Disposable Income: The Cheat Code to Financial Freedom

There are many different things you can prioritise when it comes to financial self improvement and building wealth.

However, few, if any, will give you greater benefits than prioritising increasing your disposable income.

Here’s why you need to prioritise this term over anything else, if you want to achieve financial freedom in 2024.

What is Disposable Income?

Disposable income is the amount of money you have left each month, after all of your expenses have been paid.

It’s a simple calculation:

Income — Expenses = Disposable Income

The greater this number is, the better your chances are of having a more affluent future.

Living below your means is the greatest cheat code in personal finance, and you can get years ahead of your peers simply by prioritising your disposable income.

Sure, it comes at a cost, but, who tries to achieve financial freedom without an element of sacrifice along the way?

It’s simple concept, but for most, a hard thing to adjust to over a long period of time.

The lack of financial education has led to a lack of understanding about the true value & power of money.

As a result, for the average person, once they earn money, they spend it.

Benefits of Disposable Income

The benefits of increasing your disposable income are huge, and extend way beyond the realms of personal finance.

Investing For Your Future

Disposable income gives you the opportunity to begin investing, and building a diverse investment portfolio to serve you in the future.

Whether it be:

• Stocks

• Real Estate

• ETFs

Putting your disposable income into assets which will benefit your future self is a great thing to do.

Delaying your gratification with disposable income is a hugely valuable in today’s society, and it’s always valuable to put your spare money to good use.

Building A Business

As well as investing, if you have some time to invest, you might like the idea of starting your own business, or side hustle, to increase your income and overall fulfilment levels.

Peace of Mind

As well as the financial gains above, the greatest benefit of having disposable income, for me, is the peace of mind.

When you’re living paycheck to paycheck, there is always a feeling of being trapped in your current situation, having to do things you don’t want to be doing, to pay the bills.

Even the smallest amount of disposable income in the form of an emergency fund, can have a positive impact on your mental well-being, giving you some breathing room if anything unexpected was to occur.

How to Increase Your Disposable Income

Firstly, if your disposable income is already greater than $0, you’re in a good place financially.

Despite this, there are several ways that you can increase your disposable income.

Let’s break down the two main components of this sum:

• Income

• Expenses

To increase disposable income:

• Increase income

• Decrease expenses

• Or both

Increasing Income

Starting a Business

In the digital age of 2024 and beyond, you don’t need money to start a business.

A lot of business models require capital, of course, but to say that you can start a business in 2024, would be true.

Business doesn’t have to be complicated. Identify a problem, and provide people or business with a solution.

Starting a side hustle

A side hustle is a second job, but with a more entrepreneurial connotation than your typical second job.

If you find something you’re good at, you can make a healthy second income by investing your spare time into a side hustle.

Job hopping

Job hopping involves moving jobs more regularly than normal, which enables you to significantly boost your salary in comparison to staying at one company for a long time.

Job hopping has great benefits, but also has a few drawbacks, so take some time to decide if this is right for you.

Decreasing Expenses

Creating A Budget

A budget will help you gain knowledge on where your money is going each month. This can help you:

• Find ways to cut expenses.

• Cancelling unused subscriptions.

• Become more financially disciplined.

In most cases, the quickest and easiest ways to increase your disposable income is by reducing your outgoings.

There isn’t a better place to start than creating a budget.

Learning About Money

Your knowledge of money and personal finance will have a direct correlation to your ability to generate disposable income.

The better your knowledge of money, the better your ability to increase disposable income.

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