In What is FIRE?, we outlined the three pillars of FIRE:

• Save more.

• Earn more. (This Article)

• Put your money to work.

Sometimes this is easier said than done, so I thought it would be helpful to write a detailed post on each one. In this post, I’m going to focus on the second pillar: maximizing your earning power. I’ll also address some of the pitfalls people fall into when trying to make more money or after they have achieved some success. These pitfalls will ultimately hold you back from your retirement goals, so it’s essential to go about this pillar the correct way.

In this article we cover … (Skip to links…)

Why You Should Try to Earn More Money

Pitfalls to Watch Out For

How to Make More Money

Now Get Out There!

This pillar comes down to basic math. The more you earn, the more potential you have to save a larger percentage of your income. Many people have a spending problem, finding ever more imaginative ways to spend more. Do you really need avocado toast delivered?… Really? However, you might find yourself with the opposite problem: where you live a very frugal lifestyle but don’t have enough coming in to put any money toward savings. We call this an income problem!

You’ll remember from the 1st pillar of FIRE- the length of time you have to work until retirement directly correlates to your savings rate (SR). The higher the SR%, the less time you have to work.

Savings Rate (SR%) = $$ Saved/ $$ Earned

The two variables you can control are reducing how much you spend and increasing how much you earn. To retire as early as possible, you’ll need to improve both as much as possible.

Before we get into easy ways you can make more money, I want to highlight some common pitfalls people fall into when chasing a higher income.

The Student Loan Trap

Go to college! Go to college! Go to college!

This message gets drilled into us the entire time we are in the K-12 school system. As a result, many people get higher education because they want to make more money. Unfortunately, nobody seems to factor in the costs or properly evaluate the value of the education you are purchasing. (Yes, it’s a purchase, not a birthright.) So I’m sure nobody is surprised to see this one on the list.

1 in 8 Americans has some form of student loan debt.

In 2019, 69% of students graduated with an average of $29,900 to pay back! That is an annual salary for some people! Even worse, the debt isn’t forgiven if you fail to get a degree, and many degrees don’t offer much of a pay boost. You might be surprised to learn that the plumber most likely makes more money than your well-educated teachers.

My Tips:

If you feel compelled to get a college degree, try to get scholarships and spend as little time in school as possible so you can start earning money in the workplace. Get a general degree such as business or something in the sciences such as engineering or computer science. These skills translate well into many fields and will generally get you a livable salary. Also, if you’re trying to retire early, spending 8-10 years in college doesn’t make a lot of sense. Instead, you could be out making money in the workforce after getting a two or four-year trade skill or degree. Keep your costs down and get into the workforce as soon as possible. Make money instead of accumulating more debt you’ll have to pay off later.

Lifestyle Inflation

This is a trap I fell into myself! As I worked my way up through corporate America, all my peers had new trucks and big houses. They lived in expensive areas with craft beer on every corner. It’s good to spend time with friends, but make sure you keep that spending in check! Making more money won’t get you any closer to retirement if you don’t increase the % that you can save.

“Spending Money to Make Money”

This advice is the biggest load of horse shit I’ve ever heard. Yet, salespeople across industries continue to repeat it. There has been no better time than the internet age to make money without spending a penny. If you’re starting a business or working on leveling up your earning potential, focus on what it takes to get the job done, not the shiny equipment or fancy car to “impress clients.” Nobody cares. I’m honestly a little offended if my real estate broker is driving a Mercedes. It means I’m probably paying them too much. The best business people I know are the ones who know how to get stuff done without spending any money. The only time you should be spending money is if there is a direct payout, such as paying for materials to make a product you have firm orders for.

Enough of the why and what to look out for! How do you actually make more money? Here are 11 easy ways you can make more money along with some tips!

1) Ask for a raise!

