerts / Plays
Sports
Outdoor Recreation
HEALTH
Health Insurance
Gym Membership
Doctors / Dentist Visits
Medicine / Prescriptions
Veterinarian
Life Insurance
Step 3 - Analyze What You Can Cut Back On
As you begin to analyze your monthly expenses, typically one of two things will happen. Either you will be surprised at how much money you truly have left over at the end of the month, or you will realize you don’t have much money after you pay your bills to accomplish your goals. Whatever you uncover, build a plan to address it. If you have more margin than you expected make sure you keep your budget tight. There may even be additional opportunities for you to cut back further. If things are looking a bit tight you need to take a hard look at your expenses and cut away all the fat. You may also need to think of ways you can increase your income.
Increasing your income is always a good idea and can accelerate the time it takes for you to achieve your goals. You can increase your income in many different ways. It might be as simple as getting a job in the evening or on the weekends. You may also work toward getting a promotion or raise at work. Some people also decide to start a side hustle. There are many options to choose from. Analyze which is best for you.
Step 4 - Decide What You Will Do With your Margin
This is the fun part. You get to decide what you are going to do with the money you have left over every month.
To calculate your monthly margin you will take your monthly expenses and subtract that number from your after-tax monthly income.
After-Tax Monthly Income - Expenses = Monthly Margin
Once you have established what your margin is, take a look at your goals and align what you use your margin for with those goals. If your goal is to get out of debt (it should be a goal if you have high-interest debt) then use all of that hard earned money to pay off the debts you have.
For more information on paying off your debt read this article: How To Get Out of Debt in 2021
If your goal is to start or increase your investing, you now have the opportunity to start doing that. After going through this budgeting and planning process you will soon realize that a budget is not a constraint on your money and life. A good budget actually provides freedom and intention to your finances. It is not uncommon for one to feel as though they have more money than they did before they started budgeting. When you assign a task to all of your dollars you prevent money from “falling through the cracks” each month. So much of our money each month is spent on things we never intended it to be spent on. When we stop this we feel as though we have more money than we did before we started budgeting.
Pay Off Debt
Paying off debt is often what most people who are just starting to get their finances together first focus on, and with good reason. Getting out of debt, especially high interest consumer debt, is the foundation of what you are looking to build long term. First we will take a look at why you should get out of debt, then we will assess a couple methodologies on how to do so.
Why Should I Get Out of Debt in 2021?
Having high interest debt is forcing your money to do the opposite of what you want. At the end of the day, we want our money to work for us. We want our money to grow, and we accomplish that by investing in things like stocks and real estate. When you have high interest debt your money is crippled. You purchase something at a price and end up paying much more for it in the long run. Let’s take a look at a credit card balance calculator.
On average, Americans have $6,194 of credit card debt. The average interest rate on this debt is just north of 17%, so in our example, above we analyzed how long it would take to pay off a balance of $6,000 with a 17% interest rate. We also took a look at how much total we will have paid once the balance is completely paid off.
In this example, it would take 444 months to pay off that $6,000 balance if just the minimum payments were made. In total, we would have paid $13,313.91.
Those numbers are staggering, and this example proves why you should stay far away from high interest debt. That same $13,313 dollars invested in the market getting an annual return of 7% would turn into $101,341 in 30 years. That is a big price to pay for $6,000 worth of purchases!
This math works out the same on vehicle loans, personal loans, student loans, etc. It is best to stay away from these types of transactions because it makes your dollars work against you, not for you.
How Can I Get Out of Debt?
Now that we have a good understanding of why we should get out of debt, let’s take a look at some ways to actually do so.
There are two main methodologies that most in the finance community adhere to when it comes to becoming debt free. We will take a look at both and assess the pros and cons of each.
The Debt Avalanche Method - The Debt Avalanche Method would have you list your debts from highest to lowest interest rate and would advise to work your way down the list. Let’s take a look at an example.
