Step 5: Increase Your Income
A successful man is one who can lay a firm foundation with the bricks others have thrown at him.– David Brinkley
It is not essential to have a high income in order to reach financial freedom. I promised a ‘poor man’s guide’, and this you shall have. However, if you can find a way to increase your income a bit, you’ll achieve financial freedom more quickly, and/or reach a higher level of financial freedom. As we will keep repeating, it is all about what you do with the money once you have it. Plenty of high-income people are floundering in debt and have no control over their finances at all.
If you ask pretty much anyone in the world how much money he needs to be perfectly comfortable (not rich), his answer will be the same: ‘A little bit more’. Everybody thinks that an extra 20-30% of income would solve most of his financial problems.
Look at me. I tried living in the Philippines on $1,200 a month and found it a bit tight. And yet, there are Filipinos who live on less than that and consider themselves well-off. Meanwhile in the United States, you can read articles about middle class families ‘struggling’ to get by on $350,000 a year![i]
As wise men have told us for millennia, the key to happiness is to be satisfied with what you have. There are probably people with lower incomes than you who are content, and there are definitely those with far higher incomes who are struggling to make ends meet because their expenses exceed even that lofty amount. That is why the chapter on budgeting came long before this one.
All that said, any extra income you can make will enable you to reach your financial goals faster. The poorer you are, the bigger difference it can make. Consider this example:
Mark and Richard both start a side gig and earn an extra $5,000 a year. They put 100% of this into savings. Nice, hey?
Mark has a very high income and was already saving $40,000 a year. Now he’s saving $45,000 a year – a 12.5% increase.
Richard has a low income and was only saving $4,000 a year. Now he’s saving $9,000 a year – a 125% increase!
The more you’re struggling to save, the more significant an impact even minor changes can make.
Let’s systematically look at your income and see if there’s anything you can do to improve it through large changes or small. We’ll start with the obvious then move to the more esoteric.
Is there an alternative career that would pay more?
This will be by far the hardest option for most readers, but let’s not dismiss it until we’ve considered it. Is there something else you could do without gaining additional training or qualifications? Are you able to retrain, and what would the costs be? If you are young, you might find it works out to your advantage to go back to school. If you are an old fellow like me there may be no point. It might make sense to look at how to earn more without changing jobs. Which takes us to:
Could you increase your income within your current career?
Are there promotions or overtime available with your current employer? Could you ask for a pay rise? Would you be able to make more money by seeking a job with a different employer?
Here’s another thing to consider: are you able to increase your savings by doing the same thing in a different location? Various professions pay more money or attract lower taxes in remote areas or overseas. I’m thinking here of nurses working in Saudi Arabia, miners working in remote areas, teachers working in the outback or arctic, or ski instructors spending a season in Japan. Have a look around and see what the options are. As discussed in the chapter on budgeting, there may also be an advantage in moving to a location with a lower cost of living, especially if you can work remotely.
Can you hustle?
You may be able to earn a second income. Is there some evening or weekend work that you could do? Are you able to make a small, extra income running your own business, say, teaching piano lessons or making novelty letterboxes that look like former presidents’ heads, or something like that? Consider starting up a little business in an inexpensive way that won’t entail too much risk. Be prepared to try a few different schemes until you find one that works. It’s hard to know what might be profitable until you give it a go.
Here are a few work-from-home ideas to get you started. These mostly involve an investment of time rather than money. Later, in Step 8: Invest Wisely, we’ll look at investments that require more money than time.
Niche websites: If you’re on top of the technical side of things, you might make money by either selling a good/service on a niche website or by using it to refer clicks to other sites as part of an affiliate program. There is a little bit of money to be made in advertising, too. You might want to check out the course run by This is Trouble[ii] if it sounds like your kind of thing. And no, that is not an affiliate link. I should follow my own advice.
Sell an eBook: Here I’m more of an expert. Let me start by saying, don’t bother with this unless you’re really keen to write a book anyway, just like there’s no point trying to be a zookeeper if you hate animals. It is a huge investment of time to write even a short book, it will probably cost you more than $1,000 to get it copy edited, and much more if you choose to get it hard edited, i.e. to have a professional editor help you shape the book itself rather than just pick up all your bone-headed typos. Add another $200 – $300 for a professional cover design, or more if you also want a dead tree version.
Non-fiction books tend to sell well, especially niche how-to guides. As for fiction, erotica and romance are most popular.
Maybe that book you’ve always dreamed of writing about how to knit your own woolen underwear, or that fantasy romance about the diamond-in-the-rough werewolf and the wallflower Stegosaurus, is just what the world has been looking for. Perhaps you could give it a go if it would be a labor of love anyway. If you’ve hated writing ever since you had to do it at school, definitely find something else to do.
A lot of your success will depend on how well you can market the book via an author webpage, online advertising, social media etc., so even after it is published there will still be work to do and perhaps expenses to incur.
Sell stock photos/classroom lesson materials/background music or images/stuff like that: What it says. There is a market for these things online if you have the skills.
Phone work: You can make money from home by telemarketing, service agent work, or, for those with the right aptitude, phone sex lines and that sort of thing. In the US you might look up Brighton Communications, Working Solutions or Arise. For other countries, do a web search and see what comes up.
Transcription: You type up recordings such as meetings and radio broadcasts. Only suitable for those with fast keyboarding skills.
Search evaluator: You test how well search engines are working or assess social media. I’m not sure how much of this work is checking for donkey-related videos you wouldn’t want your Gran to see – look into that for yourself. Check out Appen Butler Hill, LeapForce or search for other services in your home country.
