Secret to Saving Money: Earn More

Secret to Saving Money: Earn More

Daydreaming about becoming a full-time traveler? Wanting to convert from twittering #rtwsoon to #rtwnow?  What’s stopping you from picking up and leaving?

Money?

That’s the most common answer, which has led to countless articles about how to save money.  From “10 Ways to Cut Your Spending“ to “9 Ways to Sock Away a Little Travel Money” to “7 Small Ways to Start Increasing Your Travel Savings Today“ to How We Saved 75% of Our Income to Travel” or, the contrarian, “how we don’t fund our travels” advice to saving money is everywhere.  It’s a shame that this advice doesn’t focus on what you really need to save money, the most powerful weapon in your arsenal: more income.  If you are going to put your time and energy in one area, focus on increasing income, not just cutting costs.  Cost cutting will lead you down a road of diminishing returns, due to the fact that:

Maximum Savings=Income-Minimum Monthly Consumption

Minimum Monthly Consumption=(90 x cost of ramen noodles)-transportation to work-(12 x items of protein on the dollar menu)-utilities-rent-therapy (because your life would be very sad)

That’s it.  You hit a point where you can’t save any more unless you become an anorexic homeless hermit.  You can squeeze that savings rock all you want, but it isn’t your most efficient path to saving.  While we can all benefit from cutting consumption, you will soon hit a point of “diminishing returns” where the work you put in to save a $1 isn’t worth saving the dollar.  Let’s face the facts; it’s a hell of a lot easier to make $10,000 a year more than it is to wring $6,666 (the same $10k after taxes) out of most budgets.

A quick aside…I am basing the rest of this article on two assumptions:

  1. You have a college degree. If you don’t have a college degree, your primary target in life should be obtaining one, not traveling, quitting your job, etc.  A college degree will, by itself, increase your income an average of $29,000 per year, for the rest of your life, and increases your chances of a better marriage, smarter children, and being healthy.
  2. You have self-control. This is the key to controlling consumption, there are thousands of tips on how you can save money, all predicated on your ability to control yourself and actions.  If you cannot control your self and actions, saving money may be difficult and traveling the world may not be a good idea.

OK, so how do you get $10,000 more a year in income?  This is simple…yet hard, you need to find a job you like, even if you plan to quit it and travel.  How can you identify if you have a job you don’t like?  Here are some tell-tale signs you are not into your job:

If you don’t like your job, you probably suck at it.  Since you suck at it, you are getting paid commensurate with your output.  Since you are planning a trip or adventure, you need more money, therefore now is the time to find higher paying work.  There are four main strategies you could employ to get paid more.

Find a totally new job, in a totally new field. If you don’t like your current roles and responsibilities, find something new.  If you don’t know what you want to do in life, how do you expect to find it?  Traveling?  Do you think you’re going to go on a trip around the world, wake up one day and realize, “I want to become a state comptroller, the pay and hours are good, plus I get government holidays?”  Ain’t gonna happen, traveling can focus the heart and feed the soul, but the reality is that one day, most people are going to have to find a career.  Why not use the little time you have now, before you leave, to try something new?

Why this will increase your pay: If you have been in a job for several years, you have probably received step increases that don’t match the market rate.  If you have an average job ($40-60k), you will probably get a nice bump by taking a new role.

Other benefits: You will get new experience.  If you find something you like doing, when you return and are asked in an interview, “why do you want this job?” you can confidently answer, “because I did this for nine months before I left and found I really enjoyed it.”  This is a much better, and more convincing answer than, “after a long night at ‘coffee shops’ in Amsterdam, I was walking through the Red Light District when it dawned on me that this was my calling.”

Think of this as an internship you are giving yourself.  You know you are leaving, but you can spend your remaining time learning a new role, working with new people, and exploring options that you may want to pursue in the future.  Experience is one of the best guides out there, so get some new experience.  Taking a new job is risky, but if you are considering leaving, this is a risk worth taking as the worst that can happen is you leaving earlier for your trip.

Find a new job, in your current field. Again, if you have had the same job for a few years, you probably have not been given market raises.  As long as you do something of value (engineering, healthcare, accounting, or a trade), I would bet you would get a 10-20% pay increase by switching firms.  Look around, maybe not the identical position, but something tangential.  You may actually find that your current firm ups your pay just to stay, remember the words “retention bonus” for that discussion.

Freelance.  You have a marketable skill that someone is willing to pay money for.  You do…I may not know you, but I know you have some skill that someone needs and will pay a higher wage than they pay a FTE (full-time equivalent) to do.  There are so many options: freelance after work, freelance in a different field, freelance full-time.  The last option has the most risk and the first two are probably least risky of any of the options to increase your income.  Since the freelance world is as deep as it is wide, I can’t get into detail, but know that most “contractors” get $20-100/hr depending on their skills.  If you want to do this, but need some ideas, email me and we’ll identify your skill, define pricing, and develop a marketing plan.

Overtime. If you have this option, you should be maxing it out.  There are not many real jobs that offer overtime, so if you have it; take advantage.

It may seem difficult or time consuming, but these are four live options that can get most people $10,000 or more a year in income.  Think about all the time and energy you could expend trying to pinch pennies, as long as your income is not increasing, your savings ability is limited.  Raise your income, work a little harder, and you will reach your goals much faster.

LOCAVORista and I are traveling for the next 2-3 years on savings we accumulated in about one year, without many real life changes.  We had the benefit of setting up our life cheaply.  While we built a life with low fixed costs, our savings were due to our incomes.  We did this because we both loved what we did, the people, the places, the work and were subsequently financially rewarded.

You can control your spending all you want, but income is going to determine your rate of savings far more.  Earn more, save more, do more.

CLICK HERE to learn more about how we saved money to take a 2-3 year trip around the world.

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About the Author

thinkCHUA: Photographing and documenting the world on a 3 year round-the-world trip to help future travelers discover new places, travel longer and enjoy the world's great experiences.

About the Author
thinkCHUA: Photographing and documenting the world on a 3 year round-the-world trip to help future travelers discover new places, travel longer and enjoy the world's great experiences.
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