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We explore how to increase your savings and decrease your debt in this FREE 21-day challenge!

 

 

With being fired from four jobs in four years, it felt like door after door was shutting in my face.  Add to that I had two children to take care of, one with special needs.  So yes, in 2016, I was in panic mode.  At that time of my life, I did not know that you needed an income plan.

Yes, you need an income.  What’s even better than income?  A plan to get more income.

http://https://www.youtube.com/watch?v=F_LU7DXyCiQ

Therefore, an income plan is how you can increase savings and reduce your debt.

So let’s ask a question that is critical:  What level of income are you the most comfortable with?  Let us break down this idea at an even deeper level:

• When you understand the different types of income, you can choose which one works for you.
• When you understand what level of income you are comfortable with, you can begin to visualize how to actually get the money.
• When you are clear of the different types of money plus you can visualize the income you want, then you can reach out to the right team to build your income plan.
• When you have your income plan, you can finance the lifestyle that you desire by building savings and reducing debt.

9 TYPES OF INCOME

There are a bunch of different ways you can get money. Some you have to work for, others your money does the work for you.  When considering building out your income plan, you have to decide if you are going use your labor to bring in additional income (wages, salary, commissions, selling something you create) or are you going to use your money to bring in more money (investing and interest income) or will you focus on support from other people (gifts, allowances and government funding).  Let’s take a look at a couple here.

Your homework for this section of the 21 day challenge is to review the list of ways to earn an income and decide which one will help you to increase your income and reduce your debt.

#1 – 🎯Wages
This is income you earn from a job, where you are paid an hourly rate to complete set tasks. The more hours you work, the more money you earn.  Here are eight suggestions to boost your wages.

• Years of experience
  Typically, more experience results in higher pay – up to a point. Similarly, if the position calls for someone with 10 years of experience in a particular occupation, and you don’t meet those requirements, you may find yourself on the lower end of the pay scale.

Negotiation tip: emphasize your years of experience if you have slightly more than what’s required; if you have too much experience, you may be overqualified.

• Education
  The match between your education and what’s normally required for your job usually affects your pay. Plus, the quality of education can affect salary. Earning a degree from a top program typically has a positive influence on pay, while earning a degree from a school that’s considered weak in a particular field may decrease your earning potential.

Negotiation tip: emphasize your education if it is more than what’s called for in the job – and it’s relevant.

• Performance reviews
  Since most employers base their pay decisions at least partly on individual performance, this is an important variable when being considered for a pay increase or promotion. Even when applying for a new job, this information may be important to your prospective employer, as it gives a more complete picture of your abilities.

Negotiation tip: performance has a significant impact on pay, especially incentive pay.

• Boss
  The more discretion and latitude you have in relation to your company’s success, the more directly your decisions and actions will affect the bottom line – and your own. And if your boss is higher on the corporate hierarchy, his or her recommendations concerning your pay have less chance to be overridden in the cycles of review.

Negotiation tip: in the interview process, find out who the position reports to, along with the position’s potential for growth.

• Number of reports
  The more employees you manage, the higher your pay in certain jobs. Of course, your level of success is also based on the performance of the employees you manage.

Negotiation tip: emphasize the successes of those who report to you or who reported to you in your previous position.

• Professional associations and certifications
  Certifications and memberships in professional organizations or trade associations can have a positive effect on pay. However, if a job calls for a certification you don’t have, you might not get the job or your pay might be set at the lower end of the range. Some employers require employees without certifications to work toward them.

Negotiation tip: if you have a certification that is optional, but considered a plus, that means you can expect to earn a little more because of it.

• Shift differentials
  In certain jobs, workers may be expected to perform tasks during less favorable shift times. These employees are typically paid a premium due to the higher social and physical costs involved in working outside “normal work hours.” In jobs that don’t normally operate on more than one shift, the differential is negligible and usually only taken into account when a nonsalaried employee works overtime or on a special project.

Negotiation tip: you can expect to earn a little extra for working the second or third shift.

• Hazardous working conditions
  In certain jobs, workers are expected to perform tasks under dangerous working conditions. Dangerous working conditions can be defined to include anything from handling dangerous chemicals in a research facility to walking a police beat in a dangerous section of town. Jobs that fall into this category are usually regulated by outside authorities, including labor unions and the government.

Negotiation tip: ask for hazard pay if you are put on a temporary assignment in a dangerous location.

