In the last post on personal finance, I represented personal finance in an equation, which was:
Income(t) – Expenses(t) = Savings(t) + Investments(t) where time t signifies moving money, or purchasing power, backward and forward in time.
Now, Deepak Shenoy has a lucid post on the difference between Savings & Investments. In his intro, he says and I quote:
There are two kinds of people, really – those who have extra money left over at the end of the month, and those who don’t. I’m assuming you’re one of the former, otherwise you shouldn’t even be here.
Totally agree with Deepak on the difference between S & I. But the point I want to make is that even when you have no money left over at the end of the month at present, there’s still hope. Go back and see our equation on personal finance.
I mean we can take a shot at maximizing our income and/or practicing some frugality to optimize our expenses. And thus have something to save/invest though there’s no surplus as on today.
This post is about maximizing your income.
An year ago, I would have looked derisively at the post title and would have muttered, “Oh, here comes another preacher” or “BS, that’s easier said than done”. But today I think it’s possible.
Before I share my own learnings (Showing not Telling!), a few links that talk about maximizing income from popular bloggers:
Spend Less Than You Earn: The Wrong Way to Think
Ramit Sethi’s “Earn More Money Using Your God Given Skills
Update: The Simple Dollar’s 50 side business you can start on your own (Tip thanks to Swaroop)
For a laid back, unambitious guy like me, increasing my income was not really a priority. Even more so for my wife. But we discovered that we enjoyed doing things beyond our daily/professional life.
My wife always enjoyed being with the kids. And she enjoys learning and singing rhymes. Even writing a few of them herself. Since last year she has started going to a nearby preschool. Parents to a few special children requested her to give personal attention to them at home. And even though she is embarrassed at accepting money from the School/Parents, she earns enough to take care of our daily expenses. And btw, her salary increase in 1 year of recession is over 100%!!
Recently, I too, sold my first software. It’s a Money Manager application and had more than 600 free downloads in the last two months before I made it a paid software. Mind you, I’m not a techie and perhaps too old to learn programming now (?).
I also have some earnings from my various websites. And I learnt all this in the last two-three years.
Together my wife and my earnings have resulted in more investments for our future. Without cutting back on our eating out, chocolates, icecreams, et al.
In essence, we have (inadvertently) taken the route of increasing our income rather than minimizing our expenses to achieve our Saving/Investment targets.
You can do it too. Infact the best argument is that if we could do it, anybody else can! 
So what do you do to increase your income? I can give a few clues but ultimately you need to decide it for yourself.
- Freelance on what you enjoy doing.
- Ask for a raise at your present job.
- Learn a new skill in your interest area.
- Find your latent talent.
- Teach
- Take parttime gigs at Restaurants, Corporates
And so on….Give it a thought!
Yes, that’s why it’s called “Personal” Finance.
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Have you seen http://www.thesimpledollar.com/2009/04/11/50-side-businesses-you-can-start-on-your-own/ ?
How did I miss that! But 50!!?!!
Nice one
Ranjan , my points on this would be like this .
All over the world , esp India almost all have this equation : savings = Salary – Expenses
Rather , it shouls be Expenses = Salary – Savings.
Savings happen by chance currently , if there lifestyle leaves them some money at the end of the month , they save accidently . There is nothing wrong in spending like crazy after they have taken care of things which they should
.
Indians savings rate is among highest in the world , I just wonder if they start investing it smartly , We could be on the top of the world
Keep going .
Manish
Dear Ranjan
I am fully agree with you that spend less than you earn is a wrong way it should be like, Try to earn more by your hidden skills .
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@Mohammad Khalid Siddiqui
Thanks
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Ranjan,
your equation is very good way to look at tangibles. How can you include intangibles? If both are working, it is going to affect something else, e.g. time with kids, time with parents, priorities getting pushed out. In the end one may have wealth, but other intangibles do get affected. In way to capture that? would this be part of personal finance? Or you believe it does not have intangibles have no relationship with personal finance?
Regards,
my apologies for the repeating…
@TIP Guy
That’s a fascinating perspective. But you can’t make the tangibles and intangibles as black and white, i.e., two different things.
For example freedom from financial worries can help you devote more quality time with your kids and time with parents.In other words tangibles and intangibles work in tandem!
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Ranjan;
I accidently stepped in to your blog & am deeply impressed. I always thought i was a clever businessman ,but a stupid manager of personal finances.Thank you for providing great insights on the subject. I wish to follow all all your future inputs.
Thanks
Thanks Ranjan, very good post.
i like this sentence “increasing our income rather than minimizing our expenses to achieve our Saving/Investment targets.”
Sharukh Khan mother gave this advice to him as i red it in one magazine. I too likes this lot and trying to follow it.
Thanks for your wonderful articles.
Dear Ranjan,
your old theme looks good than this.
Hi Ranjan,
My wife & i both work for the airlines and though some would say that makes a fair enough living we seem to feel it’s not enough. what i’m trying to say is that through your website i’ve found a way to educate myself on better handling of my income & in the bargain hopefully maximize my savings through intelligent Investments as well. I hope it’s not to late to learn.
Robert, it’s never too late to learn. As I do that everyday!
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Money is made by earning it,not by saving it.Everyone should live by this motto and they will be happy in life.
I like your concluding statement about it being “personal” finance for a reason.
We have heard it many times before that the key to become rich is – Spend less than you earn. This is great advise and you should follow this without any hesitation.
But I am agree with Ranjan that sometime spending less doesn’t seem much Fun and one should search new ways to earn more money.
1. The simplest way to increase earning would be to Ask For a Pay Raise. According to the Pareto principle, 80% of the tasks you are doing on your work bring only 20% result and other 20% tasks bring 80% result. Concentrate on 20% tasks that are important and do them in the best way possible for next three months and then ask for a Pay Raise.
Note : Before asking Pay raise, you should improve your working skills. By improving your skills and becoming a better person you would definitely get a pay raise. In case your employer refuses to you more, someone other would certainly pay you more for your skills.
2. Start A Part-Time Business – This is the best advice, I can give you, Start a Part-time business. Here are few ideas – Creating website, Blogging, Computer repairing, Home painting, Gardening, Dogs training, teaching language and computer skills.
There are many ways to earn more money and invest it wisely. He Who Searches Finds…..