Winning in the Margins!!
Richard Paul Evans wrote the book The Five Lessons a Millionare Taught Me. Lesson four is "Winning in the Margins". It's been several years since I read his book and I don't truly remember how he explained the principle, but this principle is one that has stuck with me and somewhat haunted me. Though this isn't exactly how he meant it, if I remember correctly, I'm beginning to see that we need to "win in the margins" of every part of our life and business. Said another way, it's the great magnitude of little things.
I’m convinced that this is the primary reason for business success or failure. Success in business finances and personal finances isn't a matter of doubling income, it's a matter of doubling net profits! This can be done in several ways. A failing business and successful business are usually not that far apart. Understand that if I make $4,000/month and I am saving $400/month. I only need to make $4,400 and save the extra $400 to DOUBLE my retirement income. In other words an increase of 10% in salary can increase your retirement savings by 200%! And if we take the same principle into retirement things get even better! If you can retire on 100% of you retirement savings (and I hope you can, otherwise you probably should think three times about retiring, and then keep working instead) then you can blow the extra on whatever floats your boat (how 'bout buy a boat and then buy what floats it to the little island that you also will own one day) or retire a lot sooner! Or realize that your time is freed up to make some real money and make a real difference in the world and your world.
All the little things matter a ton! It’s the last little push that makes all the difference. Your salary pushes you up the hill, the margin pushes you the last 3 feet so you can coast down the other side. Once you've paid for all of your expenses, every dollar you earn goes in your pocket (after Uncle Sam picks your pocket of course).The little things--the extra dollar you earn (Richard Paul Evans' mentor's meaning), the extra dollar you don't spend, the extra smidgen of a percentage point added to a loan, the extra smile you give your customer, the extra perk you give to over-perform, the extra flair you give your marketing, the extra thanks you give your employee, the extra few dollars negotiated in a business contract, the extra $1/hour you negotiate in your salary which equals $2080 if you work full time. If you can’t get an extra dollar try an extra 50 cents for $1040, or even 25 cents for $520. Ask your boss for an extra 25 cents when you are negotiating your salary--who can say no to that?--and you get yourself a nice Christmas bonus of $520. You may even get a Christmas bonus from work too!
In addition to skills and attitude (much of which depends on your upbringing and social construct and much of which depends on what you are willing to work for), I bet this largely accounts for the disparity between classes--at least between low and upper middle class. If you and I both live on $50,000 to pay all our bills and you make $50,000 and I make $55,000 and invest the extra $5,000 at 7% per year interest in a Roth IRA from age 20-65 (check out bankrate.com for many easy financial calculators). I will have over $1.5 million dollars when I retire and you will have $0. If I want to double my retirement to over $3 million, I need only make $60,000 per year instead of $55,000. Or perhaps I ask for an extra 25 cents/hour when we get hired and I make $50,520 per year. That 25 cents ($520/year) invested = $158,991 in retirement. You could go on a SWEET 25 cent vacation for $158,991 even factoring in inflation. Or blow it on Christmas for the next 45 years, that works for me too. If you can make an extra 1% (8% instead of 7%) on your interest, you get an extra $58,071. Two simple tiny changes: 25 cents and 8% = $217,062. May as well ask for a dollar, you may get 50 cents and then you’re well on your way to half a million!
As a business owner, if you negotiated 25 cents lower, you could give out some sweet $520 bonuses to all your employees every year! Or if you are an owner of a company with 1924 employees, you could pocket an extra $1,000,000 a year. Of course you’d have to consider whether that extra 25 cents would lose you some good employees or morale which may cost you more. But most studies show there are better ways to say “thank you” to your employees than an extra 25 cents an hour...like saying "thank you"…though a $158,991 Christmas retirement check wouldn’t hurt either.
