how to make money without a job and why you should
Spend less than you earn is the wrong way to think! Your time will be much better spent thinking of more ways to make money than it will be thinking of ways to save money. Chances are good if you read this blog that you’ve already given some thought to alternative income, but let’s back up.
“It is better to have a permanent income than to be fascinating.” – Oscar Wilde
Everyone has a primary source of income. Usually it is a traditional job – an employer who asks them to show up from 9 am to 5 pm, file a TPS report and pay an ungodly amount of taxes for the privilege of being laid off in a restructuring when the company misses earnings estimates by $0.01. Income can also come from self-employment, a small business, unemployment checks, a pension, or hundreds of other primary sources. Alternative income – which is sometimes referred to, incorrectly, as passive income – can come from rental properties, royalties, investments or other sources. All of these sources could also be primary income to someone but usually these are income streams that people receive in addition to their primary income. To be truly rich one thing is certain: for every ’stream’ of income you have, you should have an alternative. Alternative income is the key to wealth.
…a few of my simplest ideas – that you could start tomorrow – are:
- Make a few loans through Lending Club and start receiving interest instead of paying it;
- Start up a blog using GoDaddy, and then sign up for affiliate sites like LinkShare.com
and start generating some alternative income; or
- Set up an Amazon bookstore (here’s mine)
Most people have a single source of income. They work for employer Megacorp or Wal-Market and receive a paycheck. Some people may have a trickle of investment income, or occasionally sell something on eBay and then give up after a few sales, but a large number of people consider catching up on the final season of NBC’s beloved quirky comedy “The Office” a better use of their time than trying to earn more money after a tiring day in the office. Their goal is to get by on minimum work, minimum income and maximum “down-time.” Alternative income seems like a lot of extra work to these people, and extra work isn’t what anyone wants.
However, there are many advantages to finding alternative income, not the least of which is being able to get rid of your primary income stream. Having alternative streams of income means that no one stream can direct your life. Do you think you could tell your boss you were going to quit at the end of the month if your wage is your only source of income? Not unless you had an offer letter from your next ex-boss ready. But what if you had 15 streams of income? What if no single stream accounted for more than 10% of your total income? You could do a constant analysis and drop underperformers. You could drop streams that were inefficient, or frankly just made you blue. This is why being a consultant is better than being an employee, and why owning a business is better than being a consultant, and why creating content is better than owning a business – ease of adding and dropping income sources. Consultants and businesses and especially content creators can have more than one ‘employer’ at a time. No one ‘employer’ becomes critical for putting food on the table.
There are two more advantages to alternative income besides diversification of income sources. First of all is the expansion of skills. Creating an income stream from a website you create or eBay sales or a small business is a completely different skill set than being a financial analyst, for example. Not better, not worse, but different. Even blogging about financial analysis is a different skill set than being a financial analyst. Every time you create a new revenue stream, you are expanding your skill set. You are learning something new, and making it that much more likely that you’ll be able to add further income streams.
This leads to the greatest advantage of alternative income streams of all. This is the viral nature of alternative income. For the first 10-12 years of my working life, I never thought there was any point in worrying about income past my wages and a quarterly trickle of dividends from my stock holdings. The truth is that when you start thinking about creating alternative income you’ll find out that something funny happens. Your ideas will snowball. That first idea will spawn two more, and they’ll each create two more. You’ll get excited the first time you make a few dollars that didn’t come from your employer. You’ll see opportunities everywhere and even though many won’t work out, some will. The one that does will give you a lead to another stream. That stream will inspire you to create another. You won’t be content to sit back and wait for your corporate payroll department to mail you that never-changing check every two weeks. You’ll want more, and by wanting more you’ll find more. Once you understand that alternative income is the only way to real, long-lasting wealth every idea you have could be the start of something amazing.