Online tutoring: If you can do something, you might be able to teach it online. The most common such skills would be your language, school-level math, or exam preparation. Have a look at Chegg, InstaEdu, Verdant and many others.
Virtual assistant: Some back-office work is now outsourced. If you know how to do basic admin and use common software, this might be for you. Consider Worldwide 101 or Virtual Office Temps.
Uber: If you have a car that meets their specs, you could earn some income on the side. There are also alternative apps out there.
Other: There are various opportunities available online if you have the right skills, including web design, over-the-phone medical advice (you’ve got to be a registered nurse, obviously), proofreading, translation, website testing, copy writing, and many others. Whatever skills you have, search online to see the possibilities.
The general caveats for online, at-home work are (1) make sure it is not a scam, and (2) be aware that what you gain in the convenience of working from home, you lose in remuneration. Most of these jobs don’t pay much, especially those that require less skill.
If you are willing to put on your pants and actually leave the house, further opportunities become available:
Do you have any stuff that you rarely use, say, a jet ski rotting in the shed or some furniture that’s been sitting in storage for years? Go through everything you own and consider whether you really need it or not. If you don’t, and it has resale value, sell it. Also consider selling expensive items and downgrading to a cheaper equivalent, especially if you have a valuable car that you really shouldn’t have bought in the first place.
For some reason, people consider selling off their things as a sign of economic desperation and disaster. In fact, it is a very powerful way of generating cash quickly. I’ve heard of families unwilling to sell the BMW that sits unused in the garage most days of the week because of what the neighbors might think, despite their economic distress. SELL IT! Don’t let nosy neighbors or other peers get in your way when seeking financial freedom. And remember – a lot of them are suffering hidden money problems of their own, for the same silly reasons.
A wealthy person isn’t the one who has the flash clothes, sweet watch and fancy car. It is the one who, whatever his material possessions, spends significantly less than he earns. That’s it. I’ll come back to the point as many times as I need to.
No, I’m not kidding. If you live near a major university or other research institution then this might be a possibility. Generally, the deal is they give you a very thorough medical examination, and then select only the fittest and healthiest potential subjects for the test. If you are not fit and healthy, obviously this is not for you.
Often you have to go to a hotel or other controlled environment for the duration so that they can keep you under close medical observation in case anything goes wrong. You might have to take a new medication or something like that, and they watch you to see whether you turn blue and float up towards the ceiling fan like Violet in Charlie and the Chocolate Factory, or have a strange, bloody-jawed creature burst from your belly like in Alien.
Common sense is required here: the reason they give you money for this is because it is potentially dangerous. In one case I’m aware of, they got subjects to sit in an ice bath for hours to see what would happen to their body. In another, subjects took a new schizophrenia medication, and those are notorious for their side effects. I guess there’s a 50/50 chance they’ll give you the placebo if that makes it any more tempting . . .
There are also psychological tests. It might be a reflex test or showing you different colors to see if there’s an effect on your blood pressure. Or maybe on your way to see the colors an old crazy lady randomly flashes you, and the researchers are actually testing your blood pressure reaction to that, the color thing being a ruse to make sure the experiment is blind. Who knows.
The researchers are legally required to give you full information about the risks, though they might not be able to tell you some other details if it is a double-blind experiment. I advise against even considering this option if you live in a jurisdiction where enforcement of medical ethics might not be as rigorous as you’d hope. For examples of horrific experiments in the past, I point the curious to MK-Ultra, The Milgram Experiment, the Stanford Prison Experiment or the Robbers Cave Experiment. Search and enjoy.
Look for lost money
It is estimated that there is over $50 billion in unclaimed money in the United States alone.[iii] It is amazing how many people have money in bank or retirement accounts that they have completely forgotten about. Rack your brains for any old accounts that may still be around, including ones you had when you were a kid.
These sites tell you how track down forgotten money:
Other: search “find unclaimed money [my country]”
You’re going to laugh, but seriously, check behind the sofa and in pockets of jackets you haven’t worn for a while. You’ll be astonished. My mate cleaned out his room when he was moving out of home and found a birthday card from his eighth birthday. He’d obviously never opened it because inside was $10.00 from his auntie!
He spent it on beer.
While it is probably not essential to make extra cash in order to achieve financial freedom, it can help to reach your goals faster. You might move to a more lucrative position or location, take on a side gig, sell some unneeded items or find lost money.
A final note
If you succeed in increasing your income, even if only by a little, well done. This will make both the previous and the subsequent steps easier. However, there is a funny little quirk that tends to completely negate this advantage: people’s spending tends to rise with their income. The same person who managed to save exactly nothing when he was earning $35,000 a year still manages to save nothing once he starts earning $45,000, though you’d think he’d be saving $10,000 per annum. This happens all the time.
Even more worryingly, the person who overspends on $35,000 a year and gets into debt is likely to continue overspending and be languishing in debt even if his income rises to $100,000. Your income makes no difference whatsoever to your long-term financial freedom if you are spending it all, and it can even make things worse because big earners are better able to borrow money and really get themselves into a pickle. As someone once said, you have to be really rich to get massively into debt.
Remember, the point of increasing income is to increase the surplus cash available for establishing an emergency fund, paying off debts or for investing. If you start spending more, you are no closer to financial freedom than you were before you took on that Saturday gig as a skydiving instructor. Stick religiously to the budget you made back in Step 2, add all extra income to the ‘savings’ or ‘debt’ lines, and you’ll be well on your way.
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