There are two practical ways to increase our cash flow or the amount of money we keep in our pockets. We can (1) Reduce Expenses or (2) Increase Income and by combining both practices you will get the best results. Let’s deep dive into the practical ways to earn more money or have access to cash to fund your plan for financial freedom.
1. REDUCE EXPENSES
To reduce expenses, you first have to identify your needs and wants. How do you identify a want? Wants are the things that are nice to have. They may make life a little more convenient but if we don’t have them we can still survive. Needs are the things we cannot live without. They are things that are required to live on this earth. Let’s start with our basic needs. Our basic needs include things that help us survive like food, clean water, and shelter. But even in providing those needs we have to choose between a need and a want.
For example, we need food but we don’t need a t-bone steak or prime rib. We don’t need lobster or lamb. Those are wants. So we have to begin to think about our priorities and ask ourselves questions like, “Is it worth eating steak today if it robs me of my financial freedom tomorrow?”
The following are some brief examples on how you can reduce expenses in certain areas of your life:
A. Housing - Downsize (i.e. apartment, rent room, move in with parents) Even if you own a house, the cost to maintain that house is a lot more than an apartment. There are many more responsibilities and expenses related to home ownership like HOA dues, lawn maintenance, all the major and minor repairs from fixing garage doors to replacing the roof. If you do need to downsize, remember it’s only temporary. Don’t wait until you are behind on your house payments because then it’s almost too late since it affects your credit which makes it harder to rent an apartment. The sooner the better.
B. Television - Do we really need television? Humans have existed on this earth a long time without television. This is a want. Some households have a TV in every room and some parents use TV for entertainment to babysit the kids. Usually if you have TV you also want cable, which is another unnecessary expense.
C. Internet - it’s nice to have but not a necessity. There are a lot of places or businesses that have free wi-fi if you need it to do some work. (Starbucks, public library, McDonald’s or other restaurants, airport, Panera Bread, Dunkin Donuts, Buffalo Wild Wings, Barnes and Noble, Staples, etc.)
D. Clothing (including shoes, accessories, jewelry, purses) - We need clothes but not name brand. Thrift stores, outlet stores, and garage sales are an economical way to provide nice clothing without spending a lot of money. If you have growing children this is a great way to meet their needs. Children go to school to learn not model in a fashion show. Instill in them at an early age the importance of prioritizing needs over wants. You can find some very nice (even name brand) clothes at thrift stores and garage sales.
E. Transportation - We live in an advanced society and usually need some sort of transportation to meet our responsibilities. But our transportation does not have to be a Mercedes or Lexus. Purchase an affordable vehicle to get you where you need to go. If you can only afford a $4,000 car then that’s what you need to buy and by all means don’t waste money on $2,000 worth of rims. That’s money that can go towards your financial freedom. Cars are not an asset. They are a liability which means the value goes down everyday so you’ll never be able to sell it for what you paid for it. Also, consider public transportation like riding the bus or for some people who work closer to home riding a bike or walking.
F. Entertainment - reduce eating out. Cook meals at home. Instead of going to the movie theatre rent a Redbox movie or use Netflix which saves a ton especially for larger families. Be creative and take advantage of the free stuff in the city like Discovery Green, Hermann Park, Free day at the Zoo. For vacation a lot of people are now staying home for a “staycation”. Then you don’t have to spend extra money on hotels and the cost to rent a car or fly somewhere else.
2. INCREASE INCOME
Increasing your income doesn’t have to be as hard as it sounds, even if you have a full-time job with 5 children. Like we stated above, it will take sacrifices and always evaluate what you have now and what you can do in order to reach your goal! Below are some tips on how to increase your income whether you are a full-time mom, young entrepreneur, successful business owner, or still in school.
- Ask for a raise or promotion or get another job paying more.
- Get a part-time job.
- Sell anything you don’t need or want. For example, books you’ve read or furniture that you’re not using that might be in storage. Just clearing out the storage will save you money every month. Sell your clothes; have a garage sale especially if you plan to move. One man’s trash is another man’s treasure. Just because you don’t want it doesn’t mean someone else won’t. Sell things you are holding on to thinking you’ll use it one day.
- Rent out that extra room in your house or garage apartment
- Create a side job/hustle - (Skills/trade) cutting hair, mowing lawns, cooking and selling meals, cleaning homes, income tax preparation (there are some tax preparation companies that will train you free if you work for them during tax season), musicians can make extra money playing at: churches, restaurants, weddings, and quinceaneras, create websites or logos, translating (companies and government agencies always have a need for people who are bilingual)
- Write a book. Fiction or nonfiction (children’s book, how-to book, poems, cookbook). You can write an ebook and sell it online.
Natalie & Roz