How to Increase Your Income (4 Proven Strategies)

Whether you’re freelancing online or working at a full-time position, earning more money is one of the most common career goals. After all, a higher income means you’ll be able to increase your saving velocity and retire sooner.

In this article, we’re going to go over four key strategies that will help you earn more!

1. Skill Stacking

Why Skill Stacking is Beneficial

Whether you’re working for a company or starting your own business, learning rare skills and combining them in valuable ways is one of the best ways to increase your income in a short amount of time.

The old way of climbing the income ladder consisted of becoming the absolute best at what you do — turning into the top 1% or 0.1% of people in your line of work. The downside is becoming the best takes a lot of time and there’s no guarantee that you’ll ever reach that upper echelon.

Instead of trying to become the best at one skill, becoming good (or great) at multiple skills offers a faster path to becoming a high-earner.

Why?

Because it makes you uniquely valuable.

For example, you could spend a lifetime trying to become the best writer in the world so your books turn into New York Times best sellers. That said, there’s a slim chance that you’ll ever hit that goal and it’ll be 10-20 years before you find out if it’s even possible.

Contrast that with taking your better-than-average writing and learning new skills that will complement it. You could learn about search engine optimization (SEO) best practices, improve your sales skills, and familiarize yourself with online collaboration software.

Suddenly you’re capable of becoming a freelance writer that clients will clamor over, instead of an unpublished author waiting to be discovered.

I’m not saying you shouldn’t follow your dreams but, if the goal is to maximize income in the shortest amount of time, skill stacking is the way to go. Getting sufficiently good at a complementary set of skills will turn you into a high-earner much faster than specializing will.

Niche Synergies

Take Scott Adams, the author of How to Fail at Almost Everything and Still Win Big and cartoonist behind the Dilbert comic strip. He admits he was never the funniest writer nor the best artist, but he combined his two “average” skills to achieve greatness (and get very rich in the process).

Learn about the six key ideas from Scott’s book in 16 minutes with Blinkist!

Scott, in essence, minimized the competition by creating a synergy of his skills.

There aren’t many comedians who can draw or artists with a penchant for humor so Scott was uniquely positioned to become a high-earner in the narrower niche of comic strips. Had he focused on the fine art market or stand-up, it’s unlikely he would’ve found the same success.

Spreading Your Eggs

Learning a single skill and trying to become world-class at it is like putting all your eggs in one basket. If it doesn’t go well, you’re back to square one and will have to start all over on your path towards a higher income.

This is especially crushing due to the law of diminishing returns.

It’s much easier to get good or great at one skill then move on to the next one than it is to squeeze that last 5% of improvement out of a skill you’re already excellent at. The deeper you go, the harder it is to make worthwhile gains.

This is true for powerlifters, chess players, and just about every other field out there.

It’s the reason why we improve faster in the first few months of learning a skill than in our 10th year of doing it. People plateau, and that’s okay — it’s just a sign that we’re approaching the point of diminishing returns need to move on to the next skill.

Let’s say you’re trying to learn the skill of marketing.

You could:

• A. Spend four years at a university learning 90% of what you need to know.
• B. Spend a year as a freelance marketer actually doing the work until you know 80%.

Is that extra 10% really worth an additional three years?

You don’t need to rush through skills or become a jack of all trades but master of none, just don’t spend excessive amounts of time mastering a single skill when good enough will be sufficient to benefit your career or business.

How to Choose the Right Skills

When choosing what to learn next, it’s important that you select skills that can be applied to a wide variety of fields. These might include persuasion, time management, foreign languages, writing, marketing, psychology, and any other skills with multiple use cases.

For instance, a BS in Psychology is one of the most valuable degrees you can get since you can apply your understanding of psychology (and human behavior) to your gain in most fields whether it’s sales, marketing, or other industries.

Conversely, getting a master’s degree in architecture will be completely useless outside the industry. By choosing broad-application skills, you’ll be able to pivot if your initial plan fails. This, in turn, ensures that you’ll never waste time learning a skill only for it to turn out useless.

You should also find skills that serve as binding agents.

Let me show you what I mean:

Let’s say you have two skills, writing and photography. You can’t figure out how to combine them in a uniquely valuable way. Well, it’s time to add a third skill that acts as the binding agent for these two skills.

You could learn marketing as your third skill then add in the existing writing and photography skills to create interesting articles with original images. If you want to learn more about the value of skill stacking, Jacob Hopkins has a great video on his experience with the approach:

2. Build Passive Income

Active vs. Passive Income

Building new skills and combining them in valuable ways is a great way to boost your active income. That said, you’ll still need to put in the work and trade your time for money. To work towards escaping that infinite loop, it’s time build passive income.

Let me start by saying that the term “passive income” is a misnomer (not to mention overhyped) since no income is truly passive. Simply put, putting zero effort in will get you zero dollars in extra income.

However, a more realistic approach to generating passive income is to frontload the effort.

This means you’ll put a lot of initial effort into building up the passive income streams but then you’ll be able to reap the benefits of long-term cash flow with a minimal amount of time spent managing these revenue resources.

Top Passive Income Sources

The most common passive income sources revolve around online businesses nowadays.

