To do this, we got a complicated and hard formula that I need you to know and understand.
The simple concept is income has got to be higher than your expenses. How difficult is that?
To achieve this, there’s a couple of factors that you need to understand:
Number one, stop trying to keep up with other people because that’ll drive your expenses up. When expenses are up, you won’t be able to go ahead and survive. You won’t be able to buy the things that you want.
Also, you have to take into account the natural cost of things because bread still costs let’s say five dollars. Whether you’re making a million dollars or you’re making fifty dollars, so bread even costs the same.
If you can drive your income, that’s great news. If you can drive your expenses lower, that’s also good news. When you have income working up and expenses working down, that’s fantastic.
So for many people, it’s very difficult to drive up the income. That goes along with career planning or looking at building a business. There are a lot of strategies that I have in this channel. Be sure to check those videos out along with my backstage income website.
A few numbers I want to point out for you so that way you’re aware of it. Most people struggle with the expense part because they’re not disciplined enough, and that’s where I find a lot of trouble happens.
One of the quickest ways is to go ahead and start increasing your total net worth or value.
I have some figures here for you.
Let’s say $8 an hour, we’ll do another one that’s $15 an hour, and on a national average of $24.57 an hour – so if you’re doing these kinds of things in one year, your total accumulation here would be $15,386, this one would $28,800, and this one would be $47,184.
If you break this down and we go into let’s say 20-year time frame, this would be $307,200, this one would be $577,600, and the last one would be $943,680.
You could see you’re accumulating much more overall. If you’re making much more money, this is a simple solution because as you know, bread costs the same but the issue is that most people they have nasty and horrible habits. I’ll share with those with you how much they cost.
So the cost:
A cup of Starbucks coffee or coffee for twenty years five times a week – $20.540
Beer/Alcohol – $25,400
Soda – $25,000
Cable TV – $23,660
Lottery Tickets – $16,280
Smoking – $40,220
Roughly: $150,000 for 20 years
You compare that to $307,000 if you’re only making eight bucks an hour, and you have all these habits, you can’t afford to live that way.
I mean, this is already half the value of what you’re making – your total income, your total wealth that you’re making and you still didn’t pay for water, electric, your kids, all these other things maybe if you will have a car payment, entertainment, there are so many things that come up from health insurance and health care costs.
Right now, you’re already sitting at about halfway there – you’re blowing up your account or getting there to the halfway point. These are just a few habits that you right away could let’s just cut off.
All these things start creeping up with the expenses. So if you have any of these that are not that valuable to you or you don’t find enjoyable, then cut them out. You see how much value you can add to your total wealth over time because you could take that money and put it into something else.
Now, if you enjoy something – let’s say you really love that coffee or you love that beer and it just makes you feel good, the whole point behind money is to enjoy life, make the most of it. So if you love something, there’s nothing wrong with going out and let’s say you have a beer once in a while or a coffee here and there. That’s fine. You don’t have to drop all of these habits. I’m not saying entirely live your life in a shoebox without doing or buying anything but what I’m saying is recognize the amount of value or the amount of dollars you’re spending on those habits over the lifetime especially based on your earnings potential or earnings power.
If you’re over here making $24 an hour, in that case, these habits are still going to be costing you the same amount, and it doesn’t impact your life as much because you’re making over a 20-year period of almost a million dollars. Whereas here, it only costs you about $150,000 to keep these habits.
Take this into account because the way you build wealth and accumulate that wealth in your life drives the income which is very difficult to cover in this video. So check out the other videos or drive down the expenses and start looking at the things you’re doing and what’s costing you a lot of money.
What usually happens is that people have very high expensive habits that maybe are not bringing them the pleasure that they desire.