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I am pretty sure you want to grow your income. A higher-income means more savings, more money to invest, and a better ability to spend. There are many advantages to having a higher income. Over the years, I have greatly improved my income. And I do not want to stop there.
There are two main ways to reach your financial goals faster. Either you reduce your expenses, or you grow your income. You should probably do both if you want to reach your financial goals. Most people are quickly reaching some limits when trying to reduce their expenses. On the other hand, your ability to grow your income is virtually limitless.
A lot of people do not focus enough on increasing their income. Even in the personal finance community, a lot of people are focusing on reducing small expenses, whereas it is sometimes easier to get more money!
In this post, I am going to detail The 7 Best Ways that you can use to grow your income. And of course, you are not limited to one of these ways. If you want to increase your income as much as possible, you need to work on several fronts. There are other ways, as well. If you know an excellent way to increase your income, please let me know!
Why grow your income?
A lot of people only focus on spending less. And it is excellent! We are always trying to spend less money. But there quickly comes a time at which you cannot spend less.
This point is when you want to grow your income instead of focusing on your expenses. There is less limit to earning more than there is a limit to spending less. I am not saying it is easy to grow your income. It is not. But when you have already optimized your expenses, it is much easier to earn more than to spend less!
But, be careful of not falling into the trap of lifestyle creep! Most people spend more when they grow their income. And it is a double trap because not only will they spend more, but their taxes will also increase. And in the end, with a higher income, they will save less! Increasing your income is great, but only if you keep your expenses constant.
There is nothing wrong with celebrating a higher income. But make sure it goes towards saving more, not towards spending more.
So, let’s see what the best ways to grow your income are
1. Grow your main career income
The most used way to grow your income is to increase your primary career income. It sounds obvious, but many people do not try to increase their salary as much as it is possible. It may not be as difficult as you think to grow your career income.
We have already discussed earlier that there are many ways to grow your main career income. You could ask for a raise or get extra education to increase your value to your company. Sometimes you can also get a very significant increase in income by changing to a new company, or even moving to a new country!
Of course, do not change for a job that makes your life miserable. I believe that a good job is essential. I prefer to reach FI while still having a good life in the meantime.
For me, this is the primary way to grow our income. I am planning to increase my salary and not increase my expenses. I am going to do with doing a great job and fight for promotions. Of course, I will continue learning new knowledge to improve my value for my company. Doing this should make me reach FI faster. And this is what I would advise most people.
2. Start Side Hustles
Another way to grow your income is to start a side hustle.
A side hustle is some small paid work that you do aside from your main career. There are many side hustles that you could do. Side hustles are a trendy way of getting some extra income.
You could develop websites for other people, for instance. You could walk dogs for your neighbors or babysit their kids. Or you could sell vegetables from your garden. Some people start a blog as a side hustle. There are a lot of things you can online, such as online surveys. These days Uber and other ride-sharing companies are also used a lot as side hustles. You can also make a profit by buying and reselling stuff. The options are limitless. Some people have one side hustle. But some people can have more than ten side hustles.
As you see, there are many possible side hustles. Some of them can bring you some nice amount of money, and some of them are more modest. When you choose a side hustle, you need to consider the return per hour. You need to decide how much of your free time you are willing to trade for money.
Many side hustles will take a lot of your time for a little side money. I do think it is worth it to spend all your free time on side hustles. However, that is what some people and they can reach FI faster because of it. In the end, it only depends on your goals and the way you want your journey to achieve these goals.
I do not have any side hustle. And for now, I do not plan on starting a side hustle. But this blog is beginning to generate a little income. I believe it is more efficient to focus on growing the career income. Moreover, I also do not want to use all the free time I have to get a little more money. Nevertheless, it can be good, especially if you can turn one of your passions or hobbies into a side hustle.
Regardless of your side hustle, you need to make sure to side hustle legally.
3. Invest in Real Estate
Another good way to grow your income is to invest in real estate. I have already talked in detail about the different ways there are to invest in real estate. You can invest either in physical property directly and receive the rent. You could also invest through crowd-investing real estate or a Real Estate Investment Fund (REIT) on the stock market.
All these forms of investment will generally bring back a nice amount of money. And it is usually some regular income. But you may need significant original investment. If you decide to invest in physical property, this will not be passive income. Indeed, it may give you a lot of work to manage the properties. If you invest through REIT or crowd-estate investing, it will be mostly passive income.
This strategy is used by many people in the personal finance community. If you have a large amount of money to invest, Real Estate can be an excellent investment. Nevertheless, you have to remember that this is an investment.
And therefore, it is not without risk. You may end up losing some money with real estate investment. The real estate could crash in your region or even in your country. You may also have issues finding a tenant. It is something that you need to consider.
I do not plan to invest in real estate any time soon. We may buy our own house. But the house in which you live is not an investment. It will not bring any income.
4. Invest in Bonds
If you invest in stocks, you will not grow your income.
We will see dividends in the next section. With stocks, you will only get the money once you sell. Before that, your gains are not realized and, therefore, not guaranteed. But there are other forms of investments that bring some guaranteed income: Bonds. A bond is some money that is lent and generate some fixed income.
