Free Money Finance

Why (and How) Some People Succeed in Business Without Getting an MBA

The following is a guest post by Josh Kaufman, a business teacher and the author of The Personal MBA: Master the Art of Business. He teaches craftsmen, artists, and professionals how to learn the fundamentals of modern business practice without mortgaging their lives. Learn more at PersonalMBA.com.

In my previous post, we discussed why getting an MBA might not be a good decision - particularly if you take on student loans to finance the degree. In this post, we'll examine the alternatives.

The list of successful businesspeople without MBAs is long, and cited often enough to be a cliché. Folks like Steve Jobs, Bill Gates, Jeff Bezos, Sam Walton, and Anita Roddick don't have MBAs, and have done quite well for themselves as CEOs of large companies. And while CEOs consistently grab the headlines, millions of unnamed entrepreneurs and small business owners around the world have figured out how to be successful without obtaining an MBA.

The question is: how?

It's simple, really: these business professionals may not have a credential, but they made it a priority to educate themselves about business - mostly by reading, experimenting, and learning as they went along.

Education is the process of learning something useful - concepts, knowledge, and skills that improve your life in some way. If you want to become a successful person, investments in education can pay massive dividends when it comes to your ability to make things happen in the real world. Aside from luck, education and application are ultimately how successful people become successful.

Believe it or not, colleges aren't really in the education business. Colleges are in the credentialing business - providing a degree, certificate, or other form of verifiable proof you've completed a mostly arbitrary, bureaucratically-defined set of criteria. Satisfy the requirements, pay the tuition, and you get the degree. Any relation between the criteria and real-world usefulness is nice, but a distant concern as far as the school is concerned.

Education and credentialing aren't the same thing. If you go to college, you're ultimately paying for a piece of paper, not an education. Education is about what happens in your head, not in a classroom.

Credentials can be useful because some employers use them as a simple screening mechanism for deciding which applicants to interview. In most cases, it doesn't really matter where the credential is from, as long as you have one.

Corporations use credentials as a way to outsource their HR screening process. By only accepting graduates with certain credentials from certain institutions, the company can save significant time and money screening out poor candidates. (The cynical view is that corporations also benefit from hiring candidates with massive debts - the employee needs the stable salary the company provides more than the company needs their services.)

That's why people say credentials "open doors." If the Goldman Sachs HR department automatically discards resumes that don't feature the letters "MBA", good luck getting an interview if you don't go to business school.

So - if you want to do something that absolutely requires a credential, and you can obtain that credential quickly and inexpensively, then obtaining that credential may help you. If you want to be a surgeon, by all means graduate from medical school - you can't practice if you don't.

Business, however, is distinct from many professional fields in the fact that credentialing and licensure isn't a legal requirement of practice. If you can create something valuable, attract the attention of potential customers, close sales, deliver on your promises, and make more money than you spend, you're in business. If you can give people what they want, you don't need a credential.

That's why getting an MBA is a poor choice if you're interested in entrepreneurship. If a credential "opens doors" you're not interested in opening, you don't really need it.

People like Steve Jobs, Bill Gates, Jeff Bezos, Sam Walton, Anita Roddick, and other successful entrepreneurs became enormously successful because they figured out how to create and deliver things that people desire enough to pay for. That, ladies and gentlemen, is what you need to learn to succeed in business - nothing more, nothing less.

If you have the drive and fortitude to become an entrepreneur, you don't need an MBA - but you still need to learn the essentials of business if you want to do well.

If working for another company is more your speed, all you really need to do is prove to a hiring manager you have Economically Valuable Skills - skills that will help the company create more value, market, sell, deliver value, and/or enhance profitability. If you can't do any of those things, you won't be hired - regardless whether or not you have a credential. Working for smaller companies, where you report directly to the CEO and have significant latitude to make things happen directly, can be huge opportunities that help you build your skills and prove to other employers your work is valuable.

No matter what path you choose, you must learn the essentials of business, people, and systems if you want to do well. Almost everyone (even graduates from MBA programs) gain most of their practical knowledge through experience, over time, and making costly mistakes. Good business education can help make that learning curve much shorter.

Here's a famous and useful quote from Alfred Korzybski that goes like this: "A map is not the territory." The purpose of education is not certification - it's to improve your mental "map" of a given "territory" by making your understanding of a topic relate more closely to how the world actually works.

Charlie Munger, Warren Buffett's business partner, calls these basic units of education "mental models" - a term worth knowing. The more accurate the mental model, the better decisions you'll be able to make using it. The more foundational the mental model, the more that idea can explain. The more mental models you learn well enough to use, the more opportunities and risks you can perceive, understand, react to, and take advantage of in the real world.

Unfortunately, even the best credentialing programs in the world focus less on mental models than on the credentialing process itself. Checking off topics on a bureaucratic syllabus means very little if those topics aren't essential mental models. If the accreditation process says you must learn the Black–Scholes option pricing formula, learn it you must - even if you never use it, and forget it immediately after the exam.

That's why even graduates from top business schools ultimately use a very small fraction of what they're tested on in the classroom - what they're learning in the classroom has almost nothing to do with the mental models they need to do their jobs. That type of "learning" is a waste of time and energy.

That's why I advocate self-education - learning the essentials of a topic on your own, before seeking credentials. By taking full responsibility for your own education, you can spend more of your time and energy learning foundational mental models that will actually make a difference in practice.

Learning is really about what happens in your head, not in a classroom. The best classrooms can certainly facilitate the process, but your ability to master the concepts that matter will always be your sole responsibility. You can save a lot of time and energy by learning the basics on your own.

This approach to learning is a natural offshoot of the "80/20" principle - you don't need to learn everything there is to know about a topic in order to do well. All you need to learn is the Critical Few - the small percentage of concepts that provide most of the real-world value. Learn the essentials first, and you can go surprisingly far. The more you read, the more you research, and the more you experiment with real projects that have real consequences, the more you'll learn.

My book, The Personal MBA: Master the Art of Business, started as a personal project. My goal was to isolate the most important business-related mental models, so I could use them to do more valuable work. By sharing what I learned in the process, I hope to dramatically decrease the time it takes you to master the essentials of business, so you can spend more time doing work that matters.

This approach to education isn't new by any means: books like Drawing on the Right Side of the Brain have used this approach for quite some time, with remarkable success. Topics like mathematics are taught by focusing on core ideas first, then combining them to explain more complex ideas. My book is, as far as I know, the first time it's been attempted in the field of business. The question of whether or not I've succeeded is ultimately up to you to decide.

Whether or not this approach to education is right for you is a personal decision. The business self-education debate is very similar in many ways to the homeschool debate, and is controversial for the largely the same reasons. Regardless of what you ultimately choose, researching all of your options and making a mindful choice will help you make the best possible decision.

In the end, the decision self-educate or go to school is yours, and yours alone. I hope whatever you choose, you find nothing but success.

Skipping the MBA and Questioning the Benefits of College - Why is it Uncomfortable?

The following is a guest post by Josh Kaufman, a business teacher and the author of The Personal MBA: Master the Art of Business. He teaches craftsmen, artists, and professionals how to learn the fundamentals of modern business practice without mortgaging their lives. Learn more at PersonalMBA.com.

Over the past few weeks, FMF has done a wonderful job exploring the value of MBA programs, as well as college degrees in general. If you missed them, here are the posts:

• The One Great Thing an MBA Does for You
• Three Big Problems with Business Schools (And the Smart Way to Get an MBA)

In my book, The Personal MBA: Master the Art of Business, I make the case that you don't have to go to business school to learn practical business skills and do well in the working world. In fact, skipping the MBA may actually help you be more successful in the long run.

That's a position that makes many people uncomfortable, and has sparked quite a bit of controversy. The question is: why?

Because I've publicly advocated skipping business school, I've been standing squarely in the middle of this firestorm for six years. To be honest, I've always wondered why people get so worked up. From my point of view, it's pretty straightforward: do the math and consider the risks - ALL of the risks.

I'm not really the enemy of the MBA - I'm firmly against unnecessary student loan debt. MBA programs can generate enormous debt loads extremely quickly, without providing enough value to compensate for the risks.

Business schools are, on average, over ten times more expensive than were twenty years ago - after you account for inflation. (Source) Most students, unless they're already wealthy, finance tuition, fees, and living expenses via debt. These loans feature 5-10% interest rates and are non-dischargeable in the US by law, even in the case of bankruptcy.

By paying for business school with loans, you're taking a huge risk: you're borrowing a ton of money all at once that must be repaid, no matter what happens in the future.

If all goes well, you'll be okay: assuming you land a high paying job you like, steadily increase your pay over time, manage your finances wisely, and nothing unexpected occurs, getting an MBA may prove to have been a decent investment.

If something unexpected happens, however, your life may not turn out so well.

Accurate risk assessment for any investment requires good Scenario Planning, which includes a Doomsday Scenario. Before you sign on the dotted line, it always pays to consider what could potentially go wrong.

In the case of business school, the list is quite long:

• You have trouble finding a job immediately after you graduate, or the search process takes longer than you anticipate.
• You're laid off, your department is downsized, or your company folds in a down market, and you're out of work for a while.
• You have an unexpected medical emergency, with accompanying unexpected medical bills.
• Your new job makes you miserable, and you decide to quit and do something else that pays less in the short term.
• You decide to start your own company, and need funding to cover your overhead, including rent and food, without an immediate income.

Financially, all of these situations boil down to one major risk: a short-term, unforeseen cash crunch that limits your available funds. If you're unencumbered with debt, it's not as big of a deal - you have the freedom to cut expenses with relatively few long-term repercussions. Also, if you aren't constantly paying debt service, it's far easier to establish emergency funds that can help you handle unexpected events more easily.

If you're encumbered with student loans that have minimum payments in the thousands of dollars, that short-term cash crunch becomes a huge deal. Every single time you miss a payment, defer a payment, apply for abatement or forbearance, or consolidate your loans, you automatically rack up massive fees and interest penalties on top of your already considerable loan balance. Missing payments can also jeopardize professional licenses, which may be legally required to do your job.

As a result, your outstanding debt (and future monthly payments) can spiral out of control overnight, with no recourse whatsoever. Modern student loans are not structured in favor of the borrower in any sense. If you're looking for the fastest way to ruin your finances in perpetuity, missing a payment on a student loan easily takes the cake. (See The Student Loan Scheme: Gateway Drug to Debt Slavery for details.)

Business school is now expensive enough that the direct costs alone are considerable, but the risks you assume with student loans are truly massive. This is not a theoretical exercise: the above scenarios play out every single day, and have a higher probability than you might originally think. It also applies if you have children, and you intend to co-sign their student loans.

Take a few minutes to browse around on StudentLoanJustice.org to survey the damage, and remember the Attribution Error - these people aren't uniformly boneheaded idiots who are getting their just deserts. Circumstances matter more than we like to admit, and risks aren't risks if they never come to pass.

If MBA programs had a proven track record of successful student outcomes, that would certainly help mitigate the cost and the risk. Unfortunately, research indicates that business schools do pretty much nothing when analyzed on every measure of professional success: job attainment, salary, lifetime earnings, promotion, job satisfaction, etc. (For details, see: "The End of Business Schools? Less Success Than Meets the Eye" by Jeffrey Pfeffer and Christina Fong, both business school professors.)

If you can mitigate the cost and risk by (1) paying less, and (2) minimizing student loans as much as possible, the situation improves considerably. FMF writes about how he made millions by investing $5,000 in undergrad and graduate school. I agree with his conclusion - if you can get a credential that opens useful doors for $5,000 total, it's very likely your investment will pay off, and the risks are minimal. In FMF's case, investing a small amount of money in college credentials helped him land a job at a big-name company, which payed off in spades for the rest of his career.

Here's my story: I landed a full-ride undergraduate scholarship from a state school, so I didn't pay anything for my bachelors degree. Part of my undergraduate program was co-operative education (essentially an extended paid internship), which landed me a job at the very same big-name company, which turned into a full-time management-track job when I graduated. That was a good investment, and the risks were minimal.

Here's the twist: most of the people I worked with on a daily basis at big-name company were recent graduates of top 15 business schools, with student loans to match. It was easy to put myself in their shoes. After a while in my shiny new job, I realized I was miserable doing this type of work, even though the job was prestigious and paid well.

The experience of taking a job I thought I'd enjoy, only to discover it made me miserable, was a huge wakeup call. After a few years, I left the company to start my own education/publishing company, which I bootstrapped. The lean times getting the business off the ground would have been impossible to manage if I was also responsible for paying a few thousand a month in student loans. Today, I have no debts, own my own business free and clear, and I'm doing work I love.

I'm very fortunate - student loans would've made it extremely difficult to do what I'm doing now, and my life would be immeasurably poorer for it. I dodged a bullet - a big one. If I'd have gone to business school, I'd be stuck doing work I don't enjoy just to pay the loans, which I'd likely carry for decades. I feel the equivalent of surviving a near miss with a semi truck - the reason I warn potential students to look before they leap.

Freedom and flexibility are enormously valuable - and enormously underrated. You give up both when you borrow money, particularly when student loans are involved. In many cases, having the freedom and flexibility to take advantage of unexpected opportunities may be even more valuable than trading those benefits for a credential.

In general, people are uncomfortable questioning the value of credentialing because it goes against many common and deeply-held beliefs about the intrinsic value of schooling, social status, prestige, and feeling clear about the world and their place in it. Credentials are also a common refuge for people in transition: in most circles, you're not "unemployed" if you're paying tuition, which makes credentialing a comfortable option. Compared to these values, the learning aspect of credentialing is a distant concern - even though the learning is far more important.

Aside from a few significant differences of opinion of how business schools should go about teaching business skills, I primarily counsel against taking on massive debts to finance any credential. Borrowing money to finance a credential puts you in a very shaky financial position - one that, regardless of the doors that credential opens, could easily make your life more difficult than it really needs to be. The risks must be considered along with the potential rewards.

That's not to say I'm against education - quite the contrary. I'm a huge advocate of getting the very best education you possibly can. Fortunately, education and credentialing aren't at all the same thing. More on that tomorrow.

In the meantime, where do you stand on credentialing? If you can't pay for a credential in cash, do you think obtaining a degree is worth the risk and loss of flexibility?

Creative Ways to Improve Your Resume

Yahoo lists eight creative ways to improve your resume as follows:

1. Analyze the job post's wording. An easy way to make sure your resume gets you in the door for an interview is to echo the language in the job post.

2. Weed out fibs.

3. Get rid of the "objective statement."

4. Get rid of redundancies.

5. Cut unnecessary resume "stories."

6. Look for ways to use exciting language.

7. Turn your resume upside-down.

8. Write a draft in a different format.

Here's my take on these suggestions:

1. Yes, the wording on your resume needs to mirror the main points in the job posting. That said, I don't think you have to use the exact words -- as they suggest.

2. Of course. NEVER lie on a resume or in an interview. There's no room for it and your integrity is worth far more than getting a specific job.

3. I never use an objective statement anyway. Never have. Personally, I think they are useless and most of them are so fluffy that they don't say anything. And they take up valuable space as well -- space that could be used to sell yourself to the employer and get you a job!!!!

4. Of course. Is this really a "creative" way to improve your resume?

5. I think they mean "be brief and quick to the point", right? If so, I agree. You want to get as many accomplishments as possible on your resume, so give them "just the facts" for each one and then move on to the next.

6. I prefer "action" words to start off each accomplishment bulletpoint -- words like "led", "developed", "created", etc. To me, this shows that someone is a person of action, someone who gets things done. And how can you be more exciting than that? ;-)

7. This is a stupid idea. I don't know why they listed it.

8. Another stupid idea. The more a resume veers from the normal, standard format (jobs listed in reverse chronological order), the worse it is IMO. Their suggestion of "writing a letter" resume is laughable.

In all, I think there are only four good suggestions here (#1, #3, #5, and #6 are good, #2 and #4 are common sense, and #7 and #8 are worthless) and IMO they certainly aren't that "creative." They should have gone with "Four Ways to Improve Your Resume" and left it at that.

Top 10 Myths About Job Interviews

CNN Money lists the top 10 myths about job interviews as follows:

Myth #10: The interviewer is prepared.

Myth #9: Most interviewers have been trained to conduct thorough job interviews.

Myth #8: It's only polite to accept an interviewer's offer of refreshment.

Myth #7: Interviewers expect you to hand over references' contact information right away.

Myth #6: There's a right answer to every question an interviewer asks.

Myth #5: You should always keep your answers short.

Myth #4: If you've got great qualifications, your appearance doesn't matter.

Myth #3: When asked where you see yourself in five years, you should show tremendous ambition.

Myth #2: If the company invites you to an interview, that means the job is still open.

Myth #1: The most qualified person gets the job.

Here's my take on these:

#10 - I've interviewed hundreds of candidates in my career and I didn't prepare for most of those interviews. The article is right -- I was usually over-worked and busy and simply didn’t have much time to prepare. The exception: when someone was to be hired in my department or working for me directly. Then I prepared well in advance.

#9 - I have never had and never seen offered any sort of "how to interview" training.

#8 - I agree -- refuse the drink unless it's right there or you really need to get hydrated.

#7 - The only time I've ever been asked for references' contact information was days after an interview. I've never been asked to provide them immediately, though I guess it wouldn't hurt to be prepared (it shows you can anticipate questions).

#6 - I wouldn't say that there's a right answer to every question, but I would say that there's a general way to answer most questions. It is to weave your accomplishments (along with facts, statistics, quantifiable results, etc.) into as many answers as possible, demonstrating to the interviewer that you are the sort of person who makes great things happen.

#5 - You need to balance between brevity/conciseness and accomplishing the tasks I noted above in #6, so I'd say you need "medium-length" answers. In reality, the interview should flow like a conversation -- with you doing most, but not all, of the talking.

#4 - Looks always matter. You need to be well-groomed, dressed appropriately, and look as attractive, energetic, etc. as possible. IN other words, look like someone that somebody else would like to hire.

#3 - I always answer that I want to continue growing and contributing to the company throughout my career. So I would see myself in a position commensurate with my performance for the organization which, based on my past experiences (insert an example or two here), would mean more responsibility/ability to influence positive outcomes for the company.

#2 - Generally this is true -- it's not a myth in most cases. IMO, it's especially true if the company flies you in for an interview and/or somehow spends a decent amount of money to have you talk with them.

#1 - Obviously, someone has to be qualified for the job to get it (unless an interviewer thinks he can "grow" into it.) But once that criteria is met, a whole host of other factors enter in: who has the best "fit" with the company, who the hiring manager likes best/thinks will work best with his team, who can be secured for the lowest total compensation, who can make the move quickly (most companies hiring need someone NOW), and so on. So it's not as simple as being the "most qualified."

