Income, Income, Yay, Yay. Who doesn't like more income? I am here to tell the tale of how I managed to increase my income over 60% (!!!) from January to June of this year, and how you can increase your income with three steps, a little bravery, and a lot of grit. To start, let's go over the example from my own life. I want to talk about income diversification because it's been a hot topic around here lately since my post on how I'm saving 40% of my income went live on Learnvest, and then another post I wrote about increasing my income 60% appeared on The Huffington Post. The two go hand-in-hand, and I wanted to piece it all together for you today.
- I am able to save 40% of my income because I earn enough to save 40%.
- I am able to save more money because I have multiple streams of income.
- Having multiple streams of income is called income diversification.
Everyone always wants to earn more. Right? Duh. Money makes the world go round. I'm not being braggy, that's just the way it is. Saving is not without sacrifices, but it was really impossible to save even half of a percentage of my salary a year ago, before I started really freelancing and took on a new, better paying, job. But I didn't truly learn the importance of having different ways of earning money until I was unexpectedly laid off on Valentine's Day of this year.
- My total income in January 2014 was $3950.00 for the whole month. (All of the dollar amounts indicate take home, after tax income…)
- In May 2014 I made $6481.00 for the month, which is a 64% increase over the six months prior.
Not too bad, eh? Since this is the biggest income increase I've been able to leverage well…ever..I decided to break down just how I was able to make such a sizable jump.
First Why It's Important to Increase Your Income & Diversify It
Here is what my income looks like right now. (You know I get turned on by a good Excel pie chart.)
Having income outside of my 9-5 pay also makes it easier for me to save, since I don't factor that money into my monthly budget. I made money from my freelancing, renting a room in my house, selling old furniture/things I didn't want on ebay, and my regular job.
Ideally, I'd like my freelance income to be a bigger portion of this (UPDATE: It did!), and add blogging/affiliate advertising revenue back into the mix. I'm not going to worry about it though, unless the pie chart starts looking like this.
See how #1 is preferable? So, for all of you income diversification newbies out there, don't get bogged down in the numbers. Just try to visualize making your pie chart a little bit healthier. See how many different slices you can carve out.
How to Increase Your Own Income in Three Steps
#1 – Increase Your Salary
Back in February, when I was unexpectedly laid off from my job, I found another one with relative ease. Total time unemployed? Two weeks. Still, even though I wasn't planning on losing my job, it ended up being a blessing in disguise, as I was able to negotiate a large increase in salary.
Changing jobs is the best chance you have of increasing your monthly take-home pay (especially for women), so I stuck to my guns and negotiated for exactly what I wanted. Thankfully it worked out, and I am now surrounded by amazing new co-workers and friends. But this is something to keep in mind in case you, yourself are looking to increase your income: you either need to get a raise, or get a better paying job, as this is the largest chunk percentage of my overall income increase came from.
#2 – Get a Side Hustle
I count “blog income”: (click here to read how to start a profitable blog of your own!) advertising revenue for the site differently from revenue I get from my freelance clients. Extra money is always nice when you can get it, and I make money on the site in many different ways including affiliates and sales of my own products. The side hustle is an extremely important part (if not MOST important part) of increasing your earnings. Not to mention that if another emergency were to happen again and I found myself without a full-time gig, I'd still have close to 40% of my total income stream to rely on.
One of the best ways to increase side hustle income without working more is to adjust your prices. Read my piece on how to do this here.
#3 – Leverage Existing Assets
Finally, finally..I was able to increase income by leveraging assets I already had, namely my house. I was able find a renter for the third bedroom in my home. As you can see I was making 0 dollars from tenant income in January, and now it accounts for about 7%. If you have spare bedrooms in your home, you could be leaving cash on the table. I won't lie, sometimes I think the additional privacy would be nice, but having that extra sense of security is nicer.
If you can do the math on the after-tax take-home pay from May, it means I am inching closer and closer to that six-figure (before tax) salary. I had wanted to hit this before I turn 30, but if things continue to go well, it looks like I may hit that well before.
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