#2 – 🎯Salary
Similar to wages, this is money you earn from a job. Your annual salary is usually set out in a contract and paid either weekly, fortnightly or monthly. Usually, the amount is regular and you won’t earn more for extra hours worked.  And you should never overlook the perks and benefits of employment.  Here are 10 underrated perks of working for someone else:

• Benefit #1: Retirement Mone
• Benefit #2: Paid Time Off
• Benefit #3: A Reliable Paycheck
• Benefit #4: Regular Work Hours
• Benefit #5: Taxes Are Taken Out On Your Behalf
• Benefit: #6: Health Insurance and Other Benefits
• Benefit #7: Free Training and Opportunities for Self-Improvement
• Benefit #8: You Don’t Have to Put it All On the Line
• Benefit #9: Generous Perks (like a company cell phone)
• Benefit #10: A Sense of Belonging

Get the support you need to build a career to finance your lifestyle.  If you want to dive deeper into building out your career, the 100 Page Career Planner will help you plan a productive, purposeful, and profitable path to the lifestyle you desire.

#3 – 🎯Commission
Another approach to increasing your income and reducing your debt is to take on commissioned income.  The commission is where you earn money for completing a task. This is common in sales roles. You might earn a set amount of money for each sale you make or you might earn a percentage of a sale price for your work. The commission is based on results rather than time worked.  More formally, the commission is defined as the compensation paid to an employee after completing a task, which is, often, selling a certain number of products or services.

For example, I am an affiliate of GrooveFunnels.com which means that if you were to choose the free unlimited webpage and sales funnel builder, I would earn a small commission on any packages you choose to buy.

Here are several different types of commission structures that companies offer.

• a. Base rate only commission
  The base rate only plan pays sales representative an hourly or flat salary. This commission structure benefits businesses where salespeople spend a lot of time educating and supporting customers before and after-sales. There’s no incentive to upsell or sell more products or services.

Example: The company’s four salespeople each earn $1,250 a week no matter how many sales they make.
There is no calculation needed since no commission is paid.

• b. Base salary plus commission
  The base salary plus plan is one of the most common commission structures. It provides salespeople with an hourly or straight base salary plus a commission rate. Typically, the base salary is often too low to support someone’s income entirely but it does provide a guaranteed income when sales are low. The standard salary to commission ratio is 60:40 with 60% being the base rate and 40% being commission-driven. The plan best serves as an incentive or motivation for increased sales performance.

Example: A salesperson earns $500 a month in salary with 10% commission, or $500, for $5,000 worth in sales. If he sells $20,000 of product in one month, he earns $2,500: $500 in salary and $2,000 in commission.
The calculation for base rate only commission:
Commission Percentage x Amount Sold = Commission Total.

• c. Draw against commission
  The commission draw plan is based on an advance payment, or draw, that helps new hires acclimate to their sales roles without losing income. It incorporates elements of the commission-only and base pay plus commission structures. The more you sell, the more you make in commissions.   Sales representatives earn a salary, or draw, each month for a specified time regardless of sales. If they earn less in commission than they do in salary, they keep the commission and the difference between it and the draw amount. The funds are considered advanced payments until commissions reach or exceed the salary draw. These advanced payments must be paid back eventually to employers. The salesperson only profits if commission totals are higher than the draw amount.

Example: A salesperson is expected to earn $4,000 a month in commission and receives $2,000 a month in draw. If they met their $4,000 goal, they earn $2,000 more, the amount over the draw. If they earn only $1,000, they owe the company $1,000, the amount under the draw.
Calculation for draw commission: Commission Total – Draw = Commission Owed.

• d. Gross margin commission
  The gross margin commission model factors in expenses involved with the products being sold. The salesperson earns a percentage of the profit. Because their commission depends on the final cost of the sale, salespeople are less likely to discount products. The more they can upsell a product or service, the more commission they can earn.

Example: A salesperson is selling a $100,000 car that costs $60,000 to make. The gross margin is $40,000. The salesperson earns 5% on the margin or $200 in compensation.
Calculation for gross margin commission: Total Sale Price – Cost = Gross Margin. Gross Margin x Commission Percentage = Total Commission.

• e. Residual commission
  The residual plan benefits salespeople with ongoing accounts or clients. As accounts continue to generate revenue, commission payments continue. The structure encourages salespeople to retain their customers or develop repeat business. This structure is most common in agencies and consulting firms that handle long-term accounts.

Example: An insurance salesperson lands a large account. As long as that company pays its premiums of $3,000 a month, the salesperson receives 5% commission or $150 each month.
Calculation for residual commission: Payment x Commission Percentage = Total Commission.

• f. Revenue commission
  Companies more concerned with larger business goals than total profit commonly use the revenue commission model when setting commission rates. Sales representatives who earn a predetermined percentage of the revenue they generate have the opportunity to become top sales performers.

