Who doesn’t want more money? Boosting your income is one of the most widely sought after topics in personal finance, and whilst money can’t bring you happiness, it can certainly help you avoid things you don’t like. It has also been said that people who say money can’t buy happiness have clearly been shopping in the wrong stores…
You should ask yourself why you are trying to make more money. If you are looking to boost your income because you want to spend money on certain things like a holiday, new car or simply looking to boost your savings rate, then you should look to your current expenditure and create a budget.
By spending less on things you don’t need, you can put that income towards the things you do. It’s super simple and this is a really tax effective way to boost your purchasing ability, because you’re not being hit by the higher income taxation from boosting your income.
Methods to boost your income
There’s a few ways to boost your income: some of the easiest and most common methods include;
- Moving to a better paid job
- Getting a pay rise at your job
- Picking up some part time work such as consulting
- Starting a side hustle
- Creating passive income streams
- Starting a business
Whilst these can all be great options to boost your income, my personal belief is that the last two on the list are the best ways to create wealth.
That’s because the first four are typically active income streams; that is, you have to actively work for them to provide income. You go to work and get paid in exchange for your time. The last two can be made passive; where you don’t have to exchange your time. Creating passive income requires a huge amount of dedication and skill, but once set up they can be infinitely scaleable under the right conditions.
Whilst I recommend that each day you work a little bit further towards creating passive income, for the majority of people the easiest and quickest way to make more money will be to get paid more at their job.
Getting a pay rise at work
Getting a pay rise at your job is one of the simplest and lowest risk ways to boost your income. Get paid more for doing the same thing, right? No risk changing jobs, no extra time commitment with starting a side hustle or starting a business, and no need to risk your investment capital. Sounds good, but you’ll need to do your research and invest some time into facilitating this.
Step zero: Should you quit your job?
Ironically, before you even try to work out how to boost your income at your job, you should consider quitting. Critically examine whether there even is a possibility of boosting your income in your current role, or whether your employers offer or encourage career progression.
A good example is a friend quit his job flying scenic flights because his employer only operated a very basic type of aircraft. He then got a job flying for a freight company – flying exactly the same type of aircraft, but the company also operated larger and more complex aircraft. Whilst he had to draw on his savings for the two month transition period and took a paycut initially, there was virtually limitless opportunities for progression in the freight company as opposed to a very limited progression doing scenic flights.
Step one: Know your worth
Step one of how to boost your income at work is figuring out what someone in your field, with your level of experience should be paid. If you don’t know what you’re worth then demanding your boss to give you a pay rise can lead to a pretty one sided conversation if you haven’t done the research.
For example, as a casual pilot flying scenic joy flights in light aircraft, you’d expect to be paid around $50 per flight hour. Demanding to be paid the equivalent casual rate of a heavy jet airline captain of around $400 per hour is easily seen to be ludicrous, as you would clearly put the company out of business. The same can be said for any job; a shelf stacker or checkout operator at a supermarket clearly shouldn’t expect to be paid the same as the store manager, or the supermarket’s CEO.
Having said that, don’t undersell yourself either. Take into consideration what someone with your level of experience and qualification is worth. If you have been able to increase revenue, efficiency, product quality or reduce waste, then you’re a valuable employee.
Step two: Become irreplaceable
You need to be good at your job. Work hard to learn everything you can about your job and make yourself valuable to the company. You want to be irreplaceable, or at least, if you do leave it’s going to cost the company a lot of money replacing you and training someone up to your standard.
Make sure you record your successes in a diary or journal. This helps to build up the picture of your competency and value. Especially things that have improved efficiencies, lowered operating costs or otherwise contributed to the success of your workplace. This gives you a good footing during any performance appraisal reviews which of course is a massive help in how to boost your income down the track.
