If your goal is to make more money (and who doesn’t?) and maximize your earning potential, the sad truth is that a traditional job may not be the best way to do it. Now, don’t get me wrong, wanting to move up the corporate ladder and make more money is a worthwhile goal. So too is getting extra education and experience to help you move up the ladder. However, depending on what kind of lifestyle you want to live, a traditional job just may not provide the earning potential you’re looking for. If you’d like to make more money, you may need to look outside your job.
Why A Traditional Job Has Limited Earning Potential
The following are some important reasons why a traditional job has limited earning potential:
- The more you make, the less likely you’ll find another job that can make you more. Put another way, the higher you move up through the tax brackets, the less potential there is you’ll find another job that can pay you more. Your earning potential is essentially capped by the relative scarcity of high-paying jobs compared to low-paying jobs.
- You only have only so much energy and there are only so many hours in a day. As an employee, you’re basically trading your time for money, so your earning potential is always limited by your available energy and the number of hours in the day. If you’re paid by the hour, you might be able to make more money by working overtime, but only if your employer is willing to allow you to do it. If you’re a salaried employee, you might not have too many options to make extra money unless you have a bonus or commission program that’s tied to your efforts. Even then, few companies allow for unlimited bonus or commission earnings – and even if they do, there’s only so many hours in the day.
- Your income is limited by the desire of your employer to give you raises. You could be a great employee, but your income will always be limited by the continuing desire of your employer to give you raises. Even if you can get a raise, how much is realistic? If you make $50,000/year, a 5% raise (which is fairly generous) only equals $2,500/year, which is just over $200/month. Throw in taxes and your extra $200/month might only be around $150/month net when you finally receive it. Now, I’m not one to turn down an extra $150/month, but will that kind of money really catapult you to your financial goals?
- Your income is limited by your inability to fully utilize your creativity and initiative to increase your earning power. Unfortunately, many people that work for a company end up being little more than drones with a set task and little say in the direction of the company they work for. Even if you work for a small company where you have access to the key decision makers and can influence the direction and profitability of the company, your efforts may not be reflected in your paycheck because you’re on salary. You would hope that your boss would recognize your great contributions and give you a raise or bonus, but there is no guarantee of that! In short, working a job often gives you little opportunity to utilize your creativity and initiative to increase your earning potential.
Increase Your Earning Potential With Passive Income
So if a traditional job limits your earning potential, what can you do to increase it? If you’re willing to put in some time and effort on the side, you can greatly increase your earning potential by starting a passive income generating business. The beauty of passive income is that once you’ve got your business up and running, it can make you money at all hours of the day with relatively little daily maintenance. It is not limited by your energy, the hours in the day, or your employer’s desire (or lack thereof!) to give you raises.
There are a variety of passive income generating businesses out there, but some common ones that come to mind include rental real estate, automated laundromats or carwashes, vending machines, or internet marketing.
Before starting a new business, be sure to do your homework! Some businesses are riskier, more competitive, and require a steeper learning curve than others, so you want to be sure you at least have a good handle on what you’re doing and what your earning potential is before you jump into your new business with both feet.
If you’d like to get some ideas for starting passive (and non-passive) side businesses, be sure to check out a great article over at Moolanomy.com.
