Many people see their income as something fixed that they have little to no control over – apart from the rare moments of salary negotiations such as when starting a new job or during performance reviews. Part 6 of the 10 Parts to Financial Independence will look at how you can influence your earnings in many more ways than you might think.
Part 6: Increase Your Income
We commonly think of our income as whatever we get from our jobs. But that’s only one way to earn money, when there are actually seven different types of income streams!
These seven different ways to generate an income are described below, along with some prompting questions and ideas to help you decide whether you can and might want to develop one of these streams further to increase your income.
The seven income streams are:
- Earned income from a job – money you earn through your work for a company. This income stream is generally based on getting paid for your time.
- To increase your income, can you increase the likelihood of a bonus by making yourself more indispensable? Can you up your earnings by doing another course or pursuing a promotion? Is it time for a new / better paid job?
- Profit – money you make by selling products or services as part of a business activity at a higher price than the cost price.
- Can you start a side hustle selling things you make or offering your services? Think about an Etsy shop, tutoring or a specialised IT service.
- Interest income – Money you get from lending money to others, such as to a bank, the government or through investments.
- Can you increase your interest income by increasing your savings, your investment in bonds or your crowdfunding contributions?
- Capital gains – Money you receive as a result of selling something that you acquired at a much cheaper price than what you are selling it at.
- Can you invest more into the stock market, houses or antiques to build up a bigger portfolio and sell that later on when these assets have appreciated?
- Dividend income – Money you get from shares if the company whose shares you own makes a profit they can pay out.
- Can you buy more shares to increase the amount of dividend earnings at the end of the year?
- Royalties – Money you receive on products you have made or from franchises of your brand.
- Can you write a book, compose music, design stationary, wall paper or a new software to generate an income stream from royalties?
- Rental income – the rent that you collect from renting out assets that you own (usually property).
- Is buying property in order to rent it out an option for you?
Go through the above income streams and work out how much you are receiving from each of them each month. Then decide which one(s) of these you can further develop on the short-, mid- and long term to increase your income to keep progressing on your path to Financial Independence!
The above is an adaptation of part 6 of the 10 parts in the guidebook to Financial Independence: 100 Steps to Financial Independence: The Definitive Roadmap to Achieving Your Financial Dreams where you can find more details as well as action plans and guidelines to each of the 10 parts. Available in both ebook and paperback format!
Coming up next: Part 7 of the Journey to Financial Independence!