Nov 5th, 2009
What Increases Income?
In my parenting class, we discuss finances once a session, and I typically write a really simple equation on the board while we’re discussing it:
Income – Expenses = ?
The point of the equation is that you end up with some number after subtracting all your expenses from your income, and if the number is negative, you’re running a deficit; if deficits continue, they will inevitably become debt.
On a smaller scale, this also points out to the participants that there really are only two things they can do to improve their financial situation–increase their income or reduce their expenses. So, that said, what can people do to actually increase their income?
There’s only a few things:
1) Get a better paying job. This may be the single most common thing that happens for people to increase their income. Yes, money talks, although other issues like schedules, commutes, and quality of life play a large part in changing jobs.
2) Get a second job/open a small part time business. This blog is an example of a small part time business that makes a bit of income. In addition, I actually have a second job teaching a couple of nights a week. These two have boosted my income approximately 30%.
3) Invest in something that creates income. An example might be dividend paying stock, or quality bonds or a bond fund (think Vanguard GNMA Fund, for instance). This requires a large initial outlay of money to do, but can be a way to increase your income without doing more work.
There really aren’t many more options to increasing your income. Just a few ways, and this is one of only two ways to really influence your financial situation. Can you think of other ways to increase your income?
Finding a good job can be pretty troublesome. Especially when you have high expectations.
Here are some tips that helped me land the job of my dreams:
* You need to have a professional written resume. If you are not an expert, you could consider hiring one.
* Take into consideration what skills do you have. You may have more choices if you consider additional job titles.
* Look for jobs in every possible source : internet, newspaper, radio and other media. Ask your friends that have similar jobs if there may be an opening in their company.
* Don’t just send the resume by email and wait for an answer. You need to call them and have them confirm the job opening and receiving your resume.
Finding a job is pretty much a job in itself and it’s all about how well can you market your abilities.
Two additional points to make about increasing income:
1. Increasing you income by a little can have a massive effect on your financial options if youe expenses are very close to (or in excess of) your current income.
2. Increasing income is (in theory) unlimited whereas reducing expenses has a limit.
Taking a real good look at expencises can make a significant improvement in debt. It ’s suprising how much “stuff” I can do without when faced with adding an additional job. Ask yourself “do I need this ? Need vs. Want Might not need and extra job if you cut out so many wants.