Money Smart Skill: How to pay yourself first
The money smart skill of paying yourself first is a tough one for many. My first years in business I felt like the pay machine for everyone but myself. Across the board every financial advisor I consulted preached the importance of paying myself first, yet I could not feel good about taking money out of my business when I still had bills unpaid at the end of the month. Finally I had to face the fact that if I could not pay myself then I had no business working for myself.
In order to pay myself I had to bring in more income and/or lower my expenses. The money smart skill of paying myself first had to become a priority and I knew I had to change my entire mindset about money. Instead of looking at money itself I started looking at how to use it differently. For instance, I knew I could not work more hours than I was working so I had to look at other sources of income that did not require more hours of work from me. At least not long term.
Network marketing was a Godsend for me. At first I worked a few more hours a week but as I gained more skills I had income coming in each month based on my previous efforts. My network marketing efforts did not bring in huge sums of income but the consistent checks gave me room to breathe and allowed be to work a few less hours a week. By working fewer hours was able to study more and increase my skills which allowed me to raise my prices.
Two ways I increased my income:
Started a network marketing business
Advanced my skills and raised my prices
Next I looked at how I was spending money. At that time I was renting my clinic and it made sense for me to buy my own property. Purchasing my own clinic was a way of paying myself because I was building equity in real estate. Another way of paying myself was to start contributing to a SEP retirement fund which also saved money on taxes. The money smart skill of paying myself first began to shift my bottom line and over the years allowed me to gain financially.
Two ways I paid myself:
Purchased my own clinic and stopped paying rent
Invested in a SEP retirement account
Because the money was automatically invested through mortgage payments and direct withdrawal from my bank account I never had to make a choice of paying myself or paying bills. Interestingly, the bills still got paid. Madalyn
Enjoy our free E book: Journey to Enlightened Wealth
Money Smart Skill: Appreciation of residual or perpetual cash flow monthly
Recently I asked myself why I get so excited about small increases in my residual cash flow monthly and take my more significant earned income for granted. It is not that I don’t appreciate the money I earn in my veterinary practice but I see that money evaporate when the bills come due and then I have to earn it all over again.
My residual cash flow monthly, on the other hand, is based on past effort and financial investment. Although generally a smaller amount than my earned income I don’t have to earn it every month, it just shows up. I love that. I have spent to last 15 years developing the money smart skill of shifting my overall income from primarily earned income to residual cash flow monthly.
Residual is what is left over at the end of a process, in the case of residual income it is money that comes to you regularly in return for your past work and investment efforts. You might argue that you should have money left over after paying bills with earned income. This is true but you have to work for that money each time.
Passive is another term for residual income but I don’t like it because it implies that the income happened with no effort on the part of the receiver. Nothing could be further from the truth. Creating residual cash flow monthly requires significant effort, sometimes working months or even years with little reward.
I prefer the term perpetual income which means something that continues indefinitely without interruption. Some people call this mailbox money from back in the days before direct deposit.
Lets look at a hypothetical example of how earned and perpetual income compare over the course of a few months:
Month 1
Earned income $1000 with $200 left over after paying bills
Month 1
Perpetual income of $200 from investments such as rentals or a network marketing business
Month 2
Economy slows. Earned income $800 with none left over after paying bills
Month 2
Economy slows. Perpetual income of $200 remains consistent
Month 3
Great economy. Earned income $1200 with $400 left after paying bills
Month 3
Great economy. Perpetual income of $200 remains constant
Month 4
Brief illness limits work. Earned income of $800 with none left over after paying bills
Month 4
Brief illness does not affect perpetual income of $200
Month 5
Vacation needed to recover from illness and overwork. Earned income $800 with none left over after paying bills
Month 5
Perpetual income of $200 comes right on time while you enjoy vacation
Month 6
Back to normal. Earned income of $1000 with $200 left after paying bills
Month 6
Perpetual income of $200 remains constant
Lets look at the final tally over a typical 6 month period:
Earned income $5600 with $800 net
Perpetual income of $1200 with $1200 net
Earned income and perpetual income combined $6800 with $2000 net
This may seem like a simplified example but it is a reflection of reality. If you ever wonder why you don’t get ahead with earned income alone I hope this helps you understand. I am not saying quit your job but I am suggesting you consider adding a source of perpetual income. Keep your job to pay the bills and create perpetual cash flow monthly to enjoy your life. Madalyn
Free E book: Journey to Enlightened Wealth
Photo credit: http://www.flickr.com/photos/joeshlabotnik/ / CC BY 2.0
Network Marketing: Customer or business partner, Follower or leader?
