Work, savings and investments are all things that come to mind when you think about increasing your income to accomplish your goals. Here are 10 winning strategies to make the money you need to take a trip, pay for your children’s education or buy the vacation home you’ve always dreamed of.
Introspection, both financial and personal, is essential. “The psychological aspect is very important. You have to ask yourself what your limits are in terms of tolerating stress and taking on debt, as well as what your motivation is for the extra income you are trying to earn,” says Sussy Galvez, Senior Advisor, Best Business Practices at National Bank Financial.
“The motivation is not just financial,” she adds. “For example, according to a study conducted by The Retirement Mirage, 48% of people are retiring earlier, but some still look for a part-time job.” They do this not only to maintain their purchasing power, but also to feel useful and keep their mind sharp. For young professionals, the desire to live out their passion can be as strong as the desire for a flexible income.
People’s motivations for increasing their income vary based on age and social situation. According to Galvez, the most important element is properly identifying your goals. “Wealth does not mean the same thing to everyone. Before discussing strategy and financial products, think about your values and priorities.” This will allow you to stay focused on what is essential and ensure you don’t waver.
Your goals should be realistic and quantifiable and have a timeline. For example, you may decide to save money each month so you can take a trip in two years, collect an annual income of $30,000 when you retire, or pay off your student debt within ten years.
The first way to generate a surplus of income is to better control your expenses. This is an often-ignored step, but it’s easy to underestimate how much is spent on daily transactions and monthly subscriptions.
“For example, if you cut out buying a coffee every morning for $2.50 from your daily expenses, you could save $912.50 before taxes. This could pay for the cost of a trip. Do your calculations!” adds Sussy Galvez.
Making a budget is an excellent way to give up unnecessary expenses and maximize your potential income. With a bit of discipline and some helpful tools, you will get a detailed look at your expenses. This will make it easier to implement an efficient strategy.
There are a lot of money-saving tricks to help you reach your savings goals. Most of the time, changing some of your habits is enough. Small and simple actions can make a big difference.
You could, for example, lower your cell phone data or look for special deals when you go grocery shopping. If possible, you could also opt to take public transportation or use a bicycle instead of a car. The famous American investor Warren Buffet recommends withholding your savings and living off what you have left over. That way, you won’t be tempted to “cheat.”
An employee can request a salary increase from their employer. However, they must first understand their value as an employee and be able to demonstrate this. You need to be well-prepared with regards to both your contribution to the company and in your understanding its internal rules.
With the emergence of the gig economy, it’s more and more common for employees to work for themselves alongside their main job. This solution is doubly advantageous, as it both increases your income and makes your time and expertise profitable. It also allows you to build on a passion that may not be fulfilled at your main job.
Galvez suggests asking yourself the following questions before you take this leap:
The sharing economy and all the online platforms that are available (Airbnb, Turo, Breather, Etsy) bring about the opportunity to start a home business. This could be an excellent way to make a profit off your assets and sell products you create yourself. An entrepreneur should ask themselves the same questions as a self-employed worker, but they must also check if there are special permits to obtain or laws that need to be followed.
“Anyone can be successful in real estate, but not everyone is made to own 100 buildings. If being in debt stresses you out, this is not for you,” warns Jacques Lépine, President of the Real Estate Investors Club of Quebec.
The first step is to acquire a few income properties, which you can purchase by taking advantage of a leveraging effect: the value and income of a first building allows you to borrow to purchase a second one, and so on.
Sussy Galvez offers this list of advice for future investors:
With converting, or “flipping,” properties, the goal is to purchase properties sold below their market value, renovate them and then resell them for a profit. “You have to know how to find good deals, evaluate properties and quickly bring your ideas to life,” explains Lépine, who has had a long career in the industry.
Professional training is recommended so you can learn to properly evaluate properties and know what it will cost to resell them for profit. It’s also important to keep in mind the importance of tax issues. An expert’s opinion could help you avoid making certain errors. For example, the tax rate varies enormously based on the “intention” of the investor converting a property.
Purchasing stocks and bonds can be a significant way to make passive income. But, again, you must understand the different products and ensure that your choices correspond to your risk tolerance.
The Autorité des marchés financiers has some helpful advice for investors:
Whether you’re a young entrepreneur or you’re approaching retirement, increasing your income can help you reach your personal goals. Feel free to speak with an expert to boost your financial knowledge and understand the products that are available so you can make the right choices.
Any reproduction, in whole or in part, is strictly prohibited without the prior written consent of National Bank of Canada.
The articles and information on this website are protected by the copyright laws in effect in Canada or other countries, as applicable. The copyrights on the articles and information belong to the National Bank of Canada or other persons. Any reproduction, redistribution, electronic communication, including indirectly via a hyperlink, in whole or in part, of these articles and information and any other use thereof that is not explicitly authorized is prohibited without the prior written consent of the copyright owner.
The contents of this website must not be interpreted, considered or used as if it were financial, legal, fiscal, or other advice. National Bank and its partners in contents will not be liable for any damages that you may incur from such use.
This article is provided by National Bank, its subsidiaries and group entities for information purposes only, and creates no legal or contractual obligation for National Bank, its subsidiaries and group entities. The details of this service offering and the conditions herein are subject to change.
The hyperlinks in this article may redirect to external websites not administered by National Bank. The Bank cannot be held liable for the content of external websites or any damages caused by their use.
Views expressed in this article are those of the person being interviewed. They do not necessarily reflect the opinions of National Bank or its subsidiaries. For financial or business advice, please consult your National Bank advisor, financial planner or an industry professional (e.g., accountant, tax specialist or lawyer).