Updated: Nov 29, 2020
Part 2: The Income Piece
Now, that I’ve discussed expenses and ways to decrease and minimize your liabilities, let’s dive into a conversation on increasing your income, investments, assets and overall net worth. For most people, the majority (if not all) of their income is comprised of funds from their “day job”. This can be funds from W-2 earnings, or for those that run their own business, that is their primary income source. The main difference between decreasing your expenses versus increasing your income, is that income earning potentials are ultimately unlimited, whereas you can likely get to a point in decreasing your expenses where costs can no longer be cut.
For many people, increasing income may not have been a thought that’s crossed their mind. If it does, most individuals look at getting a new “day job”, with higher earnings to boost their salary. However, their are a multitude of additional ways to increase your overall earnings and subsequently, your savings rate.
So, what are some ways to increase your income? Let’s start with some examples. Look at your overall situation and how you can best utilize your time. If you are actively employed and work a 9-5 job or own your own business and these are your primary income sources, first look at ways to increase those areas. Can you ask for a raise at your job? Can you bump up into a different position at your current employer? Can you look for other employment opportunities within your field at an employer that pays better? If you own a business, what are some ways you can optimize your company to bring in more income? Can you enhance your marketing strategy? Can you expand the business to serve more people and thus, generate more income? Second, with your additional time, can you create additional earnings through side job earning opportunities? Third, how can you create passive earnings, with which you are making money without having to be actively involved?
If you can do any of the above things, start there. If you can make an extra $5K, $10K, etc per year, that’s a significant amount of additional money you can add to your savings. Remember, with an increase in income, doesn’t mean an increase in expenses. Keep your expenses the same (or less). Just because you make more money, doesn’t mean you need to spend it.
There are a multitude of side hustles to choose from. Let’s look at some specific income generating opportunities. Some options might include the following: part time jobs, real estate investments, driving for Uber/Lyft, Amazon reselling, dog walking, AirBNB, etc. There are literally hundreds of different things you can do to earn additional income. Find what works for you and your own personal situation and act. Start by creating a goal of how much income you think is feasible to earn, ensure it is worth your time and create an action plan. I’ll venture into a few examples below to illustrate.
Uber/Lyft. The taxi services of the 2010s, also known as ride sharing companies, where people are shuttled from point A to point B for a fee. From what I understand, this is an easy way to earn additional income. Obviously, it requires your time, but this option provides very good flexibility. You can create your own hours. You might work a few extra hours a week, one weekend day, or multiple, depending upon your own situation. You can simply turn on the app and start working at your discretion.
Amazon Reselling (or reselling of any kind). I’m sure at some point, most people have taken at least one Economics course in their lifetime, whether in high school or college. The basics are Supply and Demand. When a product or service has a high demand, the price increases, when the demand is low, the price decreases. There are a multitude of variables, but the premise is pretty simple, buy low and sell high.
Real Estate Investments. These can include Rental Properties, Flipping, Syndications (an example would be purchasing an apartment complex with several involved parties), Note Investing, etc. There are various components and complexities of real estate investing, with quite literally thousands of books discussing the topic. The common theme and goal of real estate investing is to create passive income (through rental properties) or lump sum income by continually flipping properties (ideally increasing your income and net worth with each flip).
The Stock Market. As with Real Estate, the Stock Market can be quite complex. Buying and Selling Stocks requires considerable knowledge, as to make informed decisions. For many individuals, the Stock Market is a large component of their retirement plan, through 401Ks, Roth IRAs, etc. As with a few topics discuss above, you want to buy low and sell high. The key here is to be sure to continue to buy so that your investments can grow exponentially.
Dog Walking/Sitting/Boarding. Sites such a Rover.com allow you to advertise these options. You can set perimeters for availability, services, fees, etc. This can be a great and easy way to earn some extra cash, especially if you love animals, have a flexible job, or have some spare time after your day job and on weekends.
All of the options discussed above have varying differences and complexities that make them unique. However, all are doable. Creating an action plan and taking some time to think through your strategy are good first steps. Whether your goal is an earlier retirement, saving for a large purchase (it better be good), a vacation, etc., side hustles can be the perfect vehicle to get you to your destination.
Although topics discussed in this post were brief, my goal was to get the wheels spinning and thinking of additional ways to earn extra income. Hopefully everyone has been able to brainstorm ways to push forward in their own personal situations and make their financial position a little better. Cheers to Frugality!
NEXT BLOG: MOTIVATION