We will take a look at Andrew. Andrew is looking to get out of debt and he has decided to use the Debt Avalanche method to do so. He has a $20,000 vehicle loan at 6%, a $5,000 personal loan at 9%, $6,000 in credit card debt at 17%, and $15,000 in student loans at 6%. Adhering to the Debt Avalanche Method, Andrew would list his debt as follows:
$6,000 Credit Card at 17%
$5,000 Personal Loan at 9%
$20,000 Vehicle Loan at 6%
$15,000 Student Loan at 6%
This method leans heavily on the math of Andrew’s situation. If Andrew pays off his highest interest debts first he is saving money by avoiding paying the high interest rates on those balances.
The Debt Snowball Method - The Debt Snowball Method would have you list your debts from smallest to largest and work on paying off the smallest of the balances first. Let’s use Andrew as our example again.
If Andrew were to adhere to the Debt Snowball Method he would list his debts as follows:
$5,000 Personal Loan at 9%.
$6,000 Credit Card at 17%
$15,000 Student Loan at 6%
$20,000 Vehicle Loan at 6%
At first glance, this method may seem to have a major hole in it. After all, we just explained why it would be beneficial to pay off your highest interest balances first. If we take a closer look at the Debt Snowball Method however, we realize the method focuses less on the numbers and more on the emotional and behavioral side to paying off debt.
With the Debt Snowball Method you will get your first win quickly. By focusing all your efforts on the smallest balance you ensure you find a small success as fast as possible. Psychologically this does wonders for our continued motivation. When we experience a win we want to continue working as hard or harder to feel the next one - making our way down our list of debts. By the time you make it to your largest debt you are motivated and have the margin each month you were using to simply pay the minimum payments on the other balances you used to have to finish your debt free journey!
While I personally prefer the Debt Snowball Method over the Debt Avalanche Method, I would encourage you to assess both and pick the one that is right for you. Just remember, paying off debt is a key part to becoming financially successful in 2021. Good luck on your journey!
Build an Emergency Fund
The process of building an emergency fund is fun! By the time you are to this step you should have your goals established, a solid budget in place, and be debt free! This is the first step in your journey to becoming financially successful where you get to pay yourself! First, we will take a look at why having an emergency fund is important, and then we will talk about how to build one.
Why is an Emergency Fund Important?
Emergency Funds are important because they give us a buffer against the things that life throws at us. Many people can’t even afford a $500 circumstance that is unforeseen. When they do happen, and they will, these people turn to their credit cards or personal loans to pay for them. This only gets them even further from where they should and want to be financially.
Emergency Funds provide peace of mind and give us something to draw on in case of, you guessed it, an emergency. We are able to use cash reserves to pay for these things instead of taking out high interest debt, which as we learned makes our money work against us.
Most people in the finance community recommend saving 3-6 months’ worth of your monthly expenses as your emergency fund.
It is important to build your emergency fund on your expenses, not your income. In case of an emergency, you want to be able to sustain a bare bones lifestyle for 3-6 months. Chances are at this point your monthly income is more than what you would need to just pay the bills.
As an example, if Julie’s monthly income is $6,000 and her expenses are $3500, Julie should aim to have an emergency fund of $10,500 - $21,000.
When deciding on whether you need 3 or 6 months, consider how many people are dependant on your income. If you are single you may consider only saving 3 months. If you have a stay at home spouse with children you may consider leaning more towards 6 months.
How Do I Build an Emergency Fund?
Building an Emergency Fund is a fairly straight forward process. You will take all of your monthly margin, which at this point in your financial journey should be significant, and you will put this money into a savings account. The bigger question we need to answer when building a plan on how we are going to build our emergency fund is what account are we going to keep our money in.
There are two popular types of accounts we recommend keeping your emergency fund in.
A General Savings Account - This is where most people save their money. They go to their bank or local credit union, open up a savings account, and save their money there. These accounts are very convenient, sometimes too convenient, but there are some cons when it comes to saving this way. General savings accounts have very low interest rates, typically 0.01%.
A High Yield Savings Account - Many people don’t know about or save with a high yield saving account. This is my favorite way of saving money long term. They are a great option for your Emergency Fund. A high yield savings account is typically provided by an online bank, and they provide a higher interest rate on the money you keep there. Right now you can find interest rates around 0.5%. While these interest rates certainly won’t make you rich, they are far higher than the 0.01% you will find at your local bank or credit union.
