HfW : How Bloggers Make Money On INSTAGRAM

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"I have an idea if you're open to it," Danielle Bernstein, 22, a personal style blogger who runs We Wore What, wrote me recently.

I'd emailed Bernstein to ask if she'd be open to explaining the business of bloggers being paid by brands to feature their products on Instagram. Most people are probably aware this is going on as they flick through their feeds (#spon), but the money and business practices behind it are inconsistent—and often obscured.

She proposed she'd take me through how she makes money from Instagram, as long as she was the only blogger in the piece. "It's super important who I associate myself with in this industry," she says. "It's not that I don't like other people, but there are some other bloggers that it's random seeming to associate myself with."

Bernstein has 992,000 followers on her Instagram @weworewhat. When she gets to a million, which she predicts will happen in the next 10 to 15 days, she can charge "a good amount more" for sponsored content. "It's a big milestone," she says.

Right now, Bernstein's rate card, through Next Models, sets her range for the cost of a single piece of sponsored content (i.e. one Instagram shot) from $5,000 to $15,000. This rate can go up or down, depending the terms of the deal, such as if a brand wants a long-term commitment or multiple Instagram pictures. "Everything's negotiable," Bernstein says, laughing. "I'm Jewish."

According to experts who spend a significant portion of their days figuring out how brands and so-called creators can play together nicely on Instagram, we're at some kind of mid-point. There are still plenty of products sent out gratis to bloggers with fingers crossed that they'll throw a picture of themselves online using it. Bernstein does this, too, albeit selectively. Milly recently send her an electric blue bag that was too bright for her taste. Bernstein wrote back, "I love this bag, but do you have it in black?"

But there's also just as much contracted—often agent-negotiated—work where the blogger agrees to feature the brand in a certain number of Instagrams, often promising not to put any competitors in the same shot (or even hold off mentioning them for a week or so). Industry estimates say brands spend more than a $1 billion per year on sponsored Instagram posts. Particularly in fashion, "there's a rapidly developing economy on Instagram," says Thomas Rankin, co-founder and CEO of Dash Hudson, a program that lets you make your Instagram posts shoppable. Instagram founder Kevin Systrom even went to Paris Fashion Week, attending Jean Paul Gaultier's couture salon and meeting with Karl Lagerfeld and Louis Vuitton's Nicholas Ghesquière, to learn more about the style bloggers, models, editors, designers, and clothing brands who create such a large portion of content on the photo-sharing site.

Recently, Bernstein's done Instagram-only work for Lancôme and Virgin Hotels. Lancôme had her feature its new foundation, Miracle Cushion, in a picture of her morning routine and as part of her on-the-go makeup bag. For Virgin Hotels, she posed at the opening of the one in Chicago with Virgin's owner Richard Branson. "Last year was definitely my most profitable," she says. "I hate talking about money, but let's just say it's more than I could have ever imagined as a 22 year old. I fully support myself, and it's in the mid-six figures. I save, I invest, I'm trying to be smart about it all and learn as I go."

Bernstein is at the top end of this new Instagram economy, but it's one with a big income gap. On average, if you have hundreds of thousands of followers you can make anywhere from $500 to $5,000 a post, but if you have upwards of 6 million followers, your fee can be $20,000 to $100,000 a shot. "Which is kind of crazy," Rankin says.

Part of what makes the idea crazy that bloggers would be paid five figures for a picture of them doing something like sitting on their couch is that it just looks so casual—which is, of course, the point. Indeed, when Bernstein worked on a campaign for Project Runway, part of her well-paid contracted work was posting pictures of herself sitting on her couch. "I'd say I was watching the show," she says.

In fact, when Rankin approves blogger's Instagrams before they're posted on behalf of a brand, the only negative feedback he gives if he thinks something looks too posed. "It's not an editorial photo," he says. "We're not trying to be in a magazine. We're trying to create a moment."

