In order to truly know how to maximize your income, you must create a budget to put your income to use in the most profitable way possible. So, if you haven’t downloaded your free budget template yet, you can do so here now and create a budget for this entire year!
To begin to set up your budget, today you will focus on how to maximize your current income and future income opportunities.
How to Maximize Your Income Opportunities if You Work Under an Employer
If you are working under an employer, one tangible thing you can do today regarding how to maximize your income is to evaluate what opportunities you have for promotions, raises, and increasing your benefits. This may involve simply reading your company policies or setting up a meeting with upper management to review where you stand and what is required of you in order to move up. Some key questions to ask are:
- Since so much has changed since the pandemic, you may find that company policies and opportunities for promotion have changed due to extenuating circumstances. Doing an honest review with your employer about how things may have changed will allow you to see the big picture of how this may affect your finances. For example, during the recession of 2008, we had a freeze on raises at my place of employment. Even if there may be setbacks now, at the very least, you can be made aware and plan accordingly. Also, you will be more aware of when increases are projected to be available again. Because I was aware of this freeze, I knew to project my income to remain the same (with my place of employment) indefinitely and to make the best use of it a.k.a. maximizing my income. If I wanted to bring in more income, I knew it wasn’t going to come from my current job and could find other ways to bring in more rather than waiting and hoping due to lack of knowledge.
- If your employment has not been negatively impacted by the effects of the pandemic, it will be a bit easier for you to be direct with your employer about how to move up in position and income. If you are already doing the work now, then you should be able to easily prove yourself regarding obtaining promotions and/or increases in your income. If you are not aware of what is required of you to obtain certain positions, you can now get on the same page with your employer about what they expect. You can find out if you are required to take more classes or obtain specific certifications or a higher degree. It can be easy to get comfortable and not seek out these opportunities if your job is secure. And, there is nothing wrong with that, especially if you are happy. For those who want to build wealth more quickly, not seeking out ways to increase your income will cause you to remain stagnant.
- If you have maxed out on possible promotions and find that there are no opportunities available to move up or increase your income, it is great to be aware now. You can decide if it’s time for a job or career change. Or, if your job provides excellent benefits you would like to take advantage of, for now, this can be a great time to start a side hustle. You would be amazed at how a side hustle can succeed so well that it can replace your income and beyond. The opportunities available these days, especially through social media and the internet, are endless. For example, all of my jobs can pretty much be considered side hustles. I am an Author and I am currently creating other digital products, I do accounting work for two companies, I blog, I create videos, and I am an Amazon affiliate. I’m doing what I love so it doesn’t even feel like work! Bonus: all the while, I’m bringing in income from my passions!
- If you have a job that provides excellent benefits, you are blessed. Take advantage of them! For example, if your employer offers 401K matching, MAX IT OUT! This is by far the best retirement investment opportunity. If you are not aware of what matching from your employer is, this means they will match the amount you contribute. For example, a previous employer of mine automatically provided a percentage of my income toward my 401K. On top of that, they matched any amount (up to a certain amount) that I put into my 401K. That means, my investment was doubled AND compounded with interest! Again, if your employer offers matching, MAX IT OUT! I can’t stress this enough! (I cover more on investments in another post.) Now that I made that clear, review with your employer what other benefits they provide. For example, some employers have certain tiers based on position, income, or seniority level. Within those tiers, they can provide varying benefits. For example, you may have to be in a certain tier to receive medical benefits. Whatever the case, making yourself aware of what your employer offers gives you the opportunity to maximize the benefits they provide.
So, don’t hold back! Today, initiate that meeting with your employer to see what is available to you. If you are doing your job well, you deserve to be rewarded!
How to Maximize Your Income Opportunities if You Are Self-Employed
Whether you are working a full-time job under an employer with a side hustle or two OR fully self-employed, the opportunities regarding how to maximize your income through self-employment are endless! As stated in the previous section above, I am self-employed with what you may consider to be a combination of side hustles (I am an Author and I am currently creating other digital products, I do accounting work for two companies, I blog, I create videos, and I am an Amazon affiliate). All of which I love … so it doesn’t even feel like work!
Being your own boss is definitely A LOT of work as everything falls on you. But, if you are doing what you love, like I said before, it doesn’t feel like work! With all the hustling, however, it can be easy to forget the different ways you can grow under your self-employment opportunities.
