Hey guys today I want to talk to you about a concept that has been a little
bit controversial in the past when I've brought it up but it's also a lot of fun
to think through. So it's really this idea that you can use a notepad like
this one to figure out how to make pretty much any amount of money you want.
Now it sounds a little bit crazy at first but we're going to use real
numbers so hopefully that breaks it down a little bit and we're going to take
what might be considered an average income and compare it to what might be
your dream income and figure out how to use real numbers to bridge that gap and
get you from point A to point B. So let's get started...
First though let's talk about how to really determine the way that money is
made, right? Because if you want to make a large amount you first need to figure
out how to make a small amount. Where does the money really even
come from? And it comes from, in its simplest terms, giving value. It doesn't
matter if you're a plumber, a lawyer, a teacher, an entrepreneur, a doctor
whatever -- you get paid by your employer or by your customers or clients in the
market because of the value that you give. They pay you what they deem it's
worth and that's how you make money. So what we're really doing here is trying
to figure out how to increase that amount and we're going to use like I
said real numbers to do it. So let's start with $40,000 per year. Let's say
that you currently make $40,000 a year - got a little bit of a wobbly board here but
we'll make it work...
$40,000 a year is your current income. Now I'm going to spare you the total
math equation here but let's say that you work 1,920
hours per year and 1,920 hours per year is what you could say that maybe the
average person works. It's 52 weeks in a year and then you take off two weeks for
vacation, maybe another two weeks for personal and sick time and you're left
with 48 weeks in a year and then let's say the average person works 40 hours a
week, you do that math you get to 1,920 hours worked in a year. So if you divide
1,920 hours into $40,000 a year, what you get is $20.83 per hour
now even if you're a salaried employee if you work this many
hours and you make this income, you make $20.83
per hour. So let's say that you're not happy making $40,000 a year
you want to make, and this going to seem like a big number some
people but let's just play with it, let's say that you want to make $1,000,000 a
year and that would make you a lot happier with your income. So you know
let's say that we're using the same numbers let's say that you don't
go crazy you don't start working 12 hours a day you just stick
with eight hours a day, the typical 40-hour a week schedule, which is 1,920
hours a year and if you do that math what you end up at is
$520.80 per hour. So if you
currently make $40,000 a year and you want to make $1,000,000 a year you
need to figure out a way to get from $20.83 per hour to
$520.80 per hour. How do you do that? Well again
let's go back to value. You're paid by your customers, your clients,
your employer, whatever based on the value that you create and give according
to them, right? And that actually brings up a pretty good point that I want to
visit here just as a little side note. Some people might say that let's say a
teacher who makes $40,000 a year is even giving more value than an
NBA basketball player who might make $1,000,000 per year and I would say that
that's probably pretty solid reasoning in terms of the influence to somebody's
life, right? But the market doesn't really care about a lot more than numbers
sometimes, right, and especially if you want to go from this amount to this
amount you need to figure out how to give value in terms of what
the market thinks, right? So let's say an NBA basketball player is making a
million dollars a year but because he's on the team the team is making 10
million dollars per year for merchandise, ticket sales, whatever -- well if they're
making 10 million and they need to pay him 1 million isn't that
worth it? I mean it just kind of makes sense because your profit
margin then is 90% which is amazing so you can kind of see why in terms of the
value in revenue minus expenses equals profit that a basketball player
might make 1 million when you could argue that a teacher despite making only
$40,000 a year is actually giving more value so, just something to think about
when you're figuring this whole thing out but again you need to figure out how
if you want to make a million a year to get from $20.83 to $520.80 per hour
and again what we're going to do is really
take this back to value. You need to figure out how to take the value that
you're giving from around twenty dollars an hour to around five hundred twenty
dollars an hour how do you do that? There are only two basic ways
really of increasing your income like that and it comes down to this
1. you can either give a massive amount of value, a lot more value than you're
giving now, to maybe the same amount of people that you're giving value to now
in other words a massive amount of value to a small number of people OR
2. you can continue giving the amount of value you're giving now, at least
according to the market's opinion, to a massive number of people. So a couple of
examples of these might be a heart surgeon, right?
You're literally saving people's lives, it's worth a lot but you can't really do it
for a whole ton of people because your time is limited but since you're paid so
much to do a heart surgery you really don't need to do it for a million people
either. So the second way is by giving a small amount of value like we said to a
massive number of people and an example of that might be a selling toilet paper
let's say you're Cottonelle you don't need to make a hundred thousand dollars
per roll of toilet paper because you've got a million, two million, five million
whatever people who are going to buy your toilet paper so you can either
increase the number of people who you're giving value to or you can increase the
amount of value that you're giving. So I wanted to leave you with a couple
key takeaways and the first one is instead of just kind of dreaming about
oh, you know I need to do this job or I need to just start a business that works
or whatever... use real numbers to figure out exactly how much value you need to
create and you need to give really in order to make the amount of money that
you want to make. So you know let's say if we know that $520 an hour
is what we want to make then that might weed out a couple of
business ideas we came up with that maybe there aren't enough people who want our
small amount of value or maybe you know the product that we have in mind isn't
really that valuable to people so you know if we only want to market to this
many people it's not going to work, right? So knowing the amount of value that you
need to create is critical and you can use real numbers, real, very simple
actually math equations to figure that out. The second thing I want to leave you
with is just this idea of stopping the questions about how do I make more money.
Everybody's asking how do I make more money, how do I make more money, but
nobody's asking how do I give massively more value than I'm giving
right now?? And so since money is a byproduct of
giving more value the question really should be "how do I give ten times more
value to the market or to my employer whatever if I want to make ten times my
current income?" So I'd love to hear your questions on this one I know like I said
it's a little bit controversial to some people that you can use simple numbers
to map out how to make literally any amount of money you want but I want to
know what you think and I'd be happy to discuss any of your questions with you
in the comments section below. As always if it's valuable to you it's
probably going to be valuable to somebody else so feel free to share it
on your page and I can't wait to talk to you soon.
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