We’re up to Big-‘E’ number 6 today and that is about Earnings.
So far we have looked at Emotions, Environment, Ego, Education and Expectations in previous blogs.
You could be forgiven for thinking that Earnings should have been the first Big-‘E’ because so many people think wealth comes from earning lots of money. They think that if they could just earn more their money problems would go away. I can assure you that for most people they will not!
I have worked with high income earners who are going broke and low income earners who are becoming wealthy.
If you were to survey 100 people at random and ask two questions.
- How much do you Earn?
- Do you ever have difficulty with money?
I will guarantee that there is no logical correlation between the responses you get from Q1 and Q2. The only connection you will find is that 90% of people have money difficulties regardless of their income.
There is a really good reason for this.
As income goes up, so does the ability to become wealthy but unfortunately so does the ability to borrow and spend more and the ability to get into more financial trouble. For most people, even though their income goes up, their wealth position does not improve.
I will cover off on this more in the next Big-‘E’ which is ‘Expenses’. For now though, let’s look at the principles behind what you Earn.
What determines your income?
In general, the amount you earn at work is determined by the benefit you bring to people multiplied by the number of people you bring it to, divided by the number of other people who can do what you do.
Sir Paul McCartney earns lots of money because millions of people get value from listening to his music and he is very unique.
A brain surgeon who removes tumours earns a lot because the benefit is life instead of death and not many people can perform the operation.
A cleaner earns less, not because they are worth less as a person than a brain surgeon, but because cleaning is not of life and death importance and almost anyone could be a cleaner.
Have a think about what you do and consider how many other people do it as well. Consider how much value people place on what you do. You will most likely find there is a strong correlation between your income and these factors.
However, you also need to be aware that there is another factor mixed up in all this that many people do not understand and as a result never reach their full income potential. The value you place on yourself determines the value others get from you.
If you undervalue yourself people will get less value from what you deliver and you will earn less as a result.
Here’s how crazy this is. If you sell a service for $10, your customer will place $10 value on what you do. If you sell the same service for $20, your customer will place $20 value on the same service.
Don’t believe me? I went into a bakery the other day to see what was going on. There were people everywhere, overflowing onto the footpath! When I finally got inside I found the food was twice as expensive as in your average bakery. However, the place was packed because the presentation of each item of food was just amazing (and the prices being charged matched). Everyone was happy to pay double price because they placed a higher value on the goods. Why? Because they were presented as having higher value.
Have a serious think about this and ask yourself what value you place on yourself and how you position yourself. You will earn accordingly.
Can you get your head around this?
My uncle advertised his car for sale at a low price because he just wanted to sell it quickly. He did not get one call. The next week he increased the price by $2,000 to be at the top end of what people might pay for this particular car. It sold very early on the day the newspaper came out!
When he offered his car at a low price people perceived low value. When he presented it at a high price they perceived high value! It was the same car but the person who purchased it felt $2,000 better about his purchase than if he had purchased it the week before!
No Pain; No Value, No Gain
I can think of so many times when I have felt sorry for someone who was in financial trouble and I’ve given them a free copy of Simply Budgets. What consistently happens when I do this is that they do nothing with it. They place value on it according to what they paid for it! Nothing! They were very happy to be given something of value for no cost but that’s where it ended. No pain; no gain!
On the other hand, tens of thousands of people who paid for my software have gotten great benefit from using it because they valued it accordingly. I have had people e-mail me in a panic when they have had a computer problem because (in their words) they can’t live without the benefit Simply Budgets gives them. In comparison, someone in financial trouble placed no value on it at all because of the value I presented it as having!
When you understand this you can increase what you earn. Simply place more value on YOU and present yourself as having more value.
It may not be easy to choose to place more value on you when you have allowed people to treat you at a lesser value for a long time but only you can change the situation. I would suggest that you will find it easier to create a new environment rather than trying to make huge changes in your current environment unless you are prepared for some fun!
Here is how I did it.
I disliked my teaching job and I was not earning what I knew I was worth. There was no way I wanted to pursue a promotion to earn more. I could have grumbled and griped about this and that and been miserable for 40 years but I valued my life and what I had to offer more than that so I made a decision that I would do something about it.
I knew I had more value than a room full of 14 year olds gave me credit for. I also knew how difficult it would have been to try presenting myself as having more value in that environment.
Instead I created a new environment outside of school teaching where I had the freedom to present myself to more people with more value and then in time I left the job behind.
I now love what I do and the value I place on me determines how successful I am now and will be in the future.
I hope this makes sense and helps you to see how you can increase your ability to deal with Big-‘E’ number 6 your Earnings.
I will have more to say about Earnings in my next Blog.