I personally use Yotta as my high yield savings account. They have gamified the savings process with weekly drawings for those who save with them. The prizes scale all the way up to things like a Tesla or $10,000,000! When saving with Yotta your money is FDIC insured so you can be sure it is safe. I personally enjoy the fun it brings to my savings process.
Read my review on Yotta here - Yotta Savings Review 2021
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Start Investing
Investing your money is how you truly get your money working for you. While many of the principles to investing can be quite simple, beginning to invest can be quite intimidating. At Millennial Economics we are fans of keeping things simple and passive. If you haven’t already, at some point you will read an article, watch a video, or listen to a podcast that talks about how very active investors made millions, and while some of these stories are true, we like to keep things simple and straightforward.
The topic of investing is incredibly broad. We are going to give the basics here, but if you would like to read a more detailed article on How to Start Investing in 2021 for Beginners.
What is Investing?
The principle of investing your money is quite simple. Essentially you purchase something that you hope will increase in value. The process of investing becomes more nuanced when you look at all of the options of available things to invest in. Each investment option comes with certain benefits and projected returns, but it is also important to remember that all investments come with a degree of risk. If they didn’t, everyone would invest in them.
Most often the investments with the highest potential returns come with the highest level of risk. The investments with lower projected returns typically come with lower risk. Again, there are many investment options out there, far too many for us to analyze and list here. We will talk briefly about a few of these options below.
Why is Investing Important?
Investing is important because it puts your money in a position to work for you. At the beginning of your financial journey you were probably paying interest to a bank or a company to use their money. This is your money working against you. When you invest you put your money in a position to grow! This is how the wealthy think, and investing is what the wealthy do with their money.
We will talk about the power of compound interest below, but investing your money, both in short term and long term investments, will prove to be a great way to build wealth.
The people who are most successful with their money didn’t get where they are simply by saving money. This might be surprising to those of you who were always told to save for a rainy day as they grew up. We learned that saving does have a place in our journey to becoming financially successful, but it should not be the end of what we do without money. Yes, become a proficient saver, but learn as much as you can about investing. You will be glad you did!
What Things Can I Invest In?
Investing comes in many shapes and sizes - all with different levels of risk and different opportunities for returns. Below are a few things people typically invest in.
The Stock Market - The stock market is one of the most popular ways for people to invest their money. When investing in the stock market you are buying small portions, or stock, in a company. Essentially you are becoming “part owner” of that company when you purchase these stocks. There are two main ways for an individual to make money by investing in the stock market. The first is by the shares you own of a company increasing in value. The second is by purchasing stocks in a company that pays dividends. These dividends are small payments paid to the shareholders by the company you own shares of. These payments are typically made monthly, quarterly, or annually.
The stock market can be a great investment vehicle, but it is key to remember there is risk with any type of investment. Before investing in the stock market, make sure you have a thorough understanding of what you are doing and the implications of your actions. Many people have become very wealthy by investing in the stock market, and many people have lost a lifetime’s worth of money by doing so as well.
By implementing good principles here you can invest and see returns like the wealthy!
Real Estate - Investing in real estate is another very popular way to build wealth. There are many ways to invest in real estate. Some are listed below.
Flipping - Flipping real estate involves buying a property that needs a bit of work, doing that work, and selling the property for a profit. If done well and with the right knowledge this can be a very profitable endeavor.
Buy and Hold - Buying and holding real estate involves buying a property and renting it out. Not only can you make money every month from what your tenant pays you, but there is also the benefit of your tenant paying down the principal of your mortgage and the appreciation your property could see over time.
REITs - REITs (Real Estate Investment Trusts) can be a good way to invest in real estate without having the large financial obligation that comes with purchasing a property. Many REITs can be traded much like a stock and have a lower barrier to entry.
