There’s no doubt that frugal spending is a part of personal finances. You can’t earn more than you spend, but saving pennies and trying to be rich is like winning a race with less gas. You can’t let up on the gas pedal if you want to get to the finish line quickly.

I’d like to discuss a way to increase your savings. Let’s discuss how to earn more money. Your income depends on three factors, whether you are self-employed or employed by someone else:

• Knowledge and skills. It pays to be more educated if you want to earn a higher income.
• Your productivity. Your productivity.
• Your ability to sell. You must ask to be paid what you are worth.

To earn more money you need to be more valuable on the job market — , and show that value to the market. We’ll look at what you can do to achieve this.

The more you learn, the more you earn

In the United States education is more important than any other factor in determining work-life earnings. What you know is more important than your age, race or gender. It’s a great thing to know that you can control your education level.

How much does schooling matter? The U.S. Bureau of Labor Statistics has released the results of the 2014 Consumer Expenditure Study:

The average college graduate makes twice as much money as a friend who only completed high school.

Even a two year degree from a local community college can help. A worker with an Associate’s Degree earns two times as much annually as a dropout from high school and 50% more than someone with just a High School Diploma. A two-year community college degree can boost income by up to $20,000 annually. It’s nearly one million dollars over a 40-year career!

The Current Population Survey also shows that educational levels affect unemployment rates.

Of course, a college degree does not ensure that you will earn more money. Some philosophy majors end up working at convenience stores the rest of their life, while other high-school dropouts are billionaires.

Outliers aside: Earn more money by learning more.

It is best to start your education when you are young. Now is the next best time.

It can be difficult to find the time to return to school after a career and a family, but it is possible. Here are some examples.

• After ten successful years of selling used cars, my friend Jeremy decided he wanted to be an accountant. While he studied and took online classes, Jeremy continued to sell used cars and spend quality time with his family. He’s now a fully-fledged CPA.
• Kim, my girlfriend, was the office manager of a large dental clinic near Sacramento. She decided to work harder at age 35. She quit her job to earn a degree in dental hygiene. Now she enjoys a better salary and increased job satisfaction.
• I’ve also done it. In 1997, I attended evening and weekend computer programming classes in the local community colleges when I was 28 years old. I learned enough about programming in 18 months to be able to do it on top of my job as a salesman at the family box factory.

You can still improve your skills and knowledge if you don’t want to go to college.

I am a strong advocate of lifelong self-directed learning. I read a lot of books and blogs on personal finance. I attend writing classes at my local community college. I use podcasts and online classes. Attending conferences allows me to learn from colleagues. As I write this I am in the middle a $2000 online course on how to build a successful business.

You will be more valuable on the job market if you continue to learn and grow.

Tip: One of the most important changes in my life was switching from passive/consumptive activities — watching television, playing computer games, or sports — to active/productive ones. I am happier when I read, write, or do web design (or exercise or build something) rather than with less-productive hobbies. These things help me make more money.

Work Better. Work More.

Your income is not solely determined by your education. The quality and quantity your work is what determines how much you earn. You can earn more by increasing the number of work hours, the output per hour or the value.

Increase your weekly hours of work. It’s the fastest and easiest way to increase your income. This could mean moving from being a part-time worker to a full time employee. This could mean working overtime. Many people will need to find a second job.

It can be difficult to work two jobs, especially when you have small children. Some people think a second career is beneath them. Recognize that a second career is and not life-threatening. This is a great way to boost your income in the short-term.

• I know a biologist who works at high-end clothing stores over the holidays. She gets extra money , and receives an employee discount. This allows her to build a professional wardrobe for less.
• After taking computer classes, I was able to find a few part-time jobs that allowed me to put my new skills into practice. For a time, I worked 3 jobs averaging nearly 80 hours a week. Although the hours were long and I was earning a lot of money, it helped me to pay off my debt.
• It was not uncommon for my ex-wife’s colleagues to use their summers in a productive way when she taught high school science. They would work in bookshops, as tour guides or bartenders.

You can increase your value if you do more work within the time that you have. You may have been producing 10 widgets an hour, but challenge yourself to 12! Find a way to make fifty sales calls per week if you have been making 40 each week.

You’re worth more when you produce more.

