If you want to increase your wealth fast, and perhaps become a millionaire, but you have already maximized your savings rate and your risk-adjusted investment return , the only option you may have left is to increase your income (see article “How to Become a Millionaire”).   So how exactly do you increase your income?   This may come as a surprise to you, but there are many ways to increase your income.  We will cover some possibilities in this article:

Increase your salary 

If you are a regular employee, this may be the most obvious option.  In order to increase your chances of getting a higher salary, a promotion, or a better job, you need to increase your skills.  One of the best ways to achieve this is through education.  If you don’t have a college degree, you will benefit the most by pursuing one.  Obviously this will require some investment from you, both from a financial as well as from a time perspective.  You may argue that you don’t have either, but if you are determined to be successful you will find that there are creative ways to find the time and the money to get a college education.  One great option is to attend a community college at night where your can take a few classes at a time at a very reasonable cost, and slowly build up your credits towards a college degree.

If you already have a college degree you may want to consider getting a masters degree.  A Master’s in Business Administration (MBA) program is a popular choice if you are involved in any type of business activity.  Better yet, many employers offer reimbursement programs where you can get your higher degree paid by your employer, either partially or in full.  In 2005, US graduates with an MBA were expected to make US$88,000 per year, not including bonuses.  According to the US Census Bureau the average income in 2005 for a person with an advanced degree was US$72,824 per year.

The list below shows the average US level of income per year in 2005 for different educational levels:

• High School Incomplete – US$18,900
• High School Graduates – US$25,900
• College Graduates – US$45,400
• Masters Degree – US$72,824
• Professional Degree (MD, JD, DDS or DVM) – US$99,300

A quick glance at the data above makes it very obvious the importance of education in the United States.  But getting a formal education is not the only option available.  For instance, if you are in a commission-based job, such as sales, you can establish a plan to increase your performance, sell more, and increase your income.   There are many books that teach you how to increase your sales performance.  There are also many Personal Development techniques such as visualization, goal setting, etc, that can help you achieve a higher level of performance.  We will cover a number of topics related to increasing your performance and your personal success under the Personal Development category.  Make sure to review these articles as well.

Perhaps you have been doing a good job in your current position but have not received the raise that you deserve.  You may need to have a conversation with your manager about the contributions that you have made to your company and ask for that raise.  You should not be bashful about having this conversation with your boss.   The conversation should never be about your personal needs, such as how much expenses you incur or how you need to save more.   The conversation needs to revolve around your contributions to the company and why you deserve the raise.   If you haven’t made great contributions to you company, you may need to reevaluate why that is the case, get on a Personal Development program, and only then, after making significant contributions, ask for a raise.

Finally, if you have increased your skills, made great contributions to your company, and asked your boss for a raise, but have not been successful in getting the salary increase that you honestly think you deserve, it may be time to change jobs.  This will require some effort on your part, but the results will be worthwhile.

Start a part-time home-based business  

Starting a part-time home-based business is a great way to get your feet wet in an entrepreneurial activity.   Many people dream of becoming their own boss, but the success rate of most small businesses is not very encouraging.  Therefore, you should start small and tread carefully.  If the part-time home-based business goes well, you may consider expanding it and making it into a full-time activity.

The good news is that nowadays, with the advent of the internet, there are many opportunities for home-based businesses.   One great tool that anyone can get started with is eBay.   Many people have turned eBay into a full-time business.   It is as easy as finding great bargains at garage sales, taking pictures and posting them on eBay.  Or if you want to be a bit more sophisticated, and you have a source of goods that you can purchase at a cost low enough to turn into a profit, you can build a store site either on eBay or as an independent e-commerce site.

Find a niche that you are interested in, and something that you are good at, and then do your homework.  You will need to do some research on how to setup a business in your area.  For US residents, in some states setting up a business can be as easy as just starting as a Sole Proprietorship and reporting your business income on Schedule C of your tax return.  In some states you may have to fill out a simple form.  There are other forms of business ownership besides Sole Proprietorships that you should consider, and in some cases you may need to consult with a lawyer and an accountant to help you choose and setup the best option.   The Small Business Administration (www.sba.gov) offers a vast amount of information to help you get started with your home-based business. 

Flip real estate residential properties  

Flipping real estate residential properties is when you buy houses in order to sell them for a profit within a short time period, usually less than a year.  To be honest, this is not one of my favorite options because of the risks involved.  This can be particularly dangerous in a slowing real estate market.  However, some people have been successful in making real money flipping residential properties. 

It is very helpful if you have some handy-man skills that can be used to renovate a fixer-upper that you would sell for a profit.  If you are not interested in renovation projects, given the current market environment, you need to become particularly good at identifying bargains.  These bargains only come about when the sellers are very motivated to sell, as in the case of distressed properties.  One example might be a divorce situation where the house must sell.  Another example is when the owner is unable to pay the mortgage and the house needs to sell in order to avoid foreclosure.  These types of bargains are not necessarily easy to find, and you will find yourself competing with other buyers that are also looking for bargain real-estate investments.

There are many sources of information on how to make money in real estate.  But you should be forewarned about some of these sources which tend to oversimplify and hype real estate investment as an easy activity that anyone can do.  You may have seen the infomercials with the beautiful houses and yachts in the background.  Before you go out and spend your money on an infomercial product, do your homework.  John Reed is a real estate investor who has written many books and articles about real estate.  John has a section on his web site where he provides his recommendations on other real estate “gurus”.  I am not necessarily endorsing John’s opinions, but the information on his web site (http://www.johntreed.com/Reedgururating.html) may be an eye opener, and you should at least consider what he says and do additional research before you invest in real estate investment products or seminars.

 

Other possibilities

 

There are many other ways to increase your income.  For instance, if you are a good writer, you might consider writing a book.  If you like tinkering with gadgets, you may come up with a patent or invention.  If you are a good software programmer you can develop a cool software tool.  The list goes on and on.  What you need to do is figure out what you are good at and find ways to monetize your skills, hobbies, or passions (see article “Focus on What you do Best”).