Are You Using the Accumulation Factor to Grow Your Wealth?
People say that it takes money to make money. This is a statement that has mixed truth. But it is true that the more money you accumulate, the more you will attract. Here’s how.
The Accumulation Factor describes a phenomenon in which the more money you accumulate, the more money you will attract.
You don’t have to start with a lot of money to begin with. But, once you have created in your own mind the strong intention to accumulate wealth, the accumulation factor kicks in.
You may start by accumulating a very small amount — perhaps a dollar or even just twenty-five cents a day. But once you set that money aside and “accumulate” it, you will find that you begin continually attracting to yourself additional moneymaking opportunities.
Increasing the Inflow
The most basic idea behind the Accumulation Factor is that you need a flow of money coming into your pocket. Robert Kiyosaki tells us that there are basically four ways to get money to flow into your pocket.
- Employee: You work for someone else.
- Self-Employed: You work for yourself.
- Business Owner: A system works for you.
- Investor: Your money works for you.
Let’s talk about the first two of these.
Be an Employee
I remember the first part-time job I had after I turned 16. I worked for the local drug store after school and on the weekend. I did a little bit of everything, including sweeping and mopping floors, taking out the trash, and washing dishes at the attached cafe. I felt like I had arrived, and was finally making real money.
I had a friend who worked at the local upholstery shop. Other friends were baggers, shelf stockers, or cart wranglers at the supermarket. A part-time job is often the first significant experience you might have with earning money.
Working for someone else is a great way to learn the skills that are required to attract money to you in larger quantities.
As an employee, you work for a single employer — once you have the job you don’t have to continually drum up more work. Your boss or manager tells you when to come and when to leave. You are taught the specific skills that you need to succeed at the job you have. Many skills that you will learn carry forward into other ways of bringing in money.
In some ways, the disadvantages of being an employee are the flip side of the advantages.
You don’t get to choose your own hours. You have only one employer, and you work at that employer’s whim. You are often limited in what you can do by the work that is defined in your particular job. Opportunities to advance and make more money are often not in your direct control.
But there’s an alternative.
Being Self-Employed
When I was 15, I had the opportunity to perform a summer concert tour through Europe. Since we were amateur musicians, we had to pay our own way — which was about $2,500 — back when that was still a lot of money. A number of my parents’ friends spread the word that I was looking for ways to earn money for the trip.
Over the course of the summer, I did more different kinds of odd jobs than I even knew existed. I washed cars. I mowed lawns. I washed windows. I raked leaves. I babysat. I pruned hedges. I painted. And, over the course of about four months, I earned the money that was required to go on the concert tour.
Once the summer was over, I came back from my month-long concert tour and started looking ahead to when I would turn 16 and be able to get a real job. Many of the people I had done odd jobs for called me back after the summer and asked if I would like to do more work for them — they were impressed by how hard I worked and what a good job I had done.
I passed on these opportunities, since I didn’t consider odd jobs to be the type of work I really wanted to do.
Looking back, I think I made a mistake. I made far more money per month doing those odd jobs to earn money for the concert tour than I did for several summers afterward, as an employee.
When you are self-employed, you are your own boss. You get to work the hours you want to, to accept or decline the work that you want to, and to make as much money or as little money as you want to. You don’t have just one employer who can fire you at will.
But, you are also responsible for selling yourself and finding enough people willing to pay for what you are willing to do.
Your Attitude of Success
Our 14-year-old son said to us one day, “You know what? People just don’t understand customer service anymore.”
That was especially interesting because he’s our youngest kid — just barely a teen. We have tried to teach all of our children the importance of customer service as they have gone out and started working part-time jobs.
Our oldest daughter worked for a specialty restaurant. Whenever she worked, everyone wanted her to be cashier because she always got the biggest tips, which were divided among everyone working that day.
There may be any number of reasons why this was the case. But, I think that the advice we gave her before her first day may have had something to do with it. We told her to keep three things in mind.
- Always treat your customers and co-workers with the utmost respect, even if they’re wrong.
- If you find yourself with a spare moment between assigned tasks, look for something you can do to help out.
- Always do more than you are paid to do.
As Zig Ziglar said, “When you do more than you are paid to do, the day will come when you are paid more for what you do.”
We reminded her about why she became the preferred babysitter in our neighborhood when she was 12. She interacted a lot with the kids she was tending. She played games with them and planned activities for them. She cleaned up after them, so the house was in good shape when the parents got home.
