The Personal Finance Podcast - Can you Get Rich at Your Day Job? (The answer may surprise you!)

Episode Date: November 18, 2020

Episode 28: Can you Get Rich at Your Day Job? In this episode we cover:  How to build wealth at your day job  How to get raises  How to invest in your companies 401(k) and Roth IRA Why you can get rich at your day job  RESOURCES: How to Become a 401(k) Millionaire  How to Become a Roth IRA Millionaire  How to ask for a Raise Part 1 How to ask for a Raise Part 2 Free Negotiate Your Salary EBOOK M1 Finance Best Place to Invest  Personal Capital Free Wealth Management and Budget App  CIT BANK (Best Savings Account) ** Some links may be an affiliate link and we earn a small commission at no extra cost to you. We only recommend products we truly believe in.  Learn more about your ad choices. Visit megaphone.fm/adchoices

On this episode of the personal finance podcast, we're going to pose a question, can you get rich at your day job? What's up, everybody, and welcome to the personal finance podcast. I'm your host and the founder of dollar after dollar.com. And today on the personal finance podcast, we're going to talk about can you get rich at your day job? And this is the question that's being posed. And the reason why I want to talk about this is most of you have a day job. And this is the path most of you are going to take. throughout life. So can you build wealth with that day job? Is it possible to build wealth with that day job? Because all you're hearing right now is people preaching entrepreneurship. You have to be an entrepreneur. You have to build a business to be able to build wealth. Well, is that true? Is that something that's true? And I'm going to show you exactly why that's not true. Because the majority of people out there are going to build wealth with a day job. The majority of people only have one path to building wealth. And that's getting up every day, going to work,

and coming home to their families. That's the path most people will take. Is it the most efficient path? Maybe not. But is it a path that you can take to build wealth? Absolutely. And is it a safe path, potentially? But you can definitely build wealth with a day job and don't let anybody else tell you otherwise. And I'm going to show you exactly why, because with a lot of consistency and with your hard work, you're going to be able to increase your income and save more money to build wealth. Because entrepreneurship is not the only way to build wealth. Yes, you can make a lot of money in entrepreneurship, but you can also lose a lot of money. Along the way, when you're an entrepreneur, you're not making much money at the beginning at all. My first year as an entrepreneur,

I made zero dollars. So there's a lot of sacrifices with entrepreneurship, whereas there's a lot of benefits to having a job, especially if you have a family that you have to provide for. So understanding that you can build wealth at your job is the first big step. Then you can take the next steps to go along because the wealth building equation is very simple. It's your income and your expenses and you invest the gap in between. So you're going to take your income, you're going to subtract your expenses, and invest the gap in between. Investing that gap is the biggest part of the wealth equation. So if you can grow that gap between your income and your expenses, that's how you build true wealth.

Well, how do you do that? You grow your income at your day job by building skills, getting promotions, things like that, and you reduce the expenses that don't matter to you, that don't bring you value every single day. Because what happens to a lot of people is, especially in their day job, is they buy too many fancy things because their income is finite out of day job, a company's only going to pay you so much. So they buy too many fancy things because John over an accounting has one

and janet up in HR has one. And so they want to keep up with the Joneses and they allow their spending to get too high. But I'm going to show you exactly what steps you can take to build wealth at a day job and have the things that you want and have the things that bring you value because that's what we want to do.

And the key focus to that is just increasing your income. But if you think about this for a second, think about the Roth IRA episode and how we talked about how you could become a millionaire with the Roth IRA. Well, that's just investing $400 a month to become a millionaire and a Roth IRA consistently over the long period of time. So consistently over a period of 30 years, you can have a million dollar Roth IRA just by being consistent over those 30 years and have a day job. Most people with a day job are going to have the funds to be able to invest as long as their expenses are not too high.

And the same thing goes for people with a day job. You still have a consistent stream of income. So there's a lot of consistency there that a lot of entrepreneurs don't have. So you have a steady stream of income. Employees always get paid before the owner if a business is not doing well. So choosing the right profession is one big piece as well. You want to choose a profession that may be recession proof if we have a downturn at any point in time. But understanding these simple things is going to allow you to get rich at your day job.

And what we're going to do is I'm going to go through the five big things that I think you should do to increase your income and help you save more money so that you can invest more money and even retire early because plenty of people in the early retirement community, they all had corporate jobs. The majority of them did. And they all implemented these strategies that I'm going to talk about. If you look at it, it happens over and over and over again that you can build true wealth. You can build millionaire status by having a day job. But you have to grow the gap.

