Self-made millionaire: Here's what it means to be rich and how to successfully land a raise

Money masters like Ramit Sethi and Kevin O'Leary discuss how to increase your earning power
Money masters like Ramit Sethi and Kevin O'Leary discuss how to increase your earning power

There's no one definition for what it takes to be rich — it means something different to everyone.

"Each person defines what rich means for them," self-made millionaire Ramit Sethi, author of New York Times bestselling book "I Will Teach You To Be Rich," told CNBC's Frank Holland during the inaugural CNBC Make It: Your Money virtual event on Dec. 13. The event featured several successful entrepreneurs and financial icons who offered advice about increasing your earning power.

"For some people, rich means having a million dollars in the bank. For some people, rich means being able to go to yoga in the middle of a weekday," Sethi added.

The way most of us feel about money is highly psychological, said Sethi, with either positive or negative associations that can be untethered to actual wealth.

"I've spoken to people who have $10 million in net worth, and they still worry if they're going to have enough," said Sethi. In his experience, feeling rich is "uncorrelated to how much we have in the bank."

"I see money as a source of growth. It has made me more adventurous, spontaneous, generous," said Sethi. "When we have money, we can choose what type of characteristics we want to emphasize."

How to ask for a raise — and get one

If you want to negotiate a higher salary, Sethi says it's important to have a plan long before you ask for a raise. 

Start by meeting with your boss. Say that you want to be "extraordinary at this job" and work with them to identify two to three actionable goals to get there. As you work on those goals, update your boss on your progress every few weeks, Sethi recommends. 

Months later, when it's time to actually ask for a raise, you'll be able to show that you've made progress on your goals. You can also research what other people in your position make and share the results.

"You don't need to be confrontational — negotiation is a dance," says Sethi. If your boss says they can't offer a raise, that might be because they don't have the "budget or power" to do so.

"That's OK," says Sethi. "But what it means for you is that you need to make a decision on whether you want to stay in that job or not."

Millennial entrepreneurs discuss wealth-making tips

CNBC's Kristina Partsinevelos spoke with a panel of millennial entrepreneurs who have grown their creative side hustles into six-figure businesses. Here are a few of their top takeaways.

  • Michelle Schroeder-Gardner, founder of Making Sense of Cents, earns $760,000 a year in passive income and lives on a sailboat with her family. Side hustling, including freelance writing, affiliate marketing and renting out rooms in her home, "completely changed my life," she said.

    In the last two years, her big goal was to earn more in passive income, so that she could work fewer hours and enjoy her life. To do that, she put her business "on autopilot" by hiring a virtual assistant and outsourcing editing tasks.

    Now, she only works 10 hours a week and is able to save for early retirement. "I don't feel like I have to say yes to every project these days," she said. 
  • Todd Baldwin, who became a millionaire when he was 25, said that his passive income journey has been all about real estate. He's found success with an unorthodox real estate strategy: Rather than renting out full homes to a single tenant, he and his wife rent out each bedroom individually.

    However, he didn't earn passive income right away. Baldwin worked 17 hours a day when he first started, he said: "Every penny that I made, we were just putting it back into more real estate."

    And despite earning seven figures, he's extremely frugal. He still clips coupons, secret shops and drives "a 2009 Ford Focus with 180,000 miles on it."
  • Grace Torres — a 23-year-old who turned her wedding photography side hustle into a six-figure business — agreed that reinvesting profits into your business is crucial for growth, "especially for solopreneurs."

    Whether that's buying new camera equipment or adding employees, she's used her profits to expand the company. It's common for new businesses to grow slowly in the first few years, and one of the trade-offs can be that you're not paying yourself very much, she said. 

    However, running your own business has its advantages, she said. When Torres first started her wedding photography business, she felt "very little pressure to make a lot of money in order to survive or to support a family."

Kevin O'Leary still believes in crypto

Kevin O'Leary, star of ABC's "Shark Tank" and host of CNBC's Money Court," was a paid spokesperson and investor in embattled cryptocurrency exchange FTX. He lost $15 million when the businesses went bankrupt last month.

However, O'Leary is still bullish on crypto. "I'm going to continue to invest in crypto," he told Holland. "I'm a big believer in the platforms and the technology and the promise of what's going to come in the years ahead."

O'Leary said the industry is "culling its own herd — getting rid of the bad actors, the weak actors, the incompetent managers, all of that." For that reason, he believes the crypto space will emerge stronger.

However, if you're going to invest in crypto, be cautious. O'Leary warned against putting more than 20% of your total assets into one crypto exchange or institution. It's also smart to diversify your crypto investments across different tokens and assets, he said.

When asked about what small business owners can do to prepare for a possible recession, O'Leary shared the advice that he gives all of his CEOs: The minute you have positive cash flow, start to pay down every debt you have. 

With high interest rates on loans, "the only thing that can take you down in times of stress is leverage," he said. 

O'Leary also tells business owners to focus on three rules: "No. 1, customer. No. 2, customer. No. 3, customer."

"If you take care of your customer, they will take care of you," said O'Leary. "Customers that feel they're being well served are even willing to pay higher prices and are very sticky. Customer service is everything."

The CNBC Make It: Your Money livestream was sponsored by Edward Jones and Robinhood.

Disclosure: CNBC owns the exclusive off-network cable rights to ABC's "Shark Tank."