What comes to mind, when you think of ways to earn more money? Do you think of taking on an extra job or starting a business out of your home? Or, do you think of selling your stuff on eBay or Cragslist?
Forget about creating new sources of income for now. Why? Because the first dollar you earn, is always the hardest. A good analogy is the acceleration of a car. Going from 0 to 20 MPH, is a lot harder and takes more time than going from 20 to 40 MPH. Your speed increased by 20 MPH in both cases, but one was a lot less effective than the other.
Why start at 0 MPH when you can start at 20 MPH? Instead of thinking of ways to create a new source of income to earn more, you should concentrate on a way you can increase your largest source. Once you have maxed out your largest source, then you can look into diversifying your income.
The purpose of this post is to explain the 4 most efficient ways to ways to increase your largest source of income.
# 1 – Sell To a Someone You Have Sold to Before
The easiest sale you will ever make, is to someone who you have sold to before. The fact that you have collected money from that person or business once, means that they trust you. Trust is the hardest obstacle to overcome.
If your income is based on selling or freelancing, try cross selling a current or former client. It’s the easiest sale you will ever make.
# 2 – Ask for a Raise
If you deliver value over and above your current salary, don’t be shy to ask for a raise. (If you just do what’s asked of you, now is the time to change.)
If you put in 5 hours preparing for this meeting outside of work, and successfully received a $5,000 raise, that’s the equivalent of making $1,000 an hour. Not a bad investment of your time.
You’re going to need the entire 30 days, to complete this task. Start now by over performing. Take on any additional responsibilities today. If you don’t know what to do, just ask your boss how you can bring greater value to the company.
# 3 – Review Your Benefits
It’s not uncommon to over insure, double insure, or even forget that you even have benefits. It’s time to get that large folder out, that you receive once a year and thoroughly review your benefit package.
- Are you contributing to your employer match? - Not contributing up to the full employer match in your 401K is one of the biggest mistakes made. Amazingly, Annika Sunden the author Coming Up Short: The Challenge Of 401(k) Plans, explains that about half the people do not contribute enough to get the full employer match.
- Are you paying for a benefit you don’t need? - Do you have short-term disability, long-term disability, and a 12 month emergency fund? Depending on your job, you might be over insuring yourself. Another benefit that often goes unused is vision insurance.
- What fees are you paying in your 401K? – Find out the fees you’re paying for the mutual funds in your 401K. If they are too high, consider switching to low cost index funds.
- Cheaper to go with parents plan? – Come September 23, anyone up to the age of 26 can be added to their parents health insurance plan. If you’re under and have a younger sibling, chances are your parents are already paying for a family plan. Therefore, adding you would be no additional cost to you or your family.
# 4 – Review Your W2 Withholding
If you’re someone who enjoys getting a check back after you pay your taxes, realize that you’re letting the IRS borrow money from you, at 0% interest.
You can change the amount of income taxes withheld from your paycheck, by adjusting the amount of dependents you claim. The goal is to barely over contribute each year because if you under contribute, there is a penalty.
To find out if you’re withdrawing too much income tax from your current paycheck, use the IRS withholding calculator.
Don’t Forget The Long Run
Don’t forget that the four steps mentioned above are short-term solutions to earn more. Over the span of your career, your lifetime earnings will equal the value you bring to the market place. Therefore, the best way to earn more over your lifetime, is to increase your value.
Photo by: AMagill