How Much Money Do You Need And How To Make More Money

The more money you make, the faster you can achieve your financial goals. Let’s help you determine how much money you need and explore ways to make more money.

The first time I set financial goals for myself, I realized I needed to make more money. It would take too long to meet my goals on my salary, no matter how good I was at saving and investing. I decided to raise my income by 3x. It took me three years to achieve this, but it was worth the time and effort. The more money you make and the more you save, the faster you can meet your financial goals.

For example, I made $41K in 2009 and saved $7K – about 17% of my salary. In 2017, I made $150K and saved $70K – about 47% of my pay. You can’t save $70K when you make $41K. It’s also easier to save 47% of your gross income when you make $150K than $41K. Your essential expenses like housing, food, and transportation take up a larger percentage of your income when you make less. Imagine your rent is $1000 a month. If you make $4000 a month, rent takes up 25% of your income. If you make $10,000 a month, rent only takes up 10% of your income, leaving you with a larger share of your income for other expenses and your financial goals.

How much money do you need to make?

I ask this question often. Some people give a specific amount, and some say “as much as possible.”

If you’ve never thought about how much money you need to make, pause and think about it now. Having a goal will help you decide on a strategy, choose between alternatives, and develop the right plan for you. Here are a few questions to consider:

What are your most important financial goals right now?
How much do you need to achieve your goals? Try to quantify this roughly. It’s okay if the amount is a rough estimate for now. Your number may change as life changes, so don’t work about trying to get it absolutely perfect.
How long will it take to achieve your goal at your current income level and saving rate? How do you feel about the amount of time required? If you’re reading this article, you’re probably similar to me and unsatisfied with this timeline.
How soon would you like to achieve your goal? This will help you figure out how much extra money you’ll need to make.

Here’s an example of what this could look like:

Mia currently earns $65K a year. She has $15K invested in her 401K and $5K in her savings account. Mia wants to buy a house and save a nest egg for emergencies and retirement. At her current income, she contributes $6000 a year to her 401K and saves $750 a month ($9000 a year). Ideally, she wants to save:

- - $30K for emergencies
  - $46K to buy a house at 10% down + closing costs
  - $29K per year for retirement. She wants to max out her $401K and IRA contributions.

At her current income, she can’t accomplish all 3 goals simultaneously. She is focused on building her emergency savings and maintaining her 401K contribution. It will take her 8 years to achieve her house and emergency savings goals (about 3 years for her emergency fund and 5 years to buy her house).

She will need a raise to meet her 401K goal. If she maxes out her 401K and IRA contributions, her take-home pay (income after taxes and retirement contributions) with go from $3793 to $2042. She can’t afford that as her monthly expenses are about $3000. She could cut expenses by $200 to $300 by being more frugal, but that’s the limit for her.

For someone like Mia, making more money can shorten how long it would take to meet her goals. If Mia made:

$95K a year – she could meet her retirement savings goal OR shorten the time to achieve her house and emergency fund goals from 8 years to about 4.5 years.
$125K a year – she could meet her retirement savings goal WHILE also shortening the time to achieve her house and emergency fund goals from 8 years to 2.5 years

That’s the power of making more money while keeping your expenses in check. Even if it takes Mia 1 to 3 years to raise her income to $95K or $125K, she will accomplish her three financial goals faster than if she stayed at her current income level. Now let’s talk about how to make more money.

Three fundamental ways to make more money

Now that you know how much you want to make, you can explore how to make more money. There are three fundamental ways:

Get a raise or promotion at your job
Make more money with a side hustle or business
Switch to a higher-paying job to make more money

1) Get a raise or promotion at your job

How are you doing at your job? What will it take to get a raise or promotion? If you don’t know, it’s time to have a career conversation with your manager and mentors. You will need to prepare for this conversation. Reflect on the following:

Current performance: What have I accomplished at my job? How am I doing against my goals? What was my most recent performance evaluation?
Future career goals: What do I want to achieve in my career this year, next year, and within 5 years? Am I on track to develop the skills and relationships I need to accomplish my career goals? Who are my mentors and sponsors? Do they know what I want to accomplish?
Company policies and priorities: How is my company doing? What are the criteria for raises and promotions? How does my compensation compare to others in my role at my company and other companies in the industry? What are the most important priorities for the company, my department, and my manager? Which priorities can I contribute to – are there additional projects I can take on or ways I can demonstrate my value to the company?