I have come to believe the age old discussion of product verses business in network marketing is not getting to the real issue. Instead of asking if you want to build your network marketing team with customers or business builders, ask yourself if you prefer to work primarily with followers or leaders.
Are you a someone who likes people who don’t ask a lot of questions and follow directions well or do you want your team to do their own research and be creative. Followers will appreciate your guidance but leading leaders is kind of like herding cats. Whether your business is product or business oriented you have to decide if you want to be the only leader or share the responsibility. Being the only leader of many followers keeps you in control but doing the majority of the work. Being the leader of other leaders is less time consuming but you give up control.
Why is knowing who you like to work with and if someone is a follower or a leader so important? Culture! Your network marketing team will develop a culture whether you intend this or not and that culture needs to be a match to your style. For example, I appreciate a good follower but I enjoy the challenge of working with leaders. When I first started in network marketing I tried to make everyone into a leader and I used the same training with all my team. The results were that the followers felt like I was badgering them when they did not have clear understanding of what to do and the leaders were bored and thought I was too controlling. I was frustrated and my team was miserable. Does this sound familiar to anyone?
Followers:
Don’t ask lots of questions
Want clear instructions about how to use products or work the business model
Will work hard when they understand what they are supposed to do
Follow directions well
Often need to be regularly motivated and acknowledged to stay with a program
Need to see significant, timely reward for their efforts to keep working
Leaders:
Have many questions before making any commitment
Like to do their own research
Are wiling to learn as they work
Don’t follow directions worth a flip
Require little motivation
Are willing to delay gratification and work for future rewards
Successful network marketing businesses can be built around customers or business builders and most good groups will have a mixture of both. That being said, your core team that you work with regularly must be a match for your personality and leadership style. Do you prefer to be the “go to” person or do you like your team to share in leadership even if this means a significant number of cat herding moments?
You can have a very successful network marketing business by attracting customers or business builders but if you don’t understand the difference between followers and leaders you can create a nightmare scenario for everyone. After almost 20 years in network marketing I can say I have a wonderful balance of followers and leaders and I have learned how to work well with both groups.
Other posts on network marketing:
Company events – Do you love them or dread them
How important is your product
Network marketing – See it, Want it, Do it
Interested in network marketing as a source of additional income? Feel free to contact me.
Photo credit: Flickr via creative commons
Money Smart Skills: Understanding the hidden damage of financial stress
Sleepless nights, irritability, stomach ulcers, depression. All these symptoms are common to those suffering from financial stress. Over due bills, debt, lack of savings, unexpected repair bills, high college tuition are typical triggers for physical stress related maladies, but,
What about the less obvious damage that occurs from financial stress:
Disappointment in your kid’s eyes when you missed his birthday party because you had to work overtime
Regular frustration from working at a job you hate because it pays the bills
Less robust health from eating only conventionally grown food because organic is more expensive
Weight gain from skipping regular exercise because you are too tired
Chronic health challenges that could have been avoided with buying good nutritional supplements and better eating habits
So even if you can pay your bills, don’t have debt, ulcers or clinical depression you may still suffer from financial stress that is less obvious. An extra $500 of cash flow monthly could shift you into financial peace. Helping a few other people have financial peace can bring you financial freedom.
A home based business that can be built along side your current source of income is what many Americans are choosing to relieve financial stress. A home based business can be started with a minimum investment and can grow as big as you are willing to grow it. Think about it. Madalyn
Can you see the power of a home based business?
