Your comfort level as to how you create income is an overall determinant of whether you’ll build wealth in your lifetime and how long it will take.
Here’s a concept that took me WAY too long to understand and come to reconcile with; I am worthy to make a disproportionate wage or salary than the time that I put into something PROVIDED that I am delivering substantial value to a group of individuals.
To break this down further, I am now fully comfortable putting in just a few hours of work on a product or service and receiving multiples of income in exchange at a rate much greater than what my previous hourly rate was to do that very same thing for someone else.
Learn to disassociate time from earning income
Why is this such a hard concept for many of us to come to grips with? Quite frankly I’m not entirely sure but it is one of the single largest mental blocks keeping a lot of us from building wealth in the shortest period of time.
More specifically, there are a significant amount of us who struggle with the concept that we might have been making $25 an hour doing a task for our employer but we now have somehow completed that task or a very similar task for a group of customers/clients and we have been paid a multiple of this wage, perhaps as much as the equivalent of $100 an hour.
For many of us, we somehow feel we have ‘cheated’ someone else seeing that we were only ‘worthy’ of receiving $25 an hour for that same task previously when we worked for someone else. How could the same thing now be worth a multiple of that wage simply by performing the task for ourselves?
As perplexing a philosophical question as this can become for a lot of individuals, I am confident in saying that until someone can become comfortable with this concept it is going to be much more difficult and take a lot more time for them to build wealth. This isn’t about being cruel or wanting to hurt someone’s feelings. This is pure math. Let me explain.
You have no leverage of your time when you work for someone else
If we remain an employee for someone else we retain absolutely no leverage. In other words, we perform work for one hour and it’s valued (in this example) at $25 per hour. We only get paid that wage for every hour we work and we receive that same amount every time for that hour of work.
We can’t ‘pass’ our work along for someone else to do and we can’t give the value of our job to a family member. It is purely a linear mathematical relationship. One unit of work in, $25 of wage received.
Mathematically speaking, using this same example if we were to work 40 hours in a week we would have earned a gross amount of $1,000 in wages.
Get paid for value not time
However, if we were able to work for ourselves and somehow negotiated a contract with a client for $2,000 and put the same amount of work into the project and expended the same 40 hours to do it, we would have now made a gross hourly wage of $50 per hour.
Twice as much on an hourly basis or now being able to reach the same financial goal of amassing a specific amount of money, say $2,000, in half the time. Purely mathematical.
Based on this mathematically, in order to either make twice as much (in the example identified above) as we did for someone else or get to our financial goals in half the time, we need to work for ourselves.
This is one of the very basic principles of wealth building that an individual must come to grips with and understand why it’s so important in building wealth.
It’s not to suggest that we’re all going to be able to run out and quit our day jobs to become entrepreneurs or self employed but it DOES build the mental thought pattern of how to more effectively and efficiently build wealth that will become absolutely essential in being able to accept other wealth building principles.
Another part of this aspect that must be reconciled for a lot of people is being able to accept being paid for time that they didn’t put into a project or being paid a disproportionate amount than they think the service or product is worth. This in part is derived from having had their work previously valued by an employer at a fractional amount than what they are being paid for it now.
I still have some difficulty from time to time struggling with what I call the ‘worthy factor’. More specifically, if I was doing the same work for $50 dollars an hour for my employer, how is it that I am now able to charge $150 dollars an hour now simply because I am doing it on my own?
However, my ability or your ability to be able to accept this practice is the first step in being able to shape our money mindset to become a wealth builder and wealth creator. This is due in large part because this mental mindset is a prerequisite to being able to create a side hustle or a full-time business.
When we work for someone else they determine what we’re worth
Let me describe how I have been able to reconcile this seemingly challenging moral dilemma that is created for many of us. When we work for someone else, they dictate to us what they believe we are worth on an hourly basis for that task.
How is that hourly wage determined? It in turn is dictated by other workers and other employers in an agreement as to what that task is worth. Humm. So other people are determining what I’m worth? Yup.
In addition, your employer is actually charging out to that client at a $150 an hour just as you would if you were doing the task for that client directly but your employer needs to cover the overhead to do that. Your health insurance, your benefits, the company’s light bill, the attorney charges, the auditing bill. Okay, that seems fair enough! Of course it is.
It also includes the owners entertainment budget, the corporate jet, the failed marketing campaign that Steve and Linda blew this past year….”Ahh, wait a second”, you say, “why do I get penalized for that stuff?”
Your boss makes a profit off of you for value that you create
Great questions. In addition, your employer makes a premium, their profit margin, to manage your work and keep you in line…you ARE such a difficult employee to manage after all! “Huh, that doesn’t seem right”, you say.
So here’s the punchline. Your employer is marking up your services and passing it along to the customer for the work that you do. Think about it. If they didn’t do that in the first place, how could they ever be able to hire you to begin with?
Now if you were able to get the contract yourself and deliver the goods directly to that customer you could keep the additional money involved in covering those additional expenses.
Receive 100% of the profits for 100% of the value produced
To put it more directly, wouldn’t you rather receive 100% of the value of your work that you are providing and be in charge of determining where the funds go versus having your employer make those decisions?
Let’s be honest, YOU are making the magic happen and delivering the goods, shouldn’t YOU receive the benefit of all the work that you delivered?
The other element of this that trips a lot of people up from moving their employee mindset to that of an employers mindset is the concept that they feel like they have to work ‘hard for their money’. This in their opinion means that they have to work hard on the actual time unit task that they believe is what derives the value in the first place. Fair enough. Without someone ‘digging the ditch’ the ditch doesn’t get dug.
However, what about that individual, your employer, who had to negotiate the cost of equipment, fuel, materials, the contract itself in order to have a ditch to be dug in the first place. Was that work that s/he did not important? Was it somehow ‘not hard’?
Conclusion
Labor is not the only thing of value
When someone says that I need to ‘work hard’ in order to feel like I deserve to be paid they are invariably saying that the only thing of value in the work equation is the actual labor that is connected to the primary deliverable, in this case digging the ditch.
However, if they were to EQUALLY value the work that must ultimately be done to line up the work in the first place and to satisfy the customer/client, they could start to move onto the other side of the equation where working ‘indirectly’ on the primary deliverable is a worthy pursuit.
More off, with this mindset that working on other aspects of the deliverable is worthy they can now free themselves up to pursue multiple ‘ditches to be dug’ and work hard at getting additional jobs. This creates more work to be done and invariably creates more opportunities to create wealth.
The important aspect of this is that is critical…absolutely crucial…is that an individual must see the worthiness of secondary and in some cases tertiary level work, as being just as valuable a pursuit of their time and life energy primary level work.
The reason for this is that once they can find peace with this concept they are now in the ‘wealth creators’ mindset and can create wealth at a force multiplier scale than what they were able to before, which was on a linear scale; trading hours for dollars.
So in order to build wealth at an accelerated pace you need to become in control of how you value your own time. One vehicle in which to do that is to become your own boss!
