On one of my earlier posts I mentioned that one of the ways you can bring your FI date closer is by earning a higher income, or bringing in more money.
As long as you kept your outgoings the same and invested, overpaid mortgage or paid off your debt with this extra income, you will reach your FI date sooner. Ultimately not becoming a victim of Lifestyle Inflation.
It’s an easy statement to make to just “go on, earn more”. But without some ideas and suggestions, of practical steps you can take, it can seem like an impossible task too large to tackle.
Most of the advice I have given in previous posts, such as tax rebates and side hustles, I have applied myself. I can recall on my own experience and offer my own insight. So you can learn from my experience and hopefully have a higher rate of success.
With the suggestions on this post I have applied some of them but not all of them. This is either because the information at this moment is not practical or relevant to me, or I just haven’t got round to doing it because I have been lazy! I’ll let you know the ones I have applied and the ones I am just passing on from other sources.
1/ Ask for a raise
The most obvious but quite possibly the hardest conversation to have.
To help soften the blow here Ramit has actually made a little script for you to follow so you can prepare properly. I have been on both sides of the fence for this scenario, the one asking and the one listening to a staff member asking.
For any success you need to be good at your job, have a proven record you can draw upon to support your case, preferably be hard to replace, and be prepared what to do if they say no.
Some jobs don’t have such obvious objective markers to use in your evidence, such as I increased sales from 100 to 150 units in a 6 month period, so it can be tough to justify the increase. Perhaps using comparisons to others in the industry is a good place to start, if you are on the average salary for your peers you would need to show why you want an above average salary.
Having a timeline of how you can show them and hitting any agreed targets is helpful. So an initial conversation and then a review 1-3 months later so assess if you hit these markers.
Do not expect for you to walk into your bosses office, ask for a raise, and leave that afternoon with one. There are too many HR and finance steps for them to say yes so quickly, no matter how good you are.
So prepare properly, show them the value you offer, give a timeline for a review, and finally have a plan for if they say no.
When I asked for a raise at my old job they gave me one, but not as much as I wanted them to. My main point to them was the comparison of my position to others in the company and region. So not an overriding success but I learnt a lot in the process. Unfortunately at the time I wasn’t in a position to walk away as easy. In hindsight as well it was for the best, as this negotiating took place just before COVID, so wouldn’t have wanted to be in the job hunt at that time!
2/ Get a promotion or take on more duty
So the asking for a raise didn’t work, or it did but they want you to do more.
Well that makes sense really. You now have to weigh up if they extra stress and workload is worth the money they are offering. But you’d look pretty foolish if their compromise to an increased salary was more responsibility and you didn’t take it.
Going for that promotion and putting yourself in the mix is another way to increase your income. Sounds obvious but sometimes at the same company you can become complacent with your role and the idea of promoting wouldn’t have crossed your mind. So get onto the internal vacancy posts for your company and check it out. Generally, a company will always much prefer to internally promote than go with an external candidate.
I have taken this as well with a part role, and if I am honest the extra responsibility to pay was not worth it. It did however allow me the experience and foot in the door for the promotion, so it was worth it long term.
3/ Change companies
If you’ve exhausted options internally it may not be time to look elsewhere.
My biggest raises have come from moving companies. They want you, and they at times will lure you with a bigger salary. Especially if you are in a work environment you are happy with and is a good company. This is true even if it is the same role, and you are merely switching teams. It’s quite well documented that the biggest and easiest jumps in salary come from moving companies.
The hard thing can be for individuals who have been for so long at one company and either the fear of the unknown scares them, or the perks they have accumulated will not match the change in salary. For example if you have worked up to the position where you are getting an extra 5 days annual leave a year, this time away may not be worth the hassle and stress of a pay rise when moving companies. Something to consider and will be a case-by-case basis.
4/ Re-skill or change industries
This is a big one. This requires a fair amount of commitment but could perhaps put you on a better path.
I had been in my old profession for 8 years and for the most part enjoyed it. However I realised the ceiling for salary was pretty low, and I wasn’t far off the top. Add onto that I was becoming bored at work and wanted more a challenge, it was probably time to think of other alternatives. I then moved into a more managerial position and have continued on this path for the last two years.
This increased my salary from before, but also pushed the ceiling of what would be possible up further as well.
I was fortunate to be given a chance and didn’t need to invest in any specialist training or courses to be able to do it. I was also very fortunate to be put on a course once in the position which I have then used as a selling point for future job applications. Obviously if the requirement for the new role needed a lot of investment with courses or qualifications, you would then need to calculate if it’s worth the commitment from a financial point of view. I am ignoring the enjoyment and satisfaction aspect with this discussion for now.
5/ Work more hours/shifts
This is obvious I know. But sometimes the obvious ones need mentioning, and compared to the other ones it requires no tough conversation, investment in money or extra stress of taking on a new role. I did say I wouldn’t bring in enjoyment and satisfaction into this discussion and purely focus on the income, but this one has the potential to go down a rabbit hole and leave your quality of life very poor. You could work yourself into a rut and not enjoy or live your life at all.
I am a big advocate of doing a little more, and pocketing that money for something valuable – emergency fund, debt, investing, sink funds. But there has to be a balance that it isn’t all consuming in your life to the detriment of your own health, and of your friends and family. So make sure you do the balance on this one well. If you fail, just learn from it and make sure it doesn’t happen again.
I generally don’t do this,
6/ Side Hustle
This is cheeky of me here I will be honest.
Side hustle here can be split into two categories. First one would be a skill you have, or a job that is low effort/stress that you can use to supplement your main income. This could be evening and weekend work, such as shelf stacking, hairdresser etc to offer that extra income.
The second category is the more long term self sufficient independent style of side hustle. I’ve done a whole blog on this here which you can go through. I am in the process of applying this and the idea that in 12-18 months time it will be hopefully bringing in extra income is so satisfying and what keeps me going.
Because then, regardless of what is happening in my own main job, I will have some element of extra salary coming in.
So which ones for you seem most practical?
Which will you give a go at and try?
Are there any obvious ones I haven't put down that you think will help others?
Please tell me your success stories - I love hearing them!
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