You are earning an income from network marketing. You aren’t a 7-figure earner; in fact, you aren’t even a 5-figure earner. Can you become a millionaire?
The answer is yes.
You don’t need to be a top earner or a make a million dollars in your network marketing business to become a millionaire. You just need to be smart with your earnings and manage it the right way! Many network marketers are so focused on income earning strategies that they miss the money management part of their business. Understandable, but a mistake. Here are some simple tips to get started on managing your money right.*
There are 3 simple steps to managing your money. These may seem basic – and they certainly aren’t revolutionary – but they are important!
Create A Budget
After making your initial investment, there will be other business expenses that you will have to run and sustain your business. What expenses these are, and how much they will cost you will vary wildly on your type of business, your chosen strategies (e.g. Facebook advertising, solo ads) and how much time you dedicate to your business. There are some basic business expenses that every business, no matter the type, must consider (such as your cell phone bill, electricity, internet connection, office supplies, and especially taxes!) so don’t forget those!
Create a monthly budget by putting these items on a spreadsheet and estimating their cost, if unknown. Include items like subscriptions, auto-ship, tickets to company events and travel expenses to business meetings and events. I would include education in this budget as well. Have in mind to invest in books, coaching, courses and seminars. Please check with your accountant to see what items may be tax-deductible! This budget’s purpose is to see how much money you will need to sustain and then grow your business.
Now that you know how much you need each month, take all residual income and commissions and put them back into your business until you make a profit. (You do have a separate bank account, don’t you?) Your first goal should be to break even – that is, have your business pay for your expenses.
Your temptation may be to take that check and make a car payment. Do everything in your power to not do that! I understand hard times – believe me — and that is I’m sure why you decided to enter this business. Now, let me be clear: in an emergency, I would never tell you to take money that you made from your business and not use it. But to get to the point where your business is sustaining your family, you need to be super strict about this rule. Hey, maybe that means reducing your expenses and changing to a free strategy instead of a paid one. But don’t forget your first goal: get profitable.
Now that you are making a profit, that money goes into your family budget.
First, you MUST put aside the right amount to pay your taxes. You do not want to get hit with fines, penalties and a big surprise in April. Please speak to a tax professional or accountant on advice of how much to set aside and pay. For a quick answer, go to irs.gov and look up the tax brackets on income amounts and use those as a guide.
All the rest is yours.
A portion of this money should, at least in the beginning, go back into your business. Why? It’s good to be able increase your budgets on some items, maybe finally upgrade to a pro subscription of a service or have more money for another course. How much should you re-invest? Up to you, but in the beginning, I suggest about 25%. As your income grows, the percentage can decrease if you choose, but you get the idea.
The rest should go into basic household budgeting categories:
- Eliminating household deficits. Obviously the most important. Make sure your household is not over budget. The reason you are in this business is to alleviate that pain! Do this first.
- Saving. Save a portion a variety of reasons: an emergency fund (up to 6-12 months of expenses), big purchases, and upcoming known expenditures (e.g. new tires, stove replacement) to name a few.
- Debt Reduction. Pay down your bills, until you have no debt. There are plenty of great resources to help you do that. David Ramsey is an excellent start.
- Investments. This is where you grow your wealth! You want to put aside money to invest in a variety of ways. College funds, stocks, bonds, real estate, other passive income streams, and that “big idea you had” are a few generic ideas. My goal is to just get your thoughts brewing on other possibilities – but really, there are too much to mention here and there are people who are experts in this field you can refer to for research. These investments will be additional streams of income or wealth-building strategies. You are using your network marketing business to fund these investments.
Many people think it’s impossible or unlikely for them to succeed like our industry leaders. Not everyone wants a personal brand, a coaching business or to even invest in the time that it takes to make 7 figures a year. That’s OK! You can be a huge success without having those goals. Not everyone wants to lead in this space – maybe you want to take on leading in another area, or maybe you don’t want to lead at all. That’s fine. You can be a success making 6 figures a year. In fact, you are a part of the top percent of earners in network marketing if you make 5 figures a year!!
Remember that it is a completely valid choice to get to a level that YOU define and then devote your time, resources, and energy to projects that are important to you.
Success looks different to everyone. Define your own success. Be financially free on your own terms.
The point is to use your money wisely to gain financial freedom. Once you are financially free, you open up a realm of possibilities for your life and family that didn’t exist before!
Of course, the more you do and the faster you go the more money you make. But it’s what you do with your finances that determine your path to financial freedom!
*Disclaimer: I am not an accountant or financial advisor. For specifics, especially related to tax issues and investments, see a qualified professional.
To Your Victory,
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