You have to grow the gap between your income and your expenses. That is the key to building wealth. So you can get rich at your day job. And I'm going to show you the five steps that I would take and the five steps that I would focus on so that you can build wealth at your day job. Let's get into it. So I'm going to show you five things that you can do to become rich and still have a day job, contrary to what most people are telling you.

At these five things, anybody can do. A lot of it just has to do with hard work and a little bit of systematic planning that's going to allow you to build wealth at your day job. And if anybody tells you differently, there's countless stories of people who have built wealth at their day job. I just saw a story the other day of a Detroit janitor. He was at a janitor, his entire. life and amassed a $4 million fortune when he died because he just saved and invested his money.

And nobody had any idea that he had that much money. So you can do this because if a janitor can do this, anybody can do this. And I'm going to show you how you can build well at your day job, especially if you have a traditional nine to five. If you're sitting in your cubicle right now or you're sitting in your office right now and you're saying, there's no way. How am I supposed to do that? Well, just think through this a little bit because we're going to talk about each step. I'm going to point you towards a couple of other episodes that we've done that show you how much money you can make just by investing a small amount. So the first one is to take advantage of company-sponsored retirement accounts. What does that mean? So you need to take advantage of your 401k and your Roth IRA. Now, if you don't know

what a 401k is or a Roth IRA is, we'll get into it here, but I've done two episodes on how to become a 401k millionaire and how to become a Roth IRA millionaire if you want to do a deep dive. But a 401k and a Roth IRA are two different things, but a lot of companies will give you options to do both or one or the other. So with a 401k, it's a company sponsored plan where you get to put pre-tax dollars into what's essentially an investment account. So you don't have to pay taxes on the money you put into a 401k until you take the money out, then you pay taxes when you take the money out of a 401k. But the beautiful thing about a 401k with your company and the company sponsor plan, which entrepreneurs do not get this perk, is that you have what's called an employer match.

and every single person listening to this podcast that has the opportunity to get an employer match needs to take advantage of it. You want to know why? And I've talked about this many times before because it's free money. I like free money. Do you like free money? Because your employer is trying to give you free money and all you have to do is contribute to your 401k. This is a massive, massive benefit to having a day job because you're going to increase your savings

rate a certain percentage. A lot of times is around 4%. So you're increasing your savings rate 4% for free. And how it works is your employer says, hey, if you put in X amount of your paycheck, so let's say it's 4% of your paycheck, then we'll match you. And we'll put in another 4% on top just for you contributing to your 401k. They literally want to give you free money. And that's the beautiful thing about this. So entrepreneurs don't have this benefit.

You have to take advantage of your employer's match no matter what because it's free money. And a lot of times now they do it with Roth IRAs. If you have a company sponsored Roth IRA or IRA, then they also do it with that as well. They do Roth IRA matches. And so you always want to take advantage of that. But the difference between a 401k and a Roth IRA is that with a Roth IRA, you pay taxes as you contribute to your account. So remember, a 401k, you don't pay taxes you contribute.

A Roth IRA, you pay taxes as you contribute. But your money grows tax-free and you can pull it out tax-free. So that's a massive benefit as well. They both have benefits on each side, and I like both options. But if I was going to lean towards one, it would be the Roth IRA because it has tax-free growth. And your growth and your compound interest, if you're contributing for a long period of time, it's going to be the massive difference for your wealth building. So making sure you're taking advantage of these company-sponsored retirement accounts is huge for your wealth-building capacity.

You can build a ton of wealth just with these two accounts alone. And that's why I talk about the million-dollar episodes. I do that for you people who are working a day job every single day because you can become millionaires just by investing in those two accounts. It takes consistency and it takes discipline. So allowing yourself to save enough money by reducing your expenses and increasing your income so that you can put as much money as possible and max out those accounts. It's massive, massive, massive for your wealth building. So lately, I've been noticing how fast things are changing at home.

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Find your advisor at IGPrivatewealth.com. The next step, and this is a huge one, is you have to ask for raises and promotion. So asking for raises is a massive step in building wealth, especially if you work a day job, because nobody's going to give you a raise. So you have to actually ask for a raise to get it because getting the traditional 3% raises every single year barely keeps up with inflation if it does at all. Because inflation over the last 20 years has been about 2.5%. So your raise every single year is only a half a percent if you get those traditional 3% raises.

