Increase Your Income (Part 1): Making the Decision to Move Forward

This is the first in a series of posts called “Increase Your Income”. By the end of this series, you’ll know the concrete steps you need to take to make more money.

You can’t save your way to financial freedom. It’s limited and shortsighted to rely solely on saving. After all, there’s only so much money you can save in a month.

See, the amount you save depends on the amount you make. If you only make P13,000 per month, then there is no way for you to save P15,000 per month. There is only one way to increase the amount that we save, invest, and even spend – we need to increase our incomes.

Everyday we hear some of our friends, family, and colleagues lamenting the state of the economy, the limited number of jobs out there, or the low wages that employers pay. How is it possible to increase our incomes?

First, we need to know our income goals. How much extra income do you need to earn each month? Why do you need that amount? Knowing the numbers makes the goal more concrete – you’d know exactly what to aim for. But you also need to know the reason behind the numbers if you want a powerful motivator. For example:

“I want to earn P10,000 additional income each month so that I can save up to take my wife to Paris for our 10th anniversary.”

or

“I want to earn at least P50,000 non-employment income each month so that I can finally resign and spend more time with my kids.”

It’s very important to write this down, even if it’s just a simple sentence.  By committing it on paper, you’ve made a decision to move forward and start earning more. If you want to look at it every time you need a reminder, keep it in your wallet or as a note in your phone. Make it easily accessible, because it will provide the direction you need to start earning more money.

Also, you need to know the “givens”.  These are the existing conditions of your situation now. Ask yourself the following:

• How much capital do you have?
• How much capital can you risk?
• How much free time do you have each week? Exclude time with family, friends, and time for leisurely (but important) activities.
• What skills do you have? What skills do you need?

You don’t need to answer all these questions right away, but as you come closer to deciding HOW you’re going to earn extra income, the answers will become clearer to you.

The 4 Most Common Ways to Increase Income

Now that you’ve decided to make more money, you need to choose HOW you are going to do it. While there are probably thousands of specific ways you can earn more money, they typically fall under one or two of the categories below:

Increasing salary

If you’re an employee, odds are that your primary income source is your paycheck. There are ways to increase that paycheck, including getting a raise, getting a promotion, or changing jobs. Even freelancers and consultants can charge higher rates or find other ways to increase the base pay they receive.

This tends to be the most accessible way to increase one’s income. After all, it requires less research since you’ll still be working in the same field, industry, or company. Also, you won’t be opening a completely new stream of income, you’re just adjusting a stream that is already available to you.

Selling products

Another way to make more money is to sell products. These products can be tangible, such as food items, accessories, or electronics. They can also be digital, such as ebooks or software. Basically, before you start earning, you need a product to sell and customers to sell it to.

Selling Services

If you’re not into selling products, you can sell services instead. I believe that everyone has a marketable skill. Everyone. It doesn’t have to be unique or creative, it just has to be something that you are able to do. This can be something simple like fixing computers or cleaning houses. It could be more elaborate such as evaluating real estate investments, or programming online apps. You turn this skill into a paid service, find your customers, and make time to provide these services.

Investing

You can also make extra money by investing. This means spending your money with the hope or expectation of profit. When people think about investing, they typically think of stocks or bonds. While these are some of the most common ways to invest, there are other methods as well, including buying real estate or directly investing in someone else’s business.

Because you need large capital, this isn’t an avenue chosen by most people who are just starting out. True, you can invest in smaller amounts like P5,000 to P10,000 – but you can’t expect to get rich off  small amounts. While I believe that everyone should invest, for most people it’s very risky to make investing their only source of income.

In the next few weeks, we’ll be exploring these 4 ways in greater detail, including action steps on how to get started. That way, you can explore each option better, then choose the ones that are best suited to your situation.

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Photo by Flickr user jdhancock