Be honest with yourself. You are more likely to get a raise or promotion if you are doing a great job at work. If you need to improve your performance, develop a plan to improve and talk to your manager. Give yourself time to rack up achievements before asking for a raise or promotion. If you are doing well, schedule time to speak to your manager about your career and opportunities for advancement. Practice what you want to say in advance so you have all the information you need to make a compelling case on why you should get a raise or promotion.

2) Make more money with a side hustle or business

You can make money outside your job using your existing skills or developing new skills. A side hustle or business can encompass anything from freelancing on Fiverr or Upwork to launching a digital marketing company.

If you ever considered starting a side hustle or business, test it out on a small scale and expand as you learn more. By trying it out on a small scale, you can test out if your idea is a good fit for you and learn how to make money from it before over-committing yourself. Ask yourself:

How much time can I devote weekly to work on a side hustle or business?
What skills do I have? What skills am I willing to learn?
Which of my skills can I use to make money?
What is required to start? What resources do I have to invest in my side hustle or business?

For example, Ava works as a project manager full-time, earning $105K a year. She works from 8am to 4pm on weekdays. In her free time, she works as a licensed tax preparer. Ava studied for a few hours after work and on weekends to pass the exams and become an IRS enrolled agent. Over several years, she has built up a client base and makes $27K annually from filing their taxes.

3) Switch to a higher-paying job to make more money

Not all jobs are created equal. Some jobs are declining while others are growing; some pay more than others. If you want to make more money, does your job or profession provide enough opportunities? If not, consider switching jobs.

You can switch jobs and stay in the same profession but get a role that pays more at your company or a different company. You can also switch to another profession that pays more and has more opportunities. You’ll need to develop new skills or make a compelling case for why your existing skills apply to the new profession.

For example, if you work as an accountant, you can switch jobs to make more money as an accountant at a larger company, find a job as an accounting or finance manager, or complete a coding bootcamp and get a job as a software developer. The more overlap between your current position and your desired job, the easier the switch.

However, you can accomplish the job switch you want by researching your desired job, developing the required skills or qualifications, and leveraging your network or building new relationships. Ask yourself:

Desired job – What experience level is needed? Who are the major employers? Do I need to develop new skills? Do I need any certifications or additional education?
Network – Who do I know that has this job or works at the companies I want to work for? Are there any alumni or friends of friends I can reach out to connect me to someone they know? If not, how can I build new relationships? What industry events can I attend, or what professional organizations can I join? Talking to people who already do your desired job gives you better information on what the work will require. They may also have interview tips, tell you about job openings or be willing to refer you for a job.

The bottom line

Making more money can supercharge achieving your financial goals. First, decide how much more money you would like to make. This gives you focus and helps you determine which approach will work for you. For example, making an extra $500 a month may require a different approach than making $5000 more monthly.

Once you’ve set your goal, decide on an approach and create a plan. For example, if you want to make $1000 more a year, you can get a raise or promotion, start a side hustle or switch to a higher-paying job. The more profitable skills you have, the more opportunities you can pursue. It is always worthwhile to deepen your existing skills or develop new ones.

Be patient and be kind to yourself as you set out to make more money. It may take longer than you expect to achieve your desired income but stick with it. It took me 3 years and going back to school to achieve the higher income I wanted. I’ll leave you with a poem by Jessie B. Rittenhouse. Each time I read this poem, I feel inspired to dream bigger, take steps to achieve my dreams, and keep going even when I hit setbacks.

My Wage
I bargained with Life for a penny,
and Life would pay no more,
However I begged at evening
When I counted my scanty store;

Life is a just employer.
He gives you what you ask,
But once you have set the wages,
Why, you must bear the task.

I worked for a menial’s hire,
Only to learn, dismayed,
That any wage I had asked of Life,
Life would have willingly paid

– Jessie B. Rittenhouse