Imagine for a second you met three people and were asked to guess how much money each person had in their bank account? Well, a good guess would be that one of the three would have less than $1,000 in their bank account and if you’re living in today's world then you can appreciate that $1,000 won’t get you very far. It’s for this reason that in order to live comfortably, you must have proper saving practices in place but if you want to be rich, you need to know how to exponentially increase your savings. Luckily, in this article, I will share with you how you can multiply your money fast!
If you look at the stats of savings balances in the United States, you will see a wide array of financial prosperity. Like I just mentioned, almost a third, or more specifically, 29% of Americans have less than $1,000 stashed away. As I’ve preached in numerous videos, having a year’s worth of living expenses is critical to maintaining a proper financial well-being and with more than 100 million Americans having less than $1,000 set aside, it’s probably fair to assume that this financial safety net isn’t in place.
So what’s holding so many people back from funding their piggy banks? While each individual's financial situation is unique to them, some of the most common reasons for failing to save include not being able to cover their bills, not prioritizing saving, not having a high enough income and trying to pay off debt. With the cost of living increasing every year and salaries lagging in their growth, it’s no wonder so many people have little to no savings.
But, statistics aren’t bleak for everyone. In fact, there are millions of Americans with substantial savings to fall back on. The top 10% of American households have just under $1 million in savings so it’s fair to say that there are tons of Americans who are adept at stashing away money. So how do they do it? Well, I can’t speak for them all but I know for a fact that many of them are using a very reliable method to multiply their savings.
This money saving approach originated almost three decades ago when a man, who was trying to make it big in Hollywood, realized that if he didn’t find an effective way to save money that he would have to move back to his hometown and lose the chance at realizing his dream of becoming a world famous comedian. At the time, the man was working like most people do, at a typical 9 to 5 job. Specifically, the man was working as a car salesman at a local car dealership and while some months, when he sold lots of cars, he was able to stash away a decent amount of money, other months car sales were slow and he had to pool together all his money just to pay rent.
Stressed by the constant flux in income levels, the man wondered how much longer he could handle the emotional turmoil of making an inconsistent income. Luckily, in the upcoming months, the man began getting paid for his comedy spots and slowly but surely this income allowed the man to build up his savings. While he was far from being a household name, the man’s income coming from his paid comedy shows began to increase month after month. Soon, he was making a few thousand dollars a month, which when he calculated it, was enough to cover his rent and a few of his bills. At this point, the man was still working at the car dealership but his stress surrounding the inconsistency in pay began to subside due to the income he was gaining through his comedy work.
Finally, a few years into his comedy journey, his career really started to take off and he began making more money in comedy than at his 9 to 5 job. However, while the man was making more money than he had ever earned before, he never forgot how stressed he would feel when he had little savings to fall back on and so while he could afford to quit his sales job, he decided to keep it with a plan in mind. The man thought to himself that if he could continue making good money in comedy and bank his whole car sales paycheck he could start to see his savings exponentially increase. And this is when the two-income savings technique was born.
In practice, the two-income savings technique works by creating two streams of income - one that you use to cover your living expenses and one that is meant entirely for saving.
Now, you may be wondering which famous comedian came up with this saving technique and it was none other than The Tonight Show host Jay Leno. As previously explained, for Jay, using this approach meant saving the money he earned working at a car dealership and spending the money he made doing comedy.
While this may seem like a simple saving technique, don’t underestimate just how powerful it can be. It can become such an ingrained part of your saving mindset that even when you begin earning more money than you ever imagined possible, you may still find yourself using it which is exactly what happened to Jay Leno. During his years hosting The Tonight Show, Leno made tens of millions of dollars a year but still made sure to perform 150 comedy gigs a year so that he could live off his tour income while saving his whole television salary. In fact, to this day, Leno’s never touched a dime of his “Tonight Show” money.
And I can personally attest to just how powerful this saving technique can be. You see, for the past year, I have been using it to great success. Similar to Leno, I have been living off one of my incomes and saving 100% of the other. In my own case, I am living off the income I earn from my 9 to 5 job and banking every single dollar I earn through my online business ventures with YouTube being one of them.
Now, I realize that not everyone has more than one stream of income which would allow them to be able to capitalize on this powerful money saving technique and shortly I will share three ways you can supplement your income but before I do I want to highlight one important fact. While this money saving method revolves around living off one income and saving the entirety of the other, this doesn’t mean you need to spend every dime you earn from your spending income. In fact, I use the 50/30/20 method when budgeting using my 9 to 5 income which means that 20% of my salaried earnings are already being sent into a savings account every month which is then complemented by the income I earn through my other source of income. So as a word of advice, if you decide to adopt the two-income saving technique, this doesn’t give you the green light to spend 100% of one income if you don’t need to and by maintaining frugality in your spending ways you can see your savings compound surprisingly quickly.
So with that out of the way, how can you add a new source of income to expedite your own savings process? Let me share with you three proven ways you begin earning a second or extra income so that you too can capitalize on the two-income saving technique.
Method #1: Freelancing
In my own experience, freelancing can be an excellent way to earn some extra cash. I suggest it so often because doing freelance work gives you the option to pick the projects you want to undertake which can make the work feel less like work and more like fun. For instance, when I was doing business consulting for some small business owners, helping them market their business felt much more like fun than work which is why I kept them as clients for as long as I did. However, when I suggest freelancing as a means of making money I always get asked the question, but what if I don’t have any services to offer?
If this sounds like you don’t worry, everyone has at least a few skills they can monetize, it just takes some work to identify what they are. This is why I suggest to anyone thinking of starting a freelance side hustle to list out 10 skills or services they think people would be interested in paying them for and then testing them out on freelance websites at low rates until their skills merits charging more. In fact, if you have a hard time getting clients when you first start out, offer to do some work for free until you build strong enough relationships with clients that they will begin to hire you on a consistent basis. That’s what I did in the beginning and once the relationships were formed, earning freelance income was never a struggle again!
Method #2: Starting An Online Business
Another means of making money is by starting and growing an online business. Since you will likely be using the two-income approach for years to come, it makes sense to build a business over time that will provide you with a steady stream of income. Your online business could revolve around anything from selling software, physical products, advertising or even coaching if you have expertise in a particular area.
Now, obviously, there’s a lot that goes into creating a business based on these models like getting traffic, building an audience, launching a product or selling services but it’s quite doable if you have the patience and determination.
Moreover, unlike freelancing which is classified as active income, many online businesses can be quite passive in nature, allowing you to bank your income with little ongoing work. One prime example of this type of arrangement is a blog. Once you have a website set up, you can pay freelance writers to draft and publish articles and over time your site will rank and you can begin earning ad revenue and sponsored posts income with little to no effort.
Method #3: Get A Second Job
As of 2019, more than 13 million Americans have two or more jobs and if you want to streamline your savings efforts then picking up a second job may be the solution to your saving problems. You see, unlike the other two income generation methods I previously went over, the benefit of picking up a second job is that you can start earning extra money right away. Admittedly, getting freelance clients or starting an online business can take some time to gain traction but getting another job ensures you will start getting paid ASAP.
While you may sigh at the thought of holding down two jobs, the reality is that you don’t need to work a significant amount of hours at your second job to see your savings start to add up. For instance, if you were able to get a job paying $15 an hour and you worked one 8 hour shift a week at your second job, you would be pulling in an extra $480 a month or more than $5,000 a year. While you can’t exactly retire on this amount of money it can certainly help kickstart your savings efforts while not completely burning you out or turning you into a workaholic.
In short, if you want to go from a saving zero to a saving hero then start employing the two-income saving technique to ensure that your savings and more importantly your wealth increase over time!