It’s really that easy. Do you already have a job? Do you do more than the bare minimum you were hired to do? Do you help your boss solve his problems on a regular basis? Ask for a raise! It’s not as hard as you might think. Let them know you’d like to talk about the compensation package and schedule a time to have the talk. Corporate America is very good at giving out 2-3% cost of living adjustments and then avoiding further conversations about pay. YOU have to initiate the conversation. Do some research. What do other companies pay for similar jobs? What do new hires make? How much time does it take to train them? In a tight job market (more jobs than qualified applicants) like we have today, if you’re a strong contributor, you should be able to negotiate a 10-25% raise. You might be expected to take on some additional responsibilities as part of your negotiations. Since you already show up every day, you may as well get paid more!

2) Find a new job.

In today’s corporate world, employers often take a hardline on pay.

“It’s outside of the pay bracket you’re in.”

“My manager won’t approve that.”

It’s all part of the game. The sad fact is that, at some firms, loyalty isn’t rewarded like it once was. It’s just assumed you’ll stick around. That doesn’t mean you aren’t worth more. According to the Bureau of Labor Statistics, in 2018 the average employee stayed in a job for a little over four years. If you’ve been at your current job for more than two years, you’ve acquired work experience and training that is valuable. Hopefully you’ve demonstrated you’re dependable. The best way to get a raise may be to check out other employment opportunities, especially if you have a skill that is highly sought after. (Although showing up on time puts you ahead of 50% of the competition.) It’s not uncommon for someone to find a job that pays 20-50% more for a position that is only a little more challenging than what you are currently doing.

3) Start a side hustle.*

I put an asterisk next to this one because starting a side hustle requires a lot of time and energy. Honestly, the first two ways I’ve listed are probably going to be a better use of your time. But maybe you really like what you do, the people are great, and you feel like your place of employment is a worthwhile cause. Maybe your dream in retirement is to be a creative entrepreneur. Starting a side hustle while you have steady income coming from your main job can be a great way to get something off the ground, and there are a ton of ways to do it! If your idea doesn't work out, the only thing you are out is some of your time. Update: I’ve created an article on the Top 10 Side Hustles you Can Start Today - Check it out!

A word of caution:

Activity is not the same as achievement. Make sure your side hustle isn’t preventing you from making more meaningful improvements elsewhere in your life. Being busy doesn’t mean you are getting closer to your goals. For this reason, I caution people against filling their time with low paying gigs like Uber, grocery shopping, or food deliveries. You can quickly fill up your schedule, incur costly car repairs, and send up your expenses with little to show for it.

4) Map your career path with your boss.

Maybe you work with a great company and you like the people, but you feel like you’re stuck. Have you considered that maybe your boss doesn’t know you have bigger ambitions? I actually had a family friend who was about to go back to school because she thought that’s what she needed to “move up.” She talked to her boss and found out they didn’t know she wanted more responsibility, so she had been passed over. Instead of spending two more years and $40,000 on an MBA, she was promoted with a significant pay raise within six months! Let your boss know what you want from your job. You might be surprised how helpful they are in getting you to the next level. In general, it’s easier to fill lower level jobs than it is to fill higher level jobs with qualified people who are in touch with the company culture.

5) Go back to school.

I know, I know. I harped on student loans earlier in this post … a lot. But the fact is there is a glass ceiling in many industries. If you don’t have the right education or certification, you simply won’t be able to progress. With this in mind, if you are already in an industry and it’s absolutely necessary to take that next step and go back to school, I would make the following recommendations.

• See if your employer will pay for part of it.

• Avoid student loans at all costs.

• Go to a community college, evening courses, or public school: anything but an expensive private school.

• Get a certificate instead. (In some cases, work experience with an industry certification is better than a new degree.) What certificates does your employer look for?

• Consider a trade! This is some of the most underrated education you can get, especially if you are looking to retire early. The electrician or plumber that works on your house likely makes a lot more than you think. Most trades take two years to get certified in. You can even find sponsored programs where companies will pay you to learn a trade through a paid apprenticeship program. They need skilled workers that badly!

6) Start a business.