So you need to start asking for raises. And we've had two episodes where we've talked about how to ask for a raise very systematically. have a very specific system on how you do it. And the system talks about how you basically need to go in there and ask your boss, how do I get a raise, then execute what they tell you, follow up with them again, and say, am I on track to get this raise and continue the communication until you can get that raise and get that promotion? Because surprising your boss by asking them for a raise is never a good idea. So what you want to do is be in communication for six months, eight months to a year so that they know that you deserve this raise. Because a lot of times, if you think about it, your boss isn't watching

every single thing you do. So you may think you're overperforming at the company. You may think you're doing everything you can to get a raise. And if you walk in there and ask your boss cold for a raise, they're never going to give it to you. You have to make sure and remind them as to what you're doing and show them that you guys are working together so that you can get this promotion. And that episode lays out very specifically how to do it. And I also wrote an ebook on how to ask for a raise and how to get a promotion. So I will link all of this in the show notes so you guys can see it. But go through that ebook, listen to those episodes, so that you can make sure that you're getting those raisins and promotions because it's key to increasing your income income income is massive in this whole

equation and i am all about increasing your income the reason why is as you increase your income you can save so much more money but you can also do the things you want to do because why a lot of people quit is they just can't do everything they want to do they can't buy all the things that bring them value so increasing your income allows you to do that and you can definitely do that at a day job you can definitely do that a day job so go talk to your boss figure out what you need to do within the next year, maybe it's adding skills to your resume. Maybe it's getting additional certifications. Look at all the options that you have to ensure that you're going to get to the next step. And part of that is my third recommendation was to show up every single day. What I mean by that

is your work ethic is going to matter, especially at your day job. And guess what? A lot of times at your day job, they're not going to notice it as much as you think they are. But work ethic takes luck out of the equation because we've all seen people get promotions because they're lucky. place at the right time. But work ethic is going to allow you to push to that next level and get there faster. So the key to this is being a team player, ensuring that you're doing everything to make your department, to make your group, to make your company better, to increase the bottom line. And then you're going to do what you say you're going to do. So if you say you're going to do something, you do it and you do it to the best of your ability and you go above and beyond because the bar is set

so low these days at corporate environments. When I was in the corporate world, the bar was so low. People would just goof off all day long. Half the day they'd be on Facebook or their phone or whatever else they're doing. The bar is so low. If you just focus for eight to ten hours a day at your day job, showing up, doing what you're going to do, being a team player, that's 50% of the battle. And then the other 50% is mostly corporate politics,

which I know we all hate, but we have to do it. But showing up and working hard is half the battle. And if you're in communication with your boss constantly as to what you're doing, you're going to get those raises and promotions, and they're going to take notice to what you're doing. doing. But you have to maintain communication. And that's the key in the corporate world is to maintain your communication. And along these same lines, never show up late to work. Because what you want to do is make a pact with yourself that you're going to be 10 minutes early every single day, especially if your

boss gets there early, you definitely want to make sure that you're early every single day. So that they see that you're the first person in and that you're ready to work. So you're just getting it going and you're getting ready to work. So there's little things that you can do every single day that shows your work ethic that improves your quotations luck because a lot of people can get lucky in the corporate world. But if you outwork those people, it's always going to shine through in the long run. Number four, and this is contrary to a lot of people's beliefs. And I've seen a lot of people do well in the corporate world not doing this. But consider switching companies because every time that you move companies, there's a good

chance that you're going to get a 20% raise increase, especially if you think you've hit a wall and you're working at a company where there's nowhere else to go. I'm not saying jump ship right away, but you've had these communications with your boss and you're saying, I want to raise a promotion and you're just not getting it year in, year out, then maybe it's time to switch companies because when you switch companies, a lot of times you're going to get paid a lot more when you switch companies. And I've seen this happen over and over and over again. It's happened to me. But when you jump ship and you move around, you're going to get an increase and pay. And sometimes when you say you're going to leave, your current company offers you more money

to keep you. The reason why is that it costs them more to go find another employee than just to keep you on with this new salary. But you don't want to do this too frequently because I've seen people do it too frequently where you look at their resume in every three years, they've jumped ship to a new company. That's not what you want to do. But if you've hit a brick wall and you're not going anywhere with the current company that you're at, then maybe it's time to switch companies because getting that 20% increase is going to be massive in the long run. In fact, in the how to get a raise episode, we talked about two people who one person asked for a raise and got a double the raise of the other person. So one person just got the traditional 3%. They started at the same salary.

and the other person got a 6% raise every other year. Well, at the end of the 20 years, the person who asked for a 6% raise every other year, in addition to getting the 3% raises, made triple what the person who just got the traditional 3% raises make. And that's the massive difference here. So making sure you get those big jumps every couple of years is key. And switching companies may be your only option.