Anything I missed? Any disagreements with me or CNN Money?

The One Great Thing an MBA Does for You

The Personal MBA: Master the Art of Business lists the following as "the single benefit of business schools (getting an MBA)":

The one significant benefit that business schools do provide is better access to Fortune 50 recruiters, consulting firms, and investment banks via on-campus recruiting and alumni networks. Upon graduating from a top-tier business school, you'll find it much easier to get an interview with a corporate recruiter who works for a Fortune 50, investment bank, or consulting firm. The effect is strongest immediately after graduation, then largely wears out within three to five years. After that, you're on your own: hiring managers no longer care so much about where you went to school -- they care more about what you've accomplished since then.

Lots for me to comment here:

• This was written as if there's only an elite set of business schools that people attend and that other schools do not matter. Yes, if you want to work for a Fortune 50 company, a consulting firm, or an investment bank, then you probably need to get a top-tier MBA. But what about all the other great-paying jobs with wonderful companies? What if you "only" want to work for a Fortune 500 company? Or want to work in an industry other than consulting or investment banking (BTW, most people do want to work outside these industries)? There are tons of "other" schools (those out of the top 10) that can launch your career in a way that leads to a high income.  
• I agree that one big (the only? the biggest?) benefit to getting an MBA is that it will open doors for you. You will be able to interview for jobs that you would have no access to whatsoever without the degree. As such, it's important to know where you want to work (company or industry and field) before you decide where you go to school. Pick a university that has recruiters from your target company/job hiring people from it.
• I also agree that after awhile (I'm not sure if it's three to five years -- it's shorter in some cases and longer in some cases IMO) your experience counts for more than your education when looking for the next job. Future employers don't really care if you went to the best business school in the world as much as they care whether or not you can get the job they have done -- and done well. And the best indicator that you can do it well is what you've done in your other positions. This is why I always talk about having, recording, and promoting your accomplishments. They are the key to an ever-increasing income for you. (BTW, once I worked for a name-brand company in a well-thought-of position for my first job, no one cared where I went to school -- my experience was what got me hired and hired again for the rest of my career. But without the MBA I never would have had that initial job.)
• It's interesting to me that recruiters still place so much weight on hiring from certain business schools. It can't be because of what the students learn because much of what all business schools teach is not relevant to the real world of business IMO. It must be because recruiters want bright employees and they assume that a person had to be bright to get into and graduate from a specific school (in particular, a top-flight school.)

What's your take on these issues?

Three Big Problems with Business Schools (And the Smart Way to Get an MBA)

One of the keys to growing my career and enabling me to establish a great income was that I got an MBA 20 years ago. That degree opened the door to my first job which, in turn, set me on the path to earning a great income. I have literally made millions (with more to come) off a degree that cost me $5,000 to obtain.

But have the glory days of MBAs passed us by? And is the degree even relevant today?

According to The Personal MBA: Master the Art of Business, the glory days have passed and the degrees are not as relevant as they once were. The book makes a strong case for skipping those two years of added schooling (and the debt that most people accumulate during that time) and instead implementing a personalized course of study (reading books mostly) that will better prepare you for the real world of business.

I'm looking forward to hearing from the author of this book directly (he'll be doing some guest posts here at the end of December), but for now I wanted to share what he lists as three big problems with business schools. They are:

1. MBA programs have become so expensive you must effectively mortgage your life to pay the price of admission.

2. MBA programs teach many worthless, outdated, even outright damaging concepts and practices -- assuming your goal is to actually build a successful business and increase your net worth.

3. MBA programs won't guarantee you a high-paying job, let alone make you a skilled manager or leader with a shot at the executive suite.

Here are my thoughts on these:

1. Yes, getting an MBA can be expensive, but like any other college degree there are ways to lower the cost. I detailed these when I talked about making the most of a college degree, but here are two tips for an MBA in particular:

A. You don't have to go to Harvard. I recommend going to the most affordable school that gets you into the company/industry you want to be in. (FYI, I went to a Top 25 school -- nowhere near the top few, but not a sluggard either) These schools are much less expensive and still get you the start you want. From there, the results of your career are up to you.

B. Get an assistantship. That's what I did -- and it saved me a BOATLOAD.

2. I agree, MBA programs do teach many worthless things. They have done so for years (I haven't used even 20% of the educational knowledge that I learned in grad school.) In fact, much of what all our universities teach is different than what works in the "real world." That said, I learned several other valuable skills while in grad school -- working with and leading highly motivated people, how to handle a seemingly never-ending amount of work on tight timelines, how to communicate and present effectively, and so on.

3. Of course an MBA does not guarantee a high-paying job. Nothing does. There are no guarantees in life. However, you have a better chance of earning more with an MBA than without it. But it's worth saying that you simply can't get a degree and then wait for the world to bow before you. You'll still need to work hard and manage your career so that you maximize your earnings. But assuming you do work hard and have a decent amount of skills and abilities, an MBA can help you make a lot more than you would otherwise.

Here are some additional thoughts from me:

• Generally, I think getting an MBA is like getting any other degree. Do a cost/benefit analysis and see if what you're likely to get out of it is greater than the cost of it. If it is, then it's probably a good idea. If not, it probably isn't.
• Even if an MBA degree is totally useless from an educational standpoint (I'm not saying it is, but let's assume so for a moment), it does one powerful thing for your career/earning potential: it opens doors. When I graduated with my Bachelor's degree, I would have made $18,000 or so per year (remember, this is back in the day, so $18k wasn't as terribly low as it is today). Two years and an MBA later, I was making over twice that much and working for a name-brand company that set my career on an upward path. There is NO WAY I could have been hired by that company (or any like it) without my MBA.
• All MBAs are not created equal. You can NOT get an MBA from any school you like and expect to get the same benefits as you'd get with any other MBA. If I had a dime for every time someone told me they got an MBA from "Nowhere University" and now wanted to know why they weren't making $200k per year, I'd be a rich man. As I said earlier, you need to get an MBA from a school that will get you into the company/industry you want to be in. For example, if you want to work in marketing for Microsoft, you need an MBA from a school where Microsoft hires marketing MBAs. If you want to keep your current level of pay and job responsibility, then any MBA will do. But assuming you actually have some sort of plan to improve your career, you need to get an MBA that will help assist in achieving that goal.

Are there any MBA holders out there? What do you think of your degree? Or maybe those who decided not to get an MBA for one reason or another. What's your take?

Hard Work is the Key to Mega-Wealth

Here's an interesting post from Dr. Thomas Stanley about perceptions of the mega-wealthy (those in the top 1% of wealth holders in America -- a net worth and income of more than three times that of those profiled in The Millionaire Next Door) in high school. The summary: few (10% to 12%) were thought of as being smart/intellectually gifted/the smartest in their class. And only 20% were seen as the "most likely to succeed." But interestingly enough, the fact that they weren't the smartest kids played a part in driving them to success -- by making them work harder. And it's this quality that ultimately led them to their high levels of net worth. The details:

School experiences often motivated millionaires to succeed financially.  These experiences helped them forge tenacity.  Fully 76% said that they were influenced by understanding that hard work is more important than high genetic intellect in achieving success.  And most millionaires never allowed poor grades to destroy their goal to succeed.

These people also listed the following factors as the top five in determining their success:

• Integrity
• Discipline
• Social skills
• A supportive spouse
• Working harder than others

I did well in school and have had a good career so far. I don't have wealth anywhere close to what these people have, but I'm doing fine. I give much of the credit for doing well in the academic and work worlds to the fact that I've been willing to work harder than most others. In school, I was the one putting in three to five hours of study each night to ensure I knew the material/completed the assignments (I didn't "get it" all by simply reading the lesson one time -- as some people did.) And once I entered the work world, I spent a lot of time and effort developing my skills and doing my job with excellence. As a result, I've seen a good amount of career and pay growth.

I'm not saying this to brag -- in fact, it's just the opposite. I view myself as probably slightly more intelligent than average. And as a business person, I'm probably at the average. But because of my willingness to work hard (and the discipline that it takes to do so), I have been successful in both school and in my career. I think this is a hopeful message for many of our kids today (as well as parents.) For those that simply can't "get it" academically (versus those who don't want to make the effort to understand -- there is a difference), they still can be successful if they are willing to work hard. And for some (many?) in the workforce today, this provides an example that they might just be able to pull themselves out of a bad situation (or even improve a good situation) -- even though they aren't the brightest in their company -- if they put in the extra time and effort required to excel.

Of course everyone who works hard doesn't become wealthy. There are millions of hard-working people who make low salaries. So the "hard work" needs to be channeled into the right venture -- into something that has the potential to get a good return for the effort put into it. Otherwise, all the hard work in the world is probably for naught.

How about you? Has anyone here had a similar experience to mine?

How My Income Stacks Up

A month or so ago I told you all about how my net worth stacked up against people at the same age and income as me. Well, now there's a nifty calculator that allows me to do a similar comparison with income.

This piece from Slate has a calculator about halfway down that's titled "where do I stand?" You put in your zip code and your income and out pops an income comparison between you and those that live in your area of the country and world. Here's a summary of where I net out:

• I make roughly four times more than the average/median income in my zip code, state, and country.
• 96 percent make a lower income than I do.

Before we proceed, let me say that this isn't about bragging. It's about (like this blog has always been) what I'm doing financially and why I advocate certain moves and not others. It's also about me sharing as much about my personal finances as I feel comfortable with (this is, after all, a blog.) So let's forget the size of the income for now and focus on what conclusions we can draw from it.

Here are my specific thoughts:

• The way I have increased my income should not come as a surprise to anyone. I've focused on growing my career, starting with getting a great degree and then taking specific steps to maximize my income. I've developed a standard formula for doing this and it's been working for me for 20 years.
• In addition, I've grown my side income. At various times I have made extra income as a writer and blogger (though I give away all the proceeds from FMF) as well as through various other pursuits.
• I've controlled my spending and living expenses as my income has increased, widening the "savings gap" between income and expenses (one MAJOR key IMO: I haven't had a mortgage for YEARS.) It's this ever-growing gap that has allowed me to save and give as I've wanted to.  
• I've been saving for quite some time now, which is a boon for my investments. If I can keep this up I'll be looking at early semi-retirement sooner rather than later.

In the end, the keys to becoming wealthy are fairly simple -- grow your income, save, and work to maximize your investments. It is these simple principles that have served me well for a couple decades and ones I hope do the same for you over time (unless you're Old Limey, of course -- he's well ahead of us all financially and doesn't need the help.) ;-)

Six Strategies To Make Sure You’re Getting Credit For Your Work

Mint lists six strategies to make sure you’re getting credit for your work as follows:

Give presentations when possible. People don’t just remember great presentations and ideas; they remember the people who delivered the message.

Send status reports frequently. When it comes to increasing your visibility, the name of the game is repetition.

Get favorable testimonials. Nothing reminds people of how brilliant your last idea was than a third-party testimonial from a customer or colleague who brags on your behalf.

Ask for similar successful projects. Focusing on projects that you know you’ll succeed in will help build your manager’s confidence in you.

Load up on projects around review time. The time to really work on getting your due credit is right before review time.

Stay visibly busy. It’s not enough to just take on projects, you need to go a step further and actually look busy.

I think these tips are great suggestions to help grow your income for one reason: they help demonstrate that you deserve a raise. And if a picture is worth a thousand words, the actions above are worth thousands of dollars (in additional income for you.) Here's my take on each of these:

• Presentations make you visible and assuming what you say is actually good, can help catapult your career. Of course if you bomb, the fact that you have an audience for your crash landing will also magnify the situation and do more damage to your career than would happen likewise. Two suggestions to make sure you do well: 1) Before you present, run your thoughts/slides by a trusted co-worker -- someone who's well-respected and will give you honest feedback. Then make any adjustments she suggests (and that you think are appropriate.) 2) Rehearse the presentation so you are smooth. HOW you say something is sometimes just as important as WHAT you say. Someone who limps through a presentation might be described as "good", but someone who presents the same presentation with ease and finesse will be remembered for giving a "great" speech.
• I recommend a weekly update to your boss to tell what you're doing and the results that are being achieved.
• If you can get a customer or co-worker to give a testimonial, that's great. But it's hard to do, of course. One way to help along the process is that if someone expresses appreciation for your work, simply ask him if he'd be willing to pass his thoughts on to your boss as a favor to you. You'll need to be sure it's easy and appropriate for him to do so in advance (and that you won't be crossing any boundaries that would make him feel uncomfortable) so you don't alienate him by asking. But it's worth pursuing if you think he'll do it -- especially if he's an important customer or vital to your company in some other way.
• Certainly you'll want projects that you think you'll succeed at -- that goes without saying. But I'll add that you want IMPORTANT projects that you'll succeed at. For instance, it's better to spearhead a team that saves the company $500,000 than it would be to spearhead a team that successfully developed the theme for the company Christmas party. I know, it's an extreme comparison, but I wanted to illustrate the point. Choices like these rarely contrast that much, but you get the idea of what I'm saying.
• It's a fact of life that bosses give a disproportionate amount of weight at review time to recent events. So if you've been a stinker the past couple of months, your review will have a tendency to be so-so at best, even if you hit home runs most of the rest of the year. Then again, you might have been a bench player much of the year, but if you've delivered a few big wins over the last few months, it's likely that you'll get a good review (and corresponding raise.) Plan your successes accordingly (to the extent you can.)
• Perception is reality. We all know that, right? So if you look busy (even if you aren't), you'll be viewed as a "hard worker." (Of course you don't want to appear so busy that you look frazzled or seem like your job is too much for you.) If you look like you have all the time in the world on your hands, you can't be doing a good job now, can you? I know, I know. Looks don't necessarily relate to performance. But I did say that perception is reality, didn't I?

What's your take on these tips? Anything else to add?

Is Now the Time to Ask for a Raise?

Here's a piece from CNBC that says during a bad economy is one of the best times to ask for a raise. Their thoughts:

A lot of people are taking on more responsibilities because companies have laid off people. Taking on more responsibility makes a person more valuable to the organization. And that’s why they can ask for a raise.

They then give some steps on how to ask for a raise:

The first step, most pros agree, is that you have to do your homework. Use a site like Payscale.com, Salary.com or Glassdoor.com to figure out what the salary range is for your profession so you have a reasonable ballpark of what to ask for heading into the meeting with your boss.

Plus, know where your company is financially.

Then, and this is a crucial step, do a self-evaluation. Make a list of what your job responsibilities are. Maybe you’re doing the work of two people after that last round of layoffs, or, like, Viscio, you’re doing the work of the next level up — without the pay.

Then make a list of all the reasons why they should pay you more. Are you bringing in more money or more clients than last year? Are you helping to cut costs? What they want to know now if they’re going to even think about paying you more is — How are you improving the company’s bottom line?

Here are my thoughts on this issue:

• Potentially, anytime is a good time to ask for a raise. You just need to fit the criteria for getting one.
• The criteria for getting a raise is making sure you deserve a raise (for details, see How to Demonstrate that You Deserve a Raise.) In short, you need to know what your employer expects from someone having your job and you need to be doing MORE than what is required (and doing it well.)
• In addition, the more your accomplishments have to do with making or saving money for the company/organization, the better. These are usually more vital positions and if you're hitting home runs in them, you're a great candidate for a raise.
• If you have met all of these AND your company is doing well financially, ask for a raise! It doesn't get any better than this.
• If you have met all of these BUT your company is not doing well financially, you can still ask for a raise, but you'll just need to take a different tone (not as aggressive and stating that you know the company is in rough shape but that you are contributing a great deal, etc.)
• Be prepared to hear "no." If you get a negative response, ask for an explanation. If it seems like a good reason, then see if there are other ways you can be compensated (extra time off, special company perks, working flex time, etc.)
• If the response is "no, no, no" to everything and you're a really strong performer, then it's probably time to explore other job opportunities. It's apparent that you're not going to grow your career even though you're a star player.
• If you're not a star player and/or have a position that's easily filled and/or a job that's not that important to the company, I have bad news for you -- it's unlikely that you'll get decent raises even in good times. You need to either change your performance and/or job or be content with the few (and small) raises that the organization gives you on its own. Perhaps you're happy with your job and this arrangement and if so, fine. But I don't have any answers for those of you who do not perform or have a meaningful job and still want to get good raises. Sorry.

I've actually written on the topic of how to ask for a raise several times. If you want more thoughts on this subject, check out these posts:

• How to Ask for a Raise
• How to Ask for a Raise
• How to Ask for a Raise

Yes, those are three different posts. I'm a creative one with names, aren't I? ;-)

Can Social Networking Really Land You a Job?

Kiplinger lists seven ways social networking (primarily Facebook, blogging, Twitter, and LinkedIn) can help you land your next job as follows:

1) Build your professional brand.
2) Keep in touch.
3) Build stronger connections with key people.
4) Collect and showcase endorsements.
5) Advertise your professional intentions.
6) Research prospective employers.
7) Showcase your tech savvy.

I have a few thoughts on this issue:

• I think we all know the value of networking to helping people find jobs (as well as grow in their careers.) Social networking is just a newer way to network. I don't think it replaces in-person meetings, phone calls, emails, etc., but can certainly be a tool used in conjunction with these to help grow and nurture your network.
• I haven't really developed any of these personally, but I do blog, Tweet, and use Facebook for FMF (I use Facebook personally as well, though not much, but I don't do it as a targeted effort to grow myself professionally.) So I'm not sure how well they do in helping people network for business. Anyone have any real-world experience in this area?
• In particular, I think LinkedIn can be a great professional tool. I've been meaning to get an account set up with it.
• How does someone manage both personal and professional "personalities" on something like Facebook? If you're regularly posting about the latest business strategies, Aunt Emily may not want to be your friend. And if you're always blabbering about your 2-year-old's potty training, it's not the best for your "professional brand." How do you balance these?
• Perhaps the answer to my question above is to use Facebook for personal messages (though realize employers can still find you here) and blogging, Twitter, and LinkedIn for professional efforts. You can also use Facebook to do research on companies, of course. How's that strategy sound?
• What about developing a personal website? Is that even needed these days? Perhaps a blog takes the place of a website.

Anything I missed or should consider?

