Back when I was doing lots of generic seminars for network marketers, I noticed a very disconcerting pattern. When many of the top income earners would buy my resources afterward, their credit card would decline. Yet these were people that bragged constantly about making $40,000, $60,000 or $80,000 a month.

And it seemed like several times a year I would get distressed calls from top distributors who had been terminated by their company, or their company had gone out of business. Invariably they would tell me that they were a month or two away from getting cars repossessed or losing their homes.

Something didn't add up...

I came to learn that many people in the business are broke. Even people that earn a lot of money. Which shouldn't be so shocking. The truth is, earning large amounts of money is fairly easy in this business. Learning how to create wealth is a completely different skill set. For many people (me included) network marketing is the first time we've ever made a lot of money, and we don't know how to handle this new wealth. This is important to learn.

Here's a usual scenario: Someone cracks $25,000 for the first time on their bonus check. So to celebrate they go out and purchase a $25,000 watch. They justify this with several validations. First they figure, "It's what I make in one month anyway." And secondly they assume that when their team sees them with this dazzling new jewelry, they're going to get "fired up" and build even faster.

Wrong on both counts.

First, 25K is one month's check, but it's not what they earn in one month. They had some kind of expenses to create that check. It may be only a couple thousand dollars for phone, business tools, samples, etc, but it could be five or six grand if they had some travel to work with long distance lines in there. So maybe they grossed 25K, but they only netted 18 or 20K.

And then there is the biggest issue for network marketers: TAXES. The number of top networkers who have been or are currently in tax trouble is staggering.

That 25 grand is before taxes. And depending where you live, your tax bill could be 25 to 50% of what your income is. Now the good news is almost everything we do is a tax deduction and smart planning can keep your tax bill modest. But even with that, it's still a chunk of your bonus check that isn't yours to spend. So if you buy a $25,000 watch with your $25,000 bonus check you have just dug yourself into a hole. You have to pay your taxes FIRST.

The other big issue is people's belief that if they "sell the dream" by loading up with trips, cars, jewelry, and homes above their means, this will inspire their team to work so hard it will pay for everything. Not likely.

People may be impressed with your new Rolex, and think your Ferrari is hot, but that's not necessarily going to make them build any faster. And do you realize how many people would have to work faster to generate enough volume to produce the increase in income you would need to pay for that?

A similar thing happens when people quit their job to do the business. This is a very serious step and should be done with a great deal of discernment. And your job as a sponsor is to help your people make prudent financial decisions, not rah-rah hype that will soon fade and leave someone in a precarious money crunch. People always want to quit their jobs too soon. That's why many join the business, because they hate their job. But we're not doing them a favor by advising them to do this too soon.

Let's suppose someone earns $2,500 a month in their "day job." As soon as their bonus check gets to $1,500, they're certain that if they can dump their boss and go full time in the biz, they'll replace that income quickly. This almost never happens.

Because now their recruitment efforts move from an expansion mentality to a desperation one. When you need a new recruit to make your car payment, you're going to send off that energy. And it's likely to repel everyone around you.

And when you're making $1,500 a month, you shouldn't be trying to live out of that. You should be investing that money to grow your business. Otherwise you'll be earning $1,500 a month forever. If you want to get up to $10,000 a month, or $50,000 or $150,000 - you must invest proceeds back into the business in your early stages.

Here's the other factor: Let's be real here. Building a network is going to involve some degree of sacrifice for everyone. You will have to watch less TV, spend some time away from your family, cut back on some recreation or other sacrifices.

I think these sacrifices are well worth it, but they are sacrifices nevertheless. If prospects see a payoff at the end of the tunnel, they are more willing to make that sacrifice. If you earn $2,500 a month with your job and start making $1,500 with your network marketing business, you can reinvest $1,000 a month in your business, and use that extra $500 to pay off your credit cards. Then when you're making an extra $3,000 a month, you may have an extra $1,000 to spend. Now you are actually living a better lifestyle and your friends are likely to notice that.

If you quit your job the second your bonus check equals your old job income, you will have exactly the same lifestyle. And prospects notice that. On a subconscious level they think about you going to meetings all the time and making sacrifices, but they don't see the tangible rewards. So truth be told, when they think about going out to presentations a few nights a week, or staying home watching TV, most will opt for "CSI" and "Law & Order."

When prospects notice you driving a new car, winning free trips, wearing nicer clothes and jewelry, they are much more likely to take your opportunity seriously. The secret though is getting those things the right way. By earning more, not going into debt to do it.

It's great that you can earn lots of money in the business. But let's make sure you're building wealth at the same time. I hope you'll join me on my Webinar in a couple of weeks and make a commitment to growing your own net worth as you grow your network.