Have you ever heard of lifetime earnings? That is all the money you have earned in your life, added up. I had calculated it a few years back and did it again after reading Jacob’s post on Budgets Are Sexy. You may be surprised at how big this number is, say you are a young professional who started at $35K at 22 and ten years later is making $70K, depending on how soon your raises were, you may have earned over half a million dollars by age 32!

My memory is not good enough to remember every single job I’ve had as a teenager or as a college student, and my pay slips are neatly stored an ocean away at my mum’s in Paris, so I have had to guess, and added only my main jobs. That means an estimation of all the tutoring, baby-sitting and piano lessons I was giving in high school, which as a rough guess were about $6,000 a year for four years, then the $1,000-something I was making flipping burgers, working a cash register or waitressing during the first three years of college, and the $2,000-odd I got during the last two years of business school. Then I traveled the world for a year without working, and added up formal employment until the end of 2009, when I left my day job for good.

The total figure… was six figures lower than my current net worth. Meaning working from age 15 to 29 and paying for all expenses from 17 to 33 (today), I have a savings rate of over 100%. If you go around my house in Guatemala, I don’t have much to show for, as I am not really into material things, and buying the house itself (cash) is part of my net worth and shouldn’t be added to spending. Still, as I traveled to over 70 countries on five continents, lived for three years in crazy expensive London, etc. I think I spent at least $2,000 a month on average, or $408,000 those past 17 years. My motorcycle, car, boat, the three blogs I manage or the $40K I put into renovating my house and developing 90 acres of land are not included either, so we may be looking at over half a million dollars in spending.

Living off side hustles

After graduating from college and traveling for a year (a neutral operation as I lived off rental income, more on that later), I didn’t add up the side hustles’ income to the lifetime earnings calculations, only salaries and bonuses from my day job. And I hustled a lot. I taught French after work when I lived in Guatemala and the UK, I wrote over 5,000 travel related posts for four different websites, did some translation jobs, waitressed at weddings on weekends… Whenever I was living for a couple of years in one place and had a day job, I was trying to make more, to “buy more freedom for later”. Meaning after working for a couple of years in Guatemala, I took 6 months off in Paris. After three years at a dreadful job in the UK, I lived and traveled around Morocco for a year. For the past three years, I have been traveling around the US and Europe for 3 to 6 months each year. So when I worked, I worked hard, saved hard, to afford some free time later on.

I didn’t realize until now that those side hustles entirely covered my living expenses, although at some point I knew I was tripling my day job’s income. Everyone can make a few hundreds extra every month. Extra hours, extra shifts, second jobs, side project, online income… the possibilities are endless.

Can you imagine being able to save your entire paycheck, to invest, pay off debt, or blow it a few months later in one big ticket item you’ve been dreaming of without jeopardizing the future?

Making your money work for you

The beauty of having some savings is you can make your money work for you. Having a savings account and generating some interest is the first step. But if you manage your investments well, you can venture into the stock market, or buy real estate and build additional wealth with your existing wealth. That is the main reason why, in spite of spending half a million dollars over the past 15 years, I still have more money than I have ever made at my day jobs.

I am learning to like the stock market, although I was only limiting my investments to index funds for a long time, as I didn’t want to take the time to research investments well enough to make investing something other than a casino gamble.

As I recently bought Savvy Scot, my third personal finance website, a little hard work allowed me to make back the purchase price in 10 weeks. Sure, it is no passive income, maybe one day it will, maybe never. But as I broke even, I now consider that the website didn’t cost me anything, and now it is making over $1,000 a month, with no other costs than a $100/year hosting and domain registration. My other two websites, RFI and MMYW were started from scratch, with the same $100 down, and have brought thousands each month from month six.

I am not saying it was easy, or that other investments are. Real estate is never totally passive, as good as your tenants may be. Stocks have a part of risk too. And generally, the bigger the reward, the greater the risk. However, as you can only reduce your expenses that far, your best bet to build wealth is to make more, then have that extra money work for you.

Some options include

1. Investing in retirement accounts. Even better if that comes with a company match. The money is stuck there until you turn 60 and you can’t touch it.

2. Maximizing tax free accounts. The rates are pretty low those days, but at least you don’t give part of the returns back to the government.

3. Minimizing your tax burden. Legally, of course. From deductible expenses for your line of work to energy saving appliances, there are tax credits for lots of things, make sure you get them all.

4. Starting a side business. Many side hustles do not require money down, or very little, like a $100 website. Worst case scenario you lost time. Best case, it starts generating a recurring income.

5. Investing in the stock market. Start with a simple $100 a month in index funds, to dollar cost average and have a wide portfolio, then to individual stock picks if you are confident enough and fine with the risk.

6. Investing in real estate. I talked before about why real estate is one of my favorite ways to build wealth as you can earn a monthly income, earn from asset appreciation, and earn from leveraging your investment.

As usual, do not invest money you can’t afford to lose, and build your investments slowly but surely. Once you get your money to work for you, you can afford to work less, retire earlier, work a less demanding job or one that pays less but that you enjoy more, etc.

It won’t happen overnight, but it will happen much faster than if you just rely on saving the same proportion of your income every month into a 1% savings account.