Three Myths About Earning More Money

The following is a guest post by Ramit Sethi, founder of I Will Teach You To Be Rich and a new course on earning more money. Ramit is a personal finance blogger and author of the NYT bestseller I Will Teach You To Be Rich. For a free mini-course on how to start your own side business, visit Earn1K.com.

Whenever a friend tells me they wish they could earn more money, I'll ask what's stopping them from doing it right now. The resulting conversation usually goes something like this:

"I can't," they say, "I have a job."

"Okay," I say, "so start it in on the side."

"But I don't have enough time."

"How much time can you spare each week?"

"Maybe only 10 hours."

"Perfect, that's plenty. Do some brainstorming and come up with next steps - I'll check in on your progress in two weeks."

"But... but... it's just not that simple! Waa..."

But be honest with yourself: Think about something you've gotten good at by sustained practice. Let's say you've lost 20lbs in the last 12 months. What would you say to yourself from a year ago? "It's really as simple as eating less and exercising more."

That doesn't mean it's EASY, though. It's HARD to try new things and to admit what you don't know. It's a lot easier to make excuses, procrastinate, and dream about how things will be different some day. Unfortunately, most people take the easy route, and that's why they'll never start the businesses they keep talking about.

FMF readers might remember that I posted a guest post here last year called "Trying to earn more money? Stop wasting your time."

If you want to be different and really start earning more money, you'll need to be able to identify and overcome three big myths of entrepreneurship:

Myth #1. "I need a lot of money to start a business."

I call this the myth of resources, where people claim they'd start a business if only they had more time, money, experience, or contacts. In fact, there are LOTS of ways to start a business on just a shoestring budget and a few hours a week, especially if you focus on providing a service (like consulting, tutoring, or dog-walking) instead of selling a product.

The simplest way is to directly email a person you'd like to work for and offer them your services. Every one of you reading can try that today, and it would take you ten minutes, zero dollars and no website.

(In fact, I pay someone on my staff over $10,000/month and he has no website or significantly social media presence. He's a highly valued consultant who simply solves my problems.)

Of course, there are some businesses that do require lots of time and money to start. But even if this type of business is your ultimate goal, you need some sort of plan to get there. I'm strongly in favor of starting any business you can with the resources available to you, and using your first business as a launching pad for your next.

Myth #2. "I don't think I'm a big enough risk taker to do it."

This is the myth of type. Wishful entrepreneurs often have a habit of convincing themselves that they're just not cut out to do business. Maybe they're just too risk-averse, or they don't like promoting themselves. Or maybe they weren't born smart or creative enough. In fact, if you say this, you've just selected yourself out of the pool!

Our own popular culture is partly to blame for perpetuating this myth. We always hear stories about entrepreneurs who risked everything and ended up with billions, and never about the ones quietly running safe, "boring" businesses.

Don't fall for that. For every supposed must-have entrepreneurial personality trait, I could find you plenty of success stories of someone who's the exact opposite. In fact, one of my program members who teaches violin told me she was afraid of being "financially illiterate" and would be my "worst student ever," but she ended up making $80,000 in 8 weeks (for the free in-depth case study, visit Earn1K.com).

You don't have to have been born an entrepreneur to start thinking entrepreneurially.

Myth #3. "I just can't think of any lucrative ideas to go after right now!"

This is the myth of opportunity. You've all seen this phenomenon - it's the crazy uncle living in the attic, still working on patenting his million-dollar invention. Or the guy who says he'll do it when the economic conditions are perfect, or when he finds the perfect mentor or business partner.

Of course, the timing is never right. The perfect mentor or business partner doesn't really exist, and of course, great ideas are vastly overrated. What you end up with here is a really bad case of procrastination - and not much more.

The truth is, there are opportunities all around you. There are people starting businesses every day. EVERYBODY has skills and the ability to learn something new. And it's always a great time to make money. So what's holding you back?

So what's the biggest barrier?

In my research, the biggest barrier is finding the right idea. People often think their idea has to be unique ("I can't just be another freelancer writer / IT consultant"), when in reality, the more competition you have, the better. Others think the idea has to come from within, when really, nobody cares about your initial idea -- almost everyone should be looking to the market to see how you could combine your idea with what people will pay for. If it helps, I've put together a free Idea Generator Tool that will show you how to identify and test a profitable idea.

When you start earning money, you'll find the myths that held you back will slowly melt away. This is true of losing weight, improving your career, managing your time, and...earning money.

NOTE FROM FMF: The post Ramit wrote for FMF last year on not wasting time was a big hit. Lately he's been talking about earning money and he knows his stuff. So if you're interested, I encourage you to check out his free preview course on earning money. And no, I wasn't paid for this post or for recommending his program. ;-)

Comments

[Eugene Krabs]

Though I don't always agree with everything Ramit has said, I am nevertheless a big fan of his. He strikes me as a younger version of Dave Ramsey in that, in the end, he wants you to Just Do It.

And we all should. We should all work on a side business or two somewhere somehow. If you're just doing it little-by-little on the side, what have you got to lose?

However, I do want to add that your "business" does not always have to make money. I think it is just as admirable if you prefer to focus on charity or volunteer work. If your idea of a side business is working at an animal shelter on the weekends, what's wrong with that? Perhaps you would rather work with your church's Boy Scout troop. Or, perhaps you would rather grow your own garden and bring in more fresh fruits and vegatable to your table.

That also helps to alleviate the pressure of knowing that most businesses do not always become profitable within the first several years. Whatever makes you feel good, gives you a sense of purpose, and even bring in some profit, is a good "business" to get into.

