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Photo By: Alex Kotliarskyi
“Just make more money.” - Nobody Helpful
In my last post, Cash Flow is King: Reducing Expenses, I outlined a few simple strategies to effectively gain insight and control over your spending habits as well as introduced the general concept of cash flow.
Why did I lead off with that topic?
For starters, it’s the least interesting (for me at least) and also the simplest and easiest approach to impacting your cash flow equation in a positive manner. Also, it’s imperative that you cultivate efficient and optimal spending habits before tackling the much more complicated approach of increasing your income; primarily because if you do not have solid control of your spending habits then you will often find that your spending will eventually creep up to your income level no matter how high.
In these next few posts, I will explore on a very surface-level some of the categories for increasing your income (and I will dive deeper into each category with my own anecdotal experiences in future posts). Simply put, these categories have one very simple goal: cumulatively increase your cash intake or income.
So we’ll start with the first category.
Category #1 - Traditional W2 Employment
The most traditional driver of monthly income is your primary job (assuming you’re employed). I also view this as the most static and dependable source of income as your employer controls both the rate and hours worked (salaried, hourly, and overtime differences excluded). I’m also somewhat ignoring employment where compensation is determined by commissions and other variable circumstances.
Simply put, the advantages of traditional W2 employment is usually a dependable income source, a clear division of work and life (in most situations) and sometimes a multitude of benefits (e.g., health insurance). The disadvantages are the lack of control in your compensation. You can ask for raises or allow yourself to be at the mercy of inconsistent annual company-wide cost-of-living raises that may never come. Your superiors or HR department are responsible for gate keeping promotions and raises and oftentimes compensation increases are less a function of work output and more-so the result of other circumstances that you can not directly control.
With that said, the opportunities of moving the needle in this category may be limited but here are two approaches:
Ask for a raise or lobby for a promotion to a better-compensated position within your company.
Apply to and join another company.
Now a lot of people would argue that time would be better spent developing your earning potential at your primary job rather than spending time in the next categories. I wouldn’t completely disagree with this sentiment, I do think that, barring exceptional exceptions, there is a certain ceiling on earning potential at a traditional job for most people that could be exceeded in the next categories.
Also, the ratio between hours worked and income earned is much more stable and consistent in comparison to these next categories which swing wildly for better or worse (more on this in later posts).
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