For example, when I flew adventure flights in antique warbirds, I spent a lot of time learning and practicing emergency handling. Most pilots would kind of do this initially but then their enthusiasm would tailor off. I knew the importance of currency (being well practiced) from my other job as a flying instructor, and so kept these skills fresh. As it happened one day the aircraft’s engine completely failed whilst returning from a flight with a customer; instinct and currency allowed me to glide the aircraft to the runway and make a safe landing. Now many aircraft have crashed in similar situations; working hard to be good at my job allowed me to have a safe outcome, and cemented my position as a valuable company pilot.
Step three: Educate yourself
If you are able to up-skill yourself by taking specialist courses or training packages you are increasing your options and earning potential. For example if you are a professional chef, training courses in a specific style of cuisine can both broaden your knowledge base and allow you to specialise in a niche. For managers, broadening your knowledge base with business, leadership and commerce studies will increase your job options and best posture yourself for promotion.
Even better take advantage of any employer specific education or career progression programs – over time you may be able to work up to being promoted. The shelf-stacker may find themselves moving from stocking shelves to leading small teams and managing other worker’s shifts. This means helping make business decisions, leading them naturally into a store manager role with higher salary.
Personally I have put a load of effort into my education, through both self funded training and also employers education schemes. I spent close to $300,000 of my own money on pilot training in order to position myself to achieve my dream job. I also maximised my participation in work funded courses, and have managed to get a bachelors and post graduate degree worth hundreds of thousands of dollars, for cents on the dollar (I still had some expenses such as books, my computer and transport but the overwhelming majority was paid for).
Don’t overlook self directed study and free educational resources; we live in an age where the internet is literally at your fingertips, on your smartphone. With some basic researching skills and common sense, you can give yourself a high quality education for free, especially using sites such as YouTube. Don’t overlook books – your local library is a massive wealth of free information, and you won’t have to spend thousands of dollars on books (and boosting some-one else’s salary in the process).
Step four: Work your way up
The key here is knowing your worth, and positioning yourself into a role of higher worth within your job or company. As an example, I used to work in an aviation operations role – it was my job to support the company pilots, and I did this through aircraft husbandry (washing, cleaning, refueling and reoiling the planes), flight planning, briefing passengers and otherwise general admin such as taking payments and booking flights for customers. It wasn’t my career goal to do that job, and I was already a qualified pilot – heck I just wanted to fly! But working in operations or ‘ops’ as we called it was a crucial stepping stone and I learned a lot about how to operate a successful aviation business, as opposed to simply flying the plane around and doing tricks for passengers. However that being said, transitioning from ‘ops’ to regular line flying was a welcome income boost.
Step five. Negotiate
In another one of my flying roles, I was able to negotiate with my employer to increase my salary. And I’m not going to lie – it took a lot of effort. This took me over a year of planning, learning the corporate governance system and structuring an application, even consulting a lawyer for legal advice! Thankfully I had a pretty awesome supervisor who was supportive of my application (and the beers he knew the said pay rise would buy)…
It got knocked back a number of times and I hit a number of dead ends, but eventually it got to the right person in upper management and a favourable ruling was made. Specifically in this case, I was actually being paid less than I should have been because of complications with my contract from me moving roles within the company. I was actually being paid well below a number of my peers and what someone with my qualifications and experience should command, so I was in a good position for negotiating for a pay rise.
Demanding and setting ultimatums rarely works, so have a think about your people skills to carefully construct an objective argument about your worth and why you should be paid more. Make sure you address the actual simple question ‘why should I pay you more’ as that is likely to come up. Keep it professional and courteous, you catch more bees with honey than vinegar!
Step six: Don’t screw it up
So with all your effort on research, introspection, mastering your job, educating yourself, working towards promotion, and negotiating a pay rise, don’t screw it up. Keep working hard and being good at your job, because with a promotion or pay rise it’s likely you will have more expected of you. If you’re not able to meet these higher standards, it will show in performance appraisals and you risk sliding back down the pay scale.
So there you have it; seven simple steps towards boosting your income and making more money. Boosting your income is one half of the equation when it comes to reaching FI, as it gives you more ammunition to start investing hardcore in stock market ETF index funds and/or property. If you have been able to boost your income and make more money, we would love to hear your success stories!
Get FI !