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Ways to grow your income

LIFESTYLE
By Pauline Muindi | June 21st 2020

Too often, you hear how people aren’t saving as much money as they should. But while cutting back on expenditure is great advice for those looking to boost their savings, you shouldn’t forget the other side of the equation: earning.

The truth, as someone said, is no one has ever gotten rich through saving alone. This doesn’t mean that being frugal and saving are useless. Rather, if you want to become wealthy, you have to excel at both earning and saving. The personal saving rate in Kenya is 12.54 per cent- a rate which might be too low for wealth creation.

Although most experts recommend that you should save at least 10 per cent of your income, you need to save even more if you want to move your social economic status by several notches.

A strategy that is becoming increasingly popular is to save 50 per cent or more of your after-tax income. You can funnel the savings into paying off debts, building an emergency fund, investing or building your retirement portfolio.

Of course, such radical saving strategies are almost impossible for people with low incomes. Most people who are able to save 50 per cent or more of their incomes are classified as middle-income earners. What this means is that to be able to save and therefore invest more, there’s one aspect you can’t overlook: increasing your income.

The more money you make, the more you will available to save.  The good news is that while there’s a limit on how much you can cut back in spending, there’s no limit to how much money you can earn. With that in mind, here are a few ideas on how to increase your income:

Negotiate your salary

An impressive 56 per cent of employees don’t negotiate their salary offers, according to a survey by Career Builder. You might feel like not negotiating your salary improves your chances of getting the job, but it might also make you leave money on the table.

One study in the United States found that by not negotiating salary offers, workers can cheat themselves of anything between $ 1 million and $1.5 million in lifetime earnings. And this figure doesn’t even include company retirement contributions based on a percentage of salary. Accepting the initial lowball offer or negotiating for more can make a huge difference on how much you’re able to save, especially since future raises will be based on the starting salary.

In the survey by Career Builder, 52 per cent of employers said that their first offer was lower than what they were willing to pay to create room for negotiation. It is, therefore, important for employees to get comfortable with negotiating their salaries.

In addition, ask for a salary raise whenever it feels appropriate: such as at the end of the year, completing a difficult project, or on getting a promotion.

Another key to increasing your salary is switching jobs.

A survey by Nomura found that employees who changed jobs earned one per cent more year-over-year than those who stayed with the same employer.

When you switch jobs regularly, you are likely to have stronger bargaining power because of your varied skill portfolio. But you don’t have to switch jobs to learn new skills and earn more. By switching departments within the same company, you can land a role that pays more.

Improve your skills

As we’ve noted, acquiring new skills or improving on the ones you already have is a great way to increase your worth in the job market.

To a large extent, your salary is directly proportional to the demand for your skills. As the philosopher, Jim Rohn says, “You get paid for bringing value to the marketplace, and if you’re not very valuable you don’t make much money.”

If you have a high skill level and your skill is in high demand, you’re also likely to get high initial salary offers and more generous raises. Many people assume that the time spent doing something will automatically make them better at it. The number of years spent at a job shouldn’t be your only claim to justify demands to be paid more. Why would you be paid more if you basically have the same skill level as someone who’s spent less time on the job?

To increase your market place value, you must always be sharpening your skills, finding better tools, and constantly try to better yourself. Some ways to do this include enrolling for training, taking online classes, advancing your education, and having a mentor.  You should aim at boosting your expertise, productivity, efficiency, reputation and influence.

As Jim Rohn further advises, “Learn to work harder on yourself than you do on the job. If you work hard on your job you can make a living, but if you work hard on yourself you’ll make a fortune.”

Build multiple income streams

Do you depend solely on your salary for income? If you suddenly lose this source of income, you’re likely to be thrown into financial distress. With the Covid-19 pandemic, we have learnt that it’s always smart to have several income streams. 

One way to do this is by having a side gig.  If you choose your side hustle well, it can net you a decent amount of money to direct towards your savings and investments.

It is a good idea to find a side hustle that complements your main job. That way, you continue building the skills you need to succeed in your main job.

The smartest way to build your income is by having passive income streams. But to create passive income streams, you have to put up some upfront investment. Passive income isn’t some get-rich-quick idea.

In fact, it might take years before you see any income from passive investments. Some great ideas for passive income include selling informative products (such as books, blogging, videos, or courses), investing in real estate to get rental income, affiliate marketing, dividend stocks, letting out a room on Airbnb, and bond

 

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