There were other teens in our neighborhood who babysat, also. They were great teens in a lot of ways. But, when they babysat, they simply turned on the TV and didn’t necessarily pay great attention to the kids. In the end, parents contacted them only when our daughter wasn’t available.
Whatever job or self-employment you have, you can look at it as a way to prepare yourself for other opportunities that will come along later. Many successful people have a number of attributes in common, which can help you. Here are some of them.
Know Where You are Going
Remember the purpose you have for earning your money. Every time you need to make a decision or to take an action relative to your work, consider what impact it will have on your financial outcome. Make sure you are moving yourself toward it. Make the elements of your outcome be the things that drive your daily activities.
Strive for Excellence
It has been said that people listen to people they like. They do business with people they trust.
Make sure that every experience you have dealing with other people in a work situation is positive. That includes clients, suppliers, people who supervise you, people who you supervise, and anyone else.
This doesn’t mean you should let them walk over you. Just make sure the experience is positive.
Focus on making sure that the work you produce is of the highest quality.
A company I know tried to increase its profits by cutting the wage of its workers. The workers compensated by cutting back the quality of their work. The client compensated by canceling the contract. That put a damper on the company’s profits.
If the company had worked to ensure quality, beginning with how they treated their own employees, they would not only have kept the profits they had, they probably would have been recommended to other clients.
The same is true if you are an employee. Suppose you were a manager who had to fill a position. Would you fill it with the employee who cut corners or the one who consistently provided quality work?
An insurance company conducted a study on what made an insurance agent successful.
They found that approximately 20 percent of the agents earned approximately 80 percent of the commissions. The company then looked at the top 20 percent. In that top 20 percent the same thing applied. Twenty percent of the top agents earned 80 percent of the top commissions.
When you break that down, agents in the top 20 percent of the top 20 percent were earning about 35 times the commissions of the average agent.
The insurance company thought that was pretty interesting. It was obvious that the top agents weren’t 35 times better than the average agents. It turned out that each of the top agents was 1 or 2 percent better in performing the key tasks than the average agents were.
You can apply the same thing in whatever you do. Become one or two percent better in the most important areas of your work than anyone else in your field is and you will suddenly find that you have very little competition.
Be a Positive Person
One of the quickest ways to halt your progress toward prosperity is to be a negative person. We live in a reactive world. People generally react when faced with situations rather than prepare proactively to meet them.
You can use this to your advantage. If you frown and growl at an associate, at a superior, or at the person behind the counter at a store, chances are that person will frown and growl back. On the other hand, if you smile at that same person, chances are that person will smile back.
The idea expands and applies to every aspect of dealing with other people. If you complain and moan about one person’s behavior to another, the person you’re talking to may agree, but will secretly wonder if you complain and moan about her when she’s not there. But, if you are complimentary and positive, the person you’re talking to will be sure you’re positive about her.
One thing to be careful of — attitudes are contagious. If negative people constantly surround you, you will find yourself becoming negative. It’s better to lose a few negative friends and co-workers than to become negative yourself.
Remember, you don’t have to be several hundred percent better in any one area to become excellent at what you do. As you work to become one or two percent better in each of the areas we’ve talked about, you’ll find that you will quickly be able to create an inflow of cash that will be more than enough to achieve your own financial outcome.
Decreasing the Outflow
Building up the amount of cash flowing into your pocket is only half the story in the Accumulation Factor. The other half has to do with the amount of cash that flows out of your pocket.
When was the last time you bought a candy bar and a soda from the vending machine? How about the last time you bought a fountain drink or cocoa at the convenience store or mall? If you are like many of us, you probably get some kind of a snack on a regular basis.
How much do you spend on snacks like this every day? Let’s suppose you get a candy bar and a soda for $1.50. That really isn’t a lot of money.
Now, let’s suppose you get a candy bar and a soda every day for a month. That works out to be $1.50 X 30, or $45. Well, that’s a fair amount of money, but not too bad. You likely didn’t realize that you had spent that much money. Perhaps you wondered where all your money had gone.
But, let’s carry this out a little further. In one year, that candy bar and soda every day works out to $540. If you get that same candy bar and soda every day for 10 years, you will end up spending a total of $5,400 on candy bars and sodas. That begins to look like some real money!
Before we move on, I want to be clear that I am not trying to say that snacks are bad. I eat snacks on a regular basis, and enjoy them. Enjoying what our money can bring us is one of the primary purposes of earning money.
