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It takes an above-average salary for Americans to feel financially independent. Check out the exact numbers and how to increase your own income. [[{“value”:”
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Two-thirds (67%) of Americans want to be financially independent, which most commonly means not needing to rely on family or friends for financial assistance, according to a study by Empower. But what does it take to get there? The average American says they’d need an annual salary upwards of $94,000.
That’s doable, although it isn’t easy. The median income was $74,580 in 2022. It would take a raise of over 25% to go from that to $94,000. If you’re trying to improve your finances and become financially independent, here’s how you can make it happen.
How to make more money
Whether or not you feel financially independent, increasing your income is typically a good move. After all, if your income stays the same, it gradually loses value because of inflation. By earning more (and investing in stocks), you can stay ahead of inflation.
There are a few ways you can earn more:
Get a raise or promotion at your current job. Talk to your manager about what kind of performance it would take to get a raise. Ideally, this is something you should do once a year so your salary is consistently increasing. Be on the lookout for opportunities to get a promotion as well. Many companies have internal job boards. If yours does, check this regularly to stay on top of what’s available.Find a new job. If you want to maximize your earning potential, it pays to go job hunting regularly. Keep your resume up to date, and review job listings at least once a month.Launch a side hustle. If you have free time, a side hustle is an easy way to increase your earnings. The right side hustle depends on your skills and interests, but popular options include driving for rideshare services, deliveries, and pet sitting.
What if you’re a freelancer? Here are the methods I recommend that have worked for me:
Look for better, higher-paying clients. This is often the most effective way to boost your freelance earnings.Improve your efficiency. Find ways to make the most of your time and get more work done, and you’ll be able to earn more.Find your area of expertise. You can generally charge more as an expert in a specific niche than as a jack of all trades.
Improving your earning potential
How much you make is largely dependent on the value you bring to your employer or clients. The highest-paid professions require advanced, specialized skills. For example, cardiologists, surgeons, and professional athletes all land in the top-10 highest average incomes. Professions that require minimal training typically don’t pay much.
This doesn’t mean you need to enroll in medical school or set your sights on the NBA. But it’s important to have something you specialize in and that can’t be learned by anyone in a few hours of training.
If you’re feeling stuck at your current salary, your best bet may be to focus on developing profitable skills you can leverage to earn more. There are plenty of skills that can boost your income, and you can learn many of them for free online. Examples include:
Graphic designVideo productionWriting/copywritingProject managementWeb development
There’s more to financial success than just your income
Everyone defines financial independence differently. The most common definition is no longer needing money from friends and family. From that perspective, as long as you’re paying all your bills, you’re financially independent.
But most people want more than just being able to get by. After all, you can be financially independent while living paycheck to paycheck. You just won’t have much security or be able to prepare for the future.
That’s why it’s important to set aside money for your savings and investments. A good goal is to save 10% and invest another 10% of your income. For example, if you make $80,000 a year, save $8,000 and invest another $8,000. Those amounts are just suggestions, and you can adjust them as needed to work with your income and expenses.
While your income matters, there’s more to being financially secure and independent. An income of $94,000 or more won’t solve everything if you don’t manage money well. And it’s also certainly possible to be financially independent if your salary isn’t that high. Do your best to maximize your earnings, but also make sure to save and invest, no matter how much you earn.
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