So, today is a good day to take a step back from all the busyness to see if you can better utilize your time. Here are some things to think about to help you maximize your time and income:
- If you find yourself overwhelmed by tedious jobs which take you away from income generators, it might be time for you to hire out. If you are a perfectionist like me, I KNOW HOW HARD THIS CAN BE. However, it might be time to let go if your time can be better spent making fewer big decisions rather than numerous small decisions. So, take a step back, list out the little things you can hand over and start. For example, if your website could use some updating, you can start by utilizing a small job hiring site like fiverr to hire someone to create a new brand logo for you. As you become more comfortable handing over smaller jobs, you will feel less anxious about hiring for longer term and get all the little things off your plate. Besides looking at hiring out as a way to give you more time to focus on bigger income generators, these smaller tasks that you hand out can become income generators in themselves as they help you improve your business overall (i.e. a better website bringing in more business, improved customer service, etc.)
- Note your highs and lows with your business last year. Let go of the lows and focus more on the highs. For example, if certain products or services sold better than others even if you worked SO HARD on the ones that didn’t sell well, it’s better to focus on what did sell well to make up for the time spent on what didn’t. I know it may be tempting to push the products you put so much work into. But, the market is always changing. So, to maximize your income now, focus on what the market is telling you what they want right now. Your other products may just be more suitable for another time.
- List out all the ways your job can turn into other income opportunities. For example, maybe people ask you all the time how you make money being self-employed. You can create a resource you can sell teaching them how you bring in income through your experience and expertise. If you are a blogger, you can review different ways to place ads on your blog or include affiliate marketing links from your favorite, trusted brands. The opportunities are endless! Simply take the time today to brainstorm what you can do, and take action on at least one item on your list today!
The Importance of Understanding Tax Brackets
Whether you are working under an employer or are self-employed, the tax bracket you are in can make a huge impact on what you actually take home (or end up paying during tax time). You can go to nerdwallet.com and look up “tax brackets” for the current federal income tax brackets and rates. The percentages vary from year to year (in October, you can find the tax brackets and rates for the following year).
For Those Working Under an Employer
For those working under an employer, it’s easier for you to understand what tax bracket you are in and what you can eventually be in with possible promotions and raises. Below, you will find all the calculations for your taxes due and take home pay would be if you were at the very top of each tax bracket (with the exception of the highest tax bracket being at the minimum).
2023 Single Filer Tax Brackets
| If taxable income is: | Excess of the max equals: | Percentage equals: | The tax due is: | Take home pay is: | ||||||||
| Not over | $ 11,000.00 | 10% | of taxable income | $ 11,000.00 | $ 1,100.00 | $ 1,100.00 | $ 9,900.00 | |||||
| Over | $ 11,000.00 | but not over | $ 44,725.00 | $ 1,100.00 | plus | 12% | of the excess over | $ 11,000.00 | $ 43,625.00 | $ 5,235.00 | $ 6,335.00 | $ 38,390.00 |
| Over | $ 44,725.00 | but not over | $ 95,375.00 | $ 5,147.00 | plus | 22% | of the excess over | $ 44,725.00 | $ 90,228.00 | $ 19,850.16 | $ 24,997.16 | $ 70,377.84 |
| Over | $ 95,375.00 | but not over | $ 182,100.00 | $ 16,290.00 | plus | 24% | of the excess over | $ 95,375.00 | $ 165,810.00 | $ 39,794.40 | $ 56,084.40 | $ 126,015.60 |
| Over | $ 182,100.00 | but not over | $ 231,250.00 | $ 37,104.00 | plus | 32% | of the excess over | $ 182,100.00 | $ 194,146.00 | $ 62,126.72 | $ 99,230.72 | $ 132,019.28 |
| Over | $ 231,250.00 | but not over | $ 578,125.00 | $ 52,832.00 | plus | 35% | of the excess over | $ 231,250.00 | $ 525,293.00 | $ 183,852.55 | $ 236,684.55 | $ 341,440.45 |
