Making BIG money vs small money? - W1:D2 of the Debt Free Millionaire Personal Finance Course

GOALS: INCOME – HIGH OR LOW? (W1:D2)

Game View: In the game, you set your goals. This about this: what would make you feel like a winner? This is to track your sheet and analyze later. Will your goal be to make a high, medium, or low income, when you are older? Perhaps yearly income of $1 million? Place a dollar amount or just state high or low income.

Personal Game View: What is your goal, annually? Tell us if it is High or Low, and give us an amount.

Real Life: The best way to understand finances is to understand where you want to be, not just where you are today. You want to know what will get you where you want to be, from where you are right now. Do you want to make a little, or a lot of money? Will money solve your issues? To make a lot of money, what do you have to do to increase your income? We will go into each of these more in upcoming chapters, but until then, here is a brief overview with three basic ways to make money.

Full-Time Job (Job/Career): Consider: Full-time employment takes a significant part of your day with opportunities for promotion. Statistics: Only 69.8% of Americans work for someone else full-time. Who’s In Charge: In a full-time job, you are working for someone else. Time Commitment: Normally, working hours are 9:00 a.m. to 5:00 p.m. - outside of that timeframe, the hours are yours. Paychecks: You receive a steady paycheck, on a consistent basis, called “Pay Day”. How to Lose this Position: If you do not perform your tasks, to a level of your employer’s satisfaction, you may be fired. If your company is doing poorly, you may be laid off and go without work.

Part-Time Job (also be known as a “Side Gig”): Consider: Employment that takes fewer hours per week than full-time, commonly less than 30 hours per week. Statistics: 43% of Americans have a side gig as their sole employment, or in addition to their full-time job. Who’s In charge: In a part-time job, you are working for someone else. Time Commitment: You work when you can and/or your employer needs you, and less than 30 hours per week. Paychecks and Pay Days: You receive a steady paycheck, on a consistent basis, when you work. How to Lose this Position: These jobs are not usually secure, and you are normally the first to be fired or laid off. Such as if you make significant mistakes or they decide they don’t need your help anymore.

Small Business Owner: Consider: Privately or solely owned, partnerships, or corporations, use fewer employees than larger corporations and have less revenue. Statistics: In the United States, 44% of GDP (revenue) is from small businesses (in 1998 it was 48%), and 99.9% of businesses are small businesses. 20% of small businesses fail in their first year, and 50% within their first 5 years. Who’s In charge: If you own it, you are in charge; if you use others’ money to fund it, you may lose control. Time Commitment: You set your own times and work as much as you want, though not working consistently may cause your business to fail. Often, you are still working after normal business hours. Paychecks and Pay Days: This may not provide you with a consistent paycheck. You make money after your business makes money, and pays all expenses and employees, first. You are the last to be paid. How to Lose this Position: You are not fired by your employer, but instead your clients (those who pay you, or use your services).

Investment: Definition: You buy something (stocks, real estate, metals, cryptocurrency, etc.) and it increases or decreases in value, depending on how others see the value of that commodity. If people want it, the value goes up; if they do not want it, the value goes down. This is also known as Supply and Demand. Statistics: According to Newsweek, in 2021, 52% of Americans have money in a 401(k) or 403(b) plan; 37% have an individual retirement account (IRA); 22% have a pension (retirement provided by your employer); 14% buy individual stocks; 65.1% own a house, and 15% own precious metals. 25% of Americans have no retirement savings for when they are older. Who’s In charge: The market is in full control over the value of these investments. Time Commitment: These work when you do not. Little commitment is needed after purchase. Except for keeping rentals, which take maintenance, paying taxes, etc. Paychecks and Pay Days: You normally receive revenue when you sell your commodity. How to Lose this Position: You can’t lose this investment unless you sell it, or your investment loses all value. Typically, the longer you hold the investment, the more its value increases.