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HfW : Here's What I Learned Working For Self-Made Millionaires

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I spent years working in small business accounting, so I've had a chance to know a number of self-made millionaires.

As a result, I also got an insider's view of their financial positions and behavior — both business and personal. It's kind of like being a doctor and giving physicals — you see people for who they really are, minus their magnificent external wardrobes.

So, what are typical self-made millionaires like, how did they come into their fortunes and what do they do with it once they have it? The answers represent a wealth of direction to those of us who hope to join them:

They're fiercely independent. 

I think this quality drives them more than anything, including the quest for money. Money doesn't rule over them, but they're quiet mavericks, working to build their businesses and avoid any complications that might weaken their independence.

They're survivors. 

The millionaires I knew weren't MBAs. They may have college degrees, but most graduated from the school of hard knocks. They usually come from modest beginnings and bring those philosophies to their businesses. Having been through hard times they know their financial survival requires:

• Full control of their business
• A full bank account
• A frugal lifestyle, and
• A debt free position

They're self-employed. 

Because they're so independent, they're not organizational types. In fact, I doubt many of them could even survive in the corporate world, let alone in government or academia.

They're principled. 

Generally speaking, I found legitimate millionaires more pleasant to be around than the imitation wannabes. There's a surprising humility about them; a practicality that's disarming. You can't play mind games with them; they can sniff out b.s. from a mile away.

You won't see them driving around in one of these.

They're NOT high rollers. 

A debt free business is the holy grail. An independent business is an unencumbered one, and these people are keenly aware of that. They know that taking on business debt puts them in an unwanted partnership with banks. So any debt incurred early in life was paid off as soon as possible. They don't buy stock on margin, don't borrow against retirement plans, and mortgages for investment property — if taken at all — are taken for ten years or less and paid off early.

They save money. 

A fat bankroll is their ace in the hole and it's increased constantly by a conservative lifestyle that expands ever more slowly than their wealth and income. When they need to expand their businesses, they do it in cash.

They usually have basic product lines. 

In popular culture millionaires are often portrayed as being inherited money, dot.com entrepreneurs, shady money shufflers, stock market wizards, entertainers, athletes, and the occasional Jed Clampett who strikes oil in his backyard. The few I came across who actually fit that description seemed better at dissipating money than building it.

I knew one guy who took a flier on a stock with $25,000 that exploded into about $2.5 million within a few years. He expanded his lifestyle, quit his job, and made a career out of finding the next longshot. Ten years later, he was still looking for it. He was also down to his last million and falling fast. There's a reasonable chance he'll retire on social security alone.

What businesses were the real wealth builders in? To name a few: hardware, corrugated boxes, building products, food supply, and medical products.

They're discreet. 

Real self-made millionaires don't stand out in a crowd —they may even be your neighbor. Overalls or business casual are a more typical wardrobe than business suits. Armani suits and gold watches are for people trying to prove a point; a multi-million dollar portfolio means they don't need to prove anything to anybody.

They don't talk about big money. 

Most don't discuss what they've got; often they actually don't have much in the way of stuff anyway, preferring to have their money tied up in their business or in income preserving/producing assets.

They're patient.

"Patient capital" best describes the investment philosophy of most millionaires. Entrepreneurial millionaires are careful to expand their investments slowly and generally to do so without incurring debt. There's a pronounced preference for income-producing investments such as dividend paying stocks, bonds, certificates of deposit, treasury securities, and unleveraged investment real estate with positive cash flows.

They generally avoid raw speculation, although they may devote a very small amount of money to mutual funds or to the occasional penny stock. They’ll leave the potential of a quick score in order to avoid a wealth-destroying bear market.

For us non-millionaires, the risk is that we'll become tempted to pattern ourselves off the stereotype rather than on reality. We may fake it until we make it by "investing" our money in material goods and a lifestyle rather than in capital assets like businesses and income-producing investments. But that only feeds our ego and drains our finances.

