Midlife Money: Getting Money  into Your Hands

Midlife Money: Getting Money  into Your Hands
By Vix Munro – Our Money & Wealth Expert

The first pillar of financial literacy

Receive

 “Receive” is the first pillar of financial literacy. It’s the art of making money and making the most of your earning potential. You need to make money before you can do anything else like pay off debt, spend, save, or invest. And in many ways, the more money you can make the better, so long as it doesn’t compromise your quality of life.

There are three main ways in which people make money: (i) as an employee; (ii) from running a business; and (iii) from assets or investments. These aren’t mutually exclusive, so it’s possible that you could be making money from all three.

Making money as an employee:

 The money you make as an employee is payment for your time, skills, and expertise. When employed, you usually take an hourly wage or an annual salary.

As an employee, you’re usually taxed at source. Income tax is the government’s share of your earnings, and it’s important to comprehend how it works. So, know your tax bracket and take a look at your payslip and ensure you understand the calculations.

Learning to negotiate is key to increasing your income throughout your career. It’s particularly important for women as we don’t’ negotiate as much as men. Many women leave money on the table by not negotiating their salaries or raises effectively.

Research, preparation, and confidence are key when approaching salary negotiations. Recognise your value, showcase your accomplishments, and be ready to discuss how your skills and contributions benefit your employer.

You also need to ensure that income will keep flowing to you in the future. The future of work is changing; increased automation means the type of jobs available will change significantly and young people will need to retrain many times in their lifetime. You can enhance your job prospects by selecting a field less likely to undergo automation in the near future.

If you want to make more money as an employee, you need to either negotiate a pay increase, get a promotion with a higher salary, or move to a new position at a new company. Or take on a side hustle.

Making money as a business owner:

If you make your money from owing and running a business, then you’re in charge, regardless of whether you’re a one-woman band or a large company. Today, more and more women are stepping into the role of business owners, reshaping the traditional landscape of entrepreneurship. And why not? It’s your business, and you get to define how it operates.

And you’re in charge of your own financial destiny as you’ll be relying on the business to generate an income for you. If you own a business, then your business will make a profit and you can use that profit to pay yourself. If you want to understand the best way for your business to pay you, then I suggest discussing this with your accountant who can recommend the best option for you.

There are primarily two types of businesses: lifestyle businesses and legacy businesses. A lifestyle business is designed to provide you with a certain lifestyle, generating profits that translate into your income. While it may not be readily sellable down the road, it can still have a substantial impact.

On the other hand, a legacy business is an asset that can be sold. It’s structured for growth and has the potential to outlast its founders. Over time, it appreciates in value, thanks to ongoing investments and consistent profit generation. In such businesses, owners often reinvest the majority of profits back into the company, taking a minimal income.

One common challenge faced by owners of lifestyle businesses is irregular income – going from feast to famine to feast again. These fluctuations often make it challenging for your business to provide you with a steady income.

Here’s how you can pay yourself a regular income: Calculate the total profit your business made over the past 12 months, assuming you anticipate a similar performance in the future. Divide this annual profit by twelve, and that figure becomes your monthly income. Any surplus profit can be designated as bonuses or dividends.

Making money from assets/investments:

Income from investments is the return you receive on different investments. That could be interest on savings, dividends from stocks and shares, rental income from real estate, capital gains from selling investments or royalties from your creations e.g., music.

To receive this type of income, you need to create or purchase assets. You’re more likely to live off this type of income when you’re older or not in active work and while you might make money this way when you’re younger, it’s usually reinvested. I’ll talk more about this in the article on investing.

I’ll be writing articles over the next few months about the other pillars of financial literacy, based on my RICHES model:

R  – Receive

I   – Insure

C  – Clear

H  – Hold

E  – Expand

S  – Spend

So, no matter where you are in your financial literacy journey, there’ll definitely be something in these articles for you.

Love Vix

PS Warren Buffet (one of the wealthiest men in the world) says:
“The more you learn, the more you earn.”
And it’s so true. Becoming financially literate and understanding how to make the most of your earning potential is a good place to start.

Vix Munro is a certified financial coach, mentor, and educator. She’s also an entrepreneur, author, and eternal optimist.

She’s passionate about money, investing and the economy. Her mission is to help women create and grow wealth so that they can live the lives they want.

She believes we all have the ability to transform our money mindset, rewrite our money story and become financially empowered. And that this can be liberating, life-changing and fun.

Vix is also the author of – Financial Cliteracy:  A Woman’s Guide to RICHES and Financial Pleasure

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