Earn More Money by Being the Proper Weight

This post is sure to ruffle some feathers. ;-)

FMF has covered all sorts of unusual ways of making more money in our jobs. The list so far:

• Wearing skirts and makeup (for women, of course)
• Being taller (heels, anyone?)
• Being attractive
• Having just a "touch" of gray hair (for men)

Well now we can add "weight" to this list. I say "weight" in generic terms because this issue impacts men and women differently. We'll start with the situation for women according to MSNBC:

Separate studies of 11,253 Germans and 12,686 U.S. residents found that very thin women (who weigh 25 pounds less than the group's norm) earned an average $15,572 a year more than women of "normal" weight, according to the study published in the Journal of Applied Psychology the findings of which are reported in The Wall Street Journal.

Sorry, ladies. ;-)

Now for the men:

For overweight men, however, the trend is reversed. Overweight guys tend to earn more than their skinnier colleagues, the study found. Thin guys earned $8,437 less than men of average weight, and they were consistently rewarded for getting heavier. The highest pay point, on average, was reached for guys who weighed a strapping 207 pounds, the Journal said.

Pass the chips, pizza, and cookies, guys!!!!!!! ;-)

So let's put some hard numbers to this. If skinny women really do make $15,572 more per year than even average-weight women, this means that over a 40-year career they earn over $620k more. And if they took that extra money each year and invested it at 8%, they would actually have $4 million more. Yikes!!! Even if this is true only in part (say it's not $15,572 per year but $5,000 per year), the financial implications are still massive.

For guys, the extra $8,437 means $337k more over a working lifetime -- or $2.2 million if invested at 8%. Another pretty good sized financial impact.

A few thoughts from me:

• While I really, really doubt that the difference between an average-weight woman and one who weighs 25 pounds less has that much impact, I think weight does play a role in compensation (and thus finances). Like it or not, attractiveness does factor into how people are paid. And in our culture, "thin" women are deemed to be more attractive on average. It's unfortunate, but I've seen study after study say the same thing, so I think it is true.
• This leads to a basic conclusion: if you're a woman it's especially important to eat well and exercise to watch your weight. Doing so has a big impact on your finances.
• For men AND women, the facts seem to point to us needing to make ourselves as attractive as possible (proper hygiene, dressing well, etc.)
• Is it just me or does "25 pounds less than the group's norm" seem massively low? 25 pounds is not a huge amount for most men, but for women we're talking rail-thin people if they are 25 pounds less than average (unless "average" is 150 pounds for a 5' 4" lady.)
• For men, 207 can mean an overweight slob or a fit guy depending on how tall you are (I'm 200 pounds and 6' 4" and most people would say I'm "thin" -- FYI, I think I'm "average".) So I wonder if much of the impact is felt because taller men get paid more and taller men happen to weigh more.

Anyway, some interesting conclusions. Once again, women seem to get the shaft. Seems like that happens a lot in our culture...

Volunteering Can Help Grow Your Career

Here's a piece that discusses the benefits of volunteering in order to get a job. The summary:

With the average unemployment period now lasting eight-and-a-half months, many job seekers are grappling with ways to meaningfully bridge the gap between being out of work and getting hired, especially young adults who may lack experience. For some, the solution is volunteering. There may be no paycheck, but in some cases it’s proving to be a means to a gainfully employed end.

I love, love, love this idea -- and not only to get a job, but to help advance your career in many different ways. My thoughts:

• Yes, volunteering is a good idea when you're between jobs. You can build valuable skills and avoid the resume-gap problem that so many who are unemployed have to deal with. Certainly you won't want to volunteer so much that it interferes with your job search, but you should be able to do both.
• Volunteering is a great way to get a new/better job even if you are currently employed. This worked for me BIG TIME -- at a time when I really needed a career move. It could hold the same potential for you.
• By volunteering you develop a broader network. And having a great network is key to growing your career.
• Personally, I do this by serving on the board of a non-profit organization. I've been president of the board for the past four years of my six years with the board. I not only get to use my skills and abilities to help people in need, but I also develop new skills (which help me in my job) and meet a lot of great people (and many of them are very well-connected.) It's a "win" all the way around.

How about you? Do you volunteer in any capacity (or are you thinking of doing so)?

Getting a Job Offer Right

The Wall Street Journal suggests what to do when you receive a written job offer but it's different (not as good) than what you were promised verbally. They say you should first get things straight by asking for an explanation and then working on a compromise (if the issue isn't simply an error on their part.)

Here's my take on the whole issue:

• It really depends on how major the difference is. If it's not that big of a deal to you, I'd bring up the issue and try to get something I really wanted out of it. For instance, I'd trade an executive golf club membership for an extra week of vacation.
• If it's a major sticking point, I wouldn't accept the position until it got sorted out. For example, let's say they promised you a 15% bonus and the letter now says 5%. That's big money over the course of a career and worth fighting for IMO (after all, they promised it, so it shouldn't be much of a fight.) But if they insist that 5% was all they could offer despite having promised 15%, I'd seriously consider not taking the job. If they're already ripping you off before you're even hired, what will it be like once you're employed by the company?
• GET EVERYTHING IN WRITING. Once it's settled, get a new, written document that details the revised agreement. This is VERY important. I won't tell the story again, but getting an offer in writing several years ago earned me five figures (plus set the stage for bigger bonus opportunities in future jobs). If you want details, click on the preceding link.

Anyone out there ever received a written job offer that was different than what they'd promised you? What did you do and how did it turn out?

Making Your Career Reputation

The book The New Job Security, Revised: The 5 Best Strategies for Taking Control of Your Career talks about how we all need to make our career reputations what we want them to be (reflecting positively on us) instead of simply letting them happen. To do this, the author offers five main avenues for developing your reputation as follows:

• Executing your job well -- Delivery is job one.
• Connecting with external groups such as professional and industry associations -- Your external reputation is not only instrumental in case you ever want to make changes in your work, but it also builds your reputation internally.
• Writing and publishing -- Getting your name out there in a positive way can lead to consulting jobs, speaking engagements, etc., that may or may not have anything to do with your primary job. In this economy, it never hurts to develop a side profile that can lead to other opportunities if something happens to your primary job.
• Speaking and teaching -- Do either or both. There are always small groups, including nonprofits, that are looking for content for meetings, not to mention learning needs within your own company, so come up with three engaging subjects that you would present and start talking about the topics to pique people's curiosity.
• Networking -- Network internally and externally by helping others.

Lots to say on this one. Here goes:

• Having a good reputation is a key part of marketing yourself. And marketing yourself is vital to career success.
• I have got to agree that you MUST deliver results if you want to build your reputation. Do all the others and DON'T deliver results, and you're sunk. Deliver only results and do nothing else, you're still in good shape. (Of course if you do them all, you're in REALLY good shape.) I would go one step beyond "deliver results" though and say you need to over-deliver versus the expectations for your job. 
• I've had past success by combining #2, #3, and #4. At one point in my career, I was very active in the main industry association. I made speeches at their convention, served on committees, and wrote articles for their magazine. In addition, I wrote for another industry publication that was even more visible and respected. The combination of these efforts resulted in just what the author says above -- an enhanced reputation both inside and outside the company. This led to a promotion and some raises inside the company and the receiving of a career award (one I didn't even have to apply for) outside the company. In addition, my company received a prestigious award from the association and I was viewed as being a major contributor to us getting it. All this AND I made some good coin on the side (the publications paid me for writing those articles). I then used this experience to start writing personal finance pieces and getting paid for them as well. The rest is history... ;-)
• "It never hurts to develop a side profile that can lead to other opportunities if something happens to your primary job." So true. Now I have a writing skill/background that I can turn to in case I ever get fired or laid off. No, it won't take the place of my current job, but it will help cushion the blow of a job loss at least a little bit.
• I've started to speak on personal finances in my hometown. In 2010 I will have given five different speeches of 30 to 40 minutes in length. I don't know where it all will lead, but it can't hurt, can it? If nothing else I'll learn to be a better speaker -- a skill that can be valuable in almost any job.
• I've thought about volunteering at the local high school and helping to teach either personal finance or marketing (my work background/experience.) Not sure I can find the time now, but it's something I'd like to do in the future.
• What can I say about networking that I haven't already said in How Networking in Your Office Can Help Your Career, Three Rules of Networking, and My Networking Plan?
• Many (if not all) of the tips above require extra effort (and some demand a lot of it.) Most people won't want to take the time and energy to do these things, so they don't. But if you go the extra mile and do them, you'll be rewarded.

Anyone else have anything to add?

Warning Signs of Career Obsolescence

The book The New Job Security, Revised: The 5 Best Strategies for Taking Control of Your Career lists the following warning signs that your career may becoming obsolete (increasingly unemployable):

• Not knowing your strengths -- Can you communicate your value clearly?

• Complacency -- Habit and repetition become the norm rather than pushing the envelope.

• Isolation from outside networks -- The more you feel secure because you have been at a company a long time, and the more you neglect your connections with the outside world, the less secure you actually are.

• Losing confidence -- Ragged edges (poor tone in conversation, bad body language, stopping exercising, poor haircuts, etc.) can send the wrong signal about your confidence level.

A few thoughts on these:

• These four are so dangerous because they mess with your #1 financial asset. Ignoring them could cost you a boatload of money.

• These are very, very easy to fall into. In fact, they often happen very slowly, over a course of time, and make such simple, small inroads into your life that you barely notice them. Simply reading the list and seeing the explanation of them challenged be to shake off the complacency and isolation that have been creeping into my own career.

• I would add "staleness" to this list and define it as "if you're not advancing your skills, you're falling behind." If you know the same information and have the same abilities you had five years ago, you are in a world of hurt because time (and the rest of the world) has been marching on. You need to keep advancing in your skills, abilities, knowledge, and other aspects of your job just to remain afloat. And if you want to progress, you REALLY need to develop additional skills.

Anyone out there dealing with any of these issues? Or perhaps you're taking steps to ensure they don't impact your career?

Do You Ask Anyone How Much Money They Make?

Yahoo lists three rude money questions that pay to ask, but it's the first one I want to discuss. A summary of their thoughts:

How much do you make?

It’s one of the boldest questions you can ask in our professional culture. But it can be the most rewarding. If you’re looking to break into a new industry, salary information from a friend in the field is more useful than any published statistic. You get the benefit of knowing her career trajectory, her responsibilities and the specifics of her employer. While blurring the friendship line with work talk can be daunting, asking a peer to be a mentor will facilitate full disclosure.

But the real high-stakes game of truth or dare is sharing salary specifics with a co-worker. It’s awkward, paranoia-inducing and the answer can be hard to stomach. But the benefits can’t be underestimated. If you’re feeling undervalued at work, finding out about a colleague’s salary can serve as hard evidence or surprising consolation. The knowledge can also promote confidence come time for raise and salary negotiations. “With an average inflation rate of 3 percent, you need to make sure that your salary is keeping up with the changing value of the dollar,” says Von Tobel, whose site covers salary negotiation tactics. “Not talking about money benefits your boss far more than it benefits you.”

Personally, I don't ask anyone what they make. Of course I wonder and can guess, but I consider it rude to outright ask.

I don't know what my parents make, I don't know what my friends make, and I don't know what my co-workers make. I do know what one family member makes, but that's simply because she got a great promotion and pay increase a couple years ago -- almost doubled her salary.

And I certainly don't see a lot of benefit in asking people what they earn.

Perhaps I'm wrong and Yahoo is right. Either way, I thought it would make an interesting conversation.

So, do you ask people what they make? Who do you ask? And do you tell others what you make?

The Five Best Strategies for Achieving the New Job Security

I'm reading the book The New Job Security, Revised: The 5 Best Strategies for Taking Control of Your Career and am really liking it. Here's how they describe "the new job security":

The New Job Security is a work agreement that you make with yourself. You consciously decide to take the initiative in your work life, to set your own course for your current employment and future alternatives. No, this doesn't mean that you're going to tell your boss what to do and tell everybody else to get out of the way. It does mean that you will have your own professional goals and fallback plan. You decide how you're going to play to win, and you tweak your strategy according to the cards you are dealt. As you transfer the control of your job security to yourself, you'll develop an overall strategy to help you get what you want from your work. You'll learn how to develop a demand for your services, either at your current company or a new one, so you will always have choices. You'll identify goals and the skills that you'll need to reach them. You'll develop backup plans to help you conquer the challenges that will inevitably appear. Anticipating change and being ahead of the game, positioned where you want to be before shifts in the economy or company occur, will keep you vital. Watch out world: you're taking control and you're going to make a difference.

Now you can see why I like this book so much! Here are a few comments from me on this subject:

• As I talk about regularly, your career is your #1 financial asset. So I LOVE the "take control of your career and make the most of it" mentality that this book starts with.
• "You will have your own professional goals and fallback plan." Two great things we all need to consider/develop: the goals for our career and what "Plan B" is in case things go south.
• IMO most career success can be attributed to over-performing versus your job expectations. Do this consistently over your working lifetime and you'll do very well indeed.

The book then goes into what the author calls the five best strategies for achieving the new job security. They are (along with my paraphrase description of each):

• Send clear signals -- Send the right messages out (to employers, potential employers, co-workers, etc.) that show you're a valuable employee who can deliver results.
• Market for mutual benefit -- Deliver what your employer wants (results) and you'll get what you want (raises, promotions, etc.)
• Stop looking for jobs -- Focus instead on tracking employer needs (and filling them), helping others, and developing your own skills and abilities.
• Build sustainable networks -- Develop an ever-expanding group of contacts inside and outside your company to work with on mutually beneficial career-related efforts.
• Negotiate in round rooms -- Don't back yourself into a corner when negotiating pay raises and salaries for new positions.

Hard to argue with anything here, huh? When it comes down to it, the author is talking about developing a comprehensive plan to market yourself in order that you make the most of your career. And you do this by positioning yourself as a solution for your employer's (or potential employer's) challenges. Good stuff IMO!!!!

I'll be covering the highlights of this book over the next week or two (plus have a guest post from the book's author!), so stay tuned. You're sure to learn a few more tips for making the most of your #1 financial asset.

Jewish Thoughts on Wealth: Gain Knowledge

For those of you new to Free Money Finance, I post on The Bible and Money every Sunday. Here's why.

In my Sunday posts we're currently digging into the book The Jewish Phenomenon: Seven Keys to the Enduring Wealth of a People. It notes that Jews are disproportionately wealthy and accomplished and much of this success is due to seven keys which can be traced to the teachings of the Jewish faith.

Today we're going to talk about one of the "seven keys to Jewish success" that the authors list: understanding that real wealth is portable; it's knowledge. (BTW, this "key" goes nicely with "key" #3: successful people are professionals and entrepreneurs.)

This whole chapter is an ode to higher education. The authors detail much of the information that we go over regularly here at Free Money Finance, in particular how much more those with a bachelor's degree earn over a lifetime versus those with no college education (and the more education, the better -- in general.) They also give statistics on Jewish higher education (from a 1990 study, so it is a bit dated):

87 percent of college-age Jews were enrolled in college versus 40 percent for non-Jews.

So, more education (in general) leads to a higher income and Jews have more education than average. Hence, Jews have more income than average.

Now of course we know that a higher income doesn't necessarily lead to greater wealth (they could spend all of their higher income), but it certainly helps. Plus, we'll see in a later post that Jews also have a good handle on controlling their spending. And we all know that a high income with an ability to control spending are keys to becoming wealthy.

The book goes on to list six ways we all can use what the Jews do in this "key" to the economic advantage of our kids. They suggest:

1. Build your child's self-esteem.
2. Build the ability to defer gratification.
3. Choose the best education possible.
4. Develop and demonstrate informed and literate habits.
5. Create the education expectation.
6. Keep your skills up to date (as an adult).

I would agree with most of these. The one I might take issue with is #3. I think you want to get the education that costs you the least and still gets you the job/pay you want. I've seen too many studies that say the "best" schools don't really end up getting you much for the extra cost. And I've also seen way too many people with enormous amounts of debt because they "had to" go to "the best" school. There's no such thing as "the best" school IMO.

Any thoughts to add?

Are Tattoos at Work Really That Acceptable?

MSNBC says that tattoos are becoming more acceptable for potential employees. Their thoughts:

While more than 14.5 million Americans are out of work, tattoos are becoming less of an obstacle to finding employment, according to a Challenger Gray Christmas report released earlier this week.

Tattooing has become so common employers are increasingly forced to choose between rejecting inked employees or having a severely limited job candidate pool, said John A. Challenger, CEO of the outplacement firm.

“Today, even in this tight job market, most companies are not going to view tattoos too harshly,” he said. “One reason is that with everyone from soccer moms to MIT computer science graduates sporting tattoos, preconceptions about tattooed individuals are no longer valid. Secondly, and more importantly, companies have a vested interest in hiring the most qualified candidate.”

Human resource workers have been seeing more job applicants with tattoos, including more with prominent art placement such as on the face, said Sue Murphy, association manager for the National Human Resources Association.

Tattoo-friendliness often depends on the position, employer and industry the worker is in, she said. Employees having frequent face time with customers are more likely to be forced to cover up than those working a cubicle desk position, according to Murphy.

Here are my thoughts on this issue:

• These two set of comments don't make sense to me:

• "While more than 14.5 million Americans are out of work" and "this tight job market"
• "Tattooing has become so common employers are increasingly forced to choose between rejecting inked employees or having a severely limited job candidate pool."

It seems to me that employers can be as picky as they want to be these days. No?

• "Preconceptions about tattooed individuals are no longer valid." Really? Most of the people I know (in middle to upper management) might not think tattoos reflect gang activity or biker stereotypes, but most would say they do hint at poor judgment. Why? Because most (not all mind you) employers and most (not all mind you) hiring managers are more conservative/older, and this group generally frowns on tattoos in my experience.
• "Human resource workers have been seeing more job applicants with tattoos, including more with prominent art placement such as on the face." On the face? Really? To me, that's the kiss of death.
• "Tattoo-friendliness often depends on the position, employer and industry the worker is in." I agree. And while it may be more acceptable these days to have a tattoo, I think the percent of employers and hiring managers willing to overlook them is still small.
• Here's my question: in today's tough job market, why make it tougher on yourself by getting a tattoo? For the same business reasons that I wouldn't get a nose ring or paint my hair blue, I wouldn't get a tattoo. Why make life harder on yourself -- especially when you're putting your #1 financial asset (your career) at risk?
• Here's my advice: don't get a tattoo. If you MUST get one, put it somewhere easily concealable -- on a spot where you normally would wear clothing in a work setting.

Maybe I'm just showing my age. What's your take on the issue?