You can purchase a bond from a government or a company. There are also Certificates of Deposit that are a form of bonds that you can get from a bank. All these bonds will have a duration before maturity. During the duration of the bond, you will receive some fixed income year after year.
After the duration, you will receive the principal back to you. If you do not sell it before, you cannot lose money with a bond. However, if you sell before maturity, you may lose some money or even get some money. It will depend on current interest rates.
However, even if they generate a fixed income, bonds are not without risk. Big governments are not very likely to default. Nevertheless, if you invest in shadier, smaller countries, they may default on you. It is still rare. On the other hand, corporate bonds are riskier. And generally, the higher the yield, the riskier the bond. That is up to you to decide how much risk you are willing to take.
And one more thing to consider, there are also bond funds. However, these will fluctuate in value much more than single bonds. These fluctuations are because the fund managers will sell and buy more funds. And also because the value of the fund represents the current value of the bonds, not the bonds at maturity time.
I do not own any bond. And I do not plan to soon. I think that bonds are a great tool to grow your income once you are closer to retirement. But I am quite far from it. Once I will get closer to retirement, I will consider bonds and bonds funds again. Hopefully, by this time, Swiss bonds will have gotten better.
If you want to invest in bonds, you will need a good broker account.
5. Invest in Peer-To-Peer Lending
Another thing that some people do is to use a peer-to-peer lending platform.
On these platforms, you can lend money to other people using the platforms. They are generally offering high yields compared to banks or bonds. So, it is an excellent way to grow your income. Some people reported some very nice income from these platforms. There is an entire online community of people using these platforms.
I hesitated a bit before mentioning this option to grow your income. Because I am not yet sure it is very safe. Once again, this is not without risk. The originator of the loan could default, and you would not get your money back. And some of these platforms could go bankrupt. And there were a few cases where some of these platforms were a Ponzi scheme.
I have invested very little money in P2P Lending, mostly to try it out. But I never invested a large amount of my portfolio into it. And I only tried the platforms that seemed the safest.
But I am not yet sure about this. P2P lending has advantages. But I am not sure it can hold its promises in the long term. Most of these online portals are advertising very high yields. I am very skeptical about returns of 20% when you can borrow money from the bank at a fraction of a cost.
Nevertheless, this could be legit. And I could be losing some opportunity. I do not know. Only time will tell.
6. Invest in Dividends Stocks
Another way to grow your income is by investing in dividends stocks.
I have already talked about Dividends in details for stock investing. If you invest in the stock market through index funds, you will have some dividends. Not all companies pay a dividend, but many of them do.
Some people choose to invest only in companies that are paying dividends. That means that they do not focus on building capital gains. But they focus on increasing their dividends. And dividends are generally reinvested into the companies that distributed them.
The advantage of this kind of income is that it is entirely passive income. Your money is invested, and it brings back some extra money. There are two ways to invest here. Either you pick the stocks, or you invest through indexing. It seems that most people in the dividend investing community are picking stocks themselves. But both options are perfectly viable.
In our case, we do not plan to invest, especially in dividends paying companies. The reason is that dividends are taxed as income in Switzerland. Therefore, capital gains are more tax-efficient than dividends. It is not the case is a lot of countries where dividends are not taxed.
If you want to invest in bonds, you will need a good broker account.
7. Sell Some of Your Stuff
The final way to grow your income is to sell some of the things you already own but do not use anymore. Most people have a lot of stuff in their house that they do not use.
Sometimes you can find some valuables. It will take time to go through your things. But it is an excellent thing to do. Not only will this bring you some extra cash, but it will also declutter your home. If you manage to tidy your house in the process, it can have a lot of advantages for your life!
Now, your mileage will vary will this way of increasing income. Some people do not have much clutter in the first place. And not all clutter is valuable, far from it. However, everybody should value more a tidy home and some cash rather than some clutter they do not use. And of course, this tip is limited in that there is only some much stuff you can sell!
I prefer selling things online. But there are other ways such as a yard sale.
If you do not know how to get started, I have an article on how to sell things online in Switzerland.
As you can see, there are many ways to grow your income.
However, not all these ways are equal. Some of them are just investments of money that will grant you some extra income. Some of them are investments of your time. Side hustles can bring back a lot of money but may take away a lot of your time. And we already have so little free time.
My favorite way to earn extra income is to push a career to the maximum. Improving your career is the best way because it will not take all of your free time to do it. And I believe the return on investment can be significant. However, side hustles are not a bad thing at all. And investments into real estate can make a lot of sense as well.
Do not forget that every situation is different. What works for one person will not necessarily work for another one. It is essential to know the various available tools. But then, it is up to you to decide what to do with these tools! And remember not to push yourself too hard!
So, I will try to increase my primary career income as much as possible. I will have to make it one of my goals for next year. I do not plan on starting any side hustle any time soon.
To learn more about increasing your income, learn The Ways to Grow your Main Career Income.
But enough about me, what about you? Do you have any tips for growing your income? What do you do to grow your income?