Now that we’ve covered the basics of this site, let’s spend the next few posts getting into ESI Money’s three focus areas — AKA the “three simple steps to wealth.”
Today we’ll talk about the “E” in “ESI Money.” As noted in the explanation of the site’s meaning, the “E” stands for “Earn.”
Why It All Starts with “E”
You’ve probably heard it said that the key to personal finance success boils down to “spending less than you earn.” I believe that’s a true statement. This means to do well you need to do two things — you need to earn something and you need to spend less than that.
It goes without saying that the more you earn, the easier it is to spend less than you earn. It’s also true that the more you earn, the larger your gap or cash flow which in turn drives your net worth. So spending some time thinking about how to earn more is a key part of becoming wealthy.
Best Ways to Earn Much More Money
For most people the most common ways to earn money include:
- Your career — For the vast majority of people, this is where 95% or more of their potential lies. It’s a large part of your financial success and deserves significant time and attention.
- Second job — This could be an actual second job, a hobby that produces some income, or even a small side business.
- Side business — This is more substantial than above. It’s something that’s a second job in and of itself (and probably more lucrative).
- Credit cards — Cash back on purchases as well as sign up bonuses.
There are others options but they are usually insignificant (FYI, I’d put income-earning investments under the “I” in “ESI” — which stands for “invest”). If I missed any big ones, chime in with your suggestions in the comments below.
Your Career is Most Important
Of all the items listed above, your career is by far the most important because of two main reasons:
- It’s a multi-million dollar asset.聽
- You can increase the value of your career asset by a significant amount.
Consider the following:
If you begin a career today starting at $40,000 and average 3% pay increases over a 45-year career, you will make over $3.7 million during that time. What other asset do you have that’s worth almost $4 million?
Using the same basic numbers, let’s look at some different examples of how you can make your career worth even more:
- You double the earnings growth and average 6% increases per year. You end up earning over $8.5 million during your career.
- You earn a decent amount above the 3% and average 5% increases per year. You end up earning almost $6.4 million during your career.
- You earn slightly above average at 4% per year. You end up earning over $4.8 million during your career.
Even if you only earn 1% more than average, you end up with over a million dollars more! And if you do a bit better than that, you can literally earn millions more during your lifetime.
So doesn’t spending some time, effort, and money on developing your career sound like a great financial investment? It does to me!
Think it can’t be done? I’ve averaged over 8% per year for 25 years — and the last decade or so I haven’t really been trying hard as I’ve put other priorities first (like time with my family).
- Good news #1: it can be done.
- Good news #2: I will tell you how you can do it.
- Good news #3: You don’t need anywhere near 8% annual growth in salary to earn millions more than you would if you did nothing to grow your career.
We’ll discuss these issues (and more) a lot over the life of this blog.
Everything Else
As you might imagine, all other income opportunities pale in comparison to the potential of your career.
The one exception is owning your own business. Having your own business can actually help you reach financial independence within ten years! Now that’s something to get excited about, right?
That said, there are smaller ways you can pick up some extra money. Credit card rewards can be worth hundreds if not thousands per year. In upcoming posts I’ll share my strategies for making the most of this opportunity. I’ve earned almost $15,000 in credit cards rewards during my adult life. That’s a nice used car!!!
The Basics of “E”
For now, as we consider the “E” in “ESI”, the vast majority of you should be thinking of your career and how you can manage it so you make millions more over your lifetime. Once you do that you’ve taken the first big step towards spending less than you earn.
Step #2 is then to begin working on your own side business.
To read more about earning, check out my “earn category” which contains all my posts on earning money.
A great way to earn is with Credit Card bonuses, I left a lot of money on the table by not taking advantage of this easy source of cash sooner.
I missed out on thousands of dollars of credit card rewards by not learning about them sooner too 馃檨 But we’re doing GREAT with that now (and not doing any crazy manufactured spending, etc. to earn the money!) A great way to earn extra money outside of your normal job is to put your car and extra rooms in your house/apartment to use in the sharing economy. You’re already paying for these – so put them to use!
I signed up to be a mystery shopper. I like to do a few shops when I’m looking to earn some extra cash.
The best way to earn money is to invest in yourself and build your career.
Earn indirectly by investing in your children. Teaching our 20 year old son and 10 year old daughter how to work and save. He’s starting his 2nd year of college with $30K in a Roth IRA after working three years part-time during high school (and still got into the college of his choice), working part-time as a leasing agent while in college learning valuable real estate and life lessons along the way. Helped our daughter mow our lawn recently and paid her $6 with the promise of a 50% match which she could use as she pleases but the $6 goes toward her future Roth IRA. My point: I won’t have to earn as much later taking “care” of my dependents. They will be independent and self-sufficient. A win win.