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Money Smart Skills: Being willing to work today for someday money
Money smart business owners understand the concept of working hard now for money that will come someday in the future. Patience is one of the most important money smart skills and also one of the hardest to develop. We live in a world of instant gratification and waiting for many people is not an option.
Building a business is all about working hard now for what you will reap someday. In most cases that someday is not well defined or completely in the control of the business owner. It takes someone with an entrepreneur spirit of adventure to work hard to lay the foundation of a business and wait for the payback but this is exactly what makes money smart people wealthy!
Business building activities that don’t generate immediate income:
Building a brand or reputation
Finding the best location or building the best website
Developing a product
Marketing a product
Hiring employees
Building infrastructure such as purchasing equipment and setting up utilities
Finding financing for start up expenses
It is pretty obvious why many people don’t jump right out and start their own business but what if most of these business building activities were already in place? A franchise is an example of a business that has much of the initial work done. Network marketing is another example with a much lower start up cost. Both of these business models are very profitable for the money smart person willing to put in the effort now for someday money.
You can always forget about ever being wealthy and just do what you are already doing that pays you right now but offers little hope for the future. Or with the money smart skill of patience you can start now, even as you continue with your current job or profession, and build a business that will someday allow you to live your dreams. With the right company and support team that someday could be much sooner than you think. Take you first action today and contact me. Madalyn
Along similar lines check out the post: Want it, See it, Do it.
Photo credit: Creative Commons
Wealth Building 101 – Why you need a coach
Last Monday I had 3 coaching calls before noon. One with my Kiyosaki, Rich Dad education coach, one with my network marketing coach and one with my personal and business coach. Yesterday I took my horse and had a lesson with my barrel racing coach.
Why do I work with all these coaches? The answer is simple. All these people know more than I do about what I want to get better at. I want to become more money smart, be a stronger network marketer, a better writer and person and learn to barrel race. I sure can’t do these things by myself and be successful.
Being coached is not always a pleasant experience. I don’t particularly enjoy being told what I am doing wrong but I know my coaches have my best interests at heart and they give me positive feedback along with the constructive criticism.
My coaches see what I can’t see. For example, with my barrel racing, I am supposed to run my horse full speed to a spot a few feet from the barrel, slow down enough to turn, but not lose momentum. I find that when I slow my horse down we lose momentum and end up losing a lot of time in our turns.
My coach was able to see that I was stopping my body momentum instead to continuing to drive my horse forward even as we slowed down to prepare for the turn. She modeled what she wanted me to do on the horse she was riding.
My coach pointed out that I was thinking slow down when I really needed to be thinking gather and prepare. A Ha! I got it. I doubt I would have figured this out myself and even if I did it would have been after much stress for me and my horse.
I also tend to be off in my timing when I ask for my horse to get ready to turn. Unfortunately, this is not something my coach can teach me. Perfect timing has to come through feel and this will take lots of practice. What my coach can do, however, is help by calling out when to give the slow down cue until it becomes instinctive for me.
In summary, why you need a coach:
A coach knows more than you about the subject you want to get better at
A coach has your best interests at heart and gives you encouragement even as they point out your mistakes
A coach sees things that you can’t see
A coach will model the correct actions
A coach will point out your limiting or incorrect beliefs
A coach can cover for your lack of skill while you practice
I love my coaches. I would recommend the Kiyosaki, Rich Dad education training program to anyone looking to go to the next level in becoming money smart. I love my business coach. She is a true friend and mentor. I love my network marketing coach and would never try to work my business without her. My network marketing coach works with me and my group in the big business, network building model. I am looking for a few partners who are ready to increase their cash flow monthly quickly and predictably. Contact me. Madalyn
For similar information check out: Is you dream big enough?
Network marketing: See it. Want it. Do it.
My business partner, John David Mann summed up the three things which have to be in place for a person to realize the significant cash flow monthly available from a network marketing business. You have to See it, Want it and Do it. I think most people can understand the need to want it and do it but what does See it really mean?
When he says See it, he means see the big business model of network marketing. Most people have only been exposed to the small business, product selling model of network marketing so even when the big business model of building a network of customers is presented they can’t really See it. I have come to understand that, like me when I first heard about network marketing, most people do not have a frame of reference in their minds to fit the big business model of network marketing. Selling products is the small business model for network marketing and what most people can relate to.
