Many financial experts will give you advice on building the right investment portfolio and what percentage you need across stocks, bonds, mutual funds, etc. There is also a lot of advice on how much your mortgage, groceries, and charitable contributions should be in comparison to your monthly income. However, how many of you have ever been told how much you should budget for Investing in Yourself?
Back in 2010, I read the book Secrets of the Millionaire Mind: Mastering the Inner Game of Wealth. It was a life-changing book for me. It shares the mental beliefs that hold people back in being successful in managing or attracting money. It is also specific in recommendations on the different broad categories and accounts that you should create in your budget and % to allocate to each:
- Financial Freedom bank account – 10% of all your income (after taxes). This money is used for investments that will produce passive income for your retirement.
- Play – 10%
- Long-term Savings for Spending – 10%
- Education – 10%
- Necessities – 50%
- Give – 10%
- Financial Freedom jar – Deposit any loose change, even a single penny each day. This will put your attention towards achieving financial freedom.
Most of us see “Education” on the typical budget spreadsheet and probably only think that this refers to college tuition, private school, or even preschool costs for children. However, T. Harv Eker is one of the few authors that I’ve read who recommends that this is a monthly budget item where you use this money specifically for courses, books, training, one-on-one coaching, or any other method you choose to educate yourself. Only a poor person will feel like they already know everything. A successful person knows that he can’t possibly know everything and will seek to read and learn from other successful people.
When I hear of friends or family members who complain that they want to quit their jobs because they didn’t get a promotion or raise, I always ask them why they feel that they deserved one. The common response that I get is, “Because I’ve been here for several years and haven’t gotten a promotion or raise.” I always shake my head in disbelief that people think that their company or boss will reward them based on seniority. You have to continue to show potential and make yourself indispensable to your company by being the best and always looking to improve yourself. In order to get a promotion over your colleagues, you have to show why you are clearly the best candidate. Also, T. Harv Eker found that the “key difference between rich people and poor and middle-class people is that rich people are experts in their field. Middle-class people are mediocre in their field, and poor people are poor in their field.” So if you don’t think you are being paid as much as your colleagues or friends, then ask yourself how good are you at what you do? How good are you at your job or at your business?
In all investment marketing material, there is always a disclaimer that past performance is not necessarily indicative of future results. You would typically only purchase stock in a company that you believe has future growth potential. The same is true for us as employees or business owners. Just because you showed potential when you were hired or started your company in the past, doesn’t mean that you will continue to be a high performer. If you are the exact same employee that the company hired over five years ago and you haven’t done any additional training, whether in-house or on your own, then why would the company want to invest more in you?
By budgeting your income to invest in yourself and gain new marketable skills, you convince your boss and company that you are worth the time and money to keep happy, motivating them to give you the promotion or raise that you deserve.
Example: If your take-home pay is $8,000 a month:
So what falls into this Education bucket? How could you possibly spend almost $800 a month on education material? Here are examples that the money could be used for:
- Books, magazines, trade journals
- Training – on-line courses, certification courses
- Coaching – life or career coaching, financial coaching, brand management
- Conferences and Seminars – registration fees, travel costs, meals, and childcare
- Resume and Social Profile – professional help to write resume, cover letters, LinkedIn profile
- Membership fees – Toastmasters, Meetup membership fees or meals/entertainment while attending sessions
- Golf lessons – If you are in the business and IT world, many deals are likely being made on the golf course. Take lessons to make sure you can hang with the best of them.
About six months ago, I found out about a financial media conference that a colleague said would be a great opportunity for me to attend and meet other financial experts. It was going to cost me over $350 in registration fees, plus food, travel, and childcare costs. Having money in my Education fund allowed me to make a last minute decision to attend. It was one of the best conferences that I have ever been to, with access to published authors, successful bloggers, and social media experts. The knowledge and networking that I gained from this four day conference will likely produce a greater return than my initial investment. I have another colleague who would have loved to been able to go to this conference, but wasn’t able to due to finances. Don’t miss a great opportunity because you didn’t have the foresight to plan to educate yourself.
- Be intentional and save 10% of your monthly income to invest in yourself.
- Commit to reading at least one new book a month around money, business, or personal development.
- Research and write down 3 conference, seminars, training, or coaching that you could do that would further your career, help you get the next promotion, or kick-start your business.
- Budget and plan to do these 3 things over the next 12 months. If you need help figuring how to budget for these, contact a financial coach.