Increasing Your Income

Increasing your income can have a huge impact on the time it takes to reach your financial goals.

Most people will find it incredibly difficult to cut out $5k or $10k of annual expenses from their budget (there are only so many lattes that you can stop drinking).

However, some people will be able to negotiate a raise or find a new job that would bump up up their income by many thousands or even tens of thousands of dollars.

To be clear, this is not for everyone. There are many industries or careers where your salary is based on a pre-determined grid. Jumping to a new employer or negotiating harder won’t yield any results in some cases. If it’s not possible to increase your income, you’ll still get to where you want to go by focusing on the core personal finance skills — budgeting, spending less than you earn, and investing wisely.

With that said, let’s discuss the steps you can take to jump on the rocket ship to financial freedom by increasing your income.

Know Your Market Value

We need to walk before we run. Before you can make any radical changes to increase your income, you’ll need to understand how your current income compares against people working in similar companies / departments / jobs.

To get a sense of the market salary range for your job, try out these resources:

• Glassdoor
• Payscale
• AngelList (for startup jobs specifically — all job offers have salary ranges listed)

For Americans: Check out this fantastic interactive map from the Hamilton Project, which allows you to see salary data with filters for job titles, age, and location. A pretty amazing data set.

Try searching for a few variations of your job title (companies tend to use slightly different terminology to describe the same job). Your goal should be to find out what the typical salary range is for your type of job (low, average, high).

Where do you fit in the salary range?

Figure Out What You Want

Spend some time to figure out what you want next in your career. Are you happy with your current path, but want to move up the ladder? Do you want to jump ship to do the same job at a better company? Do you want to try out something entirely new?

What would your dream role would look like? What are the key areas where your current job is lacking in (pay, type of work, seniority, work-life balance, team, purpose, autonomy, etc.)? Which companies would offer a better overall role?

Try to sketch out an outline of what you want.

Use those same salary research tools above to get a grasp on what the pay range is for a few of the jobs you’d be interested in.

Don’t skimp out on the effort here. The decision of where you’ll work for 40+ hours a week, week after week for years (or decades), is not one to be taken lightly.

Informational Interviews 101

To get in in deeper than what’s available on the internet, and to increase your job switching prospects, I highly recommend setting up a few informational interviews.

An informational interview is a quick chat with somebody (over the phone, in person over a coffee) where you’re trying to learn about their industry, what their day-to-day job is like, good ways to break into their company, etc.

The goal of an informational interview is well, information. You’re not trying to immediately leverage this into a job offer. Instead, this is a great opportunity to expand your network, learn about a new industry, and ask some basic questions.

A quick primer:

• Start with your existing network of friends, family, and acquaintances — can you easily reach out to anyone that works in an industry you’re interested in?
• If no luck there, try to find someone on LinkedIn. Use the search function to look for people working at relevant companies, and try to find someone that you have some mutual connection to (went to the same school as you, friends with someone you know, etc.)
• Any way you can, gather up a list of a few people you’d want to meet with, and send off a message to them. For best results, try to get introduced by a mutual contact. Otherwise, an email or LinkedIn message out of the blue works as well
• Mention that you’ve been doing some research into their industry or company, and have been considering a potential move in the future. Ask if they’d have 30 minutes in the next week or two to chat with you about some questions you had about their company and the industry as a whole. Be polite and flexible!
• For the informational interview itself, make sure you do your research beforehand on this person’s background, what their company does, and come ready with some general questions about the industry. Try to find a few news articles about emerging trends or developments in their industry — you can base your questions on what you learn here. The idea is to show that you’ve done your homework and have a genuine interest in what they do
• Try to find out how this person got a job at the company they work at. Do they have tips for someone trying to break in? What are the hard and soft skills necessary to succeed?
• At the end of the interview, ask them if they could recommend a couple of people that you could reach out to in order to continue learning about the industry. Would they mind introducing you over email?
• If all goes well, you’ll be able to schedule more informational interviews. Keep the ball rolling until you know enough to make an educated decision about whether you’d like to pursue an opportunity in this industry in the future
• Depending on how the conversation is going, it may be appropriate for you to mention that you’re really interested in the industry, and would love to hear if their company or other similar companies have any roles open
• Always keep in mind that the person chatting with you is doing you a big favour by taking time out of their schedule to meet. Offer to buy their coffee; don’t be too pushy asking about job offers; send a “thank you” note to follow up

By the end of this informational interview process, you’ll have met plenty of people actually doing the job you want, and you’ll be ready for interviews. You will be miles ahead of the competition if you decide to switch.

