If you're like a lot of people, you started the year off with a few well-intentioned resolutions. Is it exercising more or eating healthier? Or is it saving more? According to a recent Statista survey, saving more is the fourth most popular resolution.
What does “saving more” mean? For many people, it means spending less in order to free up enough money for saving. But that's not the only way to look at it. Why not turn the idea of saving more money upside down and commit to earning more money instead?
There's no problem with you watching your spending — I think we should all be intentional about how we spend. But focusing only on the spending side of the equation reinforces a scarcity mindset, urging you to pinch your pennies in the name of fiscal prudence. Shifting the conversation to earning is about your power to create wealth.
Now or Never
You've seen the headlines: Inflation is at a 40-year high, running at 6.4% at last count. Some categories of spending are well above that, like food, electricity and transportation. And while workers have gotten bigger salary increases in the last year than they have in years past, those raises aren't keeping up. In reality, the average worker is taking a pay cut.
Under those conditions, there's only so much you can cut from your budget before it starts to hurt.
If you want your lifestyle to stay the same — or improve — then you need to look at your earning potential. Make 2023 the year you boost your income. Here are some ways to do it.
1. Get a New Job.
The best time to boost your salary is when you're negotiating a job offer.
But salary negotiations can be touchy — or downright scary — for some. You might worry that you're being too pushy and getting off on the wrong foot. Remember: Negotiations are part of the hiring process. Your new employer expects that you'll make a counteroffer. You should never accept a salary without trying to get a higher one.
How do you do it? First, research the market value of your skillset for your position within your industry. When you come to the negotiation table knowing what the industry standard for your position is, you're in a better position to make the case for why you deserve the salary you're asking for.
In addition to salary, don't forget to negotiate other perks, like additional paid time off, remote work, student loan repayment and educational reimbursements.
When I was negotiating my own compensation package, it was important that my employer reimbursed me for my professional development courses. As a financial planner, I have to maintain my professional designations with additional education each year, which can get pricey.
2. Ask for a Raise.
Like negotiating a salary at a new job, asking for a raise starts with knowing how well you are compensated compared to others in your field. It's probably hard to get salary information from your coworkers. But people working at other companies in your industry might be willing to share their salaries with you.
Or reach out to online professional networks to ask for this information. Another tip: Ask a financial planner or an accountant what salary range they see for people in similar industries since they look at people's financials all the time.
Make your case based on your contribution to your company's bottom line and your willingness to take on greater responsibilities.
3. Level Up Your Skills.
Did you know that your salary might be your biggest financial asset? Think about it. If you make $100,000 a year and your career spans 30 years, that's $3 million. Therefore, should you maximize the value of your career? Gaining new skills can make you much more marketable and improve your earning potential.
If your company offers any type of tuition reimbursement plan, use it. However, it may only apply to certain types of classes, and you may need to maintain a high enough grade point average to get the reimbursement.
Online classes can be a cost-effective way to learn new skills. LinkedIn Learning, for example, charges just $40 a month for access to courses on topics like data visualization, branding and strategic thinking. Khan Academy has loads of free courses to help you learn skills you might need for your job like statistics, computer science or finance. You can even take college classes (without the cost of college) with Coursera.
4. Get a Side Gig.
Sometimes you need a little extra cash to meet a specific goal, like paying off credit card debt or saving for a down payment. You may not be interested in getting a new job or asking for a raise. That's where a side hustle can be helpful.
The list of potential gigs is almost endless, from fitness instructor to Uber driver to dog walker. It's an excellent opportunity to turn a hobby or a passion into an income stream.
Not excited about working more? A side hustle doesn't have to be forever. Set a savings goal and work just long enough to reach it. But you might find that you like the part-time gig enough (or at least the money that comes with it) that you don't want to give it up.
5. Make Your Savings Work Harder.
One silver lining of inflation is that interest rates are up, too, thanks to seven rate hikes by the Federal Reserve. That's a bummer for borrowers, but a boon for savers who have suffered through more than a decade of near-zero rates.
In February, Ally Bank is offering a 3.4% APR on savings accounts without a minimum deposit. SoFi's savings accounts are posting APRs of 3.75%. But don't count on your bank to automatically boost your rate. Banks have been slow to give current account holders higher rates, even as they've teased high-yield accounts for new customers. You might need to move to another banking institution to get higher savings rates.
Another option is government-issued I Bonds, which you can buy from Treasury Direct. The interest rates on these inflation-protected bonds have two components: a fixed rate and a fluctuating rate based on inflation, which is reset twice a year. I bonds are now yielding 6.89%.
The downside is that you can't cash them in for a year. And if you cash them in before five years, you'll pay a penalty of three months of interest.
Here's to Earning More
Of course, this isn't an exhaustive list of ways to increase your income. You have to look at your own situation to uncover the opportunities that make sense for you.
You might find it useful to work with a career counselor or a financial adviser to help you see how you can earn more. If you do, you'll be well on your way to boosting your income.
Erin Wood is the Senior Vice President of Financial Planning at Carson Group, where she develops strategies to help families achieve their financial goals. She holds Certified Financial Planner, Chartered Retirement Planning Counselor and Certified Financial Behavior Specialist designations.
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