No Joke: Jay Leno Teaches Us a Valuable Lesson About Personal Finance

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The Tonight Show with Jay Leno - Season 21
NBCU Photo Bank via Getty Images
Earlier this month, Jay Leno officially retired from "The Tonight Show," capping a more than two decade run as host of that American institution -- a stretch only eclipsed in length by the "The King of Late Night" himself, Johnny Carson. And though the media frenzy surrounding the event was nonstop, one of the stories that was missed in all the excitement was the unique retirement plan Leno implemented using his salary from NBC -- a plan everyone can use to ensure a larger nest egg when they're ready to retire.

All you have to do is get a major network to pay you millions of dollars a year and you'll be all set. (See, it's easy!)

OK, now back to reality.

As Leno recently explained to Jerry Seinfeld, since becoming the host of "The Tonight Show," he's never touched a penny of his NBC salary. Instead he's lived on the money he makes from his stand-up gigs, personal appearances, and endorsement deals.

Of course, Leno's income -- no matter what the source -- is at a level that most of us will never achieve. But as he told Seinfeld, even when his pay was normal, that was how he's always done it:

"You know, when I was a kid, I always had two jobs, and I would bank one, and I'd spend the other. Then when I got 'The Tonight Show' I just continued to do that."

Applying this same concept to your retirement plan can yield you much better results that you'll get from saving alone.

Saving for your retirement means carving out a piece of your income separate from what you use for bills and recurring expenses. However, if there's an interruption in that income, your retirement fund will suffer.

The "income redundancy" in Leno's plan creates a completely separate income stream -- distinct from the one you use to live on -- that feeds your retirement fund, and which won't be affected by a temporary disruption of your main income source.

What's Your Second Income Stream?

There are a number of ways to create that income redundancy, depending on your age, the economic climate, and the amount of effort you're wiling to put into it.

The most straightforward option is to actually have two jobs -- one full-time and one part-time -- or if your personal circumstances allow, two full-time jobs. This arrangement is ideal for young, single people with plenty of energy and little outside responsibilities. A 20-year-old who nets $500 a week from a side gig and earmarks it solely for his retirement fund would amass almost half a million dollars -- not including interest -- by the time he turns 40.

But what if you already have a full-time job and are in your mid-40s, with children,
a mortgage and other responsibilities? How can you take a second job without it affecting not only your relationship with your family, but your physical and mental health, as well?

This is where you need to redefine what the term "job" means.

We're fortunate enough to live in a time where technology gives us the opportunity to create income without the massive investment of time and money that would've been needed in years past, and we can use that advantage to create our second job.

For example, a friend of mine took some classes a few years ago on repairing computers. He now runs ads offering to buy "broken" laptops online; once he gets them, he fixes them up and resells them for a nice profit on Craigslist. But the best part is that he does it in his own garage, spending only a few hours a night -- after his kids go to bed -- on his "job."

Do you know how to code, or design, or write, or market? If you do, you can offer your services as a freelancer on sites like Elance where you can choose the work you want, work as much as you want, all with flexible hours and from the comfort of your own home. Don't know how to do any of those things? Can you shop?

One of the most popular reality series today is "Thrift Hunters," which follows a pair of middle-aged men who make a good living by finding items at thrift stores, buying them cheap, and then selling them on for profit eBay (EBAY). Could you spend a few hours a week doing the same?

The possibilities are nearly endless as to how you can come up with your secondary income source, and are only limited by the amount of time and effort you're willing to invest in the process.

No man is an island, or even a peninsula, so I encourage your feedback in the comments below. And don't forget to pick up my book, "Trading: The Best of the Best -- Top Trading Tips for Our Time."

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noqozofapid

Good idea Jay! Always have backup revenue streams... the people that don't are the same people that spend their "free time" watching sports, watching TV shows, playing video games, shopping, etc. Always, have a backup plan people!
I've invested in gold, diverse collection of funds, a life insurance policy (that PAYS great dividends and is cheap... from Life Ant), and I'm even a part time contractor aside from my day job as an accountant. Be wise, guys!

March 05 2014 at 10:15 PM Report abuse rate up rate down Reply
David

What a joke. How many of us have a first job that makes the kind of money he does ( for stand up and guest appearances). How many cars can I buy on my first job salary.

Most people have a regular job, bills, family etc.

February 27 2014 at 10:59 PM Report abuse -1 rate up rate down Reply
vlady1000

That is pretty much the same as I have done. Started 13 years ago buying my 1st student rental property. Always did everything myself, kept all the profits in it (and added a few more $$) and kept building it up. I now own 12 properties, still do 95% my own work, manage them all, etc and can retire any time I want (very comfortable for my wife and I) from the positive cash flows alone, with more income coming in every month than I make a my job. A lot of weekends vacation time, nights, etc lost in 13 years, but nothing comes for free.

February 27 2014 at 10:36 PM Report abuse rate up rate down Reply
PRINCE C& DEVLON

Jay Leno did what alot of millionaires do secretly. I read it in an amazing book that takes what Leno did, even farther. This video link is what we do for our second income. And boy has it paid !! It's Incredible !! njoi : WWW.MMXGO.COM/WVG

February 27 2014 at 7:26 PM Report abuse rate up rate down Reply
betty_brock

Find the Lord, Jay. That is more important than money.

