You Can Increase Your Income

One of the greatest mistakes you can make in your financial journey is believing that you have reached the absolute peak of your earning potential. With everything that life throws at you as you age, it is easy to get complacent with your current situation, financial or otherwise. I’m here to tell you that you do not have to choose that. Regardless of how improbable it might seem now, you are not incapable of increasing your income.

Before getting into the numbers, the first thing you need to understand is that income is generally divided into two groups: active and passive. Most people are familiar with active income primarily. This refers to money you earn in direct exchange for a time commitment on your part. If you work for an employer, the money you earn from it, whether it’s paid on a salaried or hourly basis, is a form of active income. One of the primary reasons why many people believe increasing their income is unlikely or even impossible is because they think exclusively in terms of active income. We’ll discuss passive income in a bit, but there are still several ways in which you can seek to increase your active income.

Data tends to show that Americans experience a steep increase in their income throughout their late teens and into their 30s. This is obviously not surprising, as many people start their working lives close to the bottom of their earning potential and steadily move up in whatever field they end up deciding to work in. By their 40s, Americans’ earnings tend to increase at a slower rate before coming to a point of stagnancy, beyond which the average American does not see a significant rise in income.

It is inherently more difficult to seek out greater opportunities for active income when you reach middle age. By their 40s, most American adults are saddled with children, a mortgage, and often aging parents as well. These life factors do lock a person in to their current state in a way workers in their early 20s are rarely encumbered by. Career changes become more unlikely with each successive year and potential for promotion begins to slowly dissipate as younger workers begin to swell the organizations they work for.

Okay, enough with the explanation as to why so many Americans stop seeing their income rise as they age. In all likelihood, you haven’t learned much new information so far. The purpose of this post is to provide you with suggestions for moving forward, so let’s get into it.

Time Is An Asset

How many hours do you waste in a day? Feel free to define the word “waste” however you like; I will not do it for you. Be honest with yourself: from the time you wake up to the time you fall asleep, how many hours slip by that could be used for more growth and development? Two? Four? Nine? The answer will vary greatly depending on your current situation in life. But, if polling of Americans’ average non-work phone use is anything to go by, four hours a day is a very modest estimate. By itself, four hours might seem negligible. It’s probably not enough to pick up a second shift at work or even a new job altogether. However, any time used well in the present has enormous potential to pay off in the future.

If you are able to find a second job in addition to your first, don’t ignore the opportunity when it comes your way. It might pay less than your regular job. That’s fine. Even an extra $200 a month can go a long way when handled properly. It’s very possible that you’re already stuck working two (or possibly more) jobs in your life right now. Perhaps you don’t enjoy it in any way, but you keep at it because it’s the only thing between you and a missed rental payment. Keep going if that’s you. Getting yourself out of whatever position you’ve found yourself stuck in will require discomfort, especially early on. Always focus on the why behind what you do. Not only will it help motivate you to continue your work, but it could very well inspire you to do and seek more as well. That inspiration is the key to your journey towards eventual independence.

There are many legitimate reasons why you might not be able to work more hours at your current job or pick up a second job altogether. Perhaps you share a car with a family member and are only able to use it for your current work schedule. Maybe you take night classes three times a week or have several kids that need feeding and homework help when you get home. For many people, setting aside a consistent period to earn more active income is simply not feasible. And this is where passive income comes into play.

We will discuss passive income in far greater detail in a future post, but it’s important to understand that initiating a consistent stream of passive income rarely happens without significant hours of hard (and often unpaid) work upfront. When your situation is desperate, it is better to focus on finding work with a guaranteed payoff in the immediate future. Once the dust begins to settle, you can (and should) devote your free time to exploring possibilities for passive income.

One of the things you will discover as you progress in your journey towards independence is that options for both active and passive income will expand as time goes on and you continue to move up from zero. If you’re starting off your journey with what seems like a mountain of debt and hardly any money in the bank, even the idea of flexibility in how you earn your money will feel like an impossibility. Just remember that the earliest steps in almost any endeavor are often the hardest and in the case of achieving financial independence, I would definitely say that is the case. Be patient. Focus on the little increments of success you can find today and congratulate yourself on each step you take forward.

Ultimately, whether you realize it or not, you are fortunate if you live in a highly-developed country such as the United States. Historically, most humans would work their entire adult lives in the same profession that their parents worked in. Their children would work the same way and the cycle would go on and on. Whether you’re able to fully appreciate it now or not, you live in a highly-diversified economy and that means your potential to earn more and in different ways is far higher than most people historically could have ever dreamed of. Just think about that for a moment. I know that probably sounds quite tone-deaf to many of you. I don’t know your story; I don’t know why you’re in your current situation and why every attempt you’ve made to get out of it until now has been unsuccessful. All I’m asking is for you to take the fullest view possible and recognize that as humans, we often have much more potential than we realize, which extends far beyond the realm of money.

Do what you’re doing now as well as you can. Think hard on all of the ways that you wish things were different. Believe they can change.

Peace!