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How Millionaires Manage Their Money Differently?

How Millionaires Manage Their Money Differently?

Wealthy people manage their money differently than everyone else. They make different decisions and have an entirely different way of thinking about money. But even if you’re not wealthy, you can still manage your money like the wealthy do. It’s step one of becoming wealthy. There are 10 specific ways wealthy people manage money differently than everybody else.

1. The wealthy forget about instant gratification.

Humans are wired for instant gratification. We love it. But evolution made us that way long before our modern monetary system came about. The desire for instant gratification doesn’t help us when we’re trying to become wealthy; it hurts us. Stop making decisions that will make you happy now, but mess up your future wealth.

2. The wealthy understand the difference between wants and needs.

“We need a bigger house,” you may say. Don’t confuse wants with needs. A common mistake poor people make is to disguise wants as needs as a way to to justify them. Then you feel better about making a poor financial choice. Wealthy people understand the difference between what you need and what you want. Know the difference between a want and a need and don’t lie to yourself about it.

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3. The wealthy invest automatically.

There are ways to automate investment, such as payroll deduction to a retirement account, which is great, but the mentality of investing is more important. Automatic or not, wealthy people believe so strongly in investing that they do it as habitually as you brush your teeth in the morning. There’s no question about how much they invest, they know how much they must invest because they set goals (we’re going to get to that) and know how much money they need to reach those goals.

Roy Sheppard, millionaire and finance expert says, “Save 15% of everything you ever earn for the rest of your life.”

4. The wealthy understand the cost of debt.

“What are the monthly payments?” is what poor people ask when considering a car purchase. That’s the wrong question. A better questions is “what is this car really going to cost me?” When you multiply the monthly payment by the number of months of the loan, you’ll see a shocking number that’s way more than the cost of the car and that’s before depreciation, taxes and other expenses. This is the number you have to be comfortable with. Better yet, be uncomfortable with it and keep your old car.

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5. The wealthy start with a goal and work backward.

Know what you want and what it’s going to take to get it. If you don’t know what you want, you’ll get something that’s the result of a bunch of decisions made for instant gratification. Most likely that will be poverty. Decide what you want your life to be like, figure out how much that will cost and do exactly what you need to do to get there. 

Josh Simon, 28-year-old real estate millionaire, says, “Figure out how you would like to live in retirement, come up with a number, then work on a strategy to realize that number. ”

6. The wealthy live within their means.

The great thing about investing automatically (see number 3) is that it basically takes care of this one. If you start by investing as much as you must to reach your goal, you can take what’s left over and do whatever you want with it. By making saving a priority, you can’t spend more than you can afford to. The important thing is that you spend way less than you make. To reiterate: spend way less than you make.

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7. The wealthy make short-term sacrifices

Think bigger than right now. Think about the future effect your decisions will have on your life. The whole point of getting wealthy is to have more of what you want. But sometimes you have to trade off what you want now for more of that or something better later. Think bigger than what you want right now.

8. The wealthy get help.

Know what you are good at and leave the money management to a professional. Focus on the unique value you bring to the world to make money to invest. Don’t be completely clueless about managing money either. Understand the basics at least well enough to know what your financial advisor is telling you. The information is cheap and easy to get. Wealthy people have written lots of books about it.

Millionaire entrepreneur, Vladimir Gendelman says, “I know how to build and grow businesses, but I leave my money management to a professional financial advisor.”

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9. The wealthy do math.

We’re not talking about trigonometry and advanced polynomials; just simple addition, subtraction, multiplication and division — third grade stuff. Wealthy people run the numbers when they make a decision. For example, poor people believe that when a car begins to have problems, it’s better to get a newer car so they don’t have to spend as much for maintenance and repairs. This is not necessarily true. You can spend thousands of dollars a year repairing a car and be financially way ahead when compared to buying a car. Think about all the expense of a car purchase. Do the math.

10. The wealthy take advantage of opportunity.

Wealthy people know that things like IRA’s and 401k’s are tax-free or tax-deferred growth and they take full advantage of them. When an opportunity like that arises, take advantage of it. If you also do the math (number 9), you’ll see exactly how beneficial this is.

Managing money like the wealthy is learnable and it’s not hard. If you want to be rich, manage your money using thise 10 principles and you’ll be on your way. You’ll have to make some sacrifices in the short-term, learn some stuff and work hard to earn the money you invest. The result is a really cool tool that lets you do a lot of good in the world and have a blast doing it, which is all anybody really wants. If you can’t handle all ten, just remember this: spend less than you make.

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Published on November 8, 2018

How to Answer the Tough Question: What are Your Salary Requirements?

How to Answer the Tough Question: What are Your Salary Requirements?

After a few months of hard work and dozens of phone calls later, you finally land a job opportunity.

But then, you’re asked about your salary requirements and your mind goes blank. So, you offer a lower salary believing this will increase your odds at getting hired.

Unfortunately, this is the wrong approach.

Your salary requirements can make or break your odds at getting hired. But only if you’re not prepared.

Ask for a salary too high with no room for negotiation and your potential employer will not be able to afford you. Aim too low and employers will perceive as you offering low value. The trick is to aim as high as possible while keeping both parties feel happy.

Of course, you can’t command a high price without bringing value.

The good news is that learning how to be a high-value employee is possible. You have to work on the right tasks to grow in the right areas. Here are a few tactics to negotiate your salary requirements with confidence.

1. Hack time to accomplish more than most

Do you want to get paid well for your hard work? Of course you do. I hate to break it to you, but so do most people.

With so much competition, this won’t be an easy task to achieve. That’s why you need to become a pro at time management.

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Do you know how much free time you have? Not the free time during your lunch break or after you’ve finished working at your day job. Rather, the free time when you’re looking at your phone or watching your favorite TV show.