Both the small and big business models of network marketing are legitimate but they are very different. Much of the misunderstanding of the network marketing industry involves confusing the two models. People want the passive cash flow monthly of the big business model but because they don’t really understand it they end up doing the small business model.
These new network marketers are expecting to get the significant, passive cash flow monthly they heard about in the presentation of the big business model and when they don’t see these results, with their small business model efforts, many get frustrated and quit. This misunderstanding is rampant in network marketing and creates a disconnect that is bad for the industry so I would like to clarify the differences.
The small business, self employment model for network marketing is a time for money model that can bring nice returns to a person looking to build a storefront type business without actually having to stock products. The income from this model can be significant but will be limited by the time a person has to find, educate and communicate with customers. The better you become at these skills the higher your check will get but the less time freedom you will have.
Small business or self employment network marketing model:
Focus on product sales
Focus on large personal base of customers
Focus on commissions generated from personal customer base
Focus on educating customers about products
Focus on communicating with customers about product discounts to generate sales
Income limited by time available to spend with finding and keeping customers
Big business or leverage model of network marketing:
Focus on a simple, duplicable, effective, profitable system
Focus on building a network of customers by leveraging the networks of others
Focus on commissions generated from sales all through your network
Focus on educating partners on personal growth and business skills
Focus on communicating with partners how to maximize their checks
Income not limited by time because you leverage other people’s time
In my post, raise your cash flow monthly by $500, I describe the small business model. Why do I do this when I think more from the big business model? I do this because this is where I started in network marketing. The small business model is where most people can relate and through working the small business model a person can bring in some income even as he or she develops the skills needed to work the big business model.
To become a big business thinker you have to change who you are fundamentally and change your habits to match who you are becoming. This is a process and a journey.
For those reading this blog who feel you see the big business model of network marketing, want it and are ready to do it, I am looking for 3 new partners who are ready to move quickly forward over the next 30 days. Contact me. Once I have my 3 big business partners I will not be looking again for at least 6 months. Small business partners are always welcome to work with me at your own pace. Madalyn
Network Marketing: How important is the product?
Regardless of what some may say, your network marketing product is hugely important and here are the reasons I believe this:
Passion for your product shows when you talk to someone
Your customers and business partners must like your product well enough to become loyal, consistent consumers
Your product must be unique enough that people can’t just get it anywhere
Your product must be fairly priced and give fair value to the consumer
That being said, when building a business your product is not the only thing to consider. You also have to consider the business system and management. Here is my experience that has led me to this conclusion.
I have been part of one network marketing company with an incredible product for almost 20 years. I still get a good check but lack of a business system and bad management has almost brought the company down several times. Based on my concern for the long term viability of this company I joined another company that also had a unique product and a solid business plan and management with a long range plan.
The power of a new exciting product was confirmed for me last summer when my new company, Xango, introduced the stress relief, herbal product, Eleviv. Within 10 minutes of taking 2 capsules I felt relaxed and sleepy. I slept like a baby that night and generally felt like a weight had been lifted off my shoulders. My business partners saw similar results. Not only did we personally see the immediate benefits but we started using the Eleviv on all kinds of animals. Seems that stress is stress whether you are two or four legged. One of my partners, Stephanie, actually put together an e book with lots of cool Eleviv case histories.
Since Eleviv was introduced and I had such great results my business has taken off with fresh energy. I have a new business partner and several of my other partners are equally excited. Plugging this new, powerful product into a great business system gives value to both the customer and business person. So, based on my experience, product is always important for your customers but not enough to build a big network unless you have the business systems and management in place as well. Madalyn
Concerned about selling? Check out Is network marketing selling?
Wealth Building 101: Change your stinkin thinkin!
There is one common denominator in all your financial failures. You! Have you tried changing your job, your location, your business or your investments but been frustrated that your financial situation did not change. Until you change your stinkin thinkin your actions will never yield the results you desire.