To help boost your earning power, commit to being a lifelong learner. Jobs are changing with technology advancements. Those who can learn and adapt to use the new technology will continue to be valuable employees, and can justify a higher compensation package.
1. Determine how much you really need to retire on.
2. Minimize your fixed expenses… focus on house, transportation, and food as these typically take the most out of ones budget
3. From that create a side hustle. For instance, a Box subscriptions are simple and reoccurring residual income & take little time to maintain or even sell on an amazon the largest retailer in the world & at their expense you can reach an endless audience to capitalize on.
With that i leave you with a quote by mentor always shares with me, ” it is better to have money than not have money at all”… you decide.
I earn extra money by two means right now: all the bills that are possible get paid with a credit card so I can earn the cash back money (just remember to pay off each month or you’ve lost money!), and I bought into a direct sales company that sells consumable wants, not needs. You would be surprised how many people want, I was. I did take a couple of DS tries to get it right, but each one was a learning process and I’m finally happy with the primarily passive income I earn from this one right now
To earn more, make sure that you keep asking for more. When you get your first job offer, when you get promotions, etc. Don’t just take what is offered as first amount, you may be leaving money on the table that will compound greatly over your working career…
Work hard and be on great terms with your supervisors. You never know when they will step up the ladder to even more fiscal influence
Good post! Yes, career is one of the best ways to make money. Credit card and bank bonuses are a good and relatively easy way to make money. Other methods include buying dividend paying stocks.
Thanks!
Pay attention and spend less than you make, which is much easier the more you earn!
To earn more negotiate your bills. . .”Times are tough, is there anything you can do for me?”
Always negotiate…on. everything.
And, do not underestimate the power of a side gig!
Perform, be a good teammate, and take risks.
Yes I have a career that earns money in exchange with my time but also like to know that every penny and asset I have is still working hard for me when I’m in bed 馃槢 We talking everything from offset accounts, savings, funds, investment (be creative) as long as it’s working harder than me, then it’s money well-earned regardless small or big amount. *even the empty bedroom down the hallway is now occupied by a paying guest. It’s very enjoyable feeling and the song goes…sweet dreams are made of these….
To grow income, understand what you are good at that is also valuable to the market. You have to understand both. There are tons of really hard working high quality people in jobs that are just not as valuable as the time and talent they put into them (like squeezing blood from a turnip).
Always look for the roles that maximize your value for doing the things you enjoy and that will help you stay motivated and succeed in places where there are rewards to be had.
I think side hustles are an excellent way to earn more income like others mentioned, and I have always been interested in real estate too.
Taking your talent or something you love to do into money making by teaching others. My daughter has swam since she was 12. Started teaching swim lessons with her club team at 15 and within a year start her own business. She went to the 1 college out of 10 which she couldn’t swim and receive a full ride. Now she earns over $18,000 ($1,500-$2,000 week) teaching lessons in the summer just in case mom and dad can’t cash flow something. So swimming is still paying off. She is half way through her nursing program and wants to grow her business with additional swim teachers so when she starts working she can still run her business. Her spots book out in 3-5 minutes and her business keeps growing every year and she is 20 years old.
You definitely need to make your career number one since it is in the beginning this is your major source of income unless you are in the minority of having a trust fund. Commit to being a lifelong learner in other areas of interest.
I think you really need to know a bit about :
Technology (overall)
Science
Insurance (health, auto, liability)
Taxes
Estate Planning
Stocks, bonds, futures, options
Contractual law
Real Estate (residential and commercial)
and if you are in Real Estate then also know about Electricity, plumbing, HVAC, and paint.
Get married! Sharing as many expenses as possible with a partner will drastically lower your cost of living. Just make sure you hook up with someone frugal!!
Take advantage of opportunities and getting those opportunities by networking. That is how I am growing my career and my employer paying for going to grad school even though it is in a more specific science field than I would have done if on my own. However, the critical thinking skills will be useful for any future employment or change of careers to the more business and management side eventually. I also sell things online at poshmark and ebay and send in designer finds to therealreal (online used designer retailer). I buy super low and sell high generally 10x or more my invested money. I also put 25 percent away every month which is now over 1100 per month into a couple different retirement plans one roth and one traditional.
Save money by wearing good-looking free t-shirts. Also, don’t forget to read instructions.
