Income vs Expenses

CaptureA lot of focus is put on expenses and how to save your money by creating a budget and cutting costs. “Follow these 10 steps to cut your expenses”. “Having a cheaper life”. “How to travel cheap”. Don’t get me wrong a lot of what is preached is great. I try to have a budget and follow-up on my expenses to find out what holes I need to plug and stop spending too much. It’s actually a healthy if not a cleansing act to create your first budget and then follow-up what you’re actually spending your hard-earned money on. Food and entertainment is usually the crook that goes away with a larger part of your income (after rent, mortgage). Finding out that you spend $300-500 on take out food every month is a harsh wake up call.

That is one part in starting your new journey to financial freedom. Finding these money holes and plug them with a new life style. I bring food from home to work now and cook a lot more at home. I also don’t eat out in restaurants that often. The gf have her complains about this and we will of course not be able to go cold turkey and stop completely. Although, friday night is not always a night out with dinner at a fancy restaurant, more now it has become friday night pizza where we make our own pizza and share a bottle of wine. It’s actually my new favourite thing. I love that friday night pizza. It’s a nice reward to end the workout week with (I try to exercise between 4-5 times a week) and it taste amazing.

Back to keeping track on your expenses. We have a bunch of software out there to help us, like Personal Capital. Something as simple as an app in the phone will track your expenses. Even my banks app has its own expense follow-up that can categorize 90 % of my expenses all by itself. I really enjoy these small built-in IT solutions and I am glad that even my bank know how important it is. The other app I use is Tink. It’s an app that is connected Tink showing a graph.to your bank and helps with not only tracking your expenses, but also creating a budget in the app and warn you when you are going over budget or getting close to it. it has even more features that I won’t go into (And no, I am not sponsored in any way for this). Software like this, easily available in your smart phone, makes it impossible for you to come up with an excuse for not having a budget. 

I have been a little to overzealous about the expenses and how important it is to control it. That just shows you how important I think it is. But just as important, if not more, is the income. I really feel like most personal finance blogs out there focus on the expense side of finance and not so much on the income side. We all have great tools out there to track our spending and try to control it. So what about income. It’s just as easy to track, but what about increasing it? I mean, it’s not as simple to give yourself an income budget. Or is it? I’m sure most feel like there is not much else then the annual salary raise that can affect their current income situation. I have thought the same thing, but I am starting to doubt this “fact”. So, what types of income are there?

The majority of us gets a salary. It’s the biggest and for most of us, the only income we have. We can work hard and compete with our colleagues to get a yearly salary increase. Some of us even gets a bonus for the extra hours and effort we put in. It’s what you get paid for between 9-5 (Work).

A few of you out there have a side business or side hustle that gives you an extra income. It could be anything that you do besides your work. Pretty much the work you do between 5-9(Side business). you usually only need to put in more time and effort to increase the income.

A brave few own a company that the make a living off. It could be that side business that grew into a full fledge business that takes 24 h of your day. For a lot of companies the increase come when they get their big break.

Some of us have a passive income generated by different assets. Which could consist of shares, real estate or for some an investment in P2P lending. The input is closer to a 0 hour work day. To increase the income in this category you need to invest. Simple enough right?

I am sure this is far from the only ways of generating an income but it gives us a slight overview of different income categories. if nothing else we can clearly see that we could and should have more ways of filling our income buckets. The key now is to find out what we can do in these different buckets to increase or create an income that was not there before.

I would definitely try to centre around the income part of personal finance. To turn the debate from saving more by cutting expanses to having a debate about how to increase your income. Now I’m serious about the debate  part, I want to know your input, and your views. I personally don’t have a magical formula (yet) that can put you on the prosperous road to freedom without a lot of hard work. But maybe we can formulate one together? I would like to know what type or types of income you have? How to increase it? and finally what have you learned from it?

I hope this is just the start of finance things to come.

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About financethingsinlife

I am an Investor, a gentleman, and a dreamer. My goal is to achieve financial independance thru investing and saving.
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