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All personal finance advice can essentially be narrowed down to one key maxim: spend less than you earn.
This is easy to comprehend, but for most people it is difficult to put into practice. To grow this gap between what you’re earning and spending you need to either decrease your expenses or increase your income.
Cutting Expenses
I write a lot about how we’ve decreased our expenses, by challenging everything, and avoiding monthly payments whenever possible. Some of the areas we cut back on were cutting cable, switching our car insurance provider, cooking meals at home instead of eating out, and switching to a cheaper cellphone plan. A great place to start is focusing on the big expenses: housing, transportation, and food.
The benefit to decreasing your expenses is two-fold. First, you need less money each month, (which also means you’ll need less money to cover your expenses in retirement). Second, you’re freeing up money each month to put towards paying off debt or building wealth.
For example, say you start cooking more meals at home and cut $200 off your monthly restaurant spending. Not only do your expenses decrease by $200, it will feel like your monthly take-home pay is increasing by that same $200.
Be cutting back on certain expenses, we were able to grow our gap, and use that larger gap to pay off our $55,000 of debt much more quickly. Focusing on decreasing our expenses was a great first step for us. It gave us something tangible to focus on immediately, that would bring benefits every month going forward. We cut back on the areas that were bringing us the least value, none of it felt like deprivation. In fact, we don’t miss any of the spending that we used to do.
When someone is looking to improve their financial situation, my first advice is for them to track their expenses and look for areas to cut back. Most of the time, this is an easier solution to implement.
Increasing Income
The other side of the equation is to increase your income. This played an integral role in our debt payoff as well. I started out making minimum wage, but over the years both my wife and I have gotten promotions and raises. I also work a side hustle with a minor league baseball team to bring in some extra money.
It’s easy to say that you need to increase your income, but how is that put into practice?
Various ways include negotiating a raise with your current employer, switching jobs to a higher paying position, or side hustling. In my own experience, the biggest key was building more marketable skills.
My Story of Learning and Growth
I graduated college in 2013, with very little job experience. I had worked at a restaurant since turning 16, interned at my church, and done an unpaid sports marketing internship. While these positions displayed my work ethic, I had yet to develop a wide set of marketable skills.
Upon graduating, I decided to pursue my passion in sports and got a part-time job with a minor league baseball team, with the goal of turning it into a full-time position. For the next year and a half, I worked multiple minimum wage positions as I tried to work my way up the career ladder.
Eventually I came to a crossroads. I could be stubborn, continue working part-time for the team, making minimum wage, and hope that a full-time role eventually opened up. Or alternatively, I could pivot and find a marketing role in a different industry. This would let me build additional marketable skills to better prepare myself for a role in the sports industry down the road.
The choice was clear. I took a bet on myself, left my part-time job, and began to pursue a full-time marketing role. In total, I was unemployed for about 6 months. This was one of the most challenging times of my life – battling doubts with my self esteem and watching my wife go off to work while I was still at home. While difficult, I learned a lot during this time. I started blogging about sports, teaching myself various aspects of content creation and refining my writing ability.
After numerous job applications and interviews, I finally found the right fit – landing a full-time Content Marketing role in May of 2015, which turned into a salaried position in August 2015. I worked at this position for nearly two years, building a wide variety of marketable skills including content management, blogging, and SEO. The company went through some tough times, leading to layoffs.
I was back on the hunt for a new job, and this time I found the right fit in about 6 weeks!
So what happened between these two periods of unemployment? Why did it take 6 months to find my first job, and then only 6 weeks to find the next one? It was the result of having a much more impressive resume due to building marketable skills.
How to Build Marketable Skills
There were two ways that I built more marketable skills:
Blogging – My blog was mentioned in both interviews, and ultimately was part of the reason that I landed both roles. What started as a creative outlet, a place where I could build skills and have a portfolio for my writing has now turned into my passion project for having a positive impact on other people’s lives. In time, I would like to grow this passion project into a form of monthly income.
Learning on the job – As I mentioned, I learned a lot during the two years at my first Content Marketing position. I asked questions and tried new things. These new skills helped me determine what to look for in my next job, and also helped display my capabilities.
There are plenty of other ways to widen your skillset, including:
- pursuing additional education
- taking online courses
- reading
- listening to podcasts
- finding a mentor
- creating, building, and trying new things
When you build additional marketable skills, you’re making yourself a more valuable employee. Often times, this will lead to new roles and higher income. It has certainly happened for my wife and I during our journey.
Talent Stack
Scott Adams, the creator of the Dilbert comic strip, talks about this concept in his book, “How to Fail at Almost Everything and Still Win Big.”
He discusses how the best way to reach success is to stack multiple talents, being pretty good in multiple complementary areas, rather than being excellent in only one area. Your unique combination of multiple skills makes you valuable.
“The idea is that you can raise your market value by being merely good — not extraordinary — at more than one skill.”
I have found this to be true in my career, the more skills that I can stack together, the more valuable an employee I become. By pursuing side hustles, including blogging, I was able to learn and experience more. You’ll find that you learn much faster by doing, rather than observing.
Final Thoughts
If you’re feeling stuck in your career, or want to reach higher levels and more income, I would encourage you to try and broaden your skillset. Gain additional marketable skills by learning, doing, experiencing. Build your talent stack and make yourself more valuable. When you bring more value, you should be generating more income. With more income, the gap between your income and expenses grows larger. This gap can be used to build up savings, pay off debt, grow your investments, and eventually be used to reach financial freedom.
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