Investment returns are very important for your wealth. Over many decades compounding will grow a relatively small amount into a pleasing amount of wealth.
However, your earnings is just as important, if not more important for your finances. If you earn $50,000 a year you are earning the same as a $1 million portfolio with a 5% dividend yield.
Just think of it this way. If you have a $100,000 portfolio with quality shares, you might be pleased with a one year return of 10%. This would add $10,000 to your wealth that year.
But, it's entirely possible to increase your annual work earnings by $10,000 too, or even more than $10,000, in just one year.
Obviously it's not easy to suddenly extract an extra $10,000 from your job or business, but it will hopefully mean more earnings for you for years.
For example, spending a bit of time on learning a qualification for your role could make you a more valuable employee and add thousands to your annual earnings.
You only have to look on SEEK Limited (ASX: SEK) to see that people with different qualifications in the same industry can be paid materially different pay packets.
Someone who earns $50,000 a year after tax over a decade will get $500,000. Someone earning $60,000 a year after tax will get $60,000. It makes a huge difference over your working life!
Don't trick yourself to think you don't have what it takes to gain a qualification. Most people aren't significantly smarter than you, but there can be big differences in how hard they work and how they well apply themselves.
There are plenty of online resources that can help you improve your earnings, from simple lessons like CV advice, to a more complicated matter of how to improve your standing in your industry. Most of the initial reading materials are free resources, except for the actual qualification part. Becoming a better worker could also be as simple as learning how to be a more organised or efficient person.
Foolish takeaway
Two of the richest people in the world, Warren Buffett and Bill Gates, both say that having focus is they key thing to achieving your goals. I completely agree. If you focus on achieving that once-off qualification then your financial life could look much better for the long-term.
