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Do you want to make more money as an engineer? With some help, you can definitely increase your income by at least 20% in the next 12 months. The advantage is that you are an engineer, so you are already good at numbers and analysing risks and opportunities; in fact, it comes naturally to you. Therefore, with the right advice, you can try at least one of the following money-making tips.
Before we can go into those effective ways to increase your income, you need to answer some critical questions about how you want to increase your income which directly affects your situation, financial position and your lifestyle:
A- Do you want a passive or active income?
It is essential to determine this as early as possible before thinking of ways to make more money. Active income is basically trading your hours for money, whereas passive income is earning money while you sleep. Choosing each type of investment depends mainly on your goals.
Passive income is harder to achieve than active income, but it does not require your constant attention and can potentially earn you more money. In contrast, an active can increase your income much quicker than a passive investment.
B- What will be the return on your invested capital (ROIC)?
This mainly depends on the way you choose to make more money. ROIC is the ratio between the return on your investment after expenses and the capital invested. Some methods require huge capital to start, and some do not. This is a fundamental question that depends on your lifestyle and how much money you are willing to invest.
C- How much extra time are you allocating to increasing your income?
This question directly relates to building an active or passive income. Even the most passive income methods do require some of your attention to maintain and ensure they are healthy. At the same time, some active ways of making more money may only take a small amount of time, maybe extra 10 hours a week but can significantly increase your income.
Therefore, thinking about the type of income you want to make and how much capital and time you want to invest can significantly help you choose the best way to increase your income. The following are 5 proven and tested ways by engineers to increase your income:
1- Negotiate your engineering salary
Negotiating your engineering salary is one of the easiest ways to increase your income because you are already working as an engineer and already entitled to a small pay rise every year as an engineer, so you can use this opportunity to increase your income by at least 15%-25%
There are multiple ways to get paid more as an engineer, but it mainly depends on being the best at your job. The more responsibility you take, the more valuable you become to your organisation. If you are a successful engineer, then everyone wants to hire you, keep you and pay you the salary you deserve.
Even if you can not negotiate for a higher salary at your current job, you can easily negotiate your salary in another job. Applying to different companies is easy for engineers as they are highly employable.
The following are things you must do to become more attractive as an engineer before you start seeking a pay rise or looking for a new position with higher pay:
- Obtain or maintain your engineering license: In any county, there is an organisation for engineers that track engineers’ achievements and competency. In the US, it is the PE license. Depending on the county, some engineering licenses are not mandatory, and some are; either way, obtaining your license as early as possible can help make you more accredited as an engineer.
- Know the salary your position deserves: If you are an engineer, you most likely have an idea of how much your position is worth in the city you live in. But if you do not, it might be time to use your connection and search the internet to find the answer. Also, you can check our guide for the Average Engineers Salary to know how much your position is worth. Knowing how much you deserve can give you more confidence when negotiating your salary.
- Market yourself: If you are an engineer, you need to become better at marketing yourself and your achievements. Platforms such as LinkedIn have grown so big to include all engineering professions. If you are not involved as much, it is time to become more involved in those communities on LinkedIn. Start posting about your work or thoughtful posts to grow your connections and opportunities.
Doing all of the above will give you all the tools you need to start negotiating your salary or looking for another job. This option is by far the easiest to achieve in this list.
When negotiating your salary with your boss, we have written a complete step-by-step guide to negotiate your salary, whether it is your current job or a new job. Read, How To Negotiate Your Engineering Salary – 4 Effective Tips.
| Negotiating Your Salary | Pros & Cons |
|---|---|
| Type of Income | Active |
| Invested Captial | None |
| Time Invested | Least time-commitment option |
| Risk | The least risky option |
2- Invest in high value & high-dividend stocks
While working, your job can only pay you as much as you can work. Usually, it is around 8 hours a day for 5 days a week. Beyond that, even if you want to work more hours, there are not enough hours in a day, so you need to consider growing a passive income.
Investing in the stock market is one of the biggest passive income ways you can do and work so well with increasing your engineering job salary because it means you can allocate a mall amount of your salary toward investing in stocks that can give you a good return on your investment.
The bonus is that you are already an engineer; even if you have never invested in the stock market, you can learn quickly. Most of the things taught in finance and stock market investing come naturally to an engineer with the right education.
While investing in Roth IRA or 401K or any retirement fund (for those outside the US) is a good way to invest in the stock market for retirement, and you should definitely keep doing them. But the chances are you are still in your prime youth and want to make some good returns in the stock market now.
In general, there are two ways to invest in the stock market:
- Investing in ETFs: Exchange-traded funds or ETFs are a basket of stocks that track a certain market or industry; these are the most passive way you can ever invest your money, and you do not have to analyse companies or do anything technical. You only need a brokerage account, the ETF you want to invest in, and the strategy. If that sounds interesting to you, then you should see our Guide To Invest In ETFs – Stock Market Passive Investing.
