Welcome back to the blog!
Today we’re on step 3 in the series, and we’re talking about ways to increase your income. If you missed Know Your Numbers and How To Create a Budget then I recommend that you read those before diving into step 3.
By the end of this post you should be able to calculate your break even number, know and how the amount you need to increase your income by, and have ideas of how you can and will increase your income.
There are many reasons why you would want to increase your income and there are various ways you can increase your income. It was important that I increased my income because I wasn’t able to make ends meet in the beginning of my journey.
When I first started creating my budgets, my expenses were more than my income resulting in a negative number at the end of my budgeting session. Not having enough income to cover my expenses and bad money management led to missed payments, stress, anxiety, and ruined credit.
After I knew my numbers (step 1), and created my budget I knew what my next goal was: to at least break even. At minimum I wanted to be able to climb out of the hole and have my income equal my expenses.
Of course the ultimate goal is to have more income than expenses so that you can do other things with your money like save, invest, etc., but my NEXT immediate step was to simply break even.
Identify your break even number
In order to break even, I needed to determine how much more income I needed. This is not the same break even you learned in school, it’s an easier plug in number in my opinion. An easy way to figure out this number is identify the negative number in your budget after you entered your income and expenses (if you have a negative number).
Refer to your budget and see how much money you will need in order to have your income equal your expense or simply how to have a 0 at the end of the budgeting period instead of a negative number. If you budget multiple times a month, add up the negative amounts from each budget and that’s your break even number.
Example: Say you have an income of $1,000 every two weeks totaling $2,000 a month and your total expenses are $2,500. Your budget would have $-500 at the end (income minus expenses). That means you would still need an additional $500 to break even or have 0 at the end of the month. If you get an extra $500 your expenses would equal your income and everything would be covered.
Find ways to increase your income
Some was you can increase your income is by finding a better paying job, cutting back on expenses, and finding a side hustle. Other options are to sell some of your belongings that are in good shape, ask for a raise, or find a part time job.
Ask for a raise or find a better paying job
I started by asking for more money at my current job and when I was denied, I started looking for a better paying job. Working multiple jobs is an option, but it wasn’t one that I would like. My goal was to find one job that would pay me what I wanted and what I was worth based on my skillsets and degrees.
Fortunately, I was able to find a job that paid $5,000 more a year which was about $400 more a month before taxes.
Tip: If you want to calculate how much you would make a month before taxes, you can divide the salary by 26 weeks. If you need to determine the hourly rat you can divide the salary by 2080.
Another plus to the new job was that it had better benefits, which was extremely important since I was pregnant at the time.
Other things that I did included cutting back on eating out which I truly needed to do for my health too. I drank coffee at the office since it was free. I no longer had to pay for parking downtown or use public transportation (which saved me gas and money on parking). Think about gas and how much you eat out, could bringing your lunch help save you money?
Cut back on expenses
Cutting expenses worked in my favor too, but there’s only so much you can cut back when you are reviewing your expenses. Some things you need and if you cut too much you run the risk of being miserable AND broke – I don’t recommend this.
Make decisions that make sense for your life. Start looking at your subscriptions and things you don’t actually use or haven’t used in a while. I also sold some of my belongings like my clothes, my tv and things that I wasn’t using at the time like my apple watch, old tablets, etc.
Find a side hustle
These days, it seems so easy to find a side hustle. What are things you enjoy doing that you can monetize, or skills that you have that others would pay for? Do you like to craft, draw, write, etc.? Are you a designer, content creator, or great at strategizing? Do some research and see if there’s a market for your skills and if you should monetize them.
You should also think about how long it would take you to generate the side income, for example when you sell your items locally you can get money right after the items leave your home but if you need to get certified or anything like that, it would take longer.
I began with learning how to trade options in the stock market. This was well after I had gotten the new job in 2018, had my baby, gotten a promotion, etc. While I was able to pay off over $10,000 worth of debt, I would say that it is risky. I would recommend that you start by finding a low cost, less risky side hustle.
If you work hourly, you could start by asking for more hours. You can also try to get overtime since it pays time and a half (1.5 more per hour).
Don’t forget to look at the different types of benefits they offer because that can help or hinder you from reaching your goals.
If the insurance is costly, you may want to explore other plans or consider getting insurance elsewhere.
If they have a better 401K plan and the match is better than your previous job, then it could benefit you if you contributed because its more free money.
Note: it’s okay to wait until you’re in a better financial position to contribute to your 401K. Yes, it’s great for the long run, but it shouldn’t hinder you in the short run. Be smart.
Tip: Do check and see how long it will take for you to be vested. If you leave the job before that point in time, you’ll lose out on the free money.
I hope you find this post helpful! You should now have an idea of ways you can increase your income. Choose a couple or all and get started!
Stayed tuned for the next one!