This is the last lesson in this series on money. I consider it the best financial tip I every learned – developing a side income.
Many people have issues with their current job/career; they don’t like it, they don’t make enough money, they don’t see an opportunity for a promotion, they are not really good at their job, or they don’t like the people around them.
A lesson I learned was to get myself a part-time job. Not just because of the extra income (although certainly nice) but to do something I love, to get good at it, have a separate source of income, in case I lose my job, and most importantly, to have something to do when I retire and that can earn me some money that means I don’t have to pull as much out of my savings. As a result, I can either retire earlier, or more comfortably.
For example, let’s say you determine that you need $85,000 per year in your retirement to live the lifestyle you desire. You research and note that you will receive $20,000 per year from Social Security and another $20,000 from your pension. This leaves you $45,000 that you need to pull out of your savings. If you follow that you will withdrawl 4% from your retirement each year, you would need about $1.1 million in your savings to generate the $45K needed and have your savings last during your retirement. If, however, you had a side income where you made $24K per year, you would only need to pull $21K out of your retirement savings, so you would need to have saved $525K or about half of what the original amount was.
The drawback, of course, is that it will take up some of your free time. In my opinion, the benefits are far greater than the costs. Since you are doing something you love to do, it won’t be awful like working in a fast-food restaurant.
Once you become proficient at one skill that you can make $500-$1000 or more per month, try to make it into a system that can be automated and doesn’t require your time, or only requires a small amount. For example, if you make leather belts and sell them at local arts and craft shows, consider having the belts made for you and sold online where the payment, fulfillment, shipping, customer service…is all handled for you. This will allow you to start a second income, third income…
The amount of money may become enough for you to quit your current job and do it full-time, or if you have several small streams of income, they can add up to more than your current income. The good thing about that is diversity. If one business is struggling, you have several more that can cover it.
The important thing is that they are side jobs you love to do, require little of your time, provide a benefit to someone else and are profitable. If they require a lot of your time and you can only charge a small amount, such that you’re making $1.50 an hour, than rethink how you can make it more passive. Although you may decide it isn’t about making a lot of money and you enjoy the process so much that you don’t want to give it up to someone else. However, you should be able take almost anything and turn it into a system that requires little of your time.
Make a list of all the things you are good at, that people compliment you on, that you enjoy doing or have always wanted to learn to do. Review the list and determine if these items would solve other people’s problems and would they pay for it or would they like to be taught how to do it as well. Consider combining two or more of these into one. For example, if you have a clean, organized desk and people always compliment you on your dress, how about writing an ebook teaching other people how to put together an organized wardrobe that is not only stylish but is simple and keeps your closet clean and organized?
Well that is it. My last in a series of seven lessons I have learned over the years on money. These have been great practical tips that have helped me become debt-free, increase my savings, make me more comfortable in preparing for retirement and making life more enjoyable. No there aren’t any tips for investing or getting rich quick, but there is great value in simple ideas that work and improve your life. I hope you have found some value in them as well.
If you have missed any of the lessons, here are links to them all.