Personal Finance Tip of the Week, By Financial Fundamentals, LLC of Watertown

A successful budget looks beyond cost cutting toward ways to increase your income (for more on this, see http://www.ffundamentals.com/Blog/Post/9/Want-to-improve-your-budget---Start-with-your-income). The reason: income growth can be a greater benefit to your budget and savings than expense reduction over time.

One of the most direct ways to increase your income is to secure a raise. But that approach isn’t practical for everyone. For example, some people work for a company that is having financial difficulties, and others work at a job with salary band constraints.

In cases like those, another approach to consider is part-time entrepreneurship. This path involves starting a small business to supplement the earned income from your job. Entrepreneurship offers lots of potential benefits, including the following:

1. Flexibility. When you run a small business, you aren’t limited to weekdays from 9-5. Instead, you can set hours that fit your work/household obligations and lifestyle. You have the freedom to start a business on a part-time basis, on top of your existing job. This allows you to start small and see if the part-time business has the potential to become full-time someday.

2. Earn Extra Income. A part-time entrepreneur creates two income sources, one from a job and one from a small business. This provides a couple of important financial advantages. First, the extra income from the business may be larger than what you could get from a typical raise. Second, it can offset some of the financial risks associated with a job, like a forced reduction in hours or a layoff.

3. Use Your Talents. Many people have unique and valuable talents that are underutilized in their jobs. They could start a business that allows them to use these talents for profit. Other people have specialized skills that are related to their job but have broader application. They could become a consultant, offering their industry or functional skills to other organizations.

4. Turn Obstacles into Opportunities. Sometimes people are held back from advancing in their jobs. For example, maybe your English skills as a second language aren’t perfect, or perhaps you aren’t able to travel due to family obligations. A small business can convert these corporate obstacles into opportunities. You could start a business that specifically caters to clients who speak your first language. Or you could start one in your home or neighborhood, so that you never need to travel.

So if you want to shore up your budget and increase your savings, explore ways to grow your income. Part-time entrepreneurship may be an opportunity, especially if you aren’t able to secure a raise.

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Stephen Barkhuff, CFP(R), CFA, MBA is the founder and president of Financial Fundamentals, LLC, based in Watertown, MA. Financial Fundamentals helps couples and singles with modest incomes take control of their financial future. You can reach him at mailto:SBarkhuff@FFundamentals.com.