The Foundations of Financial Literacy #1: Increased Income Provides Greater Financial Opportunities

Let’s face it, earning income is a given unless one has somehow come upon a source of cash so that one doesn’t need to earn money. Who knows, winning the lottery, receiving a large inheritance, or marrying someone who has enough money to go around (or putting enough away to provide financial independence).

The world revolves around money, and most everybody was brought up with the understanding that money is required to pay for things, and that earning it is the most common way to acquire it.

I’m pretty sure that every reader has earned money at some time, and probably did so at an early age. I did. Early on I received an allowance when I completed my assigned weekly chores.

I also learned early that I could make more money by doing chores that were not my normal duties, such as pulling weeds for my mom. That’s known as Hustling, something we’ll get into further down the road.

I learned early on that my allowance would provide just so much income each week, usually not keeping up with my desire for model kits; a passion that I picked up at an early age. I would constantly scrape to together enough money to buy the next “Fix,” well the next kit.

Okay, so far this isn’t out of the ordinary or new information, right? Let’s look at things a little deeper. Early on, when still under the parents’ roof the need for large amounts of money was not an issue. For most of the formative years, we didn’t have bills. Probably not until driving age came along and then it was a car payment, insurance, gas and such.

So, how many kids know about cash flow or the need for a budget? Not many I’m sure, I know I wasn’t one of them. Budget, what was that? Usually something I saw at the store, in the form of a label or advertising, “BUDGET BUY.” Nope, budgets didn’t come into play until later years, and we’ll talk more about that later.

Right now, Earning Money is the topic, which is a Key Element of Cash Flow and Budgeting.

Anyone who sat in my college classes, or has followed any of my posts on Facebook or Money is not Taboo, has possibly caught me talking or writing about, “More Money Than Month vs More Month Than Money. Not my original words, but something I heard a LONG time ago.

Simply put, having more money than month means that there’s enough income, that month, to pay the bills, provide gas money, and have some for fun. Having more month than money means that the income was not high enough to pay all the bills and provide extra coin.

Let’s look at some examples of some various earnings. This is going to be interesting!

An hourly wage, at the average minimum wage of $7.25, for 40 hours of work, will provide a weekly GROSS INCOME of $290.00. That’s simply the amount earned, it’s not the amount that actually makes it into your pocket or bank account, which is known as NET INCOME. There’s always Income Tax, Social Security, Medicare, and such that is taken out before your pay makes it to you.

Here’re some examples that were generated using Suburban Computer’s calculator at:

Notice the difference between the amount of “Straight Time Pay” (Gross Income) and the amount that you actually received, “This Check (Take Home)”?

Really, Schindler, I’ve been aware of this for years. Bear with me though, there’s more and this may not be clear to everybody.

So, 40 hours a week, for $7.25 an hour Grosses $290.00, but Nets $250.93.

Let’s multiply that by 50 weeks in the year, accounting for the average American’s Two Weeks Vacation. So, $290.00 a week provides for an ANNUAL Gross Income of $14,500.00. Now, let’s look at the ANNUAL Net Income. Fifty weeks of Net Income of $250.93 provides for $12,546.50 in ANNUAL Net Income. Divide that by 12 months and the MONTHLY Net Income is a bit over $1000.00.

Now that’s for minimum wage and not everybody makes minimum wage, but that’s realistic for the beginner worker or someone that chooses to be in such a job. Let’s bump the hourly wage to $10.00 an hour and compare the two.

Now there’s GROSS Weekly Income of $400.00 and a NET weekly Income of $336.49. How do the following compare?

  1. GROSS Annual Income at $7.25 an hour ________________ vs GROSS Annual Income at $10.00 an Hour __________________.

  2. NET Annual Income at $7.25 an hour ________________ vs NET Annual Income at $10.00 an Hour __________________.

  3. The difference between the GROSS Annual Incomes of each of the hourly wages, from the examples above _________________.

  4. The difference between the NET Annual Incomes of each of the hourly wages, from the examples above _________________.

That’s just a quick example between two, fairly, close wages. Let’s jump things up a bit, to $50.00 an hour.

Look at the difference!!!! So, now calculate the following:

  1. GROSS annual take home, calculating 50 weeks _______________________.

  2. NET annual take home, calculating 50 weeks _______________________.

  3. NET monthly take home, using the NET annual take home then divide by 12 ____________________.

So, we’ve seen that the Straight Time Pay (Gross Earnings) and Take Home Pay (Net Earnings) have risen in each scenario. There’s quite a jump in the earnings of $7.25 an hour and $50.00 an hour, proving the power of earning. The higher the wage the more money for the time “Spent.” Notice I said the time spent? One Spends time, and when you trade hours from your life to earn money, you’ve spent hours that you can never get back.

This begs the question, “How Much Is An Hour Of Your Life Worth?”

Now the above examples were for hourly wages. The same applies to salary income.

The more you earn for your time spent the more money you can use to provide for yourself and your loved ones.

From my point of view, the action of regularly trading a set a mount of time for income is known as “Hustling”. One hustles to make money. Well, maybe not everybody, as some people make money by sitting around drawing income from the government.

If you’re reading this book, then I imagine that you’re not one of those people, you’re somebody who’s a Hustler and wants to learn more. But. Then, maybe, you are one of those people and you’ve decided that handouts are not enough and you want more control over your income, if so, CONGRATULATIONS!

So, what can one do if earning money by hourly wage, but the normal work load doesn’t provide for enough? The first option is to pick up extra shifts, or over time, whenever possible.

For those that don’t have the option of picking up over time, there’s always the “Side Hustle.” According to David Carlson, founder of Young Adult Money ( and author of the book Hustle Away Debt, any side hustle is an activity done outside of the usual job to bring in more money.

When David and his wife got married they had combined student loan debt around $100,000.00 dollars. David is using Side Hustles to attack their that debt. Of course, Side Hustles help, even if one doesn’t have student debt.

Early in my teaching career, I Side Hustled by making vacuum form molds for a local company, as well as manufacturing wiring harness for an antique truck parts company. My current side hustle is freelance writing.

There’s SO many options for Side Hustles these days. Many folks become distributors for Avon and other direct sales products. Others work online as virtual assistants. The list goes on and on.

So, if you’re “Hustle” isn’t providing enough, you have plenty of options for a “Side Hustle.”

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About Keith

Keith, aka Shin, is a close to 60 former teacher and counselor who's blundered through the world of personal finance, learning the basics later in life than he likes. It's his mission to share as much about personal finance as possible, helping others get a handle on it, much earlier than he did.
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