In last week article, we have discussed the several financial stages. With that, I hope you have identified which financial stage you are at and know the key issues that you need to resolve to improve your financial situation. This article, I will be sharing how to earn more money and spend less.
To earn more money, you need to first understand a very important principle – “money = value”. Money is just a tool for us to get what we want. We are willing to spend money as long as it can give us value. Similarly, we will get paid because we can provide value to others. Value can be provided via services or products.
When you are employed, you are selling your time and expertise to your employer. So, in order to earn more salary, you have 2 choices. First is to increase your working hours by having part time jobs or working overtime. Second, you can increase your skills and expertise to make your employer more profits. The simple way is to work on the first option, however, increasing your working hours for a long time will not be sustainable. Increasing your skills and expertise shall be the way to go. This can be done through getting more qualified professional certificates, getting more relevant licenses. When you are being recognised as a professional, your pay will be higher compared to when you are an executive.
Many mistakenly think that the longer they stay with the company, their pay shall increase. If you are still thinking to work longer so that you can earn more, bear in mind that the younger generation who just graduates may be more hardworking. If you do not become more competent, you will be left behind. The key words here are not getting more experiences in years without improving in skills but becoming expert through years of experience. The expertise shall be able to provide more value to the employer in order to get more income. Remember, money = value. If you can provide more value, you will get paid more.
Similarly to entrepreneurs, the key to earn more in entrepreneur world is to be able to solve the client’s problems. The bigger the problem to solve, the bigger the pay will be. If you haven’t been earning enough, it is because the value that you provide currently is not high enough or the person is not appreciating your value.
Some suggestions for direct ways to earn more can be starting a part time business or home business to do something you are passionate / good at. If you are providing valuable service, someone will sure pay for it. With the technology, you do not even need a lot of capital to start off a new business, you can sell things online through Lazada or Shopee, do freelance works via www.freelancer.com. These are some direct ways to earn more apart from your main job.
How about saving more or spending less? In one of my article previously (read here), you shall understand that you need to save at least 20% of your income for retirement. To spend less, you must first set aside the 20% required saving before you spend. If you pay for your retirement first when you have your income in the bank, you spend only what is left. If you spend first for your expenses, you save only what is left.
Budget wise, you can allocate 40% of your income for your basic lifestyle expenses, 30% of your income for housing loans / vehicle loans and the remaining 10% for contingencies, etc. With this budget, observe and record your expenses for a few months. Identify what are the items that you spend the most and have plans to reduce those major expenses. This will help you to save more by working on the right major items rather than spending time to work on the expenses which are not significant.
You can also read this article on how to spend wisely. This will give you a guide to spend according to your value and priority. Money = value! When we spend, we want to ensure we are spending on things which are valuable to us too!
With the items discussed, you can slowly increase your income and save more! Watch the Youtube video here on this topic.
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