House Hacking - House hacking can be explained in many ways. Some people house hack by buying a duplex that they live in while renting out the other unit. It may also involve buying a home and having roommates to help pay the mortgage. It could also involve buying a distressed property that you live in for a few years while you fix it up to sell it at a later time for a profit.
How to Buy Your First Home in 2021
Businesses - Investing and starting businesses is one of the oldest ways to build wealth. There are several ways to invest in a business. Some may decide to start a business for themselves. You may also decide to invest in someone else’s. You may even decide to purchase someone else’s existing business. However you go about it, investing in a business can be a great way to create income, generate passive income, and build an asset for the future.
CryptoCurrency - CryptoCurrencies are relatively new to the investing landscape, especially when comparing them to some of the other options on this list. A cryptocurrency is a digital currency that can be used as an investment vehicle but also to purchase goods and services. There are many different types of cryptocurrencies and ways to invest in them. If you are interested in investing in cryptocurrencies we would encourage you to do extensive research before doing so.
Yourself/Knowledge - Investing in yourself is and forever will be very important in your financial journey. Oftentimes, investing in yourself can have a larger ROI (Return on Investment) than any other investment vehicle on this list. If you learn how to become more financially literate, how to start a business, or learn a valuable skill, it will seep into every step of your financial journey. Not only can this new knowledge increase your income potential, but it could also help you make better investment decisions and become better at budgeting and managing your finances. You can invest in yourself by simply getting books from the library, watching quality YouTube videos, and listening to podcasts. A more formal way of investing in yourself is getting a college degree or certificate.
What is Compound Interest?
Compound interest is an investor’s best friend. Looking at it simply, compound interest is just math. Compound Interest is interest made on earned interest.
Let’s take a look at a compound interest calculator.
In the example above we illustrate how much money someone would accumulate if they invested $1,500 a month into assets that gained 8% annually in interest from the age of 20 to 50 (30 years). Their money would accumulate to be $2,039.097, with the actual amount they invested only being $540,000. This means that due to compound interest this person’s $540,000 investment over 30 years would turn into $2,039,097! If that doesn’t get you excited about investing I don’t know what will.
How Do I Start Investing?
Now that we understand the importance of investing and doing so early in life you may be asking how to actually get started.
There are many ways to invest in all of the things we mentioned above, but in this article, we will focus on how to invest in the stock market.
Investing in the stock is easier today than it has ever been. There are many brokerages available to you, some of which make investing incredibly easy.
A brokerage account is simply an account you open with a company that allows you to buy and sell stocks.
There are too many different companies who offer brokerage accounts to mention here, but Acorns, M1 Finance, and WeBull are some of our personal favorites here at Millennial Economics.
Our Reviews on M1 Finance and Acorns:
If you are a beginner, Acorns makes investing very simple. They allow you to pick pre-made portfolios ranging from conservative to aggressive. You can fund your account and invest in your selected portfolio as you please, but what makes Acorns special is the ability to set recurring funding to your account. This makes investing passive and an automatic part of your month. They also have a round up feature where Acorns rounds up each of the transactions you do with your debit and credit cards to the nearest dollar and invests it for you. I have personally used Acorns for over 4 years and love it! Acorns offers many other services like retirement accounts and accounts for kids!
Sign up with Acorns and receive $5
M1 Finance is for the more Intermediate to Advanced investors. They have a unique take on investing. With their platform, through “pies” or portfolios. You can pick from a prebuilt portfolio or build one for yourself. You will set what percentage you want a particular stock, ETF, or Index Fund to be of your portfolio, and every time you fund your account it will automatically allocate money to each investment as you dictated. I also use M1 Finance and have really enjoyed it. M1 Finance offers many other services like retirement accounts and lending!
Sign up with M1 Finance and receive $30 when you open and fund your account
WeBull is also for Intermediate to Advanced investors. WeBull functions and looks much like what you probably would picture a brokerage to look like. With WeBull you can buy and sell individual stocks, ETFs, and Index Funds. WeBull has a lot of functionality, but I would recommend only the Intermediate to Advanced investors use this platform as a tool for their investing.
Sign up with Webull and get 2 free stocks!
