Most people think a lot about the income that they make every year. In fact, it’s common for people to over-think when it comes to money, and this isn’t always a good thing. Worrying about money or allowing your job to take up all your time can result in you feeling stressed out or burned out.
Most people equate income with how many dollars they make a year.
A better way to look at this is by what I like to call “income efficiency”. This is taking your dollars per year and dividing that number by the time you invested. Why? Because time is super valuable, and if you’re spending an incredible amount of time to make ends meet, you’re not really experiencing income efficiency.
For example, let’s say Joe makes $180K per year, but works 80 hours per week at a job he dislikes. Then there’s Kim, who makes $70K a year doing what she loves working 25 hours per week. As you can imagine, Kim is happier, experiences more freedom, and autonomy.
But what about a higher income?
I understand most people want to increase their income and experience financial freedom. I am a firm advocate on that, but I also want people to have the time to experience and enjoy life in the process. If you’re spending most of your time on the job, and you’re so exhausted when you’re not on the job that you can’t enjoy anything, it may be time to look at your income and time levels.
Learn to be income efficient
I understand that it takes more time when you’re learning a new job. Take real estate investing, for example. In the beginning of my investing career, I spent an incredible amount of time studying, talking to others in the business, attending seminars, and so on. That is understandable, but as I continued the business, the hours started dropping and what may have taken me days to research before, might take me hours now. As my knowledge and skills increased, I’ve become more time efficient!
Becoming income efficient for you means that as time progresses, you’ll spend less time being inefficient.
Ways to become more income efficient
1. Become a pro
Your income efficiency will increase when you become a professional in your career. This means giving your job 100 percent effort and offering exceptionally valuable services. The pros are the ones who are charging more dollars. They’re not charging by the hour; they’re charging by their knowledge and expertise, and that can be thousands of dollars for a couple hours’ worth of work. Now that’s income efficiency.
This means that if you’re a real estate investor, spend time becoming an expert in your niche. Increase your wisdom and skill, and offer the best services for a fixed price that increases your income nicely.
2. Begin a business
Another path to income efficiency is to start your own business. Years ago, I gave up working for others to begin a business in real estate investing. Now, you don’t have to start off full-time. You can start part-time and grow it into a full-time business. One great thing about owning your own business is that there’s no salary cap like there can be when you work for a company.
3. Save and invest
To become more income efficient, you must begin saving and investing. Too many people make more money and spend more money on things that don’t really want or need. Instead of letting your money fall from your hands, maximize it by minimizing your expenses and investing in various niches to begin building a nice portfolio. There’s various ways to invest, including stocks, bonds, 401K, and real estate. You want your money to grow more money without you having to put more TIME into it. That’s the beauty of compound interest – it doesn’t require your time to earn more money.
Make it your aim to become more income efficient. How’s your efficiency for this year? Run the numbers and time put in and see. Then, as the New Year approaches, make the changes you need in order to become even more income efficient.