Example: A car salesperson sells a $25,000 vehicle and earns 3% of the sales. They receive $750 in revenue commission for that sale.
Calculation for revenue commission: Sale Price x Commission Percentage = Total Commission.

• g. Straight commission
  Salespeople who work on straight commission only earn money when they complete a sale. No sale equals no income. Since the company doesn’t provide a base salary, it can offer higher commission rates which often attracts the best salespeople. The straight commission structure allows salespeople to function like independent contractors who set their own hours, which saves companies money in taxes, benefits and other expenses. The company is out money only when the salesperson brings in revenue.

Example: A telemarket that sells vacation condo rentals earns $150 for every booking. The more time put in on the phone, the greater the chance of making a sale.
Calculation for a straight commission: Sales x Commission Rate = Income.

• h. Tiered commission
  In the tiered commission model, salespeople earn a certain percentage of commission on all sales up to a designated amount. Once they achieve their revenue goal, their commission increases. This encourages them to exceed sales goals and close more deals.

Example: A salesperson’s base commission is 5% up to a total of $100,000 in sales. That commission increases to 7% for total sales between $100,001 and $200,000. Any sales over $200,001 earn them 10% in commission.

• i. Territory volume commission
  In this model, salespeople earn their income based on the set rate for their defined region. The amount of compensation typically depends on territory volume, where sales numbers are totaled and commissions split equally among salespeople within the region. This compensation plan will only work for sales representatives who work in a team-oriented environment.

Example: Two salespeople are expected to sell $50,000 in product each month in a 100-mile region. One sells $30,000 while the co-worker sells $20,000. Since the total goal has been met, they split the 10% commission, earning $2,500 each.
The calculation for territory volume commission has many factors depending on the company’s sales formulas. A simplistic calculation would be:

Sales Totals x Commission Percentage divided by Number of Salespeople = Commission Total Per Person.

#4 – 🎯Interest income
Interest is something that your money earns for you (yay!) Interest is usually paid on money that you have deposited with your bank. The interest varies between account types and is usually expressed as a percentage per year (or per annum).  In this article, we outline the different approaches to growing your investment income.

#5 – 🎯Selling something you create or own
Again, we are on a 21 day journey to increase your savings and reduce your debt.  Here is another suggestion to build out your options to earn income.  Maybe you’re handy with a needle and thread or you’re a gifted mathematician. You might have a ton of stuff you don’t want anymore. Selling things you make, your skills as a service or stuff you own and no longer want are all ways to bring in some cash.

#6 – 🎯Investments income
Investments like property, shares, and art can all earn money for you either through an increase in their value (this is called capital growth) or in the case of shares, by paying you an amount of money per share you hold (this is called a dividend).  What I like about investment income is that the sky is the limit and you can leverage other people’s brains and talents to increase your savings and reduce your debt.  For example, there are 23 ways to earn from real estate without having a large deposit or excellent credit.  This training is perfect for someone who is looking to build out this portfolio (create sales page on Google sites and do Eventbrite for January).

In this article (link when post is live), we outline the different approaches to growing your investment income.
#7 – 🎯Gifts
Who doesn’t love a cash present? Birthdays and Christmas can be great and sometimes unexpected sources of income.
#8 – 🎯Allowance/Pocket Money
Money your grown-ups give you on a regular basis. They may or may not expect you to do jobs in return for the moola.
#9 – 🎯Government Payments
Depending on your situation you may be eligible for assistance payments from the government.

Increasing your awareness of the different pathways to income is key to MULTIPLYING the money you earn now. This planner is ideal for those who want to get on the path to building multiple income streams. This workbook may be very useful to help you map out your income plan.

WHAT INCOME LEVEL ARE YOU COMFORTABLE WITH?

So we have run through the 9 different types of income that we can focus on.  Many of us say that the sky is the limit when we think of the income we want.  I want a million dollars right now.  Or I want to win the lottery.  However, I believe we suffer from so many limiting beliefs about our money that it truly holds us back from achieving a higher level of income   In this video, we talk about the idea of underearning.  That is where you take actions that reduce your wealth.

And remember that in this 21-day challenge, we are all about increasing your income to reduce your debt.  So under-earning needs to stop now.

So we want to eliminate underearning.

Next, we want to remove negative blocks.

This is the BIG LIST OF 100, that’s right 100 limiting beliefs around money that stand in your way!!! In this episode, we are going to discuss how to profit from releasing money blocks without being dragged down by stress worry or anxiety. We want to open the doors to a better life by releasing the blocks holding you back.

Of course, if you need a deeper dive into your own issues related to building out your income, I would invite you to join the Financial Success Academy.  In this lifetime access package, you get everything in the program – on demand videos, live monthly coaching, and courses that help you to finance the lifestyle you deserve.