Seven Ways to Ruin Your Resume

Yahoo lists seven ways to ruin your resume as follows

1. Apply for a job for which you are not remotely qualified
2. Include a lofty mission statement
3. Use one generic resume for every job listing
4. Make recruiters or hiring managers guess how exactly you can help their client
5. Don’t explain how past experience translates to a new position
6. Don’t include a cover letter with your resume
7. Be careless with details

Here's my take on these:

1. I wouldn't totally agree. Sure, if you're a janitor you shouldn't apply for a position as a brain surgeon, but I think it's ok to submit your resume for a position that "requires" 10 years of experience if you only have seven or eight years -- AS LONG AS you have a reason/justification for why you can do the job without the requirement. As I noted in How to Get a Career Award, stretching a bit to get a job can have a major, positive impact on your career.

2. I hate all mission statements personally and I never use them. I think it's understood what my mission is -- to do this job and to do it amazingly well. As a hiring manager, I ignore mission statements for the same reason.

3. I don't use multiple resumes. Instead, I decide the type of position I want, then I develop one well-crafted resume that is designed to sell myself for that sort of position. If I was applying to be an engineer at one company and a salesman at another, then I would have different resumes. But since I know what field I want to be in, one will do (and has for 20 years.)

4. Agree 100%! You should tell them how you can help the company and back up your claims with example after example of how you've been able to do the same for other employers.

5. I'm not sure what this means. Surely it doesn't suggest that you ignore past accomplishments to demonstrate how well you can perform in the new job, right? I don't think it does (based on reading the article), but it's not clear. I think they would have been better served to leave this point out.

6. You have to introduce your resume in some way, so I think a cover letter is required.

7. Your resume needs to be free from errors. If you're shoddy with it, the employer will think you're probably shoddy in your work habits.

Do you have anything to add?

How to Be the Team Member Everyone Wants

Alexandra Levit tells how to be the team member everyone wants as follows:

• Be good at my job
• Be well networked
• Be a problem-solver
• Be willing to get my hands dirty
• Be respectful

It's a pretty good list IMO. Here's my (a bit shorter) list of how to be successful in your career:

• Deliver results 
• Be likeable
• Have a few, key traits that can grow your career no matter what field you're in

If you do these, you will be positioned to grow your career and potentially earn millions more than you would without them.

Agree or disagree?

Are You Marketing Yourself?

If you've read Free Money Finance for more than two seconds you've probably heard me say that your career is your most important financial asset. I've also noted the steps you should take to grow your career (see posts in my career sections prior to 2008, for 2008, for 2009, and for 2010 for details) including the fact that you should be regularly marketing yourself as part of your plan to develop your career.

This last point was recently covered by Seth Godin when he said that self marketing might be the most important kind of marketing. His thoughts:

What story do you tell yourself about yourself?

Do you have an elevator pitch that reminds you that you're a struggling fraud, certain to be caught and destined to fail? Are you marketing a perspective and an attitude of generosity? When you talk to yourself, what do you say?

You've learned through experience that frequency works. That minds can be changed. That powerful stories have impact.

I guess, then, the challenge is to use those very same tools on yourself.

It's an interesting concept -- marketing yourself -- and one that needs to be thought about and implemented if you want to make the most of your career.

Here's the (somewhat ideal) way to deliver on what he's talking about IMO:

1. Develop a 30-second brand statement (a "promise" of what you do/are). Here's an example of one (it needs some word-smithing, but I'm writing to demonstrate a point here. If you were to have a brand statement, you'd need to spend a good amount of time and effort on it):

I'm a marketing executive that delivers results for my company. I balance creativity with critical thinking to develop new and profitable programs. I combine these with judgment developed through two decades of business experiences and accomplishments. I am always on the lookout for ideas to benefit my company and deliver value. As a co-worker, I am known for both my competence and likeability. My peers, subordinates, and superiors respect my opinion and enjoy working with me.

Notice this is not necessarily what you are doing now, but it's an ideal you're shooting for.

2. Once you have the brand statement, list the actions you're taking to deliver it. There's a lot promised in the example above, and to deliver on it the owner will need to come up with some great ideas, handle himself in a certain way on a daily basis, and so on. Write down what your "deliverables" are and what specific steps you're talking to make them happen.

3. Be sure your statement and your actions are in line with what your employer wants/expects from you. If they aren't, you'll be wasting your time and effort. So if they don't match what your employer demands, you'll either need to change them or find a new job.

4. Check yourself along the way. Have regular intervals (weekly, monthly, quarterly) where you evaluate yourself compared to your ideals. Are you delivering or not? What changes do you need to make to be sure you are on track? Adjust accordingly.

If you take these steps (or anything even remotely close to them), my experience is that your career will thrive, you will advance much faster than the normal employee, and your compensation will be much greater than those of the masses as well. In addition, you'll likely be happier and more satisfied with your career.

So, what are you doing to market yourself?

How Going the Extra Mile Can Pay Off

When I detailed how I turned a career award into a big career boost, I left out one important item -- the fact that it took a lot of extra effort to apply for the award and I was highly tempted to let the opportunity pass.

The application was long and difficult to fill out. It was several pages, required charts/data to back up my claims, and needed to be written in a concise yet clear manner (in other words, I was going to have to write and re-write a few times.) As you might imagine, applying for awards was not part of my job description, so if I wanted to submit my accomplishments I had to do it on my own time.

And that's when I found myself on a beautiful Sunday afternoon, sitting at my kitchen table with four or five hours of work ahead of me for an award I thought I had little chance of getting. I was within an inch of forgetting it and going outside to enjoy my day.

But something made me keep going. Perhaps it was a drive to succeed, the thought that maybe I could win, or simply pure stubbornness. Whatever it was, it kept me going through the hours of writing and data collection needed to complete a winning proposal. It wasn't easy -- I wanted to quit several times along the way -- but I persevered. And eventually I reaped big rewards for it.

I wonder how my life and career would be different if I hadn't gone the extra mile to do this. Or what if someone else who was better qualified had gone through instead of giving up as I wanted to do? How would each of our lives have been different? It's an interesting question.

This whole topic was brought up a couple weeks ago when a friend of mine told me he had just made the Law Review at his school. He had barely missed making it based on grades (you had to be in the top 5% to automatically get in -- he's in the top 10%), but he had the chance to try and "write in" -- submitting a long (20 pages), detailed legal piece that demonstrated what he had to offer the Review. The question was, would he do it?

Imagine the situation he and others found themselves in: They had just completed a grueling first year of law school. They had just completed their arduous final exams and projects. They had a summer of rest and internships ahead of them -- plenty of other things to consider and deal with. Some of them (including my friend) had families who they probably hadn't seen much in the past months. How easy would it have been to blow off the written application and move on to the next phase of life? Pretty stinking easy.

And I'm guessing that's what most people did. My friend didn't tell me how many people took up the challenge, but it probably wasn't many. Why would I reach this conclusion? Look at the situation. How many would persevere and voluntarily subject themselves to such a tough task considering what they had just gone through and what they were about to experience? Not many.

But my friend did. He fought the same demons I did those many years ago, completed the project, and was accepted to the Law Review. No one knows yet how this will impact his career, but it's a pretty solid guess that it will be a major, positive contribution -- at least in getting him to the next level. He'll have an advantage over other graduates that could result in a higher starting salary, a better job, a more sought-after employer, etc. In other words, it's likely he'll jump-start his career from the get-go. And starting off on such a positive note is a great way to supercharge your career (and thus your income.) It's not much of a stretch to think that this one move could end up reaping him hundreds of thousands of dollars in extra income over the course of his career.

He has the potential to reap this reward because he kept at an unpleasant task, fought through the temptation to ditch it, and went the extra mile. Was it worth it? Time will tell. But my guess is that it will be well worth it. Did it look like it was worth it before he went through the process? Maybe, maybe not. But he kept going on and that short period of struggle will now likely benefit him for the rest of his career.

So, consider this a reminder that going the extra mile to do what others won't do can pay off big for your career. What similar opportunities like this do you have in your life? What's keeping you from seizing them?

Five Tips When Starting a New Job

The summer edition of the Charles Schwab On Investing magazine lists the following five tips when starting a new job:

1. Sign up for your employer's 401k.
2. Make every effort to rebuild your emergency savings (if you drew them down while unemployed.)
3. Reassess your budget.
4. Claim the right number of withholding allowances.
5. Take full advantage of health and life insurance plans.

My thoughts on these:

1. Of course! Never pass up free money (assuming your employer offers a match.) I've been contributing the maximum to my 401k for over 15 years now and it's a major source of our net worth.

2. Your emergency fund is your first line of defense against having to borrow. ALWAYS be sure it is fully funded (and re-funded asap if drawn down.)

3. Hopefully you'll be making more money at your new job. If so, it's a great time to refigure/readjust your budget.

4. This is a moving target for those of us who may or may not receive annual bonuses, but do the best you can to come out even at the end of the year.

5. I'd add disability benefits to the list as well, though fewer and fewer employers are offering this benefit (or at least it seems so to me.)

One BIG thing I'd add here: hit the ground running to make sure you're moving your career forward as quickly as possible. This means laying the groundwork for your next raise NOW, so when time comes for the next promotion or annual bump in pay, you're ready to make a big jump.

You Don't Have to Earn a Very High Income to Be Wealthy, But It Helps

Later on in the book Stop Acting Rich: ...And Start Living Like A Real Millionaire the author makes a point about a group of millionaires who didn't have to earn a high income in order to become wealthy. He talks about millionaires who live in homes worth $400,000 or less (91% report they are extremely happy with life) and has this to say about them:

Most of the people who make up this low-profile millionaire segment never earned very high incomes. In fact, the median household annual realized income (from all sources) of this group was $113,334 at the time they first reached millionaire status. However, most people will never earn enough money to become wealthy and to be hyperconsumers at the same time. Do you want to become wealthy? If you do, you might want to follow the ways and means of this affluent group.

He goes on to say that the key to becoming wealthy is, as you might guess, spending less than you earn.

A few thoughts here:

• While it's not a fortune, $113k is nothing to sneeze at either. It's way more than most people earn.
• That said, the income certainly isn't "very high" as he notes in his first sentence. In addition, this is the income these millionaires had when they first became millionaires. This means (most likely) that they had salaries that were below this level that got them to millionaire status.
• Still, it's likely they had "good" salaries for much of the time on the road to millionaire-ville. That's why we not only need to keep spending under control but also make the most of our careers -- so we can maximize income. Yes, you can become a millionaire while you make $40,000 a year, or $60,000 a year, or $80,000 a year. But it's easier to do so if you make $120,000 a year, $150,000 a year, or $200,000 a year, right?
• Let's look at an example. If you earn $50,000 a year and save/invest $5,000 a year (using the "pay yourself first"/save 10% of your income guidelines) and it grows at 8% per year, you'll be a millionaire in 36 years. Looking at these numbers, you can see how someone making $75,000 then $90,000 then $113,334 a year could become wealthy well before 36 years, especially if that savings is matched in whole or part by something like an employer's 401k program.

How are you doing on the road to becoming a millionaire?

No One Cares About Your Career Like You Do

Here's a comment left on my post titled "Advice for Graduates" that I thought was worth sharing with all of you:

My advice would be this (I am 4 years removed from college, and learned this lesson all of five days ago).

Your employer does not give a (bleep) about you. They might say they do, but they don't. If there is a decision to be made, your personal well-being will not be taken into consideration.

Case in point - for the first 3 years out of college, I was working for a large regional bank, making decent money, good job security, well thought of within the company. 6 months ago, a smaller bank which I interned for during college came knocking. Offered me a nice promotion with more responsibility. My only hesitation was that the bank was family owned, so I was concerned about it being acquired by another large bank (exactly what I was trying to get away from). I was assured by my future boss that this would never happen, because the bank had been in their family since before 1900 - they would never sell.

Fast forward 6 months (to last Thursday). I am informed that the bank has been sold to a large bank, all the insider family members have received large, long term contracts. As for the rest of the employees, they have no idea if we will be kept, and they don't really seem to care.

Lesson is: Look out for yourself, because it is highly doubtful that anyone else really cares about you or your career.

If they tell you they do, look them in the eye, and (respectfully) say, (bleep).

I wanted to share this for one reason: to emphasize the point that no one cares about your career like you do. Sure, you may have friends, mentors, sympathetic owners, and the like, but ultimately YOU need to care for and manage your career yourself. Why? Because they aren't feeding your family on your salary -- you are.

This means you need to have a good back-up plan in case things go south -- which they can quickly no matter how solid you think your position/company is. Even if you have someone in the organization who's willing to "protect you", they might not be able to under certain circumstances (a family problem, them getting fired, a take-over, etc.) That's why a key part of making the most of your career is making sure you plan for the contingency of being fired and/or the company going under.

I'll be writing more about this topic in the future, but for now wanted to share this comment as a warning/something for all of us to think about. 

How to Go from a Two-Person to One-Person Income

In June I detailed the author who quit her job to stay home with her kids (and I've been posting suggestions from her book rather frequently since then.) It's an interesting topic -- and one that apparently several people are dealing with.

This post from the Wall Street Journal highlights the author's friend, a woman who is in the process of transitioning from working to staying home with her kids. A few of the details:

The family relied on her income– even though much of it went to pay the nanny, the money made things like trips to see family and eating out an easy possibility.

But she says she’d felt the pull to stay home and her heart wasn’t in the work anymore. It felt wasteful to spend so much on a nanny for a career she no longer loved. So she and her husband went over their finances and decided that if they dipped into their savings and cut back their spending, they could pay off much of their debt and live on one income–even if it would be tight.

She’s nervous about the decision, of course, and wonders if she’ll go bonkers at home or miss having an office.

And just to show that many people deal with this issue, the Journal also includes the following:

According to a recent white paper published by Ad Age on working women, almost 65% of working women said they would rather stay home with their families full-time if it were financially possible.

Here are my thoughts/comments on how to move from a two-person family income to a one-person income:

1. Realize that the person moving home will save a ton of money on work-related expenses. In particular, child-care costs a fortune these days, so eliminating it alone is a huge step in making up the lost income. In addition, there are several more costs of working that will go away with the job loss. That said, there will be some added costs as well -- like home utilities which will likely be used more with more people home more often -- but these will be a fraction of what's saved.

2. In addition to the work savings, the person at home can focus on saving money other ways. He/she will have more time to shop and take the steps needed to be more frugal. I suggest reading Miserly Moms: Living Well on Less in a Tough Economy where the author went through the same process, and ended up saving her income when all was said and done.

3. The person at home can do some part-time work if need be. For instance, he/she could watch one other child and instead of paying child care costs, he/she could turn them into a source of earnings. Or if that won't work, perhaps the web offers a solution. There seems to be a long list of ways to make money online these days. In short, there are numerous ways you can make an extra side income. And having a part-time work oulet can help negate the "bonkers" issue the lady above is afraid of.

4. If the working spouse works at it, he/she should be able to make up the difference (or a good part of it) in shortfall over time. This is another reason I constantly harp on how your income is your most important financial asset and how you need to take steps to make the most of it. Doing so gives you a whole lot more flexibility.

5. And speaking of flexibility, if you have very little debt (or none at all) you have MUCH more flexibility in deciding if and when to go to one income. My guess is that a good portion of those 65% who would rather be at home but aren't could move home if they didn't have so much debt.

Anything I missed? Anyone out there gone from a two-person to a one-person income? What tips do you have for the rest of us?

The Costs of Working

As I detailed awhile ago, the author of Miserly Moms: Living Well on Less in a Tough Economy found that she saved a TON of money when she stopped working. It wasn't as much as she lost in salary mind you, but it's not inconsequential. She says that "financial experts have calculated the cost of working at anywhere from nine to thirty-five dollars per hour."

Here are some of the extra costs associated with having a job that went into these experts' calculations:

• Child care
• Taxes (local, federal, state)
• Commuting fees (tolls, parking, etc.)
• Gasoline and mileage
• Car insurance (extra car, nicer car for the job, higher mileage, etc.)
• Clothes (new clothes, accessories, etc.)
• Gifts for co-workers
• Fast-food lunches and breakfasts out
• Convenience foods at home
• Extra eating out
• Occasional housekeeping help

The author calculate her cost of working (this was in 1991, so the numbers are probably higher now) as $915 per month. Ouch! She combined these savings with other measures she took to cut costs (mostly food-related) to save $1,510 per month (or $18,120 per year.) Doing these things allowed her to quit her job and stay at home (which is what she wanted to do.)

She says that what those figures mean to her is that she would lose the first $18,000 of her salary if she went back to work. I'm not so sure about that. The $915 per month would be lost, but she could still take many of the money-saving steps she does now (she says they take her only seven hours per week, so she could fit them in with a job too.)

The point is that when you earn a salary, that's not anywhere close to what you take home. You have taxes (of course!) and a host of other costs that eat into your earnings. And that eating is pretty significant.

We have several friends who work at jobs where the income is not that high. And yet they pay for child care, taxes, extra car expenses, and so on. My guess is that when all is said and done, they work for 1/3 of their paycheck or so. Ugh.

What's your take on this issue?

The Top Ten Worst-Paying College Degrees

Yahoo lists the top 10 worst-paying college degrees as follows:

10. Drama (starting annual salary: $35,600; mid-career annual salary: $56,600)
9. Fine arts (starting annual salary: $35,800; mid-career annual salary: $56,300)
8. Hospitality and tourism (starting annual salary: $37,000; mid-career annual salary: $54,300)
7. Education (starting annual salary: $36,200; mid-career annual salary: $54,100)
6. Horticulture (starting annual salary: $37,200; mid-career annual salary: $53,400)
5. Spanish (starting annual salary: $35,600; mid-career annual salary: $52,600)
4. Music (starting annual salary: $34,000; mid-career annual salary: $52,000)
3. Theology (starting annual salary: $34,800; mid-career annual salary: $51,500)
2. Elementary education (starting annual salary: $33,000; mid-career annual salary: $42,400)
1. Social work (starting annual salary: $33,400; mid-career annual salary: $41,600)

Consider this the supreme "do not borrow a ton of money to get one of these degrees" list. If you do, you could be in big trouble financially -- stuck with huge college loans and no real way to pay them back.

On the other hand, here are five degrees that have great returns on investment. These are much more worth borrowing to obtain (though I still recommend to keep borrowing as low as possible.)

And I'm not saying you should get a degree in a field you hate simply because it will help you earn more money. I'm simply pointing out that college costs should be in line with the expected income you hope to receive during your career. So it's probably not a great idea to borrow $100,000 to get a degree in social work, but it could be ok to borrow that much to get an MBA. Though again, I'd suggest you do all you can to minimize your college debt no matter what degree you get. That's what I did -- and it's worked out well for me so far.

