Step 33: Income stream 1: Earned Income

Step 33 of the 100 steps mission to financial independence: Income Stream 1: Earned Income
Step 33: Income Stream 1: Earned Income

In step 32 we looked at a quick overview of the 7 different income streams one can build, and in these next 7 steps we are going to look at each income stream in turn, to analyze possibilities of (further) developing each possible source of income. You shouldn’t however feel that you need to take action in all 7 areas, instead the main purpose is to make you aware of each income source so you can decide what works best for you.

Let’s start with the first income stream, which is your earned income. Most people get this from working for somebody else, although if you are an entrepreneur you might also receive a regular wage from your own company if you are taking a salary.

A key feature of earned income is generally that you are paid for your time, be that time you spend in the office, working from home, at conferences, at clients’ offices or wherever your job requires you to be. Generally speaking the more you work, the more you get paid: if you go from part-time to fulltime you get paid more, if you work extra hours you get paid more and by taking on a management role which might require more time (as well as extra responsibilities, experience and whatever else), you also get paid more.

This key feature of “trading in time for money” is incidentally the main reason why people get dissatisfied with their jobs and start looking for financial independence: they want to stop giving up their time in exchange for money and instead have more time without having to worry about money. They’ve often come to realize that you can’t make more time, but you can always make more money and are therefore looking for ways to move away from relying solely on income stream 1.

Of course there is nothing wrong with depending on earned income as your main source of income, especially since it tends to give people financial security (up to a certain extend of course, as one can always lose their job unfortunately), as well as financial comfort to pay for their expenses. In fact, in the action plan following we are going to look at option to earn even more money.

If you are an entrepreneur, please bear in mind that you aren’t looking at earnings from profit that you might be getting from your company (we will look at that in step 34). So if you are getting both a salary AND a profit income, then only take your wage into account here and leave the profit analysis until later.

Similarly, if you have more than one income stream, for example if you are working more than one part time job, consider each wage separately for the questions below, as they might generate different answers.

Step 33 – Income stream 1: Earned Income – in detail

Grab a pen and paper or your digital notebook and write down your answers or thoughts on the following points:

  • How much do you earn a month?
  • How do you think your wage will develop over time?
    • Do you get a pay rise every year?
    • Do your bonuses increase or decrease?
    • Do you think you will start working more or less hours in the near future?
  • Is your company laying off people? Might you lose your job?
  • How happy are you with what you earn? Of course everybody will always say they want to make more money, but do you really? Why? What would you do with it? Or are you already comfortable enough with what you get?
  • Are you likely to get or are you working towards a promotion? How would that affect your salary? Would that be worth it? Bear in mind extra time you might be expected to put in, travels you might have to make etc.
  • Is there anything you can do to increase your salary?
    • Can you take a course in order to earn more? Would it be worth it?
    • Can you talk to your manager to discuss a pay rise? Have you got arguments to back up your request?
    • Can you do something that would make you more valuable and indispensable to the company so you can start building arguments for a pay rise? Would it be worth it?
  • Do you want to consider looking for a job in a different department / company to increase your wage? Would it be worth it?
  • Do you want to start a completely different career path and corresponding salary? Would it be worth it?
  • Can you start something on the side to supplement your salary, i.e. take up some extra hours once a week in a different company? Can you start something on the side that would pay you for your time (dog walking, teaching etc.). Would the extra money be worth your time?

Note that for a lot of these questions I have added in the question: “Would it be worth it?”. Think about this from not just a money side (i.e. you might earn an extra €100 per month if you did a certain course to become more qualified), but also the investment that you put in: how much does the course cost? How much time would you need to put in before even getting the raise? What would you have to sacrifice in order to do the course: time you currently spend on your family, friends, hobbies, sports.. Nothing comes for free so if you did a course it would have an effect on other parts in your life. The same if you earn more through a promotion. Would you actually work more hours? Would that be worth it? Would it be worth sacrificing even just a little bit of your relationship with your significant other, friends, children etc. for this promotion and extra wage?

More money doesn’t just have to come from a job as we will see in the next few steps so you might be better looking for alternatives in one of the next steps. With everything you do and analyze, remember that you do have an influence on everything. Maybe you see your wage as being controlled by your manager. Think about what you can do: ask for more, make yourself more valuable, do a course, and if none of this helps, you have the freedom to go and look for a new job that might give you what you want. Never fall back in believing that others control your situation, your wage, your happiness, as you always have a choice, however hard it might be.

Read more about my 100 steps mission to financial independence or simply decide to take control today and join us on our step-by-step quest on how to make your finances work for you, starting with step 1.


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