- Individual Stock Picking: However, if you want more of an active way of investing in the stock market that can give you a higher return on your invested capital, buying individual stocks is the best way. There are many ways to invest actively in the stock market. Still, the most suitable one for engineers is value investing, where you look into the company’s fundamentals and use some math to determine whether the stock is overpriced or not. We have made a full guide on value investing. You can check here.
It is important to know that investing actively in the stock market has some risks. Investing in ETFs or actively picking stocks is very unpredictable over the short term and has a high return over the long term. It requires huge initial invested capital even if you want to build a high dividend stock.
| Stock Market Investing | Pros & Cons |
|---|---|
| Type of Income | Passive |
| Invested Captial | High invested capital required |
| Time Invested | Low time commitment |
| Risk | High risk-high return type of investment |
If investing in the stock market is something you want to do, you can check our top 9 tech and engineering companies that you should have in your stock portfolio.
3- Buy cash-positive investment properties
When building a passive income, you can pursue as many things as possible; you do not have to pick between property and the stock market; you can do both. However, if you feel that the stock market is not your cup of tea, then buying and investing in a rental property that can bring you cash flow is definitely the way to pursue passive income.
Buying a property is one of the most passive ways to grow your income. Many people think it might take ages to save for an investment property. Although it requires the highest capital invested in the list, it can still be achieved, especially if you are an engineer, as you already get paid a decent salary.
Here are some methods you can apply to buy your first investment property:
- Get paid more: Yes, go back to step number one and try to increase your annual salary. If you are already dead set on buying an investment property, you are already living below your means, so any additional income can go straight to your goal.
- Live below your means: To save for an investment property, you need to be okay with cutting down on some unnecessary expenses that are not crucial to your survival. You will be surprised by how much money you can save by cutting down your expenses by at least $200 or $300 a month.
- Look for undervalued properties: The whole idea of investing is to buy low and sell high. Even if you do not plan on selling the property, you will most likely want to buy it cheaper than the market average. If you are looking to buy in a specific area, you will become familiar with the average prices of the property, which you can use to your advantage to buy a cheap property with high value.
| Buying Investment Property | Pros & Cons |
|---|---|
| Type of Income | Passive |
| Invested Captial | The highest invested capital in this list |
| Time Invested | Low time commitment |
| Risk | High risk-high return type of investment |
4- Start an online side hustle
Starting an online side hustle is a fun way of making money on the side, requiring a small capital investment but a huge time investment.
This type of income is good for someone who does not have huge commitments outside their full-time job and can afford to work at least 20 hours outside work on their online side hustle.
The good thing is that there are many ways to start a side hustle, and even with the right time commitment, it can generate a substantial income that can even exceed your full-time job.
These are the two most promising ways you can do to creating an online side hustle:
- Open an online store (E-Commerce Store): If you have a passion for something such as beauty products, fitness or household items, you can create an online store that sells these products. The good thing is you do not have to sell the product yourself; you can outsource manufacturing and shipping somewhere else. You only have to create the website, advertise and promote those products. One of the best platforms that enable you to sell online products is Shopify.
- Creating content: Youtube, by far, is the biggest and the most promising platform to start creating content. The business model is easy. You create content around a specific topic and serve ads, sponsorship and affiliate links which can help bring you income.
It is important to note that there is a high chance of failure; however, because it requires low invested capital, the consequences are low, but it does require a high time commitment, at least when you build the income.
| Online side hustle | Pros & Cons |
|---|---|
| Type of Income | Passive & Active |
| Invested Captial | Low invested capital |
| Time Invested | The most time commitment option on this list |
| Risk | Low risk financially |
5- Become a freelancer
If you do not want to spend huge capital on building passive income or huge time commitments to build a strong side hustle that may fail or take a long time to work, you can become a freelancer and earn money immediately.
The good thing about becoming a freelancer is that you can earn more money whenever you want, you do not have to learn something new, and you can just do something you are already good at, such as engineering, teaching, writing, photoshop, video editing and more.
All you have to do is sign up with a freelancer agency such as Fiver, Freelancer, Upwork and many more. Put in your skills and experience (Putting an engineer in there will attract many eyeballs) and how much you cost.
Finally, focus on providing the best service possible, which can help you get good reviews which ultimately can help increase your hourly cost. The better your reviews, the better you can charge for your services. You can make $1000 a week if you charge $100 an hour on something that will take you two hours to complete and take on 5 clients a week.
| Freelancing | Pros & Cons |
|---|---|
| Type of Income | Active |
| Invested Captial | None or low (Depending on your service) |
| Time Invested | Require high time commitment, but you still get to choose how much time you want to work |
| Risk | No risk, and it is the quickest way to make more money on this list |