Start a side business where you can provide some sort of remote support. Let’s say your good with computers, you could reach out to friends, family, or even small businesses and see if they need help with their computers. You can even setup remote assistance type tools so for 98% of the issues you could just remote into their computer to see what is going on and fix the issue right from your desk. Also, since it is really a side job I suggest charging like its a side job. You could charge $50 an hour for remote support, and if you have to go on site you could charge $75. Make sure you are upfront though that this is your side business and you do have a regular job. This way you can set the ground rules that you can not just show up at a moments notice but if you can you will remote in. You should also mention upfront that you charge a minimum of 30 minutes this way if you get notified they need help you are going to at least make $25. Depending on how many customers you end up with you could easily add several hundreds of dollars in income each month.
“A penny saved is much more than a penny earned.”
Thanks for the great writing.
For me personally what worked is to seek delayed gratification. I spent years of significant preparation to get where I am, which is a career that is portable, flexible, and in demand. I knew that this good outcome later would require a big upfront investment in education and effort that would not pay immediate dividends. If you want it you have to be willing to work for it. The bottom line: education/training was what did it for me.
My best piece of advice would be to save and to work hard. You may not be the smartest in the bunch but as a person in a family business, we want the ones that work hard over the book smart person that does not work hard.
Earn a BS degree in a STEM field. Do 2 years at a community college and your second 2 years at a state university. It is a long term investment.
Find something at work that nobody else wants to do, and do it to the best of your ability. It may not be glamorous work, but it will get you noticed. More opportunities (and money) will come to those that are willing to take on responsibilities that other shy away from.
Manage your career carefully- it’s your most valuable asset and taking too long to build it up properly or prematurely winding it up can have an adverse impact to your net worth.
-Mike
The simplest and easiest way to “make money” is in the words of my late Father-In-Law, “Let your money work for you”! Take advantage of any company’s matching savings program, 401-K,etc. Have your savings deducted from your paycheck because the saying “If you don’t have it, you can’t spend it” truly works!
The gift of time and the Power of Compounding is the most important—-Start saving early!
Invest in yourself. I earned a degree from the local public state college in a field that I would automatically be paid day 1 and have high hiring potential in the medical field anywhere in the USA.
On top of that, I have continued to invest in myself via professional continuing education courses yearly. Earlier in my career, I was hired several times over others with more experience because of my continuing education and drive.
As my father always said to me “invest in yourself (education). No one can take that away from you.” Been financially supporting myself every since graduation and passing my national boards.
Change jobs. You can earn vastly more by switching companies versus just getting a raise and/or promotion at your current company. It’s better to change companies every few years than stick with one place for decades. The views on what’s considered “job-hopping” are changing, and the data backs up the salary increases you can negotiate when you start at a new company.
Of course, if you’re happy with what you’re making and your job situation, no need to move. However, since “earning” more is the prompt…. 馃槈
Start early. Start now. No better day to save and invest than the present.
RE: Focus on your career. Spend as much time networking, looking around and getting ready for your next move as you do working in your day-to-day job. In my experience, knowing how to maneuver the politics is as or more important than actual competency and execution (more so at large megacorps). That is, keep your resume up to date, fine tune that elevator speech, always inquire about what groups/industries are growing and adding staff (advice for both internal and external moves). In no time at all, your earnings will grow exponentially.
The best financial advice I ever received was from watching a Jay Leno show when I was in High School. Jay Leno stated that he has two jobs: stand up and the late night show. He lives off of his “stand up” income and saves and invests his “late night show” income. Since college I have saved and invested 97.5% of my full time job income. I have a part time job and I base all of my spending as if my part time job is my sole income.
ESI –
I love your focus on “career” first! It 100% provides the highest amount of leverage towards increasing your earning potential. I often find myself losing focus on that myself, which I attribute to sometimes falling into a “grass is always greener” mindset. One thing I do when I start feeling that way is to try and remind myself that building wealth is a long-game and no matter what I path I take, I need to have patience. Any recommendations on how to keep your focus on a career, especially when it becomes challenging?
Thank you for the great resource!
For me, I always had annual goals which I then broke down into quarterly goals and eventually daily tasks.
In my day it was the Day Planner system but today it’s probably more like GTD.
Anyway, having a system to make sure I was making progress was what kept me on track (at least most of the time) throughout my career.
Career is super super important. It’s the safest way to earn money for most of us. I think the best way to go about making money is to focus on career first, and work on a side hustle project until you are ready to leave the security of a job. That is, of course, unless you are ambitious and want to dive into entrepreneurship quickly!
Career is super important.Its the safest way to earn money for most of us.
Great Advice,!! Thank you. I agree with you that careers are super important. It can be difficult for women thought, especially during these times. I have been putting my career aside since I became a mom.
But sure thing, a career can catapult your wealth.
Cheers