So even if you come up with an idea for generating an extra $10 a month, don’t sneer at it. That $10 a month idea may someday serve as the basis for a $100 per month idea. That $100 stream may help you gain the skills and experience you need to have for a whole new stream that generates $1000 per month. If you see where this is going, you see the possibilities. Keep an eye out – you never know when you’ll come up with the next small idea that could turn out big!
This post originally appeared, in slightly modified form, on Lazy Man and Money. He’s all about alternative income, of course, which is the subject of this post, so his blog is a great place to brainstorm.
39 Responses to “how to make money without a job and why you should”
Comments
Read below or add a comment...
Connect with Steve
Facebook
Twitter
friendfeed
I like the statement you made about the viral nature of alternative income. Success in one stream does give you a “rush” and confidence to try out others. And like you said, you do run into leads.
Cheers
I’m glad you called it alternative income. Just about every stream of so called “passive” income I hear about seems to require much more work for the money than a job does!
Two points. First, many employers of professionals (especially out of the Fortune 1000) require much more than a 9 to 5 day. They usually don’t define it as such, because of various overtime regulations, but rather heap on the work with little regard to how long it takes to accomplish. I for one would love to find an employer who defines a full time job as 40 hours a week. It’s not a prohibition of alternative income, but it is a deterrent.
Second, the Commonwealth of Massachusetts, and perhaps others, defines many categories of alternative income as “unearned income,” a sobriquet that provides prima facia justification for claiming a greater percentage of it in income taxes. I’m not a MA resident, but I take every opportunity to rail against such an inherent disincentive to initiative and creativity. Of course it’s earned, idiots!
Very true. In the past three weeks, I’ve earned $200+ blogging. Nice little bit of side income.
I agree that earning alternative income sounds absolutely fabulous! Spend less than you earn, however, is a great fallback plan for those of us who haven’t yet (I remain hopeful, thus the “yet”) found a great plan for alternative income.
I read lots of blogs which talk about how great alternative income is, and I think, “Well of course it is! Everyone knows that!” The posts that are most useful, however, are those which help other people learn HOW to produce alternative income.
I agree, Steve. Making money outside your day job is a great idea. There are very few guaranteed jobs out there, and even fewer guaranteed pension or retirement plans. Alternative income gives you a little breather room should something bad happen. And as you mentioned, it could serve as the catalyst to something bigger than your current day job. There is a lot of opportunity out there. Why not grab some?
As a corporate employee, I echo what Curmudgeon said. I’m working far more than 40 hours and many times, I end up “required” to work weekends to boot. This isn’t an excuse…it’s motivation. I’m highly motivated to develop alternative income streams, but I’m hampered by this stinkin’ job!
I do have a co-worker who wants to buy some rental houses with me and I do have a vendor who wants to develop a business that would ultimately compete with where I work now. I’m interested…
I agree about the over 40 hour job – I’m a director and a 55-60 hour week is “normal” – however, like Ron, I don’t see it as a stumbling block.
I have several pieces of rental property, I make jewelry as a hobby & found a place to sell it for me, I run across great bargains and re-sell on Ebay and I just last week purchased (for very little) the contents of a frame shop – about 200 paintings & 50 frames. Don’t know exactly yet how I’m going to re-sell them but I have several ideas and know I’ll figure it out.
To Patrick’s point, there IS a lot of opportunity out there, you just need to find your niche.
Great post! Too many personal finance blogs talk only about penny pinching saving ideas. It’s important to be conscience of what we are doing with our resources, but when we focus on spending less, life just shrinks, and eventually, it becomes no fun to live. And we are here to live.
Thinking of making more money, on the other hand, is more fun, as you say. I am building my business, and adding a new service soon. For those of us who like challenges, this is the way to go!
We think in similar ways, I think, which is why I love reading this blog. I really like how you embrace possibility, and while I’m not focused on income right now (my possibilities lie in other areas), you’ve at least gotten me thinking on it. I’d love to see more articles of this sort, including some more specific ones (and maybe some featuring other people’s successes with wealth streaming?). I’m a sucker for a good case study…
Great post, Steve!
totally correct.
