Investing and saving can seem like a daunting task when you have a large hole and a small shovel. It is important to remember that each person/family’s journey is different.
Some people may have a smaller FI number than others, and it may take some people longer than others to achieve their goal. However, if you feel stuck and want to do more, there are many ways for you to increase your shovel size and in so doing, increase your savings rate.
Achieving Financial Independence is a marathon, not a sprint!
There are two avenues worth exploring for potential high-income outcomes. Fortune favors the bold. Remember that if you want to achieve more, you can’t settle for less. Consider these options for capitalizing on your total earning potential.
Check your market value. Have you been in your position for years, with no raise in pay? Now might be a good time to check out the market. Sites like PayScale.com, Salary.com, or Glassdoor.com will easily let you know if you are being paid fairly for your skill set within your field and location.
If you happen to find out that you are being paid under the industry average, it is definitely time to chat with our boss about negotiating a raise. Don’t be afraid to use your findings, and make sure to highlight your achievements so far with the company. This is your opportunity to strut your stuff and point out how much of an asset you are to their bottom line.
Start sending out resumes. If you have presented a solid case to your boss and they don’t have the means to pay you what you are worth, it is time to start looking at other opportunities. The tradition of staying at the same job for your entire career simply does not hold up in today’s economy.
Your greatest earning potential used to be derived from long-term employment in one place because climbing the corporate ladder used to guarantee periodic raises and hefty bonuses. Studies show that in today’s economy you are actually better off job hopping until you find someone who is going to properly compensate you.
Take on overtime. If all else fails, you can raise your W2 income by taking on overtime hours, if there is the availability at your place of work. Working these extra hours at time and a half will increase your bottom line while also increasing the value of your time given.
Read Our Article: Making Six Figures at 24: How I Quintupled My Income in 5 Years
Side Hustles & Passive Income
Those who have the FIRE bug may choose to seek out a side hustle. This could include anything from starting your own business, real estate investing or delivering pizzas. Every penny helps.
What is a side hustle? A side hustle is any sources or generating money outside of your regular work hours. Do you have a hobby that you can capitalize on? Something that you have always been really good at and that answers a need for someone else? You can easily turn something that you already enjoy and that you are good at into an added source of income.
A good way of choosing a side hustle if you don’t already have a hobby or interest that you can turn into cash is by looking at something that you already pay for and finding a way of charging others for it.
Is there a service that you can provide for others? Do you pay someone to clean your home or walk your dog? If you are paying for it, chances are that this is a service that others need as well. Save income by cleaning your own home, and create income by cleaning homes for others. You are going to work a lot during this part of your FIRE journey, but it is going to pay off in the long run.
Decrease Discretionary Spending
Within your monthly budget, there may be items that you are willing to give up or things that you can find ways to reduce the cost of in order to raise your savings rate.
Eating Out/Entertainment – Maybe you aren’t the greatest at cooking, or maybe it simply isn’t something that you enjoy doing. Eating out every day is a huge drain in your finances, costing twice as much as buying groceries and eating at home. Consider a meal delivery service for a compromise that is easier on the wallet. There is still going to be some prep work and cooking involved, but at least all of the shopping and meal planning stress will be out the window.
This doesn’t mean that you can’t ever go out again. Try to limit your eating out and entertainment to special occasions, so that you can really appreciate them as a treat instead of a fact of daily life. Absolutely make sure you plan for them in your budget though, that way you know that you aren’t taking money from your savings for them. It’s an easy way to cut out the guilt factor from date night.
Read Our Article: 11 Meal Delivery Services that Will Save Your Food Budget
Cable – How much time are you going to have to watch tv when you are working your side hustle along with your full-time job anyway? Consider how much you actually use cable and see if it is an expense that you can cut out completely. If you’ve looked over your tv watching habits and you have decided that your sports channels or the Food Network are something you simply can’t do without, call your cable company and see if they have any lower-priced packages that will only include the channels that you actually watch.
Read Our Article: How to Reduce Your Cable Bill Without Cutting the Cord
Cellphones – Your cellphone bill can be a complete budget killer if you aren’t on the right plan for your usage. Do you make a lot of international calls but you don’t have an international calling package? Maybe you use the internet a lot off of wi-fi but your phone plan only includes 1G of streaming per month. Talk to your service provider and narrow down areas of high usage in your cellphone habits. Chances are they have a plan better suited to save you a bit of money.
Home Security – Having a home security system is a great money saver on its own. Not only are your valuable assets secured, but your home insurance premiums will likely be lower as well. Many insurers will offer discounts to homeowners who have a home security system because you are less likely to need to make a theft claim. Fewer theft claims also reduce your neighborhood’s Theft Ranking, further reducing your premiums.
But these savings mean almost nothing if you are overpaying for your home security system. When considering a system for your home, the first step is to shop around. Compare systems and make sure that you are getting the most for your money, but make sure to skip out on any gimmicky “free” bonus offers. Nothing in this world is free, and you will end up covering the cost of your free gift with inflated monitoring costs.
An important thing to keep in mind when getting home security quotes is to know exactly how many entry points your home has. The cost of your home security system is not based on the size of your home, but how many entry points you will need to secure. Oftentimes, security companies will try to convince you to secure second-floor windows as well. This is something that you don’t need to worry about unless you have a covered patio off the back of your house. Burglars are looking for the easiest way into your home, and scaling the side of your house is definitely not the best way in.
Finally, ask for discounts! You don’t know unless you ask, right? Many home security companies offer discounts if you pay for the system up front or if you have been in the military. Looking into these can save you a lot of money!
Subscriptions – Much the same way that you are going to have to scrutinize your cable bill, take a look at your monthly subscriptions. Do you really need 3 or 4 streaming subscriptions? Do you even use all of them? Check for areas in which you can trim some fat from your home entertainment budget and start cutting!
Miscellaneous purchases – Tracking your money is so important for keeping your savings and FIRE goals in check. Build a budget and stick to it. We all know that unprecedented expenditures, like clothing and Amazon purchases, are going to come up. The easiest way around those without breaking your budget is to budget a bit of money every month specifically for them.
That way, when you need to buy a new pair of shoes for work you aren’t taking any money away from something else. Make sure that you don’t go over budget on these while telling yourself that you will make up for it by not spending anything extra next month. Life almost never works out that way, so just make a plan and stick to it.
Blow money – Blow money is that little bit of cash that you include in your budget that you can spend without guilt. Much like budgeting for miscellaneous expenses, the key to blow money is to budget for it and stick to the budget! Make sure you have your bills and savings covered before you budget for your blow money and don’t spend more than you have allotted for it in your budget. A really easy way to make sure that you stick to your budget is to take this blow money out in cash. That way you have a tangible idea of how much you are spending and what you have left.