How to Afford a House – Pitfalls of Increasing Your Income
If you’re trying to save a house deposit, or trying to convince the bank to give you a mortgage, increasing your income is a no-brainer.
But there are some pitfalls to look out for as your income grows. If you make sure to avoid these, then your increased income will be all upside.
There are four common ways to bring in more money:
Work from your Phone “Opportunities”
Also known as multi-level marketing companies, these ‘opportunities’ have been selling the dream of getting rich while working part time since the 1940s. Since then, the only people who’ve reliably become rich in the MLM industry have been the shareholders in the companies. Not only are you not likely to increase your income, research indicates that between 73 and 99% of MLM participants actually lose money.
If you still want to give it a go, remember, the numbers tell the story. The figures potential income figures MLMs use in their presentations do not have any expenses deducted. Keep careful track of all your business-related costs, including your personal purchases of the product (unlikely that you would spend so much on those products if you weren’t a distributor).
Get a raise
Win-win for you, right? You get paid more for what you’re already doing.
The downside is, I can almost 100% guarantee that your boss is not wondering what the heck they could do with that spare $10k a year that they just can’t seem to spend.
Which is not to say that they can’t pay you more. But think of it as a process you’re going to start and keep moving, not a one-off question that you’re going to spring on them tomorrow.
Depending on your exact work, and workplace, there are several different ways to go about asking for a raise. The following process has worked well for salaried clients
- Research the current salary range for your job. Knowing what you could be paid elsewhere can help grow your courage and confidence.
- Gather evidence of the value you have brought to the company, or the way your job has evolved, which may mean that your original job description and salary are no longer appropriate. If this is the case, research the current pay range for the work you actually do.
- Ask for a meeting, and specify that you want to discuss your pay and conditions
- Present your research. Let the numbers speak for themselves. Do not say that you need money. It’s not a compelling argument – we could all do with more money. The point is, how much you’re worth, or how much it would cost to replace you.
- Give your boss time to take in the information. Even if they’re fair and reasonable, no one likes getting the news that something’s going to cost more. They may also be embarrassed and defensive it’s obvious you’re well underpaid. They will have to put new numbers in their budget, and possibly get sign-off from someone else. Schedule a time to have another meeting where they can make their offer of an increase to you.
- If the answer at this meeting is no; or the offer is pitiful; or they keep postponing the follow up meeting, then you have your answer. Begin searching for a new job.
Get a new job
Switching jobs every 3-4 years is one of the most reliable ways to increase your earnings over your lifetime. When companies have a role to fill, they generally have to pay enough to attract the calibre of applicant that they want.
Just keep track of job-hunting costs, and when considering a new role, don’t forget details like the cost of parking at the new place, whether you would need a new work wardrobe, or have to pay for more childcare.
Be well-informed about typical pay and conditions, and use the initial offer to see if there’s something more you could get – one day a week working from home, for example, can mean a 20% reduction in your transportation costs.
Work a second job
Done well, this can be a real boost to your finances. Just be sure you’re not going to end up worse off.
Many people spend more when they work longer hours – they have no energy left for home cooking, they let their own admin slip and miss deadlines for bill payments, or they end up saying, “Damn it, I deserve it!” and spending money on a treat rather than for its originally intended purpose.
To do a second job well, keep track of the money, but also keep an eye on your time and energy. If these start running low, you’ll probably compensate by spending more, and you’ll almost certainly damage your health and relationships.
Sell stuff you no longer use
Somewhat of a no-brainer, but can be quite time-consuming with photos and descriptions and answering questions. Research what the things you own typically sell for (or if they sell at all). Once you get into a rhythm with this it can become addictive.
Bonus – you get an eye for a bargain for the stuff you need to buy.
Start a Side Gig
Could be the path to incredible riches.
Could also give you all the downsides of working a second job, with the additional feature of uncertain income.
Track your numbers, time and energy levels. This information will tell you which path you are on.
Relating to Money aims to help you figure out the underlying emotions and beliefs behind any behaviours that are detrimental to your financial health and replace them with life enhancing alternatives. This isn't about about making you live the kind of lifestyle where buying coffee at a cafe is a punishable offence! Rather, Relating to Money will endeavour to help you identify and overcome any issues you may have when dealing with your finances.