These include:

• Becoming an affiliate marketer
• Starting a marketing agency (then hiring someone to run it for you)
• Running an ecommerce store (but outsourcing fulfillment)
• Selling ebooks or online courses
• Creating digital products like software, graphics, or music

You could also take the old fashioned route and invest your money into index funds like the S&P 500, REITs, or even blue-chip dividend stocks. If you take the investment route, a pro tip would be to set up automatic transfers from your bank account to reduce friction.

By setting it up such that cancelling an investment would take more effort than just letting it happen in the background, you’re already increasing your odds of consistently investing a percentage of your income.

Here are nine more passive income ideas from YouTuber/entrepreneur Ali Abdaal:

Regardless of which passive income source you choose, aim for those with a combination of stability, cash flow, and compounding returns on the effort that you put into it. You can also combine multiple sources (e.g. by reinvesting your ecommerce income into REITs).

3. Diversify Income Streams

Why is Diversifying Income Important

Two-thirds of millionaires have at least three income streams but that should come as no surprise. When you’re reliant on a single source of cash flow, you’re not only increasing your risk but also setting a hard limit on how much you can earn every year.

Even the best surgeons can only earn so much with a single income stream.

That’s why doctors like Patrick Soon-Shiong, the richest man in Los Angeles, diversify their income streams through entrepreneurship and investments. You don’t need to be a billionaire or even millionaire to benefit from multiple income streams though.

In fact, there’s nothing stopping teenagers from setting up new revenue sources.

Income Stream Examples

If you’ve spent a decade as a cardiologist, why not publish a book on heart health that will pay you royalties for years to come? If you’re a dentist, why not start blogging and releasing eBooks about oral health?

Heck, blogging about dentistry is a good idea in general since it’ll bring more customers into your clinic!

Even art professors and martial artists can supplement their income by doing freelance graphic design or publishing an online fitness course. The best secondary or tertiary income streams will depend on your skill set and background.

Time Is of the Essence

The most important thing is that you identify these opportunities early on and get them set up as soon as possible. The earlier you diversify your income, the sooner you’ll achieve financial freedom.

4. Negotiate a Higher Salary

It’s funny to think about it, but many people around the world could get a higher salary if they just asked for a raise. Of course, there are proven tactics that can help convince your boss that you’re valuable enough.

Six Tips to Secure a Raise

1. Value-pegged asks. When asking for a raise, base the number on how much value you generate in the company rather than what you think you’re worth. This will ensure that you don’t undercut yourself or ask too much money out of ego.
2. Use examples. Be ready with specific instances where you increased profitability for your department, reduced operating costs, or saved the company precious time on a project. Cite these examples in a calm but confident tone.
3. Do your homework. Knowing the market rate for someone in your position with the same experience level is crucial when asking for a raise. Looking at websites like Glassdoor will ensure you don’t sell yourself short or ask for too much.
4. Be specific. Asking for a specific number instead of a broad pay range shows your boss that you’ve actually thought about how much you’re worth to the company. If you do use a range, remember that they’ll usually go for the bottom of it (or even lower) so always ask for 10% above the minimum you’d be willing to settle for.
5. Highlight uniqueness. Being irreplaceable is the best bargaining chip in a raise negotiation. Highlight the specific skills and contributions that make you more valuable to the company than other employees.
6. Proper timing. If you’re in the interview stage then wait for the recruiter to bring up salary expectations. Those already employed should ask for a raise towards the end of the year during performance review season since this the best moment to leverage your past results.

If All Else Fails

If you get stuck at a dead end job with no future or possibility of pay increases, it may be time to consider finding a new employer. In fact, changing jobs every three to five years can actually help you maximize your salary throughout the course of your career.

The Obvious Alternative: Reduce Cost of Living

For many people, the true goal isn’t to earn a higher gross salary but to have more disposable income. If that’s what you’re going for, then spending less is the best way to have more money leftover — followed by moving to a lower-tax country since no one wants to give up 30%+ of their income.

If you rent a cheaper apartment, switch to a car with higher fuel efficiency, and start cooking your meals at home instead of eating at fancy restaurants every night you’ll likely be surprised how much spare cash is left at the end of the day.

Moving to a new country entirely is a more drastic step but it could offer better opportunities to lower your cost of living or have your income taxed at a lower rate. If you’re considering relocating, have a look at my full guide on the best places in the world to retire.

Conclusion

As you can see, there’s no limit to how high you can increase your income — both passive and active! It all comes down to which skills you arm yourself with, how persistent you are when building income streams, and how creative you can get when trying to earn more money.

Before you go, let me leave you with one sentiment: income, like skills, suffers severely from diminishing returns. Beyond the point of a $10,000 monthly income, earning more money isn’t likely to make you (truly) happier.

Avoid putting yourself on a hedonic treadmill where you always need more. Find satisfaction in the freedom that a six-figure income offers instead of spending decades chasing after millions of dollars that you don’t need and won’t spend.

Similarly, don’t become a prisoner to the fast cars and big houses you see on Instagram.

Going from someone living in a condo and driving a Mustang to someone living in a mansion and driving a Ferrari may cost 10x as much, but it won’t make you 10x happier. At the end of the day, working towards freedom is always better than building a gilded cage for yourself.