Three Steps to See If You're Ready for Early Retirement

A reader writes in to CNN Money with the following situation:

• He's 50 years old
• He "absolutely hates" his job (it's stressful, requires long hours and he has a tough boss.)
• He has about $1.6 million dollars saved.
• The only debt he has is a mortgage on his house that equates to less than half its value
• He also leads a very frugal lifestyle.
• He's wondering if he can retire early.

The columnist is wise in counseling him to be VERY careful before jumping off the career track. After all, your career is your most valuable financial asset, so letting go of it is a very big financial move (and potentially disastrous.) In addition, there are several costs/challenges associated with retiring anytime and retiring early makes these even more difficult. Here's how Money says it:

Before you leave you want to be sure that you're prepared. Otherwise, you could find yourself in the uncomfortable position of having left work without adequate resources to support yourself only to realize that finding another job with comparable pay and benefits may be harder than you think, especially when you're 50 or older.

This isn't a decision you want to make on impulse, no matter how much you may detest your job. Step back and do a clear-eyed and methodical analysis of whether you're prepared to retire.

I couldn't agree more. Retirement at 65 with $3 million in the bank isn't an easy decision. Retiring at 50 with $1.6 million plus some debt is a HUGE move.

Here are the three steps Money suggests he take to determine whether or not he's ready to retire:

1. Do a status report. What really matters is whether the savings you've accumulated can provide what you feel you'll need to maintain an acceptable standard of living. The only way to really know is to crunch the numbers.

2. Make an exit plan. If, after going through the analysis above, you find that leaving your job at age 50 wouldn't give you the comfort level you need, the single most effective thing you can do is continue to work and save. Each year you stay on the job gives your $1.6 mill a chance to grow, and you also get to fatten your retirement accounts with new contributions (up to $22,000 this year in a 401(k) and up to $6,000 to an IRA, if you're 50 or older).

First consider whether you could improve your situation by holding out a bit longer. Maybe you've got stock options that will vest. Or perhaps working an extra year or two could mean a larger pension. Maybe there's the chance your company could downsize, in which case you could collect a nice severance package. The point is that you don't want to leave any easy money behind by making too hasty an exit.

3. Make an entrance plan. Here, I'm talking about a plan for entering retirement. You'll boost your odds of having a fulfilling retirement if you think about how you're actually going to live once you leave the workaday world.

Overall, it's pretty good advice. But I'd offer a few more options including:

• How about looking for another job? I've had jobs I've absolutely hated. Twice I worked in them for two years (each) while I looked for a better opportunity, and each time I found a much better option.
• What about finding another position in the same company? That would get him out of the "bad job" and "bad boss" messes.
• How about finding a part-time (or maybe "easier" full-time) job so that he won't need to draw on his savings much (or at all.) Perhaps he can now do something he's always wanted to do and take a pay cut to do it. It would be better than having no income at all and would give him a chance to get rid of his mortgage debt.
• He needs to think whether or not he's really ready for retirement. At 50 he's still got a lot of life left ahead of him -- is he really going to be satisfied being retired? Maybe, maybe not. But he really needs to think it over.

My sense is that he has a job that he hates and is desperate to get out of it. But if he takes some of the steps I suggest above, it's likely he can find a job he likes and keep working. Then he can build his nest egg, pay off his debt and still retire early (7 to 10 years from now) with a boatload of money in the bank.

What do you think about the situation? What would you advise him to do?

How to Prepare for a Performance Review

The following is reprinted, with permission of the publisher, from The Essential Performance Review Handbook: A Quick and Handy Resource For Any Manager or HR Professional © 2010 Sharon Armstrong. Published by Career Press, Pompton Plains, NJ. All rights reserved.

Know your employee or your supervisor. If you’re an employee whose supervisor doesn’t often open the door, take the initiative yourself and make an appointment to talk to him or her periodically. Angst comes when the performance review is the single time, or just one of few times, that supervisors and employees sit down together during the year. One organization asked its employees to complete the appraisal form themselves—in the third person. The employees felt duped, believing that their supervisors didn’t care enough to even fill out the form. Optimally, a performance evaluation wraps up a series of informal discussions held throughout the year, serving as a springboard to move forward with new ideas, improved performance, and perhaps more responsibility.

Knowing your supervisor or employee means being better able to anticipate his or her reaction to your comments, and then “managing” your responses to generate positive results. Managers’ effectiveness is significantly influenced by insight into their own work. Those who can be introspective about their work are likely to be effective at their jobs. Employees seek not just success but also gratification.

Demonstrate respect and confidentiality. How, when, and even whether appraisals are conducted send a strong message. When a supervisor delays appraisals, does them on the fly, allows interruptions during the review session, doesn’t have paperwork complete, or generally doesn’t demonstrate that the evaluation is a priority, an employee may feel that he or she isn’t, either. If an employee shows up late, participates only half-heartedly, takes no initiative in goal-setting and sits waiting only for compensation information, the supervisor concludes that he or she doesn’t care about doing the job well or improving. Respectful interaction during the appraisal reflects the quality of day-to-day work life. Setting aside sufficient uninterrupted time, in a private setting, is key. Confidentiality is, too. Only those with a need to know should be privy to the conversation or the form.

Don’t prejudge. Our first impressions of others are automatic, largely unnoticed by our conscious minds. Past experiences, needs and wishes, and assumptions about the context in which we encounter new people all greatly influence what information we absorb and how we interpret it. Research indicates that even after months of regular interaction roughly two-thirds of our first impressions remain unchanged. The hiring process alone does not give supervisors and employees the opportunity to know each other well, and upfront impressions can be frozen or misplaced without continuing, two-way feedback.

Keep messages clear and direct. Know when something needs to be said; then, based on solidly documented examples, make sure you relay it accurately. Never assume that supervisors or employees know what you think, want, or need. Not being direct can be costly. Hints are often misinterpreted or ignored. Keeping messages clear depends on awareness, knowing what you have observed, and knowing how you have reacted to it, especially since what we see and hear externally is so easily confused with what we think and feel inside. Separating these elements will go a long way toward communicating clearly and directly.

A straight message is one in which the stated purpose is identical with the real purpose of communication. Disguised intentions and hidden agendas are manipulative. Check whether your messages are straight by asking:

• Why am I saying this to this person?
• Is this what I want him or her to hear, or something else?

You’ll know quickly whether the points you’re highlighting need to be clarified, strengthened or scrapped.

Review job description. Make sure there is a written job description and that it’s accurate and up-to-date. If not, the supervisor should write one, with input from the employee, before the formal evaluation session so it can be discussed and used for the next review cycle. Along with goals, the job description is a key basis for gauging performance effectiveness and for ensuring that organizational and departmental needs, and supervisor and employee expectations, are on the same track. Perhaps new responsibilities have been added over the review cycle, or there’s interest in adding them. There may be recent team or work group initiatives that should be integrated. Perhaps there is a community liaison role that has not been acknowledged. Employees are the people most aware of on-the-job responsibilities that are not in their job descriptions. Making sure they’re included helps measure employee workloads and assess the need to develop new skills for performing new tasks.

Track performance year-round. Keep a folder handy to toss in quick notes as the year progresses—including positive observations, others’ feedback, memos, award notices, e-mails, and other items that pertain to work performance. It’s important to keep the folder active, not just one you dust off yearly.  Use it as a basis for regular ongoing discussion. Doing this may seem time-consuming, but it’s much easier, more productive, and more fair than having to draw on your memory once a year. An appraisal at the end of a work cycle works much better as a recap with recognition, or as an opportunity to stimulate improvement plans, than as a surprise that can make both supervisors and employees uncomfortable. Not having specific examples to support your ratings can lead to the legal problems noted in Chapter 8.

Stay up-to-date on organizational goals. Know what’s going on in your organization. Effectively tying job description and goals to broader needs requires a good grasp of organizational direction and changes. Be prepared to factor what is newly needed and/or desired into ongoing responsibilities. When supervisors don’t share information with staff, misinformation flies freely and morale can plummet. Employees should feel comfortable asking questions and offering to pitch in on new initiatives, even if supervisors seldom initiate discussion.

Consider the ground rules. If you’re a supervisor, should there be ground rules for performance reviews? Does your organization mandate any? If not, perhaps it should. Ground rules might cover ensuring two-way conversation, setting guidelines for goal-setting and problem-solving, applying techniques to stay on track, developing standards for addressing conflict, and delaying talk about compensation for a timely follow-up session.

If you’re an employee being appraised, the ground rules are more informal but nonetheless important—and up to you to implement. The most productive appraisals are clear, open two-way discussions. Honesty and clarity, bolstered by written examples, are fair expectations, but may require some added determination if your work climate does not readily invite openness.

Follow up promptly with compensation discussion. Thoughts about compensation inevitably shadow the appraisal session. That should come after the appraisal, whether or not during the same session. This precludes the tendency of employees to bring up examples of stellar performance and explain away anything that might take away from a raise. The meeting can turn into a battle of explanation and defense rather than an open discussion of performance and how it can be improved. 

Sidebar: Preparation Pays Off

Make sure to review:

• Your organization’s strategic plan.
• Updated job description.
• Evaluation form/rating structure.
• Previous performance appraisal.
• Personnel file documentation.
• Goals for current review cycle.
• Preliminary appraisal recommendations --positive and/or negative aspects.
• Documented examples, including letters of praise and award information.
• As needed, suggestions for improvement, such as training, Performance Improvement Plan.
• List of questions.
• Anticipated reaction and how to best respond.

How I Transformed My $45,000 Income into a Six-Figure Income

The following is a guest post written by FMF reader Nate. He left a comment on a recent post saying an FMF piece had encouraged him to start working on growing his career/income. He said he was on the verge of making a six-figure income (from $45k) after only a few months of putting my advice into action. I asked him to write a guest post and he agreed.

The FMF article, Five Steps to Six Figures in Seven Years stirred up a burning desire from within me to increase my income.  This article pushed me to set some pretty unrealistic (or so I thought) goals!

I have always been attracted to the idea of Financial Independence (Financial Peace).  I wanted the ability to provide a good life for my future family and help others around me in a very intentional way. I wanted the ability to quit my job… or lose my job… or create my own job, without worrying how I would pay the bills next month.  I discovered that the only tried and true method to accomplish this was to increase my income as rapidly as possible and not give all of that income away to expenses. In other words: live below my means.

At 24 years of age I decided I wanted to transform my $45,000 a year income into a 6 figure income by the time I turned 30.   I looked at the FMF article and started checking off the 5 steps required to attain a 6 figure income:

Step one: Get a high-earning degree from a good school

I had earned several bachelor’s degrees in IT and business (real estate finance and entrepreneurship) from the University of South Carolina.  Check!

Step two: Work for a name-brand employer at your first job

I worked for a large name-brand insurance company for 2 years straight out of college.  Check!

Step three: Perform

I was performing like a super star! NO I WASN’T! I actually was simply doing a good job. I was coming in at 8:30AM and staying until 4:30PM, Monday-Friday; doing everything that was asked of me in-between. 

I considered myself indispensible simply because I was good at what I was doing – and both my employer and I knew that they were getting my labor for a discounted rate.

So… half-check!

Step four: Manage your career aggressively

I wasn’t doing this as well as I thought I was at the time… Looking back on the situation, I was passively maintaining my career.

Step five: Have some luck

I have never believed in luck as people perceive it to be.  I knew that luck was when relentless preparation and skills meets the right opportunity.  I just wasn’t preparing nor positioning myself to snatch the right opportunity. At least not for a 6 FIGURE opportunity…

No check

Turning things around

I had some work to do!  I desperately needed to work on steps 3, 4 and 5 if I had a fighting chance of reaching my goal. I decided I needed to open a new business...  A great business that would give me 6 figure income potential.  I just couldn’t decide what kind of business I wanted to run. I realized I needed to start selling myself (not in a creepy way)!

Me Inc. was in business. I only needed one client who was willing to purchase my product (i.e. my employer, or possibly another employer).

A snapshot of the kinds of things I have done over the past year in pursuit of a 6 figure income:

• I married a fantastic woman (shout out to my Stephy poo!) who has supported me and pushed me to do whatever I felt necessary to win for our family.

• I began reading lots of books on leadership, teamwork, influence, career building etc.

• I actively managed my online presence (Facebook etc.). Because we all know employers look at your online presence now – it doesn’t matter if you think you are only sharing information with friends and family. My new employer aggressively vetted my online identity.

• We (my wife and I) learned how to manage money like our lives depended on it (frugal, saving, investing etc.). We built up a 6 month emergency fund (on my $45,000 income). This actually gave me the confidence to begin taking chances at work – and ultimately switch jobs (paying for all the moving expenses with cash).

• I built a credit score of over 800 – very important for any possible future job switches.

• I learned how to write a fantastic resume.

• I took on VERY high profile projects that I would have historically just casually participated in or taken orders from someone else. I worked extremely hard to exceed every deadline/responsibility I was given. I made my company tons of money in very visible ways. I also worked to save them as much money as possible. A big win here was assisting my company win a multi-million dollar contract with our largest client, with whom I had developed an outstanding relationship. I kept records of the contributions I was making (even if it was on a scratch piece of paper I threw in the office after working really late).

• I invested in relationships with people (a lot!!!). I began connecting with people in dynamic and substantial ways. They started trusting me. They started listening to me. They started reporting to me. I started networking very, very aggressively. I wasn’t simply trying to suck resources and favors out of other people. On the contrary, I focused on injecting as much value into my relationships with friends, family, co-workers and professional acquaintances as possible. I became obsessed with creating win-win situations. One of my major successes in the relationships department was befriending a VP (and later the Sr. VP) of the company I now work for.

Reaching the goal!

Nearly a year has gone by since I started outperforming at work, managing my career aggressively and preparing for the right opportunity (luck) that would lead me to a 6-figure income before I turned 30.

Two months ago I was pursued by a VP from a small/midsized IT company that had been paying attention to the valuable work I had been diligently producing for the large insurance company I had been working for.  They made me an offer for close to 6 figures with a sizable end of year bonus.  We also make about $12,000 a year in income from our rental property.

I should also mention that I make a decent side income (couple thousand dollars a year) buying things from garage sales, auctions, estate sales, friends, family and strangers and reselling them.  My wife and I go out and look for deals as a hobby.  I almost exclusively look for items that have an immediate ROI (I just purchased a computer for $5 and resold the next day for $225.00).  My wife on the other hand looks for clothes, accessories, jewelry, books, appliances and decorations etc.  She saves us tons of money by making these purchases tax free for pennies on the dollar as opposed to purchasing items at full retail.

Armed with my new salary + end of year bonus + rental income + resale of assets purchased at a discount, we are on track to making well over 6 figures this year.

WOOHOOOOO!!!!!!!!!  Live like no one else so that later you get to LIVEEEEEEE like no one else!!!!!!!!!

The Seven Pillars of Financial Success, Pillar 2: Grow Your Career

For those of you new to Free Money Finance, I post on The Bible and Money every Sunday. Here's why.

The Bible discusses the keys to personal finance success quite plainly. If you read the book of Proverbs in particular, you'll see that the path to financial success isn't that difficult or extensive. In fact, the wisdom to be prosperous can be found in a few simple steps.

Over the next few weeks, I'll be sharing what I consider to be the seven pillars of financial success from the Bible.  I picked up on the number seven from Proverbs 9:1 where it says:

Wisdom has built her house; she has hewn out its seven pillars.

Today we'll be discussing Pillar #2: Grow your career.

In Proverbs 22:29 (New Living Translation), the Bible says:

Do you see any truly competent workers? They will serve kings rather than working for ordinary people.

Here's what I take away from this verse:

• People who are competent at their jobs will advance (they will serve the top levels in their fields -- presidents, CEOs, etc.)
• I think we all know that the people who "serve kings" today make more money than those who work for "ordinary people." (BTW, I'm not saying that "regular people" can't/don't have successful businesses/people making a lot of money working for them. Certainly many small business operators are "below the radar" and yet are quite wealthy and have highly-paid employees. But I think the Bible is talking about average-earning/performing people/businesses when it says "ordinary people.")

Your career is your most valuable financial asset and what you do with it either makes it more or less valuable. If you do nothing, simply "go with the flow" at work, and are passive in managing your career, you won't make the most of it by any means. On the other hand, if you work your career to make the most of it, you could earn much, much more over the course of your working career. The difference between the two can be millions of dollars which can obviously make a gigantic difference in your overall financial situation. This is why growing your career is Pillar #2 of being successful financially.

So, what do you need to do to make the most of your career? Here are a few suggestions:

1. Work to over-deliver against expectations so that you deserve regular, above-average raises and promotions. Doing this can deliver steady pay growth throughout a career.

2. In addition to over-delivering, develop a long-term plan to increase your pay.

3. Ask for raises when you don't get the increase you deserve.

If you do these you can get regular pay increases in any economy.

Do you agree or disagree?

Come back next week as I discuss Pillar #3!

The Eight Money Ratios, Part 3

The book Your Money Ratios: 8 Simple Tools for Financial Security lists eight money ratios that are designed to help us all determine where we stand financially. They're so good that the Wall Street Journal called them "some of the best tools we have seen for gauging where you stand." So I thought I'd list each of them as well as tell you where I stand on each measure. This is part three of the series and covers ratios #5 and #6. (FYI, here are #1 and #2 and here are #3 and #4).

The Investment Ratio

I've posted on this ratio previously and it generated quite a bit of discussion. But before we get to that, let's review the guidelines the author gives for this ratio. Here's how he says investors should allocate their assets between stocks and bonds at various ages:

Here is the Investment Ratio (for various ages):

• 25 years old -- 50% in stocks, 50% in bonds
• 30 years old -- 50% in stocks, 50% in bonds
• 35 years old -- 50% in stocks, 50% in bonds
• 40 years old -- 50% in stocks, 50% in bonds
• 45 years old -- 50% in stocks, 50% in bonds
• 50 years old -- 50% in stocks, 50% in bonds
• 55 years old -- 50% in stocks, 50% in bonds
• 60 years old -- 40% in stocks, 60% in bonds
• 65 years old -- 40% in stocks, 60% in bonds

The general backlash from the previous post was that these ratios are waaaaaay too conservative. Here's a general sense -- not his exact words, but a summary of what he covers over several pages -- of the reasons the author provides these guidelines:

• The greatest risk an investor faces when investing is losing a good part of his investment.

• Bonds are designed to protect you on the downside -- to minimize your losses in case the market goes bad.

• Hence you need to have a good amount of bonds to keep your portfolio safe and protected from market drops.

Again, that's my short summary of what he gets at.

