Your Income and Your Salary – Not the Same Thing!

There’s a distinction between your income and your salary. They are not the same thing, although you’ll routinely hear the words used interchangeably. I’m going to spend a few minutes telling you why I think they are different animals.

Your salary is based on what your employer pays you. I’m only aware of 2 ways to increase your salary. First, you can increase your salary at work by getting promotions. Generally, a promotion will come with an increase in your salary. Second, you can go work for another employer who will pay you a higher salary than your old employer. From what I’ve seen and read, the second method is more effective in getting you a higher salary. Your new employer might offer you 10% – 15% – 20% more than your current employer, depending on how badly they want you. Your current employer already “has” you and is more likely taking you for granted, therefore your raises are unlikely to be in the double-digits percentage range. After all, why would they pay you any more than the bare minimum when they know that you’re going to stick around anyway?

But I digress. That’s a topic for another post.

Your income is all the money you earn, including your salary. However, you have a lot more agency over your income than you probably give yourself credit for. That’s why you should think of them as two distinct things. Your income could be a lot larger than your salary, if you want it to be.

There are many ways to earn income, including but not limited to the following:

• get a part-time job
• start a profitable side hustle
• own cash-flowing real estate
• start a blog about something you love
• write a book/song/script and earn royalty income
• invest in securities that will pay you dividends and capital gains

I’ll concede that getting a part-time job means working for someone else and earning a salary. If you’re not working that PT-position, then you’re not earning any money. But go back to the first sentence of my previous paragraph. Your salary is only one part of your income. It need not be all of it. Whether your income remains equal to your salary is within your control.

A side hustle is self-employment while holding down your 9-5 position. If your side hustle is lucrative enough, you can turn it into your fulltime job or live off the income it generates. Alternatively, you can continue to work your 9-5 job if you wish and let your side hustle income accumulate to your heart’s content. Earning additional income doesn’t force you to leave your 9-5 job. All it does is provide you with extra money to buffer the expenses of life.

Content creators have the opportunity to create passive income. They have to put in the hard work up front, but the resulting product might pay them for years afterwards. Think of authors, song-writers, and script-writers. They wrote something that was a huge hit. They will get royalty income every single time their book is purchased, their song is played, or their movie is streamed. The hard work at the front end resulted in passive cash flow on the back-end. Some of these creators are even able to multiply the income earned from their product when it becomes an equally big hit in another format. Ready examples that come to mind are The Firm or The Client, two movies based on books by John Grisham. In the same vein, every so often a song becomes a musical and a movie. Think of Mamma Mia, which which was one of ABBA’s greatest hits.

Food bloggers always come to mind when I think of content creators who make oodles of cash. The hard work is done at the front end, but that work only needs to be done once for each recipe. The bloggers need to create and edit the videos for the recipe. They have to write the blog posts. They need to keep their website up to date and interesting. (And much love to the bloggers who use the “Jump to Recipe” button! You walk among God’s angels.) They ensure that the recipe is posted to Pinterest, TikTok & Instagram. They upload their videos to the internet, where it is viewed and possibly shared many, many, many times over. And I’m sure there are multiple other steps that need to be taken before a video is a success with viewers. Bottom line, food bloggers have the chance to make passive income off that one recipe for a very long time.

When I think of very successful food bloggers, these are two of many who come to mind – Delish D’Lites and Binging with Babish. As a matter of fact, Mr. Babish has figured out how to make money off of his “mistakes” in the kitchen. Check out this video about cinnamon buns. Have you ever seen a more mouth-watering mistake than these?

If you like real estate, then you can earn income by owning cash-flowing properties. At the time of this post, the Talking Heads are predicting a crash for the housing market. Time will tell if they’re right. If you’ve always wanted to be landlord, then perhaps you should start making some plans. It’s not my cup of tea, but to each their own. I prefer to earn my income with the least amount of effort.

My favorite way to increase my income is through the stock market. I love my dividends! Long-time readers know that I invest a portion of my paycheque every month. The result of my consistency has been a nice 5-figure annual cash flow of dividends & capital gains. This is truly passive income. Much like content creators, I had to do the work up front to earn my paycheque. Unlike content creators, there is far less chance that my efforts will be for naught. A book/song/script might not sell. A blog or video might be ignored in the vastness that is the Interwebz. My dividends are nearly guaranteed. They might be cut but they have never been eliminated. I’ve always received capital gains at the end of the year.

Increasing your income through dividends and capital gains is true passive income. It’s the set-it-and-forget-it way to earn more money, aka: Lazy Person’s Way to Make Money. Instead of sending my body into the work place to find a part-time job, I’ve sent part of my salary out to work. Once invested, my money makes money and that money makes money. I’ve created a beautiful money-making cycle that will continue as long as I’m alive.

Think about what you do with your time when you’re not at work, earning your salary. I’m going to suggest that you always have the time to earn additional income. Even if you’re swamped with other responsibilities and commitments, you can take advantage of the Lazy Person’s Way to Make Money. You only need to complete the following 4 steps:

1. Decide how much of your paycheque you’ll re-direct to your investment account.
2. Set up an automatic transfer of that amount from your chequing account to your investment account for each time you get paid.
3. Buy as many units you can in a well-diversified equity based exchange-traded fund.
4. Repeat step 3 without fail.

However, if you find yourself with several hours of Netflix/Amazon Prime/Hulu/Disney or any other kind of TV watching each day, then maybe consider using an hour or two to create something or start a side-hustle. Trust me. The “entertainment” can always be watched or consumed later, but your time cannot be recouped. If you want more income, then you’ll have to use your time wisely. Bear in mind that nothing is stopping you from using the Lazy Person’s Way to Make Money while also pursuing a side hustle or creating content for mass consumption.

Again, your income is not your salary. While your employer controls the salary that you receive, you have options for increasing your income. Govern yourself accordingly.