Great Savings 25 – Leveraging Income

Want to really get ahead in life? Then learn to leverage your time to create additional income. And no, this isn’t just about working more hours. Instead of working faster or harder it’s possible to learn new methods that multiply your potential to earn money. Don’t believe it? Then ask why some people put FAR less effort and energy into their lives and earn MUCH more than you do. The answer, of course, is leverage.


Great Savings Tip #25 - Leveraging IncomeLeverage is a key concept to understand when the goal is to amass personal wealth. It does NOT require we seek any and all means necessary to get more income. Sure a second job may offer a short-term solution for a family budget in crisis. However, there aren’t enough hours in the day to make this an effective solution for the long-term. In fact, a second job may severely impact the ability to get critical sleep. Studies prove lack of sleep can lead to poor health. Plus, lack of sleep can negatively impact our mood, our ability to stay focused at work, and even the way we relate to others. Leverage is never a simple matter of adding additional hours to a work schedule. Instead, it’s about learning to make more efficient use of the time we already have at our disposal.


How To Leverage Time


If leveraging time is so critical, how do we go about it? It may not seem like it at first, but the possibilities are endless:


We could turn a hobby into a career on the side, and then build it up until it eclipses a full time job.


Leverage your income by renting what you own.

Renting property is a great way to leverage income. The time spent managing the rental is often minimal compared to the dollars returned on the investment.

We might buy a rental property and let it grow in value while we work every day at our full time job. That way we could earn more every day—all by working just a few extra hours a month.


We might consider getting more education. When we gain the skills or certification we need to qualify for a higher-paying job we increase our total lifetime earnings. This is a great example of how investing a relatively small amount of time up front can reap huge rewards down the road.


I like collecting.

Do you enjoy collecting? Have you considered turning your hobby into a money making business?

We could spend time learning to invest money more wisely—becoming more knowledgeable this way may substantially increase the return on our investments. And along the same lines, putting any extra money we have to work with is a terrific way to leverage or magnify income.


Let’s look at an example of putting money to work by investing: Say we buy a dividend paying stock. Ownership allows us to earn capital gains should the stock’s value increase. That’s another way to say we’ll receive more cash than we paid when we sell the stock down the road. In the meantime, we receive a dividend. A dividend is an ongoing stream of money we collect just by holding onto the stock. Smart investors learn to find investments with ongoing streams of income. Of course when we have no money to invest, it’s hard to magnify wealth this way.


Don’t despair if you currently lack money to invest. Instead, make a choice to alter the equation. Start a savings account today. Add five dollars a week and in one year you’ll end up with $260. Now, find a solid, dividend paying stock and open a discount brokerage account like Schwab or E-Trade. Maybe that $260 buys 5 shares of company Z. If you add to it in regular intervals, and re-invest the dividends the stock pays, your brokerage account could hold several thousand dollars in a few short years. If you don’t want to wait to get started there are also companies that allow you to purchase fractions of stock shares at a time. One such company is


Finding Inspiration


When it comes to leveraging time and income, the initial inspiration can come from anywhere. Perhaps you’ve thought about painting or writing a novel. Maybe you like working with glass. It could be you’re a fantastic cook and want to take it to the next step. Starting or improving on a creative endeavor can be a terrific first step toward leveraging income.



What would leveraging creativity look like? Try this: Use some of the unproductive time in your schedule–that is the time that creates no income–and spend it honing your art or craft. Time can be measured in hours or life spans. When we talk of a single three hour block of time it may be hard to comprehend there’s a meaningful relationship between time and money. This is why we need to consider the big picture. Thus, if we consistently watch three hours of TV in a day, that’s 1095 hours a year spent idly passing the time. In a ten year span, our viewing time grows to an incredible 10,950 hours or 456 twenty-four hour days. That’s nearly a year and three months out of the ten year total!


Take what you know and turn it into something bigger.

Do you enjoy cooking? Maybe you could write a cookbook or create a series of how to videos. If you started a website, you could be receiving advertising revenues.

If you truly enjoy watching TV, it may be hard to put a price tag on all that time spent in front of it. However, if you’re really just filling your day, that time spent watching represents unproductive time and that’s time you can leverage to build future income. Visualize spending half of that time on developing a creative talent, instead. You might paint a masterpiece and sell a hundred thousand prints, or write a book and become a best-selling author. Just imagine the royalties! Altering what we do in otherwise unproductive hours creates the opportunity for developing an art or craft. Not only does that mean tapping into the potential to earn extra income, but it also means we’re doing the things we love doing the most.


This picture is "Kayakers" and original artwork by Bob Anderson. It may not be reproduced without permission.

Do you like to paint or take pictures? Can you take a class to improve on your skills? If you do, you may be able to sell copies on the internet and reap the reward of ongoing royalties. Royalties are a form of leverage.


Leverage Your Business Income


Solar energy could be more than a passion. It could be your way to more income.

Perhaps your passion is for renewable energy like solar. Could you take a class on it and learn enough to come up with an improvement on an existing design? Could you sell your idea to a business or start one of your own?

Those owning businesses can also leverage their time and money and that means more profit. One way to do this is analyze how you go about making or selling your products. This could look like figuring out a better way to build more units in less time or how to lower your costs. For example, you could upgrade your machinery and package products in less time. An increase in efficiency like this could make your products less expensive to produce, and thus more competitive in the marketplace. Or you might spend a few hours every week or month to improve on your marketing plan. That could significantly impact sales. A large increase in sales may or not be a realistic goal for a business, but even an incremental increase can make a huge difference to the bottom line, especially over the years.


Working Smarter Not Harder


The reason people say time is money is because of the unlimited opportunities it presents to us. Remember this key about leverage:


Every decision to use our time one way
affects our ability to use it another.


If we use our time inefficiently we limit our earnings. Likewise, if we learn to do a better job converting unproductive time or less-than-efficient time into more efficient time we end up substantially improving the odds our income will grow.


This is more than a piano. It's a potential money-making machine.

Start with something you love to do. Now get good enough at it you can take it to the next step. Enjoy the piano? Can you write songs for yourself or others in your spare time? Can you create sheet music to sell or sell your song on the internet or I-tunes?

It should go without saying that some forms of leverage are riskier than others. Owning a business or a stock share is more risky than honing a craft. At issue is to understand that risk and reward are two sides of the same coin. Raise the risk and our potential for reward or loss goes up. Lower risk and they go down. Knowing how you tolerant risk is therefore critically important to deciding how you go about leveraging the various opportunities you encounter.


The concept of leveraging income shouldn’t be seen as another way to pile on guilt so we work more hours every day doing the things we hate. Nor is it about holding on to some lame hope we’ll live a fantasy lifestyle at some point way off down the road. Instead, it’s about gaining a true understanding of the connection between time and money in order to start building a brighter future today.


Action Item: From everything you’ve read above, decide on one way you can start leveraging more of your time. Do you love an art or craft? Then figure out how you can turn it into a money maker. That could look like taking a class to improve on your skill, figuring out how to sell what you do, selling more of what you have more often, spending more time practicing and honing your expertise, etc. If you’re unsure how to start begin with the things that you’re already passionate about. Yes, you can control your future. All you need to do is take that first step and then keep at it.

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