Early Retirement can be obtained through frugality and a dedicated work ethic. First, we often comb through and analyze our expenses. The next step to optimizing our journey to financial independence is learning to how maximize value. This is also an exciting challenge. With hard work (and some luck), I’ve doubled my salary in less than 4 years and this article will detail my approach on how to maximize value.
Our income is largely determined by the value we bring to the market. I emphasize market because the market decides a hedge fund manager is paid more than a teacher.
I’m happy to sit here and argue a teacher is extremely valuable to the lives of every student, but the market might disagree with my $ figure.
How to Maximize Value
Given the world we live in, what are the easiest ways we can maximize our value?
My overall approach is relatively simple; define the value you bring to the table by understanding what your boss values. If there’s a gap between the value you bring and what you are paid, then concisely discuss this in a non-confrontational manner.
Here’s a great recap on How to Hack Your Boss to more effectively negotiate that pay raise.
Each time I’ve raised my pay, I was able to do it in a win that led to deeper relationships and both parties feeling better about the situation. If you mess this part up, then you’re likely to receive a short term benefit (increased pay) but at a long term cost (burned bridges and potentially being replaced).
This 5 minute podcast episode tackles the same topic of how to maximize value:
A new approach I’ve taken in recent years is to focus time on developing more skills. Knowing what skills to develop can be tricky, but I’ve generally focused on developing skills, both soft skills and technical skills. My knowledge base in taxes has increased throughout my career while I’ve also worked on networking and developing stronger relationships.
The key here is to take action consistently.
The skills we learn are of minimal value if we don’t take action and put those skills to use!
I view it now as planting a garden. You might not have a clear vision of what you want at the end of the growing season, but if you put in the work to lay the seeds, you’ll have options once it’s time to harvest.
You wouldn’t want to try to plant a seed and harvest at the same time. This is a common approach I see people take. They often look to extract value when they need it, as opposed to trying to provide value throughout the entire engagement. The latter approach has worked much better for me.
Never Eat Alone
I picked up a great book on networking a few years back called Never Eat Alone. The analogy for planting seeds may have come from this same book actually.
The largest takeaway I had, and the book is filled with hundreds of ideas, is to focus on deeper conversations instead of many conversations.
In other words, quality over quantity.
An example of how I’ve applied this approach is when networking. I’m not amazing at small talk and prefer to dive beneath the surface in the conversations I have. This approach also works well in networking IF we focus on having a few conversations. The depth of the conversation should mean more than if I were to take that same time and have 5 smaller conversations.
A simple mathematical view of this approach: It is better to have four 15 minute conversations in an hour of networking, than to have twenty 3 minute conversations.
I find that approach more natural and more enjoyable. Sure, I used to end up with fewer business cards or referrals, but each one of them felt more real and of course they turned out to be more valuable in the end. Oddly enough on the other end, I’ve seen too many people attempt to network with the entire room and leave an impression on no one.
To summarize, networking, acquiring skills and seeking ways to optimize our value is only part of the puzzle. Taking action is a large element of this but the biggest factor to maximizing value is to have the conversation asking for the raise. I was never great at this at the start, so I’d recommend the link above or this book on having Crucial Conversations.
How effective have your negotiations been with your boss or clients? How do you maximize value?