You've probably heard that your income is your biggest and most important tool in your wealth-building toolbox.
It is. But it's hard to see and feel that when you simply sit down and look at your net worth statement.
Today, I want to share with you a technique that has been useful for me. It's primarily a framing technique: it allows you to actually see the value of your income as compared to your current financial condition.
It's been incredibly useful to me and I hope it's incredibly useful to you!
- Calculate the lifetime value of your income.
- Then, think about what you can do to increase that number.
- There are three primary levers to push:
- The higher your starting income, the better.
- Focus on starting from a position of strength (higher wages).
- Look for high-skill or high-education industries.
- Focus on a difficult industry. Hard work pays!
- The higher the annual increase, the better.
- Build and apply knowledge, skill, and ability.
- Be in an industry which will reward your increases.
- Look for big-jump increases by constantly job hunting.
- Establish yourself as a leader in your industry.
- Look for industries where competition is low and you can gain a competitive advantage.
- Look for exponential growth and leverage opportunities.
- The more years of income, the better.
- Start earlier. Can you simply get started now without waiting for formal credentials?
- If it's too late for you to start earlier, can you help someone young start earlier?
- Work longer. But consider if you'll be able to persist.
- Look for work that you can do for longer. (Be careful of laboring jobs or mandatory retirement programs.)
- Look for work that you'll want to do for longer. (Does it integrate with your lifestyle? Do you gain satisfaction and enjoyment from the work itself?)
- Look for work where your age and wisdom will be an advantage. (Plan ahead for ageism and be prepared to overcome it.)
- Look for work where your lifetime knowledge and experience will be an asset, not a liability.
- Your homework:
- Calculate the expected value of your life's income.
- Is it enough? Play with the variables and see what kind of alternatives you can create.