Personally, I don't buy it and I'm willing to take on more risk in hopes for a better return (BTW, there's a risk of being left behind in a bull market, and bonds can certainly be a drag on returns during those times.) I'm about 75% in stocks (domestic and international stock index funds) and the rest in bonds or cash.

The Disability Insurance Ratio

The sixth ratio is the disability insurance ratio and is designed to make sure you have the proper amount of disability insurance for your income at various ages. Here are the ratios he recommends:

• Age 25 to 55: A disability policy that replaces 60% of your income
• Age 60: A disability policy that replaces 40% of your income
• Age 65: No disability policy needed

I'm all set here. Several years ago I bought a disability policy that replaces 60% of my income. It's pricey ($3k per year) but it protects my #1 financial asset, which is pretty valuable after all, so I think it's worth it.

So what do you think of these ratios -- good or not so good? And where do you stand compared to them?

Have You Ever Asked for a Raise?

This piece from Jean Chatzky shares some data on how many men and women actually ask for raises:

The Sheconomics research noted that in the past six months one-third of the men surveyed had asked for a raise. Fewer than one-quarter of the women had done the same.

That's a lot higher than I would have guessed. After all, I think if you're taking the steps needed to make the most of your career you won't have to ask for a raise that often -- you'll simply get it because of your good performance. My guesstimate of how many times you will actually need to ask for a raise during your career is probably three or four times over 40 or 45 years. That's it. But these numbers imply that people are asking much more frequently than that. Good for them.

Personally, I've only had to ask for a raise one time in my career (if you don't count the times I've asked for more money when given a job offer -- I ALWAYS ask for more then). In the late 90’s, the company I worked for went through a reorganization. I was promoted and given a significant increase in responsibility. My boss at that time (the CEO of the company) wanted me to assume the extra duties without any increase in pay.

It was a rough time for the company -- we were letting a good number of people go -- and I debated asking for more money or not. On one hand, I was lucky to be promoted in an environment where so many didn't have a job. On the other hand, I would be doing much more work and if I didn't get a raise now, I probably never would (companies don't seem to remember a year later that you passed on a raise at one point.)

I brought up the subject of how I was doing more work for the company (more than what two people used to do) as well as had much more responsibility. I said I wanted to be compensated for it. He was reluctant to offer me more and at first declined. But I persisted and eventually got a nice pay raise -- more than I expected and more than what I would have accepted. Good thing too since increases were a bit low for the next year and a half or so.

How about you -- have any of you ever had to ask for a raise? How did it go? What worked for you and what do you wish you'd done differently?

What to Do If Your Boss Is the Problem

The Wall Street Journal gives some advice on what to do if you have a difficult boss who is making your life miserable. A few of their suggestions:

• Cool down. If you've had a disagreement, sit on it for a couple of days.
• Go to the source. Employment experts say talking with your boss is usually the best way to solve a problem.
• Find allies. If it seems reasonable, consider talking to another manager within the organization who you trust.
• Seek outside help. If these tactics don't work, seek guidance from the company human-resources department.
• Grin and bear it. If it's critical to your career to simply put up with the boss, try to make the best of the situation.
• Walk away. If nothing else has helped, consider asking for a transfer to another department.

I've had my share of bad bosses and bad work situations (for specifics, see My Jobs, Introduction to the Real World, My Jobs, Working for a Maniac, My Jobs, The Dream Job Turns into a Nightmare, and My Jobs, The Blame's on Me.) I've also been a boss and had to deal with people who saw me as the problem. So I know a bit about what I'm talking about in the comments to follow.

Of course, it all depends on the severity of the situation. Everyone has disagreements now and then and minor ones with your boss can usually be handled by the first couple suggestions above. Ideas #3 and #4 are a bit riskier -- especially anytime you get "human resources" involved. My experience shows that unless the boss has had other complaints or there's some legal issue involved, then they usually "side" with the boss (and if a legal issue does exist, like sexual harassment, they oftentimes side with the boss even more strongly.)

If the situation is really bad, there's really only one thing to do: prepare to leave. Do NOT quit your job if you don't have a new one yet. Doing so is playing with fire and could endanger your #1 financial asset. Instead, tough out the current position and crank up the job-hunting process to full-speed. This is what I did (a couple times) -- taking two years to find a better spot each time -- and what I recommend for others (if you want details, check out What I'd Do with a High-Paying, Unrewarding Job.)

Don't leave for the first job you're offered, either. You want to leave for a better place, a good place, and you don't want to jump from the frying pan into the fire. Grind out the current job until you find something you really like, then make the move.

Do You Hate Performance Reviews?

Looks like I'm not the only one who hates performance reviews.

Fortunately I now work in a small company where performance reviews are basic and simple, but I sometimes have flashbacks from my past lives at big companies. Getting and giving reviews that HAD to be done and HAD to fit into specific, unrealistic boxes was a time drain and generally not productive for anyone.

Worst of all was having to rank all my employees so the group got an "average" score overall. So if I had several good performers and a couple bozos (which I often did), I had to pull down the rankings for at least some of the high-fliers so my department's total points were "average." Now tell me, do you think those people were motivated after the reviews were given?

I'm not against feedback and helping employees get better. In fact, this process is vital to the way I think people can make the most of their careers. But the institutionalized, protect-the-company-from-lawsuits, stale, and worthless systems that many companies use these days to conduct performance reviews is at worst a waste of time and effort and, more likely, a harm to the company (as it un-motivates some of the strongest workers -- causing them to care less about doing a good job or encouraging them to look for a new spot at another company.)

How about you? Anyone out there like or hate performance reviews? Why?

Another Example of Getting a Raise Despite a Tough Economy

I love real-life stories of people who take basic financial principles, put them into action, and GET RESULTS! I especially like it when they do this in an environment where people say it can't be done -- something like getting a raise in the harsh economic climate we're living through.

I've already detailed two stories along these lines:

• One guy got a raise despite his company not giving out raises. 

• A woman has taken many of the steps I detailed in Making the Most of Your Most Valuable Financial Asset and averaged 12% raises. 

Well, it's a pleasure for me to present another related story to you all. This one was left on my post titled How to Ask for a Raise and goes as follows:

I took the initiative and followed a plan very similar to the post. I took on more responsibility, worked hard and set myself up for a raise. It took me about 6 months of working at it before I asked.

I asked my manager by giving him a detailed explanation of why I deserved such raise, and documented it via email and printed letter (makes it easier for him to forward to his boss). Followed up 2 weeks later and was rewarded with a 16% raise.

I was very satisfied, and the best part is it set the stage for further promotion.

By the way, this happened 3 months ago, so business can give raises during bad economic times. 

16% raise, huh? In a depressed economy. Not bad. Not bad at all...  ;-)

Update: Here's an additional comment (left below) from the reader who initially submitted the story above:

Wow I'm famous. To give the post I left a little more context. I consider myself an above average employee, and happen to work with many people that I feel deserve a little more money. The difference was that I asked for it.

I really feel had I not gone through and systematically followed a plan to get a raise, and simply asked for one, I would not have recieved the results I did. I think it was especially important to give my immediate manager the tools for him to get me the raise within a fairly large company. Example: I proposed two different scenarios in which I'd assume more responsibility to justify the raise. In reality I was already doing the work, but I just made it part of a formal job description. My boss knew I was doing these things, but upper management I'm sure was unaware. My point is make it easy for the people in charge of approving your raise to justify the decision.

I also think it helps that I'm continuously taking opportunities to improve my knowledge in my chosen profession (Wealth Management). Besides having an alphabet soup of industry designations behind my name, including the Certified Financial Planner, I'm also pursuing an MBA at a respected college (85% complete). This continued education really casts me in a good light compared to my peers.

How to Ask for a Raise

If you enjoy this post and would like to receive free, daily suggestions on how to grow your net worth, you can subscribe to Free Money Finance using your feedreader and this link or get daily email updates using this link. 

I've talked about how to make the most of your most valuable financial asset -- your career, getting consistent raises by delivering what your boss wants you to deliver. But sometimes, even when you do more than expected, that raise, promotion, or bonus still doesn’t come. At this point, you need to take the bull by the horns and ask for a raise.

Remember, bosses aren't in the business of handing out large pay increases, even to top performers. They want to get the most work out of employees for the least amount of pay. David Lorenzo, author of Career Intensity, says, “Employers don’t automatically hand out raises these days. Remember that most businesses try to obtain services as inexpensively as possible. This includes labor. Chances are good that sometimes you will only receive more if you ask for it.”

Larry Myler, author of the book Indispensable By Monday says, “The secret is to create unexpected money for your company before you ask for a piece of it back. First increase profits by cutting costs, increasing revenues or boosting productivity. Second, document the financial impact of your actions so your boss can see it in black and white.”

Fortunately, you should already have this handled if you've taken my advice about deserving a raise. So you have the ammunition needed to ask for more money.

Now admittedly, asking for a raise is not a pleasant task, so you need to be prepared to make good use of your "ask time." Here are some steps to take when asking for a raise:

1. Determine your salary rank. Find out how much your position is worth by visiting www.salary.com. They list statistics on average incomes for specific jobs across the country. If your pay is well below average, you’ll want to include this in your discussion since you’ll be an even better candidate for a raise.

2. Pick the right time. Here are some times that are better than most when asking for a raise:

• When business is booming.

• If you’ve played a key role in the company’s success.

• While the next year’s budget is being developed.

• After you’ve received an award.

• After you’ve saved significant money for the firm.

I once had an employee ask me for a raise that amounted to $3,000 per year. Since he’d just developed a simple idea that saved the company $125,000, it was easy for me to grant his request.

• After you’ve agreed to take on additional responsibility.

In the late 90’s, the company I worked for went through a reorganization. I was promoted and given a significant increase in responsibility. My boss at that time (the CEO of the company) wanted me to assume the extra duties without any increase in pay at all. Needless to say, I was not too excited about that, brought up the subject of how I was doing more (more than what two people used to do), and how I wanted to be compensated for it. He was reluctant but eventually agreed to give me a nice pay raise.

3. List your accomplishments. Put both your salary research and accomplishments on paper. The bottom line is creating value for your company. There is almost always a way for a company to reward a star performer. This step should be easy if you’ve been doing the regular updates we discussed earlier.

4. Rehearse. Do not wing it. Practice your presentation aloud until it is smooth and professional. Remember, you are selling yourself, and the more you rehearse, the more confident you’ll be.

You'll want to use your own words, but the gist of what you want to say is this:

• Tell how much you love the company and your job.
• Show how you've been over-delivering in your current position by sharing your accomplishments.
• Ask for an increase in compensation to reflect the additional work you've been doing.

5. Prepare for all reactions.

• If your employer says “yes,” express your thanks.

• If the answer depends on the approval of others, express appreciation for your boss’s support in the matter.

• If the answer is “no,” you might want to suggest other means of compensation, such as more vacation days, flexible hours and the option to telecommute, or ask to reopen negotiations in a few months.

6. Consider other options.

• Sometimes the best way to ask for a raise is to get a promotion and you can use the same steps to ask for a promotion.

• If a raise is denied and you’re underpaid for your contribution, it may be time to update your resume and explore other job opportunities.

7. Begin the process again. When you receive a raise, begin delivering more than expected in the new job and working for the next raise.

Want a couple success stories? Here's one reader who's made the most of her career by working hard at it and asking for raises when needed. Here's another who went above and beyond the call of duty to get a raise even in tough economic times. Finally, here's another one who got a raise (and a good one at that) in a tough economy. 

You can get a raise simply by earning it. But sometimes you have to earn it AND ask for it!

Business Etiquette Common Questions (and Answers!)

The following is an excerpt from Business Etiquette, Third Edition: 101 Ways to Conduct Business with Charm and Savvy. Reprinted, with permission of the publisher, from BUSINESS ETIQUETTE, THIRD EDITION © 2010 Ann Marie Sabath. Published by Career Press, Franklin Lakes, NJ.  800-227-3371.  All rights reserved.

“A handful of action is worth more than a bushel of theory.”—Anonymous

In this section, we’ll take a look at some etiquette problems from the “front lines”—real, live readers of my weekly newspaper column who took the time to contact me about their own etiquette problems at work. The answers to these questions will offer you insight into dealing with some of the more interesting variations on day-to-day business etiquette.

And, by the way, as I mentioned in the Introduction, if you have an etiquette question you’d like me to address, feel free to contact me! I realize that the advice offered in this book can’t supply detailed responses to every possible business etiquette challenge you may face on the job. Let me know about the issues you’re facing at work—and I’ll do my best to find possible solutions.

Tip #112: Help others keep industry jargon to a minimum.

Question: How can I encourage new acquaintances to be more sensitive about the use of insider jargon in social situations? The other day, I was at a professional organization meeting. Several of the people were talking about what was going on in their industry. It was difficult to get involved in the conversation because they all seemed to be speaking their own language—using acronyms that meant a lot to them and nothing to me and the other people at our table.

Answer: While some people may assume that everyone understands their particular abbreviations and industry jargon, others may actually perceive it as a “foreign language.” The next time you find yourself in this type of situation, simply take the plunge and ask the people to assist you by clarifying what the acronyms mean. By requesting clarification, you may heighten their awareness and they may either ask if everyone knows what certain abbreviations or insider talk refers to or refrain from using exclusionary talk during gatherings that include “outsiders.”

Tip #113: Attend to appropriate (female) bathroom issues.

Question: Some women just don’t seem to get it! A company bathroom mirror should not be used for curling hair, plucking eyebrows, admiring oneself, or reapplying perfume. A company bathroom mirror is for freshening up, washing hands, and reapplying lipstick. Where do people get the idea that others who are also using the facility don’t notice these actions? Isn’t this a breach of workplace etiquette?

Answer: Long-term monopolization of public facilities is a breach of etiquette, and don’t let anyone tell you differently. Business and social manners dictate that you avoid excessive primping in public locations. That includes using perfume as though it were insecticide, taking over a sink when others may need the space, brushing or flossing teeth in a conspicuous location, etc. These matters should be attended to in a private area, rather than a frequently visited public bathroom.

Tip #114: Attend to appropriate (male) bathroom issues.

Question: Before I began working for my present company, I thought that all men were taught to respect the “one over rule” when using public rest rooms. In other words, when entering a rest room with three urinals, the first man should use either the first or the third urinal. The second man stepping up should use the urinal that is one over—or two urinals away from the one being used. The only time the center urinal should be used is if it is the only vacant one. Some men seem to have skipped this lesson—and the one dictating that eyes should be kept straight ahead or down. Although this is a rather raw topic, I would be most appreciative if you would address it. Do the rules I mention still apply?

Answer: They certainly sound sensible enough. Everyone needs dignity and privacy. Our private space should be respected—even (perhaps especially) in a public restroom. Until a better set of guidelines comes my way, I’ll wholeheartedly endorse yours. You may have helped to educate a new generation of men on bathroom etiquette!

Tip #115: Be prepared for the “wandering eye.”

Question: At a recent client conference, one of my best clients and I went to dinner. This person threw me for a loop when he expressed his interest in doing more with me than business. He expressed a romantic interest in me! (I’m engaged.) How does one handle such a situation?

Answer: I hope that you let this person know that, although you value him as a client, you are already involved in a healthy personal relationship, and you don’t believe in mixing business with personal matters. Setting limits gently but firmly is your best approach in this sensitive situation.

How does that old saying go? “You don’t get your meat where you get your potatoes.” That’s a colorful way of saying that lots of things can go wrong when people put romance where it doesn’t belong. You can jeopardize your career, start gossip, lose the trust of important higher-ups, cause political problems, or if one of you is married, earn the wrath of a wronged spouse.

One way to avoid being confronted with the awkward situation you describe is to arrange to have a minimum of three people in attendance at future dinner get-togethers. If you had done this, the unwelcome advance almost certainly would never have been made.

Tip #116: Don’t send the wrong message at parties.

Question: I attend many company functions at which the spouses of my clients and colleagues are invited. One of my best clients actually chose to leave our firm and do business with a competitor because he perceived me as flirting with his spouse at our holiday gathering! (In fact, I wasn’t flirting with anyone.) How could I have avoided this?

Answer: Natural, enthusiastic, outgoing behavior can be misconstrued as romantic interest in another person. The situation you describe is not at all uncommon. People at parties often try to throw the limelight on the persons they know the least well. This is a fine instinct, but in situations such as the one you describe, it’s not a good idea to pay as much (or more) attention to a spouse when there’s the potential for misinterpretation.

Tip #117: Save the love notes for after hours.

Question: Two unmarried colleagues in our office began a romance. On most fronts, they handled their personal relationship in a very discreet manner. However, they recently committed a faux pas that has made their relationship known to everyone in the company. One of them decided to woo and coo the other by sending a love note on the company e-mail system. The message was mistakenly transmitted to an entire address group! Any thoughts on how this could have been handled better?

Answer: Sure—save the company e-mail system for business use only. Unless you’re looking forward to a dressing down from the CEO, save the wooing and cooing for personal time. And remember, many e-mail systems keep track of every message sent, whether or not the message is regarded as confidential in nature. If you don’t want Mr. or Ms. Bigshot reading the message, don’t send it out on the company e-mail system.

Use business tools for business. Save love letters for after-hours!

Tip #118: Stand tall.

Question: When talking to someone who is confined to a wheelchair, is it appropriate to bend or kneel down to the person’s level?

Answer: No. You shouldn’t bend down to talk to a person who is confined to wheelchair, any more than you would stoop down to talk to someone who is shorter than you.

While we’re on the subject, avoid talking in a demeaning or condescending manner to people who are confined to wheelchairs or who suffer any other disabilities. Physical limitations do not imply reduced mental capacity.

Tip #119: Be card smart.

Question: What, exactly, should I do when someone hands me his or her business card?

Answer: When receiving a business card, look at it for a few seconds. When appropriate, a complimentary word should be said about the person’s title, logo, business card design, etc. The card should be placed either on a table where business is being conducted or in a planner or portfolio. A business card should not be placed in a wallet that is then put in your back pocket.

By the way, anyone who has business cards should not leave home (or the office) without them. Make sure the cards are clean and crisp, without even the slightest smudge or crease. Business contacts can be initiated, and cards exchanged, in some of the most unlikely places. Be prepared!

Tip #120: Give the big cheese the right kind of ride.

Question: How can I make the best impression when picking up a VIP at the airport?