Keep Your Options Open

Be open to new opportunities even if you’re happy today with your company / salary.

The best time to look for a new job is when you already have one. This allows you to be patient and picky with new opportunities, instead of being forced into accepting the first offer that pops up.

Keep in mind that your work situation can change on a moment’s notice. The boss that you get along with could get replaced by someone who drives you insane. Your company could get acquired, making your job redundant. Colleagues change, company budgets change, you just never know.

You can even go as far as interviewing for jobs that you don’t really intend on taking. You’ll keep your interviewing skills sharp, get to know your market value, and will have the opportunity to make a change when it suits you.

Negotiate Raises At Your Current Job

Negotiating salary at your current job is tough, but is definitely well worth it. A 15-minute conversation could be worth thousands of dollars a year.

Some tips for getting a raise during your next annual review:

• A couple of months before your annual review, give your manager a heads up that you want to discuss compensation at your review. By planting the seed now, your manager will be prepared for the conversation and may discuss this in advance with the HR department to secure a raise for you. If you just spring it on your manager at review time, their budget may already be locked down, meaning you’ll have to wait until next year
• When it comes time to speak with your manager, go in prepared with a list of factual reasons why you should be getting paid more. Some example: market benchmarks for compensation, how your job responsibilities compare against the average worker in this role, why your performance merits an above market salary. It needs to be clear and logical why you deserve a higher salary — don’t just ask for more money just because
• Be polite and non-confrontational. Don’t turn this into a personal fight
• Try framing the discussion as: “what do I need to do to get the raise I’m asking for?” This way, you and your manager can be on the same side in figuring out what would need to change for you to receive the pay you want
• Know your next best alternative — will you accept a hard no? Do you have a minimum raise you want? Will you move to a new role if they say no?

As always, know your market value before you walk into any negotiation.

Negotiating Salary At a New Job

If you’re moving to a new job, this the absolute best time to negotiate. They have a role that they’re trying to fill, providing you with quite a bit of leverage.

Pay is undoubtedly important, but be creative. You can also score wins on vacation time, work from home privileges, remote work, expense reimbursements (moving expenses, cell phone, car).

For some great tips on negotiating when you move to a new job, read through:

• The Luxe Strategist’s guide to negotiating your salary
• Lewis Lin’s 31+ killer salary negotiation email templates (you can use these same points in a face-to-face conversation)

Consider Going Back to School

Getting an advanced degree in your current field, or studying something entirely new can be a great way to increase your income. Taking time to go back to school can be incredibly rewarding on an intellectual level, and a healthy reward for your paycheck as well. People with grad degrees are typically paid more and are likelier candidates for promotions.

But, just hang on for a little before you trade in your briefcase for a backpack. Going back to school can be incredibly expensive. Starting with tuition, and lumping on foregone income and student loan interest turns this into a sizeable check.

To weigh the pros and cons of going back to school, use this interactive grad school calculator.

Your Assignment

• Use glassdoor / payscale to research your current role (use different word combos since the same job can be called different things) and find out what the market rate for your job is (low, average, high)
• Keep your resume up to date; after finishing a big project, work that into your resume; this way, your resume will be fresh and ready to go if an opportunity pops up
• Spend some time brainstorming about new jobs that you’d be interested in (either similar to today or completely different)
• Set up some information interviews with people working at companies / in industries that you want to pursue
• Negotiate your salary (whether at your current job, or especially if you move to a new job)