Increase Your Income
Now that we have built a solid foundation, it is time to start looking at ways to supercharge our strategy. Increasing your income will expedite your wealth building and will be a great tool in your journey of becoming financially successful in 2021. With a larger income, you can purchase assets, increase the amount you are investing, and also bolster your charitable giving.
There are many ways to increase your income. We will detail a few here.
How Do I Increase My Income?
Establish a Side Hustle - Establishing a side hustle can be such a great option for increasing your income. It certainly is the most glamorous of the options detailed here. Establishing a side hustle can not only be profitable, but it can also become an asset in the future. Depending on what you decide to start, it could also turn into a great form of passive income. Some common side hustles are starting a lawn care business, reselling items for a profit, babysitting/nannying, or selling art/crafts. The important thing to remember about side hustles is that they need to be profitable, and at this point, not cost too much to start.
Get a Pay Raise - It seems as though 9-5 jobs are vilified these days, but having a day job can be a great thing and a tremendous tool to become financially successful. Taking on more responsibility, performing well, or simply asking for a pay raise is a great way to increase your income. A great way to go about this is to communicate with your boss that you are striving for a promotion or to set yourself apart from the pack at your company. If you have a good boss they will help you achieve your goals.
Get a Second Job - This is the simplest of the options, but one that should not be overlooked. It is oftentimes the easiest and quickest way to increase your income. Many people have time on the weekend or in the evenings to pick up a second job. The great thing about picking up a second job is that additional income is usually only 2-3 weeks away! Better yet, if you get a job where you have the opportunity to earn tips, extra income could be only a few days away.
Learn to Manage Your Emotions
We have mentioned this before, but becoming financially successful isn’t just about learning math. A good portion of becoming financially successful is learning to manage your behaviors and emotions. Often times you can be your own worst enemy. Most people understand how to budget, but they have a hard time sticking to a budget. Most people understand they need to eat healthily but few people actually do. Many people know they should exercise, but few people do. You get the point. Managing your behavior and emotions is an incredibly important piece of the pie.
How Do I Manage My Emotions With My Finances?
It is one thing to understand that our emotions and behavior play a big role in our financial success, but how do we learn to manage them? In my experience, it comes from analyzing our strengths and weaknesses and observing how the people we know who are disciplined got that way.
A great exercise you can do is analyze what you spend most of your money on. You should know this after creating your budget, but if you don’t, take a look at your bank statements. Are you spending most of your money on food? Maybe you spend a large portion of your money on travel. Maybe when analyzing your behavior you learn you have a hard time with commitment or keeping a good job. This analysis will prove valuable. With it, you can work on bettering yourself in these areas.
Observing those who have learned to manage their behavior and emotions typically will come in the form of reading books, watching quality video content, or listening to podcasts. If you are lucky enough to have a good example in your life ask them to grab a cup of coffee and ask them how they got to be like they are. This might be uncomfortable, but the knowledge you will gain from this is invaluable.
Refine Your Skills
The final step in becoming financially successful is refining the skills you’ve learned. This process will never stop. You will never know it all and you will continue to make mistakes. The goal is to make these mistakes smaller and less frequent as you grow. From here on out you will be in a continual process of refining and implementing, refining and implementing, refining and implementing. Become a lifelong learner. Those that have come before you certainly are. They never have a feeling of having “made it”.
Summary
If you’ve made it to the end I applaud you. Are truly are someone who is committed to becoming financially successful in 2021, and if you implement and expand on what you learned here you will be well on your way.
We have covered many topics:
Educating Yourself
Establishing Goals
Creating a Budget
Paying Off Debt
Building an Emergency Fund
Starting to Invest
Increasing Your Income
Learning to Manage Your Emotions
Refining Your Skills
Thank you for spending time with me. I hope you have not only learned some valuable pieces of information, but I hope this motivates you to take action. Becoming financially successful will not only allow you to achieve some of your goals, but it will bring peace to your life.
Good luck on your journey!
Talk soon,
Continue Reading
How to Start Investing in 2021 for Beginners
How to Get Out of Debt in 2021
How to Change Your Financial Behavior