| Over | $ 578,125.00 | $ 578,125.00 | $ 174,238.25 | plus | 37% | of the excess over | $ 578,125.00 | $ 403,886.75 | $ 149,438.10 | $ 323,676.35 | $ 254,448.65 |
2023 Married Filing Separately Tax Brackets
| If taxable income is: | Excess of the max equals: | Percentage equals: | The tax due is: | Take home pay is: | ||||||||
| Not over | $ 11,000.00 | 10% | of taxable income | $ 11,000.00 | $ 1,100.00 | $ 1,100.00 | $ 9,900.00 | |||||
| Over | $ 11,000.00 | but not over | $ 44,725.00 | $ 1,100.00 | plus | 12% | of the excess over | $ 11,000.00 | $ 43,625.00 | $ 5,235.00 | $ 6,335.00 | $ 38,390.00 |
| Over | $ 44,725.00 | but not over | $ 95,375.00 | $ 5,147.00 | plus | 22% | of the excess over | $ 44,725.00 | $ 90,228.00 | $ 19,850.16 | $ 24,997.16 | $ 70,377.84 |
| Over | $ 95,375.00 | but not over | $ 182,100.00 | $ 16,290.00 | plus | 24% | of the excess over | $ 95,375.00 | $ 165,810.00 | $ 39,794.40 | $ 56,084.40 | $ 126,015.60 |
| Over | $ 182,100.00 | but not over | $ 231,250.00 | $ 37,104.00 | plus | 32% | of the excess over | $ 182,100.00 | $ 194,146.00 | $ 62,126.72 | $ 99,230.72 | $ 132,019.28 |
| Over | $ 231,250.00 | but not over | $ 346,875.00 | $ 52,832.00 | plus | 35% | of the excess over | $ 231,250.00 | $ 294,043.00 | $ 102,915.05 | $ 155,747.05 | $ 191,127.95 |
| Over | $ 346,875.00 | $ 346,875.00 | $ 93,300.75 | plus | 37% | of the excess over | $ 346,875.00 | $ 253,574.25 | $ 93,822.47 | $ 187,123.22 | $ 159,751.78 |
2023 Head of Household Tax Brackets
| If taxable income is: | Excess of the max equals: | Percentage equals: | The tax due is: | Take home pay is: | ||||||||
| Not over | $ 15,700.00 | 10% | of taxable income | $ 15,700.00 | $ 1,570.00 | $ 1,570.00 | $ 14,130.00 | |||||
| Over | $ 15,700.00 | but not over | $ 59,850.00 | $ 1,570.00 | plus | 12% | of the excess over | $ 15,700.00 | $ 58,280.00 | $ 6,993.60 | $ 8,563.60 | $ 51,286.40 |
| Over | $ 59,850.00 | but not over | $ 95,350.00 | $ 6,868.00 | plus | 22% | of the excess over | $ 59,850.00 | $ 88,482.00 | $ 19,466.04 | $ 26,334.04 | $ 69,015.96 |
| Over | $ 95,350.00 | but not over | $ 182,100.00 | $ 14,678.00 | plus | 24% | of the excess over | $ 95,350.00 | $ 167,422.00 | $ 40,181.28 | $ 54,859.28 | $ 127,240.72 |
| Over | $ 182,100.00 | but not over | $ 231,250.00 | $ 35,498.00 | plus | 32% | of the excess over | $ 182,100.00 | $ 195,752.00 | $ 62,640.64 | $ 98,138.64 | $ 133,111.36 |
| Over | $ 231,250.00 | but not over | $ 578,100.00 | $ 51,226.00 | plus | 35% | of the excess over | $ 231,250.00 | $ 526,874.00 | $ 184,405.90 | $ 235,631.90 | $ 342,468.10 |
| Over | $ 578,100.00 | $ 578,100.00 | $ 172,623.50 | plus | 37% | of the excess over | $ 578,100.00 | $ 405,476.50 | $ 150,026.31 | $ 322,649.81 | $ 255,450.20 |
2023 Married Filing Jointly Tax Brackets
| If taxable income is: | Excess of the max equals: | Percentage equals: | The tax due is: | Take home pay is: | ||||||||
| Not over | $ 22,000.00 | 10% | of taxable income | $ 22,000.00 | $ 2,200.00 | $ 2,200.00 | $ 19,800.00 | |||||
| Over | $ 22,000.00 | but not over | $ 89,450.00 | $ 2,200.00 | plus | 12% | of the excess over | $ 22,000.00 | $ 87,250.00 | $ 10,470.00 | $ 12,670.00 | $ 76,780.00 |
| Over | $ 89,450.00 | but not over | $ 190,750.00 | $ 10,294.00 | plus | 22% | of the excess over | $ 89,450.00 | $ 180,456.00 | $ 39,700.32 | $ 49,994.32 | $ 140,755.68 |
| Over | $ 190,750.00 | but not over | $ 364,200.00 | $ 32,580.00 | plus | 24% | of the excess over | $ 190,750.00 | $ 331,620.00 | $ 79,588.80 | $ 112,168.80 | $ 252,031.20 |
| Over | $ 364,200.00 | but not over | $ 462,500.00 | $ 74,208.00 | plus | 32% | of the excess over | $ 364,200.00 | $ 388,292.00 | $ 124,253.44 | $ 198,461.44 | $ 264,038.56 |
| Over | $ 462,500.00 | but not over | $ 693,750.00 | $ 105,664.00 | plus | 35% | of the excess over | $ 462,500.00 | $ 588,086.00 | $ 205,830.10 | $ 311,494.10 | $ 382,255.90 |
| Over | $ 693,750.00 | $ 693,750.00 | $ 186,601.50 | plus | 37% | of the excess over | $ 693,750.00 | $ 507,148.50 | $ 187,644.95 | $ 374,246.45 | $ 319,503.56 |
For the Self-Employed
For the self-employed, here is the complete, detailed IRS publication for all the common business expenses and explains what is and is not deductible. And, below, here is a summary of the things you can write off that reduce your income level and can potentially place you in a lower tax bracket:
- Charitable donations.