Answer: For starters, make sure your car is immaculately clean—everywhere. Don’t make the mistake one of the readers of my weekly newspaper column made. She was assigned to pick up her boss’s boss at the airport. Recognizing that her car was an “extended office”—and a reflection of herself—she washed it inside and out. Then she made the faux pas: she threw everything from her backseat into the trunk. When it came time to pick up the big boss, it turned out the only place the oversized luggage would fit was (you guessed it) the trunk of the car. She was mortified. Let’s just say this executive’s impression about this lady’s neatness wasn’t as positive as it could have been. An unfinished car cleaning is not enough!

Tip #121: Learn how to work with receptionists.

Question: What is it with some receptionists? When I show up for appointments and give them my name, they inevitably ask, “What was your name again?” Shouldn’t these front-line people be groomed to make better first impressions than that?

Answer: They probably should, however, bear in mind that the receptionist’s job is a difficult and thankless one.

A good receptionist will write down both a caller’s name and a visitor’s name the moment it is said (even if an unconventional name means setting down a phonetic transcription). This strategy allows the receptionist to announce the caller/visitor to the person in the office. It also allows her to be in control of the situation by using the appropriate name.

One way to assist a receptionist in properly announcing you is to have your business card in hand when you approach the reception area. I can assure you that this gesture will be much appreciated by these individuals who must juggle telephone calls and visitors at the same time.

Tip #122: Navigate the “Miss”/“Mrs.”/“Ms.” problem.

Question: When a woman announces herself for an appointment, should she do so using her marital status? And while we’re on the subject, what do I do when I’m introduced to a female client who is of the same generation as my mother? Should I use the person’s first name if the person who introduced us is doing so, or should I refer to her by her last name? If I should use the last name, what do I put in front of it, “Mrs.” or “Ms.”?

Answer: The answer to the first question is a resounding no! It’s tacky for a woman to refer to herself as “Mrs. Jane Smith,” just as it would be inappropriate for a man to announce himself as “Mr. William Jones.” Titles should be used by others, rather than by the person introducing or announcing himself or herself.

When meeting a client who is significantly older than you, address the person by his or her last name even if your colleague is on a first-name basis with the person. (In the situation you describe, you should use “Ms.” before the last name unless you’re instructed to do otherwise.) If the person wants you to address him or her using a first name, you will be told. Remember, you can never get into trouble for being too formal, but you can for being too informal.

Key point summary

• Help new acquaintances to be sensitive about the use of insider jargon in social situations; ask for clarification for the benefit of any outsiders who may be present.
• Brush up on (female) bathroom etiquette: avoid monopolizing public spaces.
• Brush up on (male) bathroom etiquette: follow the “one over” rule and respect the privacy of others.
• Be prepared to set limits gently but firmly when a business contact makes inappropriate romantic overtures.
• Be sure you’re sending the right message at parties—focus on both spouses in attendance, not just one.
• Use business tools for business and save love letters for after-hours.
• There’s no need to bend down to talk to a person who is confined to a wheelchair, any more than you would stoop down to talk to someone who is shorter than you.
• Know what to do when someone hands you a business card.
• Make the best possible impression when picking up a VIP at the airport—clean your car thoroughly, including the trunk.
• Treat receptionists with respect and help them out by providing a business card when you approach the reception area.
• Use “Ms.” before a woman’s last name unless you’re instructed to do otherwise.

Opening Moves: Making Initial Encounters Work

The following is an excerpt from Business Etiquette, Third Edition: 101 Ways to Conduct Business with Charm and Savvy. Reprinted, with permission of the publisher, from BUSINESS ETIQUETTE, THIRD EDITION © 2010 Ann Marie Sabath. Published by Career Press, Franklin Lakes, NJ.  800-227-3371.  All rights reserved.

“Civility costs nothing and buys everything.” —Lady Mary Wortley Montagu

Courtesy begins with introductions. If an introduction is mismanaged, there is a strong possibility that the emerging business relationship will also be subject to problems. That is why you must start right away to build a strong foundation for your new business relationships.

It probably comes as no surprise to you to learn that the initial phase of a business relationship can have extraordinary effects on careers—and on whole organizations. But who hasn’t felt at least a little awkward during a business introduction? Fortunately, a few simple principles can have a dramatic, positive effect on the way you meet and greet new business associates. This chapter has eight simple principles that will help you make sure those all-important initial encounters with clients, customers, vendors, and others go as smoothly as they possibly can.

Put the ideas in this chapter into practice, and you’ll have laid the groundwork for managing—and minimizing—any and all future problems. That may seem like an exaggerated claim, but the truth is that business breakthroughs are built on alliances, and alliances are built on relationships. By initiating relationships in the right way, you make later breakthroughs possible!

Tip #1: Make a super first impression.

Just as you often judge other people by the initial impact they have on you, so are you likely to be judged yourself in the first few moments of interacting with someone. Here are some tips for making a great first impression with colleagues and business associates:

• When meeting another person, extend a confident handshake as you make eye contact.
• Eliminate trendy words from your vocabulary. Though modern colloquialisms may be fine on the home front, slang is considered inappropriate in a business environment. Thus, you should avoid a phrase such as “Awesome!” when you mean to say “Great!”
• When you are representing your organization, always carry materials (such as a computer bag, pens, and notepads) that broadcast a “quality” message. Believe it or not, supporting materials are a definite reflection of your style—and your organization’s style. These materials will project an image—positive or negative—of you and your organization.

How to make it easy for others to start a conversation with you

People who have what I call “minglephobia”—a discomfort with initiating small talk at social gatherings—are often “cured” when someone else starts up the discussion. Here’s a simple way to encourage others to launch the conversation at your next cocktail party, office gathering, or business event.

Have you ever entered a room filled with strangers and thought to yourself, “I can’t approach any of these people!”? Guess what? You don’t have to. Rather than wasting time or energy feeling uncomfortable, take control. When you find yourself standing alone, look for the nearest window. No—don’t jump! Simply get yourself a beverage, then stroll over to the window. Rather than looking out the window, stand with your back against it. (Having a glass of something to hold will put you at ease and make you look approachable.)

When others are ready to begin a new conversation, they are more likely to approach individuals like you—people who are standing in front of a source of natural light. It’s true: just as plants bend toward natural light, so do people!

Tip #2: Recognize the importance of greetings before launching into a conversation.

I was on a flight to Bermuda several years ago and was visiting with the passenger seated next to me who was Bermudian. 

Because I am always interested in learning about country-specific cultural nuances, I asked this individual what courtesy faux pas he has observed Americans make when visiting his homeland. Without having to think about it, he responded, “North Americans typically jump into conversation without first beginning a conversation with a greeting such as “good morning,” “good afternoon,” or a “good evening.”

My response to him was, “Wouldn't you think anyone would know that?”

After the flight landed, I went through customs and made my way to baggage. When I saw an individual who appeared to be airport personnel, I said, “Excuse me, can you tell me where I might find a cab stand?” The person responded with, “Good afternoon. You will find a cab stand by going to the lower level and then preceding to door A."

The conversation ended with not only a “thank you” on my part, but also with a sensitization about the importance of first acknowledging individuals with a greeting before launching into a conversation.  Since then, I have found that a simple greeting has been the key to acknowledging others before beginning a conversation. This small detail has gone a long way when greeting others both domestically and internationally. Try it. You will like it and so will others to whom you are asking a question.

Tip #3: Know whom to introduce first.

In most situations, the basics of introductions are easy to master: Mention the name of the higher-status person first. But what if there is no higher-status person? When introducing two clients to each other, both of whom are on the same professional level, whose name should be said first?

I recommended that you say the name of the person you know least well first. By doing this, you will bring that person into the conversation and allow him or her to feel more at ease.

Tip #4: Know the value of a good handshake.

If you have ever had a strong positive or negative reaction to someone based on the firmness or weakness of the person’s handshake, then you already know how important this one small gesture can be. A limp handshake can tag you as someone who is hesitant or lacking in resolution. An overpowering shake can brand you as a manipulator. A sincere, confident grip conveys confidence and authority.

Beware! People from different parts of the country expect a variety of distances between two individuals who are greeting each other. When interacting with contacts from out-of-town, try to let the other person’s “space instincts” guide your approach to the handshake.

Here are a few tips for knowing how to offer a good handshake that also maintains a proper distance:

• Clasp the other person’s palm with your palm, rather than fingers to fingers. Your grip should be firm. Hold someone’s hand too loosely and it’s possible you will earn the dreaded description of being “a dead fish."
• Do not, however, be so firm that you squeeze the other person’s hand too hard. Rather than causing pain of any sort, simply apply a little pressure and then let go. Keep in mind that a handshake is not a contest to see who can grip the hardest. You should match each other, grip for grip.
• Talk to the person whose hand you are shaking; a simple “Nice to meet you” or “Good to see you again” will do.
• If you know the person well and wish to convey additional warmth, then place your free hand on top of the clasped hands or on the other person’s arm or shoulder. However, do not do this if you are meeting somebody for the first time, as such a gesture can be misconstrued as an invasion of territory. If you want to convey a sense of rapport without making the other person uncomfortable, try touching his or her arm between the hand and elbow rather than between the elbow and shoulder.
• As you release the other person’s hand, pause briefly but purposefully before continuing the conversation.

If you are going to another country, try to learn what the customs are there for shaking hands. In some nations it is considered polite to shake upon meeting and leaving; not doing so may give offense. For some, handshakes should be firm, for others they should be aggressive, and for still others, where there is a “caste” system, you should shake hands only with persons of a certain standing. Some countries frown on shaking hands with a member of the opposite sex. Finally, there are some social systems where the greeting is not a handshake but a bow of some sort. The more you learn about the specific customs governing these forms of greeting people, the easier it will be for you to get along, no matter what country you are in. (See the appendix for additional information on international etiquette.)

Tip #5: Manage the unconventional handshake.

When you are about to extend your hand to someone who is unable to offer you a right hand, what should you do? The first rule is—follow the other person’s lead. When dealing with a person whose right hand or arm is clearly disabled, avoid reaching for that hand and pumping it energetically!

Whatever the reason for the other person’s incapacity, you should issue a verbal greeting, pause, and then observe the appropriate body language and act accordingly. In some cases, the person may offer you the left hand. In other instances, the person may initiate a handshake with the right hand. The most important thing in this scenario is to let the other person set the tone.

Tip #6: Turn a social gaffe into a positive experience.

It has happened to all of us. You refer to an important client’s company by his competitor’s name. Or you are giving an important presentation and you make a serious misstatement. Or a gaffe you’ve made is pointed out to you in front of a large group.

Sooner or later, you will find yourself in an embarrassing situation that exposes you to possible ridicule or necessitates some backpedaling. Take heart: you are not alone! Blunders are a part of life. What matters is not that you’ve committed a faux pas (that’s French for “misstep”), but how you handle the mistake.

Think of the situation as though it were a baseball game: an error in the field may put you behind, however, if you keep your composure, you can hit a home run in your very next at-bat and win the game.

Following are some suggested solutions for winning in embarrassing situations.

Tip #7: Don’t say “I’m sorry” automatically.

The next time someone shares constructive (or even other-than-constructive!) criticism, don’t respond with an automatic “I’m sorry.” Instead, consider employing one of the following responses:

• “Thank you for your comment!”
• “Thank you for the feedback!”
• “Thank you—you’ve given me something to think about!”

All of these are, to my way of thinking, much more professional ways of responding than “I’m sorry,” which can come across as emotional and even a bit servile. The phrase “Thank you,” on the other hand, is both appropriate and optimistic, and it reinforces the positive intent of the person who passed along the criticism.

• Explain your faux pas with grace. Rather than getting tongue-tied with apologies, overexplaining, or trying to evade the situation, issue a concise, poised recovery. Acknowledge the misstep. Say you’re sorry—then move on! For example, you may say, “Please accept my apologies for calling you by your competitor’s name.” Then go back to the subject at hand. When it’s over, let it be over!
• Ask for help when it’s needed. So you misstated something or came up blank in an assessment. Turn this to your advantage! It shows maturity to admit you are human; don’t let embarrassment trip you up. For example, you may ask, “Who can help me with that particular figure?”
• Turn the attention elsewhere. The best way to do this is to praise another person. For example, you may say, “It looks like I can take a lesson or two from you!”

Any, repeat any, gaffe can be turned into a positive experience if it’s handled with grace and wit. People remember poise! With the right approach, you won’t be remembered as the person who made that mortifying blunder before a roomful of people. Instead, you’ll be thought of as the person who saved the day with on-your-feet thinking and a great deal of charm!

Tip #8: Handle name lapses gracefully.

It has happened to all of us: somebody comes up to you, greets you by name, and talks at length about how great it is to see you—and you can’t place him in the least. The face may be familiar to you, but the person’s name and the setting where you met eludes you completely. This situation is embarrassing, but also quite common. Believe me, it can be handled with tact and grace.

Rule number one: Do not ask, “Who are you?” Rather, respond in kind and let the person know you are glad to see him/her. One way of refreshing your memory is to ask the person what has been going on since you last talked. His or her response may reveal something (that is, a company, a professional association, or a meeting) that will trigger the memory of how you know this person, and perhaps even his or her name.

If you still can’t remember the person’s name as you are talking, be cordial and simply avoid using a name of any kind. After the conversation has ended, sound out a colleague—or someone else who may have witnessed the meeting—and ask if they can help you to remember the name. (Of course, the other person may realize your predicament and, having been there himself or herself, may willingly—and sensitively—help you out by reminding you of the name.)

When it is finally revealed to you, jot down the name to help you remember it in the future and send the person a note saying that you enjoyed seeing him or her. This gesture will compensate for any discomfort associated with your not using a name when you saw each other last.

How important is taking the effort to get another person’s name right?

Consider the following story. A friend of mine told me of the time he met then-Senator John F. Kennedy. Kennedy was a man who simply refused to say, “I’ve forgotten your name”! The senator approached my friend while they were both in the bathroom and then explained that he’d forgotten the name of someone who was waiting for him at a gathering outside. Did my friend have any ideas? Fortunately, my friend was able to provide the name of the gentleman in question, and the rest of the evening went smoothly for the senator from Massachusetts and his “old acquaintance”!

Here’s another strategy for getting people to reintroduce themselves to you. As the person nears you, simply welcome him or her with a handshake and your name…without saying another word. By simply saying your name after extending your hand, more often than not, the person will reintroduce himself or herself to you. Try it!

Besides helping you to refamiliarize yourself with this person, this strategy will turn what could be an awkward moment an extremely pleasant experience. It will put both you and the person you are meeting at ease. Remember, there’s a chance that this person has forgotten your name!

Tip #9: Use a last name unless invited to do otherwise.

One of the most common business etiquette errors is to address individuals by their first names without the other person’s (stated or implicit) permission to do so. This has become an increasingly common practice in these less formal times. Although many people have no problem moving to a “casual” conversational mode more or less instantly with new acquaintances, this practice is still unacceptable in the minds of many  people in a business setting.

Moving to a first-name basis before the other person is ready to do so is an especially poor policy to pursue during telephone conversations with customers and prospects. Common courtesy dictates that you wait until you are invited to address a telephone contact by his or her first name—especially if the “someone” is an individual you’re speaking to for the very first time. Staying with “Mr./Mrs./Ms. Smith” during phone conversations, until you’re invited to use the first name, is a sound, polite business practice that should be followed at all times.

In other settings, the rule of thumb is a little more complicated. If you are meeting someone for the first time, and the other person is either prominent within his or her field or at least two decades older than you, then you should use “Mr./Mrs./Ms.” and then the last name. (In other words, even though Phil Mickelson may be younger than you are, you should address him as Mr. Mickelson; even though Bert Rodriguez, the elderly man who delivers your mail, is not the head of the U.S. Postal Service, you should address him as Mr. Rodriguez.)

Whatever you do, refrain from asking someone permission to use a first name. Use the last name until you are directed to do otherwise. If the person wants you to move to this level of familiarity, rest assured that you’ll hear about it!

Tip #10: Negotiate business card exchanges flawlessly.

During a first-time meeting, you may, as a general rule, request a business card from the other person—provided that you’ve offered your own card first. One exception: If the person you’re speaking with is of significantly higher status (say, more than one level above your position), you should wait for the person to offer you his or her card, rather than ask for one. (If the senior person wants you to have a card, it will be offered to you!) Bear in mind that the more seasoned a businessperson is, the less likely he or she will be to distribute business cards or to ask for them.

You should give only one business card to your contact—rather than leaving two or three. Your contact may interpret this gesture as a request from you to “broker your service.” Tacky! Keep the emphasis on person-to-person contact.

Tip #11: Use two hands when offering and receiving items.

The second thing that people notice about you, after your facial gestures, are your hands.  Both the gestures that you make with your hands and the way your nails are maintained tell others a lot about you.

It is common knowledge that when someone is making a recommendation directly to you, your arms should be open rather than crossed.  When you are talking with others, one way to be perceived as giving your full attention is by keeping your hands in front of you rather than behind your back. (Note: The only time it is more appropriate to keep your hands behind your back is when you are interacting with individuals of British influence.)

A common faux pas that business people make is unknowingly looking lackadaisical or disinterest when giving and receiving items, whether it be paperwork in a meeting setting, or food during a business or social meal. Instead, two hands should be used when giving and receiving items from others.

Although this ritual began in Japan with the business card exchange, it has become both a business and social form of body language. The reason? Using both hands is an acknowledgement that you are giving your full attention to the person with whom the exchange is being made.

By offering items with both hands, you also are making a point of creating a social exchange.  The accepted norm globally is for items to be given directly to individuals, rather than placed on a table so that the person receiving it has then to lift the item.

The next time you go to a bank, give your deposit slip directly to the customer service representative using both hands. In turn, note if you are handed your receipt with one or two hands or if it is placed on the counter for you to pick up. If you are offered the receipt with both hands, I assure you that you will be quite impressed, because you will interpret this action as the person giving you 100 percent of his/her attention.

Key point summary

• Make a powerful, positive first impression: establish appropriate eye contact, avoid colloquialisms and slang, and have the right “support materials” at hand.
• Know who should be introduced first.
• Avoid offering a limp handshake; make sure your grip is confident and appropriate to the situation.
• Manage unconventional handshake situations by following the other person’s lead.
• Remember that you can use social missteps as an opportunity to display grace, wit, and poise.
• Never ask “Who are you?” Find creative ways to determine the names of people to whom you’ve been introduced.
• Don’t use the person’s first name unless you’re invited to do so.
• Present a single business card; follow the lead of a higher-ranking person, rather than asking for his or her business card.

Where the Jobs Are Now

The following is an excerpt from Where the Jobs Are Now: The Fastest-Growing Industries and How to Break Into Them.