This a bit higher risk, but oftentimes you can start a business as a side hustle and grow it into something bigger once you prove the idea works. Running a business has plenty of risk but plenty of benefits too. The biggest advantage is once you have a system in place you can hire others to scale up quickly. If you don’t like managing people or dealing with problems this might not be for you, but some people thrive on the challenge and retire while still running a business to keep themselves busy. Your business could be as simple as landscaping or offering web development to other businesses. Or it can be as complex as writing custom software for clients who have specific technical challenges to solve.

7) Sell your stuff.

This is a win-win because most of us have too much stuff anyway: old electronics, appliances in that storage unit you need to empty out, etc. Purging old stuff does two things. It puts money into your pocket today and saves you money. As you simplify your life, you spend less to organize and store your stuff.

This goes beyond items that are easy to sell on eBay like old cell phones and that extra TV you have. Take a real hard look at what you own. Do you really need that second or third car, camper, jet-skis, or those kayaks? Selling excess stuff frees up space while also reducing how much you spend on recurring expenses like insurance, registration, or justifying expensive trips when your time and energy might be better spent elsewhere. Something else to think about- it’s often cheaper to rent things like jet-skis the occasional time you want to go pound your kidneys on choppy water.

8) Get a roommate.

A roommate can come in many forms: a traveling nurse who needs a place to stay for a few months, a family friend who needs a place close to school while they go to college, or someone you find on Craigslist. With housing costs at an all time high, this can be a good way to get some extra cash every month if you have extra bedrooms. Of course, you’ll want to vet your tenants and make sure you are clear and upfront about your expectations. Plus, a written agreement is a must. The good thing about this is you don’t always have to have a roommate. I’ve had roommates off and on throughout the years. Normally it’s someone I know, and it’s a mutually beneficial arrangement. Other times, I like having my own space.

9) Rent a room out.

If you’re not comfortable having someone live with you, you might consider renting the room out for other purposes instead:

• Renting storage space through StoreAtMyHouse.com. This won’t pay as well, but you’ll have more privacy.

• Office Space - Not everyone has a great place to work from home. If you have good internet connection and an extra room, get a solid desk, screen/docking station, and printer. Rent that space out during the day. This way you’ll still have the place to yourself in the evenings. Sites like SpaceHop.com make this process easy!

10) Become a freelancer.

Do you have a skill that people are always telling you you’re great at? Are you a natural writer, video editor, teacher, designer, or coder? You can offer these services through sites like Fiverr.com to earn a little extra cash. It can even be a great way to build your portfolio if you have bigger ambitions but need something to show future potential employers. In fact, I use a freelancer (note shameless plug) to help me edit this blog because while I have great ideas, my writing is … Well, I’m a Sasquatch … Give me a break!

One of the best things about freelance work is often times you already have the tools needed to perform a service you’ve had training in, so startup costs are minimal.

11) Become a consultant.

I like to say a gig worker is paid for their time, a freelancer is paid for their service, and a consultant is paid for their expertise. If you have a lot of experience in a field such as sales, project management, supply chain management, starting a business, or legal matters, a company is willing to pay good money to get advice from you instead of paying hundreds of thousands to hire someone. This can be a particularly good arrangement once you are getting close to your retirement goal, or have already retired but want a little extra money to play with from time to time. Consultants can make as little as $60 to over $1,000 per hour.

As someone who has done consulting work, I have the following advice.

1) Charge significantly more than you think you should.

2) Be clear on what you are an expert in and don’t step outside of your circle of competence.

3) Never tell a client something can’t be done. If you don’t have the expertise in something, help them find someone who does. They hired you because everyone else said they didn’t know how. Help them connect the dots.

4) Provide a written document or report at decision points or at the end of your consultation. Clients won't remember everything and may need to share recommendations with other stakeholders. Also, people like to feel like they received something when they pay a lot of money.

There are a ton of ways to make more money. These are just a few categories to explore. Each one has many opportunities that you can make money with. My biggest piece of advice is just because you can doesn't mean you should. Being busy all the time isn’t a very good predictor of success. Find one or two things that you do well, and focus on maximizing those opportunities. You’ll end up making a lot more with less effort. Don’t forget the end goal is to retire early. Your savings rate is more important than how much you make. No matter how much you are earning, make sure you are saving as much as possible!

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