Before you start accusing me of pointing fingers let me assure you I have been this person. If working harder or changing the focus of your efforts was the answer to wealth building I would be a billionaire. It was only when I changed my thinking that my fortunes begin to reverse.
See if you have any of these very common examples of stinkin thinkin and let me offer some alternative viewpoints.
Do you think 10 to 15 hours a week to start a home based business is too much to add to your busy schedule?
What if I could show you a way to spend these hours doing something that you enjoyed and were good at and these consistent actions brought in an additional $500 cash flow monthly into your household?
Do you think investing in your own business is too risky?
What is your current risk of doing nothing and falling further and further behind? What is the real risk of investing in products each month that dramatically improve your health and spending some time in learning skills that will help you grow personally as well as professionally?
Are you afraid your friends and family will not approve of you starting your own business?
Are your friends and family financially successful and living fulfilled lives? If so, by all means follow their advice and get them to teach you their wealth building skills. One caveat, what they did probably won’t work for you until you change your stinkin thinkin.
Do you think $35 initial membership and $200 a month in product purchases is too much to invest in a business that can add $500 to your cash flow monthly ?
So what other options have you explored that can match these odds?
I started this blog to offer people alternative options to the stinkin thinkin that held me back from wealth building for so long. I realize my writing is a bit heavy and I am working on this. The information, however, is sound and I speak to you from my heart. I welcome your comments, constructive criticism and personal stories. Madalyn
Like what you see in this post? Check out Hope in not a strategy
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Network Marketing: Do you love company events or dread them?
I am an introvert, therefore the thought of being in a room with 5 to 10 thousand people at a network marketing event does not make my heart sing for joy. Then there is the cost. Airfare, hotel rooms, $15 breakfast etc. These events aren’t cheap.
To go out of town I have to leave my home and my animals in someone’s care. I don’t like doing this. I have to park at the airport which is a pain and no matter how careful I am to write down the space my car is in and try to get my bearings I still get lost in the parking lot when I try to find my vehicle. I find being lost in a sea of automobiles particularly aggravating when it is midnight or raining.
I have to find clothes to wear. Believe me, dressing “casually smart” does not come naturally for me. I am always jealous of my friends who seem to effortlessly show up in spiffy, perfectly matched outfits. I, on the other hand, am a fish out of water when I don’t have on my levis and you will never see me in capri pants. Forget cute sandals. After years of wearing boots, no one should have to see my feet.
So why do I go? Here’s why:
Leadership – You don’t go to convention to become a leader but leaders go to convention. When you first start out in network marketing, you go to convention to be around leaders and learn from them. How they act. How they think. What they do. Then at some point, in addition to learning from the leaders, you become one.
Energy – There is something amazing about being around positive, excited, energetic people. Most network marketers have all of these traits or they would not be in this business. Network marketing is not for the faint of heart. People get in network marketing because they have a dream and see the power of this industry to make dreams come true.
Vision – The founders of Xango are visionaries. They see years into the future and have a plan in place not only for the success of the company but for making a difference in the world. They see the company profits and the profits of the distributors going to bring more good to the world. Through the Xango goodness initiatives the company sets the standard for charitable giving and contribution.
Knowledge – Xango events are not pep rallies. Don’t get me wrong. We have fun and there is time spent on acknowledging the accomplishments of successful distributors but we also learn. We have medical experts who train on product knowledge, business leaders that teach network marketing skills and motivational speakers who lead us in personal growth. Some of this can be shared with teleconferences and webinars but it is just not the same as being there to hear it in person.
Socializing – Even though mingling with thousands of new friends is scary for me, I have met some incredible people in this industry and I get to see them only at convention. I often room with a cross line buddy of mine from Vermont. We pack in six months worth of visiting into a few hours when we are not at meetings. Meals between meetings are usually spent with other networkers comparing successes and sometimes frustrations. You get to see that you are not alone on your path.
So, despite any negatives, I go to convention. This is my business and this is what I do. I always come home empowered, smarter, personally fulfilled and more committed. Madalyn
Photo credit: http://www.flickr.com/photos/djackmanson/ / CC BY 2.0
