Building wealth isn’t just about cutting costs; it’s about maximizing your earnings. Frugality has its place in personal finance, but trying to grow rich by saving pennies is like attempting to win a car race by conserving fuel. If you want to reach financial goals quickly, accelerating your income is essential.
Here are three key ways to increase your income by becoming more valuable in the job marketplace:
1. The More You Learn, the More You Earn
Education has the most significant impact on lifetime earnings in the U.S. compared to other factors like age, gender, or location. Fortunately, education is something you can control. Consider these statistics from the U.S. Bureau of Labor Statistics:
- A college graduate earns twice as much as someone with only a high school diploma.
- An associate’s degree boosts earnings by 50% compared to a high school diploma, adding about $20,000 per year or nearly $1 million over a 40-year career.
While a degree doesn’t guarantee success—some dropouts become billionaires and some graduates struggle—investing in education significantly improves your earning potential.
If pursuing formal education seems daunting, self-directed learning is a powerful alternative. For instance:
- Jeremy transitioned from selling cars to becoming a CPA by taking online courses while working full-time.
- Kim shifted from being a dental office manager to a dental hygienist by earning a degree at age 35.
- J.D. Roth took evening programming classes, which led to part-time gigs that supplemented his primary income.
You can also learn through reading, online courses, podcasts, and professional events. Active, productive hobbies like writing, web design, or building projects not only make you happier but can also boost your skills and earnings.
2. Work More, Work Better
Your income reflects the quantity and quality of your work. To earn more, you can:
- Increase your hours: Consider transitioning from part-time to full-time work, taking on overtime, or finding a second job. For example:
- A biologist takes seasonal jobs at upscale stores for extra income and discounts.
- Teachers often take summer jobs like bartending or tour guiding to supplement their salaries.
- Enhance productivity: Aim to produce more in less time. Whether that’s increasing sales calls or improving efficiency in your role, higher productivity boosts your value.
- Deliver better quality: Excellence matters. Ensure your work meets high standards and look for ways to improve. In some cases, switching roles or industries can help—for example, moving from teaching to forensic science or another higher-paying field.
3. Market Yourself Effectively
Your income also depends on how well you present your value. Negotiating your salary or a raise is a key skill that can significantly impact your earnings.
Career coach Jack Chapman’s book Negotiating Your Salary: How to Make $1000 a Minute outlines a five-step approach:
- Delay salary discussions: Wait until after you’re offered the job or after a performance review to discuss pay.
- Let the employer start: Avoid naming a number first; it puts you in a stronger position.
- Pause after hearing the offer: Repeating the top figure buys time and encourages the employer to reconsider.
- Counter with research: Know the market rate for your position and confidently ask for more. Use tools like Glassdoor or PayScale for data.
- Negotiate perks: After agreeing on salary, discuss additional benefits like vacation days or professional development opportunities.
Salary negotiation isn’t just for new roles—it’s vital when requesting raises too. Document your accomplishments and showcase your contributions to make a strong case.
You Are 100% Responsible for Your Income
Your earnings reflect your market value, which depends on your knowledge, productivity, and self-marketing. While market forces may seem unfair, focusing on what employers demand—and meeting those needs—will help you maximize your income.
Exercise:
Spend five minutes considering the following:
- What’s one way you can improve your knowledge or skills?
- How can you enhance the quality or quantity of your work?
- What steps can you take to better market yourself?
Choose one action for each question, commit to completing them within six months, and share your results. By taking deliberate steps, you’ll position yourself to earn more and achieve financial success.