If you want to build wealth, you need to increase your income by 10 – 30% each year. If not more. Today’s article looks at two straightforward paths to achieving this goal: starting a side-business and getting a part-time job.
Each of these options will radically improve your disposable income, giving you the funds to capitalize off a variety of investment opportunities (and ultimately achieve financial freedom). However, both routes have their own pros and cons, which you’ll learn about in a moment. And, you’ll also discover which choice is best for you.
Let’s start with the easiest one first.
Working Part-Time: Pros And Cons
“J-O-B. You know what that stands for? “Just over broke.'” You’ve undoubtedly heard this phrase (or a variation of it) from somebody trying to sell you a get-rich-quick scheme. The concept of working is something many people hate. Their lose.
Working slightly more than the average person can leave you very well-off in a surprisingly short amount of time. Suppose, for instance, that you get a part-time job netting $200 per week. That’s $800 a month, or $10,000 per year. Now, let’s imagine you invest that money (as well as some of your regular income) over a 20 year period.
Here are two calculations (using Moneychimp.com):
In the first, you invest $13,000 each year and enjoy 9% annual returns.
After 20 years you’re up to $724,938.90.
In the second situation, you invest a total of $18,000 per year while receiving 9% annual returns.
After 20 years you have more than $1 million.
Some readers might argue with 9% yield, but these calculations use it to compensate for the fact that you’re not increasing your deposits or making windfall investments at any point. As such, the return is a little higher to make up for this (though the S&P 500 historically returns 9.8%, so you could enjoy results like this).
Spending a few hours each week working extra is a small price to pay for an hundreds of thousands of dollars in additional earnings. Likewise, many part-time jobs are fairly low-effort and low-stress.
When people think of part-time jobs they usually think of flipping burgers or delivering pizzas. In reality, there are plenty of well-paid opportunities (like consulting, moonlighting, or certain sales positions) which pay well without being super time intensive. Many of these projects can be done at home (or through a program like Zoom), giving them more of a relaxed pace.
Of course, there are some downsides. The biggest of which is scale. Eventually, you’re going to run into pricing and working limits which make it tough to grow beyond a certain point.
That said, having a part-time is a good starting place for increasing your income and building up those investable funds.
Launching A Side-Business: Benefits And Disadvantages
Owning a business is essentially the reverse of having a part-time job. You lack stability or guaranteed income, but there’s potential for massive, unlimited scale.
You could earn $1,000 in your first year. $5,000 the next, dip down to $3,000, and then make $40,000 immediately after that.
It’s a roller coaster.
While there are many different types of side-businesses, I suggest focusing on something which is time independent. Creating an information product, collecting ad revenue, or affiliate marketing all allow you to reap a nice trickle of residual income. Additionally, these are all projects which you can always scale up. There’s no need to burn the ships or go all in, a few hours of extra work each week and you’re generating decent returns.
On top of this, running a side-business allows you to naturally increase your income.
With part-time jobs, you often hit a ceiling that’s hard to break. To give a personal example, I’ll collect between $20,000 and $25,000 off my weekend contract work this year. It would be very hard to scale this income up another 10 – 30%.
In contrast, gaining an extra 10 – 30% with side-businesses is completely doable. That’s joining an extra affiliate program, submitting articles to a bigger platform with revenue sharing, or creating one mid-range info product. In other words, there’s a lot more room for growth when working entirely for yourself.
Final Thoughts
Theory is nice, but actionable advice is even better. So here’s my suggestion. If you want to greatly increase your income, start doing more part-time work like consulting or moonlighting. This is as straightforward as it gets and you can park the money in your bank account or use it for investing. At the same time, look for some easy and low-intensity side-businesses you can launch. Maybe things which take an hour or two per week when getting started.
Doing this will greatly increase your income and allow you to compound earnings over time.
Over a span of 10 – 20 years, this money adds up big-time, and catapults you to a significantly higher level of wealth.