- Home office: Divide the square footage of your home office by the square footage of your home/apartment. Multiply that percentage times your mortgage/rent. Also include a percentage of your property taxes, repairs, maintenance, utilities, etc.
- Miscellaneous business expenses: Gather your receipts for business expenses like office supplies, website fees, Microsoft programs, state business registration fees, anything required to run your business, etc.
- Internet and phone: Calculate the portion you utilize for business (i.e. if you utilize your phone or internet for business purposes 90% of the time, you can write off 90% of your phone or internet bills).
- Health insurance.
- Business insurance.
- Start-up costs including anything to get your business up and running before opening including advertising, consulting, etc.
- Advertising.
- Continuing education which is specifically related to your current job including tuition, books, supplies, lab fees, transportation, etc.
- Meals (i.e. if you take a client out for a business meeting).
- Travel (i.e. if you travel to meet a client, travel to a business networking convention, etc.)
- Vehicle expenses: Calculate the percentage of time you utilize your vehicle(s) for business purposes and multiply that percentage times the total you pay in gas, oil, and maintenance/repairs on your vehicle(s).
- Auto insurance and registration: Use the same percentage from your vehicle expenses and apply them toward your auto insurance and registration fee(s).
- Self-employment tax: Take the total of the items listed above and multiple that times 7.65%.
- Credit card and loan interest on business expenses.
- Retirement contributions: You can contribute up to one quarter of your net income (the total of the 10 items listed above) and also write these contributions off!
- The qualified business income deduction allows you to deduct a portion of your business income depending on income limits for the year. You may qualify for the 20% deduction on your taxable business income.
I share a calculator for all this within my lifetime budgeting system to make this super easy!
The Most Important Thing You MUST Understand
Maximizing your income begins with creating a budget. When it comes to organizing your finances and staying within budget, you must live below your means. In other words, you must spend less than what you bring in. This is the key to becoming responsible to eventually handle more. (These are tough times for many, so if you are living at or below poverty level, be sure to sign up for my free resources here so that you can be made aware of when I launch a free resource for you. It is highly recommended that you complete my budgeting challenge as it is an essential part of my free resource for you.) Now that we are in the correct mindset, we can create a budget and make the best use of your income now.
Today, we are taking actions on steps to see how we can make more eventually. In summary, here is what you will do today:
- For those working under an employer, review your promotion and raise opportunities with your employer by initiating a meeting with upper management.
- For the self-employed, review what you can delegate so you can focus on income generators, review which of your products or services sell better and focus on those, and create new income opportunities from your current products or services. And, don’t forget to collect your expenses over this year for write-off purposes.
- For all of us, review the tax brackets to make yourself aware of how your income can be affected.
In order to truly know how to maximize your income, you must create a budget for your income now in order to use it in the most profitable way possible. So, if you haven’t downloaded your free budget template yet, you can do so here now and create a budget for this entire year!
Remember, after you create your budget, I show you how it all comes together in a comprehensive lifetime budget that takes minutes a day to maintain.
In the next post, we cover personal financial goals you must make in your lifetime. Stay tuned!
Happy Budgeting!
Author of “How to Organize Any Space in 7 Simplified Steps“