Data from 2017 shows that Americans spend roughly 3 hours watching TV. This is time poorly spent if you’re not happy with your current lifestyle. Instead, focus on working on your goals whenever you have free time.

For example, if your commute to/from work is 1 hour, listen to an educational Podcast. If your lunch break is 30 minutes, read for 10 to 15 minutes. And if you have a busy life with only 30–60 minutes to spare after work, use this time to work on your personal goals.

Create a morning routine that will set you up for success every day. Start waking up 1 to 2 hours earlier to have more time to work on your most important tasks. Use tools like ATracker to break down which activities you’re spending the most time in.

It won’t be easy to analyze your entire day, so set boundaries. For example, if you have 4 hours of free time each day, spend at least 2 of these hours working on important tasks.

2. Set your own boundaries

Having a successful career isn’t always about the money. According to Gallup, about 70% of employees aren’t satisfied with their current jobs.[1]

Earning more money isn’t a bad thing, but choosing a higher salary over the traits that are the most important to you is. For example, if you enjoy spending time with your family, reject job offers requiring a lot of travel.

Here are some important traits to consider:

  • Work and life balance – The last thing you’d want is a job that forces you to work 60+ hours each week. Unless this is the type of environment you’d want. Understand how your potential employer emphasizes work/life balance.
  • Self-development opportunities – Having the option to grow within your company is important. Once you learn how to do your tasks well, you’ll start becoming less engaged. Choose a company that encourages employee growth.
  • Company culture – The stereotypical cubicle job where one feels miserable doesn’t have to be your fate. Not all companies are equal in culture. Take, for example, Google, who invests heavily in keeping their employees happy.[2]

These are some of the most important traits to look for in a company, but there are others. Make it your mission to rank which traits are important to you. This way you’ll stop applying to the wrong companies and stay focused on what matters to you more.

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3. Continuously invest in yourself

Investing in yourself is the best investment you can make. Cliche I know, but true nonetheless.

You’ll grow as a person and gain confidence with the value you’ll be able to bring to others. Investing in yourself doesn’t have to be expensive. For example, you can read books to expand your knowledge in different fields.

Don’t get stuck into the habit of reading without a purpose. Instead, choose books that will help you expand in a field you’re looking to grow. At the same time, don’t limit yourself to reading books in one subject–create a healthy balance.

Podcasts are also a great medium to learn new subjects from experts in different fields. The best part is they’re free and you can consume them on your commute to/from work.

Paid education makes sense if you have little to no debt. If you decide to go back to school, be sure to apply for scholarships and grants to have the least amount of debt. Regardless of which route you take to make it a habit to grow every day.

It won’t be easy, but this will work to your advantage. Most people won’t spend most of their free time investing in themselves. This will allow you to grow faster than most, and stand out from your competition.

4. Document the value you bring

Resumes are a common way companies filter employees through the hiring process. Here’s the big secret: It’s not the only way you can showcase your skills.

To request for a higher salary than most, you have to do what most are unwilling to do. Since you’re already investing in yourself, make it a habit to showcase your skills online.

A great way to do this is to create your own website. Pick your first and last name as your domain name. If this domain is already taken, get creative and choose one that makes sense.

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Here are some ideas:

  • joesmith.com
  • joeasmith.com
  • joesmithprojects.com

Nowadays, building a website is easy. Once you have your website setup, begin producing content. For example, if you a developer you can post the applications you’re building.

During your interviews, you’ll have an online reference to showcase your accomplishments. You can use your accomplishments to justify your salary requirements. Since most people don’t do this, you’ll have a higher chance of employers accepting your offer

5. Hide your salary requirements

Avoid giving you salary requirements early in the interview process.

But if you get asked early, deflect this question in a non-defensive manner. Explain to the employer that you’d like to understand your role better first. They’ll most likely agree with you; but if they don’t, give them a range.

The truth is great employers are more concerned about your skills and the value you bring to the company. They understand that a great employee is an investment, able to earn them more than their salary.

Remember that a job interview isn’t only for the employer, it’s also for you. If the employer is more interested in your salary requirements, this may not be a good sign. Use this question to gauge if the company you’re interviewing is worth working for.

6. Do just enough research

Research average salary compensation in your industry, then wing it.

Use tools like Glassdoor to research the average salary compensation for your industry. Then leverage LinkedIn’s company data that’s provided with its Pro membership. You can view a company’s employee growth and the total number of job openings.

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Use this information to make informed decisions when deciding on your salary requirements. But don’t limit yourself to the average salary range. Companies will usually pay you more for the value you have.

Big companies will often pay more than smaller ones.[3] Whatever your desired salary amount is, always ask for a higher amount. Employers will often reject your initial offer. In fact, offer a salary range that’ll give you and your employer enough room to negotiate.

7. Get compensated by your value

Asking for the salary you deserve is an art. On one end, you have to constantly invest in yourself to offer massive value. But this isn’t enough. You also have to become a great negotiator.

Imagine requesting a high salary and because you bring a lot of value, employers are willing to pay you this. Wouldn’t this be amazing?

Most settle for average because they’re not confident with what they have to offer. Most don’t invest in themselves because they’re not dedicated enough. But not you.

You know you deserve to get paid well, and you’re willing to put in the work. Yet, you won’t sacrifice your most important values over a higher salary.

The bottom line

You’ve got what it takes to succeed in your career. Invest in yourself, learn how to negotiate, and do research. The next time you’re asked about your salary requirements, you won’t fumble.

You’ll showcase your skills with confidence and get the salary you deserve. What’s holding you back now?

Featured photo credit: LinkedIn Sales Navigator via unsplash.com

Reference

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