I do want to illustrate what I call the Snack Factor.
The Snack Factor works directly in opposition to the Accumulation Factor. The Accumulation Factor helps to attract money to you. The Snack Factor, on the other hand, prevents you from attracting money to you, to the extent that it takes away from money that would have powered your wealth accumulation.
We each have something that we tend to buy on a regular basis — every day or every week — that we really don’t think about. These small, regular expenses add up to a lot more than we realize. Even worse, you may not even remember where all the money went. If you start out with $20 in cash, by the end of the week you may only be able to remember what you spent $12 or $15 on.
If this is the case for you, the first step is to figure out where all your money goes.
For this, you may want to take a lesson from a billionaire (with a “B”). Warren Buffet was the richest person in the world a few years ago, until he gave much of his wealth to charity. From the time that he was young, Warren reportedly carried a little notebook in his pocket and wrote down every cent that he spent.
You may not choose to record every cent you spend for the rest of your life. But, keeping track of exactly where your money goes for a couple of weeks or months can be huge! A lot of times, we have spending habits that we don’t even realize we have. Looking back over your spending for a couple of months can point out patterns you didn’t know existed.
So, if you do find that you have a Snack Factor happening, what can you do?
Chances are, you can figure out a less-expensive way to get the same thing.
For example, in our candy bar and soda illustration, you may instead buy a flat of sodas (24 cans), and a case of candy bars from your local warehouse discount store for a total of $15, and accumulate an extra $30 a month.
Or, you may choose to exercise your Snack Factor less frequently — maybe only once or twice a week — instead of every day. You might even find some things that you choose to eliminate completely.
In his book, The Automatic Millionaire, Richard Bach describes a similar concept. He tells how he was teaching an investment seminar, and one of the attendees swore that he couldn’t come up with $100 a month to invest.
After some finding out, Richard learned that this young professional stopped every morning at the coffee shop to get a latte and a bagel — at about $3.50 per day. (That was a while ago — it’s more like $10 per day, now.)
Richard’s best advice for him was to spend $50 to buy a coffee machine and make his own coffee every day.
I do want to point one thing out, though.
It is possible to be too frugal.
If you find that you are saying to yourself, “I can’t afford that” or “I don’t have enough money” on a regular basis, that is a danger sign. If you say to yourself “I can’t afford that” often enough, you actually condition your subconscious brain to look for ways to keep you from affording what you really want.
When that happens, you can actually let some pretty powerful opportunities slip by.
For example, the European concert tour that I mentioned earlier almost didn’t happen. When I was 15, I was very used to thinking that I didn’t have enough money. So, I initially discounted the opportunity offhand when it came up.
My mom explained to me that, if this were something that I really wanted to do, then we would find some way to make it happen. It was only then that I had the belief and conviction to do what was necessary.
Instead of telling yourself, “I can’t afford it,” a good habit is to ask yourself, “How can I afford it?” By doing this, you actually program your subconscious brain to look for more abundance.
How to Accumulate
There are many ways that you can make the Accumulation Factor work for you. Here is just one simple way that I recommend.
Get yourself a large fruit or mayonnaise jar. (Make sure that it is clean.) Then, decide an amount of money that you feel you can commit to set aside on a daily basis.
A dollar a day is great. If that’s too much, then a quarter, dime, or even a nickel is fine. Just make sure that it is an amount that you can commit to setting aside every day.
Every day, either right after you wake up or right before you go to bed, drop your dollar, quarter, or dime into the jar.
Keep doing that every day until it becomes as regular as clockwork. Then, at the end of every month (or better, every week) take the money from your jar and deposit it into a savings account at a bank or credit union or some other place like that.
And then, never, never, never, never, NEVER touch that money for anything else.
After you do this for a while, you will notice something interesting.
First, you will see the balance in your bank account start to get larger and larger. As you see this happen, you will notice that you start to have more and more money available to you in general.
Second, you will realize that you can actually commit to putting more money into the jar every day.
If you started out at a dime a day, maybe you can move up to two dimes a day. Or, if you started out at fifty cents, maybe you can now move up to seventy-five cents each day.
Every time you increase the amount of money you commit to dropping into your jar each day, you will also see an increase in the opportunities that come to you to receive or earn money.
This is the accumulation factor at work. And by continuing this process, you are putting yourself further and further on the road to achieving your ideal financial outcome.
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