From what I've seen, becoming a millionaire is a boring process: You work hard, you plan to work forever, and you relentlessly save money. You don't speculate, you don't "make a killing," and you don't live life in the fast lane. As for the self-made millionaires who do have some luxury in their lives — it usually followed many years of deferred gratification.

I suspect that most self-made millionaires don't have a problem with the masses believing the typical stereotype. They're happy to watch us speculate and spend our money on things that are likely to leave us broke because, when we do, there are fewer of us competing with them.

Is there a message in that for us?

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HfW : How To Become A Millionaire By Age 30

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Getting rich and becoming a millionaire is a taboo topic. Saying it can be done by the age of 30 seems like a fantasy.

It shouldn't be taboo and it is possible. At the age of 21, I got out of college, broke and in debt, and by the time I was 30, I was a millionaire.

Here are the 10 steps that will guarantee you will become a millionaire by 30.

1. Follow the money. In today's economic environment you cannot save your way to millionaire status. The first step is to focus on increasing your income in increments and repeating that.

My income was $3,000 a month and nine years later it was $20,000 a month. Start following the money and it will force you to control revenue and see opportunities.

2. Don't show off — show up! I didn't buy my first luxury watch or car until my businesses and investments were producing multiple secure flows of income. I was still driving a Toyota Camry when I had become a millionaire. Be known for your work ethic, not the trinkets that you buy.

3. Save to invest, don't save to save. The only reason to save money is to invest it.  Put your saved money into secured, sacred (untouchable) accounts. Never use these accounts for anything, not even an emergency. This will force you to continue to follow step one (increase income). To this day, at least twice a year, I am broke because I always invest my surpluses into ventures I cannot access.

4. Avoid debt that doesn't pay you. Make it a rule that you never use debt that won't make you money. I borrowed money for a car only because I knew it could increase my income. Rich people use debt to leverage investments and grow cash flows. Poor people use debt to buy things that make rich people richer.

5. Treat money like a jealous lover. Millions wish for financial freedom, but only those that make it a priority have millions. To get rich and stay rich you will have to make it a priority. Money is like a jealous lover. Ignore it and it will ignore you, or worse, it will leave you for someone who makes it a priority.

6. Money doesn't sleep. Money doesn't know about clocks, schedules, or holidays, and you shouldn't either. Money loves people that have a great work ethic. When I was 26 years old, I was in retail and the store I worked at closed at 7 p.m. Most times you could find me there at 11 p.m. making an extra sale. Never try to be the smartest or luckiest person — just make sure you outwork everyone.

7. Poor makes no sense. I have been poor, and it sucks. I have had just enough and that sucks almost as bad. Eliminate any and all ideas that being poor is somehow OK. Bill Gates has said, "If you're born poor, it's not your mistake. But if you die poor, it is your mistake."

8. Get a millionaire mentor. Most of us were brought up middle class or poor and then hold ourselves to the limits and ideas of that group. I have been studying millionaires to duplicate what they did. Get your own personal millionaire mentor and study them. Most rich people are extremely generous with their knowledge and their resources.

9. Get your money to do the heavy lifting. Investing is the Holy Grail in becoming a millionaire and you should make more money off your investments than your work. If you don't have surplus money you won't make investments. The second company I started required a $50,000 investment. That company has paid me back that $50,000 every month for the last 10 years.

My third investment was in real estate, where I started with $350,000, a large part of my net worth at the time. I still own that property today and it continues to provide me with income. Investing is the only reason to do the other steps, and your money must work for you and do your heavy lifting.

10. Shoot for $10 million, not $1 million. The single biggest financial mistake I've made was not thinking big enough. I encourage you to go for more than a million. There is no shortage of money on this planet, only a shortage of people thinking big enough.

Apply these 10 steps and they will make you rich. Steer clear of people that suggest your financial dreams are born of greed. Avoid get-rich-quick schemes, be ethical, never give up, and once you make it, be willing to help others get there too.

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