Sunday, 03 January 2021 03:25

Developing Your Skill Set — Part 1. Featured

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After analysing our family expenses in 2018, my wife advised we cut down on our general spending habit. But after I analysed our expenses spreadsheet, it was clear there was no way I could cut down on our expenses because we weren’t overspending.

The solution was to increase the family net income. I know there are many ways you can increase your income, but you still need to research and know what will work for you. What works might be uncomfortable and not necessarily pleasant.

You have to be honest about what you want and take risks rather than lie to yourself and make excuses to perish in your comfort zone. We refused to stay in our comfort zone. We knew we needed to increase our income. We need to identify how this can be done. Already I have an idea in my mind. The idea I have requires me to develop and upgrade certain skill set. I need to create the time and capital to develop my skills. I see the development of my skills as an investment for the future. The plan I have is not a quick fix, it will take time, but in the end, it's worth it.

If you want extra income and you have no idea what to do, the best place to start is to do research. First, you must understand what an income is and how it will affect your tax and national insurance contributions. The type of investment you choose will also determine if you are to register as a sole trader or a limited company. No matter the nature of investment you decide to embark in, you will have to at least develop your skillset to meet the demands of the investment category.

While developing my skill set, I learnt a lot and saw other skills and certification I have that I have forgotten about because I was busy hustling, making end meet and eating from hand to mouth. Until you sit down to take inventory of yourself, you will not appreciate what you have. You need to list down all your blessings so you can name and count them one by one. Everything you need is already inside you. Don't wait for others to light your fire. You have your lighters.

When I took inventory of all my resources, I started rebranding two of my companies and made the necessary agreements that will support my vision for rebranding. I could see clearly. I know with the plan I have, it is not a quick fix, but a long term solution. I need to be focused and have a definiteness of purpose if I must succeed in my rebranding. I need the right tools and the right people. I need open-minded people who will be willing to give me their and expertise. I had to constantly encourage myself any time things seem not to work.

To create extra income, you need to know where you are coming from and where you are going to. You should be aware that the road is not going to be easy, it involves a process. It is not about the money, but understanding the process so that when it is time for harvest, then you are sure that harvest will never cease. You will continue to expand and generate more income.

What is income? Income is money (or some equivalent value) that an individual or business receives, usually in exchange for providing a good or service or through investing capital. Income is used to fund day-to-day expenditures. Individuals receive income through earning wages by working and also by making investments into financial assets such as stocks, bonds, and real estate.

Financial capital is any economic resource measured in terms of money used by entrepreneurs and businesses to buy what they need to make their products or to provide their services to the sector of the economy upon which their operation is based.

Capital can include funds held in deposit accounts, tangible machineries like production equipment, machinery, storage buildings, and more. Raw materials used in manufacturing are not considered capital.

To develop my skill set I need capital. When you develop your skillset you are investing in yourself. Investment does not yield overnight. You must be patient as you continue to invest to a point when you will start making profits.

Cash flow is the net amount of cash and cash-equivalents being transferred into and out of a business. Cash flow can either be positive or negative. Positive cashflow means you have more money or access at hand. Negative cash flow shows you don’t have cash.

The following are common types of income:

Labour
A salary or wage that is paid in return for work. Wage refers to paid work or paid employment. It refers to the socioeconomic relationship between a worker and an employer in which the worker sells their labour power under a formal or informal employment contract.

Business Profits
The net income of a business that creates and captures value.

Tangible Assets
A tangible asset is a physical thing that has the potential to generate income, such as an apartment that can be rented.

Intangible Assets
An intangible asset is a non-physical thing that has the potential to generate income, such as copyright on a song that generates royalties.

Capital Gains
An investment that goes up in value and is then sold, resulting in a profit. For example, a stock that is sold at a higher price than its purchase price.

Dividends
Dividends paid by a company that you own or partially own. It represents a share of profits generated by value creation.

Interest
Loaning money to a government, bank, business or other entity in return for interest payments.

Rent-Seeking
Rent-seeking is the practice of seeking more income without creating more value or taking any risk. For example, an industry that lobbies the government to be paid a subsidy

Speculation
Risk-taking that doesn't create value, but seeks income by trying to predict price changes. For example, buying the stock of a company because you think the price will increase as opposed to thinking the company will generate profit.

Active Income
Income that results from the direct value creation such as your labour or business that you control. Assets that you directly control such as a rental proper are also active income.

Passive Income
Income that results from the processes that require no participation. For example, the interest income or dividends from a stock purchase. Passive income requires capital.

Unearned Income
Income that does not create value, but it is the result of social programs or obligations such as pensions, old age payments, unemployment benefits, alimony, and child support. In some cases, unearned income is not taxed. Note that in some cases, the government considers passive income, such as interest and dividends as unearned.

Now you understand the different types of income. A skill set is a combination of abilities, qualities and experiences you can apply to perform tasks well. These can include soft skills such as interpersonal skills, organisation, and leadership as well as technical skills such as research, computer programming, accounting writing and more.

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