It is important to improve the quality of the work you do, as well as the quantity. It may seem obvious but you would be surprised how many people just “go through motions” in the office. If you are only pretending, you will never succeed.

It is difficult to give general advice about how to improve your work. The definition of “better” is different from one job to another. You Know what a quality output for your profession looks like. If you don’t know, you need to fix this problem immediately.

Note : A non-intuitive method to increase the value of your work is to change where you are employed. Perhaps that means changing positions within your company. Perhaps that means working for a competitor. Maybe you need to change careers. When my ex-wife wanted to make more money, she quit her job as a teacher of science to become a forensic scientist. The same skillset but a completely different job.

Sell Yourself

The value of the work you do is determined by both your education and your productivity. There’s still one more piece of the puzzle. How well you promote yourself can also influence your income.

You Are a Product, whether you like it or not. Your expertise and work are commodities.

Your employer is trying to pay you as little as possible. You want to be paid for what you are worth. A smart boss will negotiate his salary to bridge the gap.

Imagine it this way. You try to get the best deal when you buy a car. Even if you need the car, you won’t pay full price for it unless you have to. The dealer will do everything to make you pay more.

The car is bought by your boss. She wants a worker but is willing to pay less. You are like the car dealer. You’re trying to convince your employer to pay more for your services.

If you master the art of salary negotiations, you can increase your earnings over a lifetime by a half million dollars or even more.

Knowing that you should bargain your salary is one thing, but doing it is another. What’s your trick?

Jack Chapman, career coach and author of How to Negotiate Your Salary: Make $1000 in a Minute promotes a five step process that anyone can follow:

1. Discuss salary only after you have been offered a position. Discussions about raises should be held following a performance evaluation.
2. Let them be the first to move. Let them make the first move. For advice on how you can deflect questions regarding your salary expectations, see the video or the article.
3. Repeat the highest value when you hear the offer. Then stop talking. This “flinching” is a play that gives you more time and puts pressure on your employer.
4. Research your response and counter the offer. Do your research before the interview so that you are aware of a fair salary for the job. This knowledge can be used to negotiate for more. Start your salary research on sites such as Glassdoor or PayScale.
5. Negotiate some more. Negotiate additional benefits after you have locked in your salary. These could include extra vacation days, a company vehicle or even a bonus.

A 2011 study published in the Journal of Organizational Behavior found that failing to negotiate a starting salary could cost 600,000 over the course of a typical career.

When asking for a pay raise, the same principles apply. It’s important to note that your employer already knows if you are an asset or liability. Prepare to make your case during your next review of performance. Sell yourself!

In the United States, only about half of employees negotiate their salaries. A money boss always does.

Note: Other ways to promote yourself and your career exist. For example, you could create a portfolio that documents your achievements at work. It’s useful when you ask for a promotion or apply for a job. When you network with your colleagues at conferences and seminars, you are also marketing yourself and your abilities.

You are 100% responsible for your income

What you earn reflects the value you are deemed to have by the market. Your income depends on your skills and knowledge, your quality of work and your ability to market yourself. You can make money by teaching or selling services if you possess a particular skill set.

To earn more money, you need to be worth more.

You may not find the market prices “fair”, but that is irrelevant. Is it offensive that professional athletes get paid so much money? Maybe. Should teachers get paid more? Perhaps. It doesn’t really matter. Supply and demand determine these numbers. You can increase your income by supplying more of what employers want.

Excercise:

It’s time to get moving. Spend 5 minutes on each question.

• What can you do to improve your knowledge and skills?
• What can you do to improve the quality or quantity of your work?
• What is one thing that you can do to market yourself better to your employer or other employers?

Choose the best answer to each question. Here’s the hard part: Make a commitment to yourself over the next six-month period that you will actually accomplish the three things. Report back to us with the results.

Note : I am migrating the old Money Boss materials to Get Rich Slowly during the month of march, including the articles that explain the “Money Boss Method”. This is the sixth article.

• The first part of this article answers the question : “What is financial freedom?”
• The second part of the series looked at Why you should treat your life as a business.
• Part 3: How to create a mission statement.
• The fourth part of this series explores the importance savings rate.
• The fifth part of the series explains why cutting back on big purchases is the best way for to save money.

You can expect to see new installments of the “Money Boss Method” twice a week, until all the content has been transferred.