If you've hit a cap, if you got to a place where you can't move up any higher, maybe the next step is you're going to be the CEO, which is not going to happen, you don't think. Then maybe you need to look. at other companies that have more room to grow. Because that's the key if you're not hitting your goals, is looking and ensuring that you're increasing your income so that you can save more money to invest it. The fifth thing, when you're in your day job, you want to limit the amount of debts that you have. The first reason why is when you're an entrepreneur and you have a business, when you have these specific debts, a lot of times you can write those off as tax deductible,

but you cannot do that when you have a day job. It's not like you're getting paid in an LLC or anything like that. So taking out huge loans in your day job can be a killer to your income. because your income is finite. You can't make more money unless you start a side hustle, which we'll talk about in a second, because that's potentially a good option for you to diversify your income, but limiting the amount of debts that you have, especially high interest debts,

to ensure that you're debt-free so that you can continue to build wealth because your chances of building wealth are extremely high if you don't have debt. Because if you eliminate that debt, all you have to do is save and invest your money. The excess money flows in, you put it into your brokerage account automatically, and you invest it automatically. You can automate this entire.

your system so you don't even have to think about it. But limiting your debts because your debts suck away your freedom. Your debts take away your freedom so that you can't invest more money. And the only reason why we're investing our money is because money creates freedom for ourselves. So once we have enough money to allow us to live off that money, then we don't have to work anymore. You don't have to work this day job anymore if you don't like it. And that's the key to this whole equation. That's why we're doing this. So can you build wealth at your day job? Absolutely. And taking these steps is going to be a massive benefit for you. But just try to avoid these interest loans. Try to avoid high interest on car loans. Try to get rid of those student loans if you

have him. And we'll have a future episode coming up here about student loans. So make sure you're subscribed to hear that because I'm going to show you a very different way on how to tackle your student loans. But give yourself the upper hand here. Give yourself the upper hand and allow yourself to build wealth at your day job by limiting those debts. A bonus tip here. If you're just starting out, this is what I did is I started a side hustle. And I've talked about this a number of times before and we'll keep talking about it because I think side hustles are so important. But starting a side gig allows you to diversify your income because one of the biggest downsides to having a day job is that your income is not diversified. You're only having one income stream. And if you're married,

then you have two income streams. But having additional income streams allows you to diversify your income because it's never a good situation if you only have one income, maybe two incomes. But if you rely on both of those incomes, A, you have to have an emergency fund to make sure that you don't lose your wealth that you're building. So making sure you have that emergency fund in place, especially with a day job because your income is finite, protects your money that you're building, your wealth that you're building. But B, just adding a side hustle is going to allow you to diversify your income, even if it's a couple hundred dollars a month, just in case you have a job loss or recession hits and your company can't pay you for a certain period of time or a furlough happens.

All these options can come up. But having diversified income in an emergency fund is going to protect you against that. And these are keys to ensuring that your money is protected. You want to make sure it's protected because you're working hard every day at your day job. And if you hate that job, you definitely want to make sure your money's protected because every dollar is fueling the fire that's going to allow you to stop having to work. And so taking into consideration all of these options, you can truly build wealth at your day job. But you got to invest your money. You can't let your money sit in a brokerage account or a savings account. You have to invest your money to allow it to grow. millions of people have built wealth of a day job at a nine to five.

Don't let anybody else tell you that you can't. Because producing this freedom for yourself is extremely important. And that's what money does. It's not to buy stuff. It's to produce freedom. And so making the moves to increase your income and to reduce your expenses so that you can invest that gap is going to make all the difference in the long run. Thank you guys so much for listening.

And if this is your first time listening, consider subscribing so you never miss an episode. And share this episode with a friend. And don't forget to leave a rating. and review on iTunes as well, because our goal is to bring as much value to you as possible. And we're trying to spread this message that money can buy freedom. That's what money is there to do, is to buy more freedom. So thank you again so much for listening, and I hope you have a great day. Frozen lasagna, medium power, 15 minutes.

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