Everyone Needs It So Everyone Wants It

Let’s be practical for a moment because making more money is always important. Regardless of where we find ourselves financially, we can’t do more without the necessary resources. Even wealthy people have to limit what they give away, otherwise they won’t remain wealthy.

Since everyone wants to make more money, the plan to accomplish this should be available to everyone. We can’t exclude anyone, regardless of how reckless they are with finances. Poverty can grip anyone at any stage in life, no one is immune. We all want to prosper. We all want to protect our prosperity.

You Can’t Get Something For Nothing

If a person exchanges their time for money, as in the case of the employee, control for their earning potential is limited by:
1.    The employers resources
2.    The amount of time they have to exchange in a given day
3.    The ability to retain their job

For the business owner who desires to increase their personal income or profits, control becomes dependent upon:
1.    The cost of expansion
2.    The ability to increase their market share by attracting more business
3.    The cost of marketing and advertising

These lists aren’t complete, but they demonstrate the principle that we can’t get something for nothing. Either we must be willing to exchange more of our time, our resources, or both before making more money will happen.

The More You Have… The More You Have To Lose

Since it costs to expand, we now have more to lose. Retaining our wealth is as important to the process as earning it was. No one desires to acquire more only to revert to having less. We quickly become accustomed to what we have.

So far our equation has:
(a)    adding to what we have + (b) keeping what we gain…

…but without knowing what we desire in advance, we can’t create the whole formula.

Let’s Break It Down

Without going into the millions of variations that would move a person to desire more than what they currently have, let’s take two clear examples.

1.    I want to put my child through college without debt.
2.    I want to achieve financial independence.

The first goal is far more popular. More than ever parents and students are discovering that loans are a bad choice. Even when the graduate lands the job they desired, the income isn’t enough to cover a decent lifestyle, plus the debt of the loans.

This first goal is also the easier of the two for calculating, provided we have some idea what university the child wishes to attend. Making a conservative estimate won’t hurt because any of the money left over will certainly come in handy to start their career.

(x) = How Much You Want

So we begin to work the equation backwards. We need (x) amount to cover a university degree. The difference between what we earn and what we need tells us exactly how much extra money is needed.

If we have several years in which to generate this sum, we can divide it out over that time. We can even break it down further to the exact amount necessary each week to reach our goal.

We still need a plan to generate the extra income, but that plan becomes specific to the individual’s circumstances. In this example the plans necessary to accumulate the cost of tuition have a wider range of possible solutions.

Since the sum is fixed we don’t need to invest for the highest rate of return. Those investments won’t necessarily be strong at the time the money is needed. Part of our formula includes keep what we gain. Since we know when we’ll need this money, it only needs to be secure until that moment.

The Bigger Picture

I chose the second example because financial independence includes the ability to pay for our child’s education. If we’re going to talk about making more money, we may as well solve the bigger problem. The person who has obtained financial freedom knows how to generate extra income; but how do we get there?

This goal may not sound subjective, but not everyone desires the same lifestyle. I may know financial freedom because I own my home and have enough money put aside to last until the end of my days. That doesn’t mean I’m financially free to travel the world buying expensive cars and boats.

Just like the equation we used to send our child to college, we need to know what financial independence looks like to the individual. If becoming a millionaire was the only requirement, we wouldn’t see so many multimillionaires and billionaires. We quickly become accustomed to what we have and the billionaire is free to do more than the millionaire.

Bigger Goal – Same Formula

Actually wealthy people don’t treat the formula any differently. They desire a specific amount, and then calculate the difference between that amount and what they have. Finally they devise a plan to obtain that amount.

The greatest challenge is for the person deep in debt with little or no income. Making the grand sweep to financial freedom will require steps. Financial planners will show them how making more money can first eliminate their debt.

Upon this achievement they immediately begin making even more. Without the drain of debt, they now have more income to save and invest.

When desire is fixed upon financial freedom, and a well devised plan is consistently acted upon, no circumstances can prevent success. Entrepreneurs continue to accomplish amazing feats despite the faltering economy or their personal situations. Having made up their minds to make more money they do just that.