February 27 2014 at 3:44 PM Report abuse -1 rate up rate down Reply
3 replies to betty_brock's comment
ron4342

It is great that Leno was talented enough to be in demand and in a field where he could make those kind of wages. I do not begrudge him a penny and I wish him health and even more wealth. However, unfortunately not everyone has great talent or is in great demand. I think of those that work two jobs just to cover food, shelter, and medical care. It is pretty tough to bank the money from one job when it takes two jobs just to pay the bills.

February 27 2014 at 3:43 PM Report abuse +3 rate up rate down Reply
1 reply to ron4342's comment
lem63

Ron I hear you.. We here all the time how if you stop a few nights out and put that money in savings you will be alot better off. where is the formula for the people( and there are alot of us ) that after we feed and house ourselves and fill the gas tank ect there is nothing left.Its called working to survive each day. we dont have a future when we get old we are left on the street to be looked down upon by society as a scurge. It is truly sad and in less then 15 years you will see what I am talking about as there will be no social security because it has been stolen by Congress and the former Presidents that wanted all of us to think they were doing there jobs. Self serving is all they are... Very sad

February 27 2014 at 4:17 PM Report abuse rate up rate down Reply
kevj1

Jay didn't do what his dad did, or what his dad told him either. Work at a mill right from high
school, 40 years of very hard labor, retire (not heathly or wealthy). When Jay was a young
teen, he practiced his jokes at family gatherings. Dad told him "Who the hells' gonna pay
you to tell jokes?" At 18 he left home in his '55 Buick. Jay Had to succeed, his Mom knew
all along, Jay recently bought that '55 Buick from the guy he sold it to and restored it.
Jay drove to work himself (a 1912 Firetruck), ate a small Pizza everyday, and wore
NBC;s suits. When the Actor's went on strike, he took a $15million cut and paid his
staff. No doubt Mr.& Mrs. Leno were always proud of their son, 'cause Jay is a stand
up guy :)

February 27 2014 at 3:37 PM Report abuse +1 rate up rate down Reply
xtremwayz7

yeah but neither of his two jobs were work easy to do when your standing and sitting around telling jokes people write for you , ******* wouldn`t know what a real job was if if bit him on his big ass chin, I always watched Letterman never like back biting ******** like Leno did it not only to Dave but Conan too , hopefully he dont get to enjoy his ill gotten gains

February 27 2014 at 3:13 PM Report abuse -6 rate up rate down Reply
2 replies to xtremwayz7's comment
teetie

He don't spend his ill gotten gains????
Ill gotten??
Jealous much???
Get thru elementary school? You sound ill educated and VERY jealous.
got much bile in your throat?

February 27 2014 at 3:19 PM Report abuse +1 rate up rate down Reply
Kent

My father was drafted into the Army in 1952, and spent his entire tour in Europe. So, he took a small amount of his pay for spending at the PX and for traveling with buddies on leave. The rest he sent home to my mother, who put that money in the bank while living off her salary as a secretary.

That money wound up being the downpayment for their house in 1964.

By the same token, my father was laid off in 1981. His employer had some funky pension rules, such that a forced retirement wasn't treated as early retirement. So, he got his pension at age 55, but he was treated as having retired at 65. My father got another job and invested his pension money. In fact, he didn't retire until the end of 2002.

Think how much money he had saved for retirement, when he retired.

By the way, it was NBC who decided that Dave was too hip for the over 45 set (considering that my parents liked Jay better, even in the early 90s, they were right). By the same token, it was the NBC affiliates who wanted Conan dumped, because his ratings were way below Jay's.

Here's the irony, I would watch Conan from 10 to 10:35, then switch to Jay. Why? They are both funny.

February 27 2014 at 3:23 PM Report abuse +3 rate up rate down Reply
photoman

The plan and strategy which works is the best one. One that worked for me was but any $20 a week in a can, not using the money, until that ammounted to $500.00 and then I invested it in a no load mutual fund, and continued to sock away $20 per week. Saving $20 a week is easy: that is foregoing a meal out, cook at home savings e instead, or stopping smoking, or quite a number of other activities. Then I increased the weekly savings to $50.00 per week, and did not notice lacking any money to spend. When my first daughter was born, I increased the weekly savings to $100.00 per week, intending that to be a college savings fund. Missing $100.00 per week I noticed!!! I foudn that I sometimes needed to count and total up the change lying around to find a few spare dollars (another way to save: every night, emptying all of your change into spearate jars, and never toudhing that, only to roll it into amounts to be deposited at the bank). About a year later, my employer, a mahor NYC daily newspaper, crying poverty, cut our work week and paid days for four days a week from five. Strange, but wonderful: I then realized that my daily take home pay was about $100.00 a day! So the $100.00 a week that I formerly saved was not missing form my weekly paycheck; I stopped saving the $100.00 a week for the "College fund" and instead started freelancing in earnest, to more than make up the fifth, and sixth days of my work week.

February 27 2014 at 2:49 PM Report abuse rate up rate down Reply
fulredy

I wonder how he pays for all the cars he has?

February 27 2014 at 2:40 PM Report abuse rate up rate down Reply
1 reply to fulredy's comment
vlady1000

and all the help it takes to take care of them

February 27 2014 at 10:37 PM Report abuse rate up rate down Reply