Maybe there was a time when you could post your résumé on Monster.com and sit back and wait for the offers to come flooding in, but that time is long gone. In today’s economic climate, that’s like waiting for the job fairy to come and tap you on the head with a magic wand. Well, guess what? There is no job fairy. That’s what I call a reality-based wake-up call, and one I’ve repeated time and time again to the thousands of people I’ve spoken to as a career coach and strategic advisor. What it means is, you can’t afford to be passive and wait around for the jobs to come back, because a lot of them won’t. It’s time to take control of your career again.

The way to take control is to go where the growth is. It’s not hopeless out there, even though it feels like it sometimes. There are choices you can make that will improve your situation. They may be tough choices, but whoever said the important things in life are easy?

It’s not just that the growth industries are the only ones that are still standing strong amid the rubble of the recession. There are other benefits to working at a growth industry, too. Chief among them is the fact that you are far more likely to have a positive employment experience at a business that’s part of a growing field instead of a shrinking one. Workers are more likely to receive raises and promotions, because when a business grows, employers need more workers to step up and fill the higher jobs. Similarly, workers in growth industries are more likely to have better, more robust benefits packages available to them, as well as perks like subsidized gym membership and transportation reimbursement plans. It’s not like anyone’s desperately trying to quit Google, right? Nor am I seeing any health-care workers fleeing through the doors of Mount Sinai Hospital.

People want to stay employed in growth industries because, by its very definition, working in a growth industry is better than working anywhere else, and that inevitably leads to a happier, more productive career.

Think of your career as if it were a business. You don’t see any businesses out there spending all their time trying to find the customers with no money, or who have so little money that they can’t spend it on that business’s products, do you? Of course not. A company like that wouldn’t last two seconds. Instead, businesses know they need to target customers who’ve got the money to spend. There’s no reason you shouldn’t treat your career the same way. Why chase a job in a shrinking industry, where benefits packages are being cut and there’s no room for advancement, when you can go where the growth opportunities are instead?

The industries that are still hiring are the ones that weren’t hit all that hard to begin with, namely, the service industries. According to the BLS, service occupations are projected to have the largest number of total job openings, 12.2 million by 2016, with 60 percent of those openings coming from worker replacement needs alone as the baby-boomer generation heads toward retirement. Just take a look at the job growth numbers for the 18 highlighted in this book and you’ll see what I’m talking about:

• Health care. 21.7 percent, or 3,000,000 new jobs created by 2016—the number one fastest growing industry in the nation
• Biotechnology. 24 percent, or 48,000 new jobs created by 2016
• Education. 3.5 percent, or 479,000 new jobs created by 2016
• Green energy. 25 percent, or up to 5,000,000 new jobs created by 2020
• Government. 4.8 percent, or nearly 1,000,000 new jobs created by 2016—the nation’s largest employer
• Security. Hundreds of thousands of new jobs created by 2016 in both government and the private sector, including even more in classified departments and agencies whose numbers aren’t made public
• Information technology. 24 percent, or 872,000 new jobs created by 2016
• Entrepreneurship. 6 million new businesses a year, 26 percent of the workforce turning to freelance and contract work, and independent niche consulting growing by 5.9 percent
• Accounting. 15 percent annually over the next decade, or 150,000 new jobs created every year
• Customer service. 25 percent, or 545,000 new jobs created by 2016
• Dental hygiene. 30 percent, or 50,000 new jobs created by 2016
• Engineering. A collective 11 percent, or 160,000 new jobs created by 2016
• Finance. 41 percent growth in personal financial advisors, or 72,000 new jobs created by 2016, and 34 percent growth in financial analysts, or 75,000 new jobs
• Firefighting. 12 percent, or 43,000 new jobs created by 2016
• Insurance. 7.4 percent, or 148,000 new jobs created by 2016
• Law. 11 percent growth in attorneys, or 84,000 new jobs created by 2016, and 22 percent growth in paralegals, or 53,000 new jobs
• Social work. A collective 22 percent, or 132,000 new jobs created by 2016
• Veterinary medicine. 35 percent growth in veterinarians, or 22,000 new jobs created by 2016, and 41 percent in vet techs, or 29,000 new jobs

It’s easy to get overwhelmed by all the doom-and-gloom numbers being reported in the news every day. It’s also easy to get overwhelmed when presented with a multitude of career options like the ones you’ll find in this book. So it’s important to remember amid all the noise and numbers that, in the end, you’re only looking for one job.

Yours.

How to Make the Most of Your Career

In a few weeks I'll be speaking on "how to make the most of your career" to several hundred people. I want to give them tips on how they can grow their careers and get better than average raises over the course of their working lives. I'm going to focus on "how to grow in your career" versus "how to get a new job", so the resume/interviewing tips will be limited (if shared at all.) Having said that, here's my list so far:

• Work so you deserve a raise
• Ask for raises
• Seize promotions
• Network inside and outside your company
• Take challenging, high-profile projects your have a good chance of succeeding with
• Transfer companies when need be
• Get involved in your community (volunteer, join organizations) -- a different way to network
• Become certified/get extra training
• Keep educating yourself
• Have a positive attitude

See any here that should not be on my list? Anything to add?

Specifically, if you had to name the seven best ways to grow your career, what would they be?

How Not to Act Old in an Interview

This piece from CBS MoneyWatch made me chuckle. It tells older workers looking for a job how not to act/appear to be old to younger hiring managers. They list 11 tips in all including:

1. Don’t play the wisdom card
2. Drop the corporate formality
3. Stay away from the slang
4. Don’t be an ageist
5. Drop the name-dropping
6. Stifle the unsolicited advice
7. Don’t get too personal
8. Nix the negativity
9. Delete the jokes about how flummoxed you are by technology
10. Don’t smirk at the vision thing
11. Don’t fear the niceties

It's a strange world out there sometimes, isn't it? A 50-year-old being hired by a 25-year-old used to be very rare. Now there are 25-year-olds that OWN successful companies, and a ton more that hire workers of all ages. I guess being in such a position is akin to dating again after being married for such a long period of time (and not being married all of a sudden for whatever reason) -- it all just seems so foreign.

Remember, to be successful at getting a new job you need to market yourself correctly. And by "correctly" (in this case) I mean you don't want to appear stodgy, out-of-date, out-of-touch, feeble, like someone's mom/dad, and so on. None of those will help you get the job you want (and thus, that's why you need to avoid the list above). Instead, you want to appear capable with a long list of accomplishments that show you can deliver for your potential employer.

Anyone ever been in this position -- either as the job seeker or the hiring manager? Any good war stories for the rest of us?

Top Tools for Analyzing Your Salary

The following is a guest post by Raine Parker, who writes about online accounting degree programs. I like this post because it gives resources that tie in nicely to point #4 in my post titled How to Demonstrate that You Deserve a Raise.

We'd all like surprise salary increases and monthly bonuses, but the truth is, our experience, education and work ethic contribute only so much to our employers' bottom line. If you'd like a raise, you're going to have to argue your case effectively, being prepared to cite statistics and compare your job level to similar positions in your area. Keep reading for the best tools to help you analyze your salary and find out how much you're really worth, professionally speaking.

• Salary.com: Salary.com is one of the most popular salary tools on the web. For personal use, you can type in your job position or description and zip code, select your experience level, and access a free base salary report. Salary.com also offers an education analytics tool, which compares your education level with others in your field.
• SalaryExpert: Here is another salary calculator that relies on job title and zip code to evaluate your potential earnings. You'll also find a cost of living calculator and executive salary calculator on the site.
• New York Times Salary Comparison and Salary Calculator: Use the NYT's tool by selecting a job category and a zip code or metropolitan area. Results include a listing of job titles within the job category and are similar to Salary.com's reports.
• Cost of living calculator: Find out what you would need to make in a different city in order to retain your current lifestyle. Powered by CNNMoney.com, this tool will show you the price difference of housing, utilities, transportation, groceries and health care between two cities.
• BLR Salary Search: BLR offers a salary search tool for employees and job seekers and one for employers and human resources professionals. Each features free reports once you select your field, job title and state, and enter your email address.
• PayScale: PayScale is another popular salary research tool that also helps you analyze raises and job offers. You can also compare current and projected salary information.
• How Much Should You Charge for Your Services?: NOLO's feature walks independent contractors through the process of figuring out what to charge for their services, taking into consideration travel expenses, profit margin, business insurance, postage costs, accounting fees and more.
• Bureau of Labor Statistics Occupational Outlook Handbook: BLS.gov publishes web guides for all sorts of industries and professions, including expected education levels and salary potential. Keep in mind some of the information is outdated but should be reconfigured after the census reports.

Warren Buffett on the Best Investment You Can Make

The following is a guest post by Rich Avery from Life Compass Blog.

Warren Buffett, one of American’s wealthiest people, is famously followed for his investing views and strategies.  And why not?  As chairman of Berkshire Hathaway, Buffett has led his company, through acquisitions and investments, to exponential growth.  A $1,000 investment in Berkshire Hathaway in 1959 is worth $25 million today!

And yet Buffet, known as the “Oracle of Omaha,” is now talking about an investment that is even greater.  During the Q&A session at Berkshire Hathaway’s annual meeting in 2008, Buffett said:

The most important investment you can make is in yourself. Very few people get anything like their potential horsepower translated into the actual horsepower of their output in life. Potential exceeds realization for many people…The best asset is your own self. You can become to an enormous degree the person you want to be.

In an ABC news interview in July of 2009, when asked whether it is still important for families to send their children to college or higher learning, Buffett said:

Generally speaking, investing in yourself is the best thing you can do.  Anything that improves your own talents; nobody can tax it or take it away from you.  They can run up huge deficits and the dollar can become worth far less.  You can have all kinds of things happen.  But if you’ve got talent yourself, and you’ve maximized your talent, you’ve got a tremendous asset that can return ten-fold. 

He went on to say that he doesn’t mean that everyone should go to college.  And he added that learning communication skills are tremendously important for everyone.

Buffett recently appeared in an online animated series called the Secret Millionaire's Club in which he teaches kids about finance and investing.  Appearing on CNBC in July of 2009 to talk about this new venture, Buffett was asked, “What’s your hope that kids will take away from these episodes?”  His reply:

Well, one way or another you develop financial habits when you're very young.  And the habits you develop live with you for the rest of your life.  So if we can get through to some young people that it's better to be a little bit ahead of the game than behind the game, watch out for credit cards.  The most important message is that the best investment you can make is in yourself. Teaching them if something's too good to be true, it probably is, and so on.  If they learn those things the easy way through these stories early on, it may save them learning it the hard way later on.

…Like I said, the most important message you can deliver to a young person is that anything you invest in yourself, you get back ten-fold.  And nobody can tax it away, they can't steal it from you.  So we'll be trying to deliver those messages.  You have to do it with a good story.  They're not going to watch it to get a lecture.  They're going to watch it to get entertained, and in that entertainment we hope there can be a good message.

So, what are some of the best ways you can invest in yourself?

1. Create your own personal development plan.  A good one helps you define your preferred future (your dream life), clarifies your life’s purpose, evaluates your current reality in the basic areas of life (financial, family, career, health, spiritual, etc.), reveals your personal values for each life area (the beliefs that are important to you), sets well-defined goals, and creates a specific plan of action.

2. Be a lifelong learner.  Read good books and resources.  Take classes (formal or informal).  Attend webinars and listen to podcasts. But don’t stop there – you’ve got to apply what you read and hear, and take action! 

3. Surround yourself with people who will help you achieve your goals and dreams.  If you have friends or family who are downers all the time, or who don’t believe in you or your goals, get new ones.  I don’t mean that you replace your friends or family, but find some new ones to add to the mix.  We all need to have positive people in our lives.  And maybe you need a mentor or coach who can help you take action on your goals.

4. Improve your communication skills. Buffett mentioned this in one of the interviews.  Communication skills are extremely important today.  And not just in how to be a great speaker, but also a great listener.

What do you think about Buffett’s assertion that the best investment you can make is in yourself?  What do you think are some of the best ways to do that?

Great Tips for Resumes, Interviews, and Cover Letters

Crown Ministries recently detailed several job hunting guidelines for successful resumes, interviews, and cover letters. Here are the key points they made for all three:

• Networking should get you to a point of someone at the company wanting your resume. The perfect resume is one that is expected.

• You need to show your results, give your track record for producing success. Harvest the things you’ve done and put them into the resume. List the accomplishments, achievements, results that are relevant to the employer.

• You must be able to present your career journey in a positive way in an interview. You must be comfortable telling it, even the difficult parts such as being fired. Acknowledge mistakes, as "speed bumps," and share what you learned from them. Use the STAR technique. Describe the: Situation you faced -- Task you had to perform -- Action you took, and -- the Results of your action.

• Contrary to the advice of many resume experts, the cover letter isn't important.

I must say that I agree with this advice 100%. A few notes on it:

• Networking is the one thing you can do to make your resume stand out from the pack. And these days, when there could be hundreds of resumes submitted for one position, standing out from the pack is well more than half the battle towards getting an interview.

• Yes! Your resume and interview must scream RESULTS!!!!! It's the best way to sell yourself to a potential employer. Show and tell them what you've accomplished. This will (again) set you apart from the pack. They will know that you can deliver results and that, after all, is what they are looking for in an employee.

• You certainly need a "story" around each of your accomplishments, and the STAR system looks like a good way of doing it. So write out your responses to basic interview questions, being sure to include your accomplishments, and then practice your answers so you deliver them smoothly and succinctly. If you need to, take some practice interviews to get "real world" experience.

• Yeah, I think the cover letter is mostly a waste as well. If you need one (which I think that's a debatable issue), just be sure it's short and sweet.

I didn't agree with everything the piece said (for instance I don't like an objective on a resume -- though a "summary statement" could be ok) and I'm not so sure about the 12 point font rule, but other than that, I'm tracking with them pretty closely.

Are Over Half of Workers Really Dissatisfied with Their Jobs?

In this piece from Crown Ministries, I was surprised by the following statistic:

A new study says just 45% of Americans are satisfied with their jobs.

Really? I would have guessed maybe 60% or 70% would be satisfied (thus making 30% or 40% dissatisfied), but to see more that were dissatisfied than were happy, really shocked me.

They also list some of the reasons 55% of workers aren’t satisfied:

• The jobs they have aren’t very interesting. This could be a problem with not understanding your purpose and your calling versus making a living.
• Their salary is failing to keep up with inflation. People aren’t making financial progress, and it has been tough the last two years.
• Having to pay more for health insurance.
• More pressure because fewer workers are being asked to do the same amount of work.
• Stress with boss and co-workers. We spend a lot of time with the people at work, which requires good relationships.

I know how much it stinks to hate your job -- I've been there. A lot. In fact, I've probably spent close to half of my working career in jobs that I disliked. My "bad jobs" were mostly made that way by people. If you work with or for people you don't like, respect, and can't get along with (some people can't get along with anyone), then it can be a real downer for you.

But even though I disliked many of my jobs, I wouldn't say I was "dissatisfied" with them. Yes, they had their aches and pains, but they also had some great benefits (like good pay), so I'd say I've been satisfied with my jobs most of my career. Maybe my expectations were just too low, but I thought surely that most people were satisfied their jobs (even if the didn't like them). Maybe it's just semantics and "like" is equal to "satisfaction." Maybe people simply expect more from jobs these days. I'm not sure what the ultimate issue is.

That said, it really, really, really stinks to be in a job you don't like. It weighs down on you and seems to put a cloud over everything. It makes most of the rest of your life miserable as well.

I'm so thankful that I've finally found a job I love that pays well and has great people to work with and for. I hope to stay here a long time. I do NOT take it for granted that I work someplace special -- I'm so thankful for it.

How about you? Are you satisfied with your job? Do you like it? If not, what are your plans for the future -- simply putting up with it or are you looking to make a move?

The Resume That Speaks Volumes: Capture Your Contributions

The following is an excerpt from Indispensable By Monday: Learn the Profit-Producing Behaviors that will Help Your Company and Yourself by Larry Myler. As I've said several times, your resume needs to scream RESULTS!

As you implement the ideas you’re learning, you’ll need to document your indispensability. If you are unemployed, you will want to bolster your resume by properly capturing past financial contributions. You are about to learn how to do just that. If you are employed, you will want to keep your resume current for performance reviews and to be considered for promotions. Either way, the resume is where you will want to update and store your accomplishments. And if written correctly, your resume will forever capture and showcase the profit contributions that an employer can’t live without.

Assume that your company operates with a net-profit margin of 7 percent, and you use the knowledge in this book to create unexpected profit of $25,000 added to the bottom line. You should chronicle your financial indispensability in the following manner:

Improved the company’s shipping process by removing unnecessary steps, resulting in a $25,000 annual profit contribution. The profit from this improvement was equal to the profit from $357,143 in annual sales revenue, or $1,785,715 in total sales equivalency over five years.

In this example, we used the random amount of $25,000. You may be concerned that you won’t be able to create that much value. On the other hand, you may already know of ways to save or create that much—or even far more—for your company. No matter your present confidence level, my commitment to you is to transfer the skills, knowledge, and tools to accomplish all that you are able. At the end of the day, you will probably surprise yourself.

Just for kicks, let’s create two new resume entries representing $1,000 and $100,000 profit contributions. Again, the calculations assume a company net profit of 7 percent.

For the Faint of Heart

Improved the company’s shipping process by removing unnecessary steps, resulting in a $1,000 annual profit contribution. The profit from this improvement was equal to the profit from $14,286 in annual sales revenue, or $71,429 in total sales equivalency over five years.

For the Overachiever

Improved the company’s shipping process by removing unnecessary steps, resulting in a $100,000 annual profit contribution. The profit from this improvement was equal to the profit from $1,428,571 in annual sales revenue, or $7,142,857 in total sales equivalency over five years.

Learn the simple math behind the sales-equivalency calculation, and you will be able to quickly determine the sales value of any cost reduction you are considering:

• Amount of Savings ($25,000)/Profit Margin (0:07) = Sales Equivalent ($357,143)
• $25,000/0:07 = $357,143

If you don’t want to deal with the math, you can simply input your idea into the Profit Proposal Generator (PPG) at www.indispensablebymonday.com, and the tool will calculate sales equivalency and many other functions for you. This free service allows you to produce profit proposals of exceptional quality, even though you may not have formal financial training.

Because your ideas must be implemented in order to legitimately make their way to your resume, it is extremely important to format and analyze your proposals professionally. The right analysis and presentation will greatly increase the chances of implementation. The PPG was created for this purpose. As you move into the next section, you will discover how key the PPG tool can be in formatting, vetting, and presenting your profit ideas—making them resonate with decision makers in your organization.