[Nick]

I agree that the right idea is the biggest barrier. Beyond that, though, knowing what to do with ideas when you have one is what I've notices stopping the people around me - and me sometimes. I had this with my blog. For years I wanted to write about personal finance and related issues. I had an idea (not unique in and of itself) but didn't know what to do with it (because I am totally not tech savvy). Then one day I dedicated a few minutes to researching easy blog sites and my blog was born.

I'm not doing it to earn a ton of money, so I wouldn't say that it is exactly apples to apples, but the concept is similar. I had an idea. I didn't know what to do with it. But with just a little search and a decision to just jump on in, my blog was born.

[Michael]

I started by doing 10-20 hours of programming on the side, which led to a 5 month contract from the company (a startup) with a guaranteed lead developer position at the company after the 5 months if we get some customers.

To take the contract I had to go from 40 hours a week to 20 at my full time lower-paying job.

Is it a risk? Sure, but staying at my old full-time job full time was a risk too. The economy isn't fantastic and who knows if I would've been let go from there or not?

Also, I helped offset the risk by saving up minimal living expenses so that if the startup fails AND I get laid off from the now part-time job I will have 6 months to find a new job before starving and missing payments on anything.

[Budgeting in the Fun Stuff]

The longer I blog, the more I can see that throwing yourself into a venture is the only way to ever make it work. I'm not making thousands yet, but I can see potential in my 6 month old blog. If something as simple as blogging can bring in more than $900 dollars in the first 6 months, I can only imagine what a full-out business could provide. You just have to go for it sometimes...

[Suba @ Wealth Informatics]

I might be a minority here, may even be a unique case. My biggest barrier - we can't earn money... by law.

(I am an immigrant working on a work visa for the company that sponsored me and waiting for my permanent residency. We are expecting to stand in the line for our green card for at least 5 yrs. First of all, I am not whining. This is the law of this country that was established to save the jobs for the citizens of this country I respect it and follow the law. So I am hoping immigration won't overshadow the question that I have)

With that out of the way, my question is what can I do NOW to position myself better when I become eligible to earn money? So even if I have an idea and a plan to execute it, I can't try it out and see how it works, what I should change, etc. I have been taking classes related to my idea to increase my knowledge. I have also been gathering information about non-profits (that is what I would like to do with the money I earn) and volunteering to understand more about the area that I would like to help with. What else could I do? I read all the material about Earn1k when it was introduced, as much as I would like to use the program to better myself, I am afraid that "using" the techniques and improving based on feedback would be a major part of the success. I can't try any of the method now, so I am stumped on how to proceed. Ideas?

[Money Reasons]

I agree. With me the starting was the hardest part!

I started out 4 years ago by selling eBay merchandise. I was luck enough to find a product in demand, and a seller online that was selling units cheaper than what they were selling for on eBay (with a 50 to 100% profit margin).

Next, I used that money to fund/start my blog (11 months old). I'm not making much money ($5 in the first 5 months), but it's fun and it's a hobby that I enjoy.

[RME]

I think that you have to have the right idea at the right time. I made a huge mistake getting into selling merchandise online without much research. I jumped into it and lost a ton of money. I had the right idea but it was the wrong time. Now, I've readjusted and gotten into a niche that is starting to be very profitable. I think before all of this I would have agreed with Myth number 1 - it takes a ton of money to make money. In this day and age it's just not true. I think if you're an entrepreneur you're already full of ideas - it's having the right idea at the right time that's the key to success IMHO.

[MBTN]

Great article. The part about "the more competition the better" resonated with me, although he doesn't explain that thought completely. If you are starting a business with no competition, that could mean that your idea is so unique and novel that you are bound to make money. However, it is more likely that the reason that there is no competition is that your idea just isn't very good!

[The Extra Money Blog]

you are often your own worst enemy - and Ramit is right when he says this applies for most aspects of life, if not all. the fear lies within the self often times and it's just a matter of getting started. for those that do not know, Ramit has a Psychology background from an educational standpoint, and he is able to connect the psyche behind money matters to human behavior (individual personalities). a lot of what he preaches can be tied to the 80/20 rule.

[MasterPo]

Don't overlook the time aspect. Time put in equates to profit coming out. But that's a lot easier when you're selling something you already do full-time. If you go off in another direction the time will be even more.

[Kris]

My parents always used to say "we wouldn't want to earn more because we'd have to pay more in taxes". Of course, I always found that to be so strange, but I think it was simply a justification for their current earnings, and not a well thought out strategy. In any case, time, money, and education should not be a deterrent from making more money. The only roadblock for most people is simply, desire.

[MasterPo]

Kris - Not to get off subject, but you're parents were right. At least in some respect.

MasterPo has considered getting a second job for some time. Just $20/hr/wk at $9/hr would be helpful.

BUT...

The amount of additional tax MasterPo would have to pay on that piddly little amount (as well as probably push MasterPo into the AMT range) just doesn't make it worth it.

[Andy H]

I'm an Earn1k'er and I can tell you that its worth every penny. The first thing I learned when I started was that I was focusing on all the wrong things: starting a Twitter account, starting a website. Ramit really knows how to boil things down to the basic tactics and cut out all the garbage. Plus the community he has built up is incredible.

[ditchtheboss]

What a great article. I really like your comment with regards to procrastination. I have read many stories from many successful people that they actually have a few ideas running at the same time. If one fails there are others that have the potential to succeed.

I guess the most important thing is to take action. I write a lot about it in my blog. Take action, think about it , plan it, do your risk analysis but take action. Don't sit around waiting. Don't wait for the opportunity, make the opportunity. Thomas Edson said the before he invented the light bulb he found 1 million ways of how not to invent the light bulb. He took action and keep going despite the failures. A lesson for all of us.