When trying to attain financial freedom, we are usually advised to closely examine our budget and find ways to cut expenses. This is great advice, considering that the average American has serious holes in their household finances. Unfortunately, most of the common advice stops right there, ignoring the option to make extra money and increase your income.
When evaluating the flow of money in a household, it’s really quite simple. You take your income and subtract out any expenses that you have, and you are left with the amount that you can save or spend. If you are left with a negative number, or if the number isn’t large enough, you really only have two options.
1. Reduce Your Expenses
Take a look at where your money is going each month and decide where you can cut back. Once you have food, shelter, and clothing covered, don’t be afraid to reduce your expenses that are just keeping you back from your goal.
However, the problem with that approach is that you can only go so far. You will ultimately come to a point where it is not possible to cut any more expenses. Once you are down to only paying for the basic necessities of life, there is little room left for cutting expenses. This is where that second option comes into play.
2. Make Extra Money
In order to fill a gap in your finances, or even just meet your goal faster, you may have to look for ways to make extra money.
I have to admit that this is something that I rarely considered until this last year. I just kept looking for ways to squeeze a few more dollars out of my budget each month! Many people that I consult with have the same mindset. They are willing to put water in their ketchup and soap bottles (and other frugal activities) in order to save a few pennies, but are reluctant to look for ways to increase their income.
When looking for ways to make extra money, there are a few guidelines that you should keep in mind.
Make Good Use of Your Time
The easiest way to ensure that you are being efficient with your time is to assign yourself an hourly wage. It is nice to think of doing a task for $100, but if it takes you 10 hours, then you are only making $10/hr; is that acceptable for you? If not, then you need to request more money, do the job faster (without sacrificing precision), or pass on the offer.
At one time I considered delivering newspapers in the early mornings. However, after discussing the idea with several people, I realized that it wouldn’t be worth it for me. The weekly and monthly paycheck seemed really nice at first, but then I had to consider all of the hours assembling and delivering the papers, and then collecting the subscriptions from the customers. Not to mention all of the wear and tear on my car (new shocks and struts aren’t cheap) from the stop & go driving and the heavy load!
Stick With What You Know
The easiest way to bring in extra income may be to work more hours at your current job. If that isn’t an option, then look for consulting work in the same field. It should be much easier for you to convince someone of your worth, if you already have experience in that particular area.
You may also find it easier to get started with a new job (much less of a learning curve) if you stay in your current field. You also will be able to ensure that you are being paid a fair wage for your labor, since you are familiar with the industry and how much a particular job is worth.
Don’t Neglect Your Family
It can become very easy to try and work day and night in order to bring in more money. However, doing that for an extended period of time can cause a strain on your family relationships. I’ve seen a number of husbands/fathers work 80-100 hours a week trying to chase after money.
They often convince themselves that their absence from the home is the best thing for their family, because it means more money in the bank. However, no amount of money can make up for not being around.
When you are looking for ways to make extra money, be sure to avoid this trap.
- Have you cut your expenses as far as you can?
- Have you looked for ways to bring in additional income?
- If so, what guidelines/rules have you followed?