I turned my passion of coin collecting into an affiliate site to generate extra income every month.
I also run several blogs and together its enough money to pay rent and put food on the table – quite a good safety net to have.
Now, this is what I call an encouraging post. Been blog hopping today and I read quite a bit of discouragement from some blogs. Of course, I had to tell them that I am making more money now for lesser effort since I am already better skilled in ways of acquiring alternative income. Regards!
I needed this advice a few months ago when I wasn’t generating any alternative income. Now I’ve crossed the $100 dollar mark and shooting even higher.
This is a huge motivator. I love the idea of having several different streams of income each generating about 10% of the total. One of the things that many people focus on are the rock stars who make six digits per month from Adsense. There’s an idea that this is easy. Compared to working as a salaryman it is easy, but it’s also hard work. I enjoy sites like John Chow or Affiliate Confessor where the authors publish a report on the income streams their sites generate. Its not all adsense. If a bit of code on my site generates only $10 per month, that’s $10 I wouldn’t have otherwise. Of course the goal is to generate a lot more than that, but it all adds up at the end of the year.
Don’t forget to put 30% aside for the KGB IRS…
Great, great post Steve.
I have a trickle of blog income, only a trickle, however it will cover the cost of hosting for my new business website, which in turn should provide extra income.
I totally agree that increasing income is important. But I think people might be misled by the assertion “spend less than you earn is the wrong way to think!” You still have to spend less than you earn, or you’re in trouble! Personally I think someone who truly desires financial freedom has to focus not only on earning more, but on spending less. There are two sides to the coin of financial success…
@Mike: Well, I stick by that assertion for this reason: if you think of a way to save a $1, you benefit, true. If you think of a way to add $1 to your income you benefit again and again and again. I focused on getting my spending to a minimal level but after that I gave up on finding out ways to save. Spending time trying to save money on coupons, for example, is time I can spend working on new income streams.
I hear you. You can’t continually increase spending AND income, but at the same time if I increase my expenses 5% per year and my income 10% per year, I’ll get ahead in a hurry. If I cut spending 5% per year, and income remains steady, there’s only so far I can cut spending. There are two sides, but one side is far, far more important.
Great bunch of comments, by the way. My problogging gig isn’t’ providing me with the time to respond to every comment immediately – nothing like having a toddler and an infant in the house to disrupt your schedule – but I hope my post the day after this one answered a lot of the comments!
This post is right on track! I work at home doing multiple businesses and I love that my income is so diversified.
Thanks for this awesome post
Hmmn. Very, very interesting post. You’re saying something that–you’re right–we don’t hear on PF blogs too often.
Off to think of ways I can earn additional income….
@GG: A lot of PF blogs don’t say it but a lot do: a lot of the blogs in my blogroll think that way!
As the “Millionaire Next Door” shows, successful small businesspeople do indeed ruthlessly control consumption expenses (small house, used domestic car) to conserve capital to build their business.
I grew up in a family of 4 in nearly 6,000 sq.ft., and I know what that costs a household.
My family of 4 lives in under 1,500 sq.ft. and living is cheap and easy (paid off my house before age 40).
Think about how much free cash flow you would have with no mortgage.
so how many income streams do you have apart from your job?
I don't go to work! Yes I am very fortunate that I love what I do. I follow my passion and therefore I do not consider what I do work. I don't care if I work all day as I actually love it. It is just the way I am. If I love if – why would I want to take holidays or retire? In fact even when I do go away I still do my passion.
I am not some rich kid. I am just a normal guy in fact I didn't do any formal education past high school, but 30 years later I live on the other side of the world from my home town and live a great life because I made decisions to do things that I love doing rather than going to work.
I earn enough to sustain a nice lifestyle, but I am not a millionaire. I have my own small company (in fact 2) one providing laser special effects and the othe providing training to people who want to make more money. Maybe you can take a look at Millionaire Anonymous if you are interested.
My suggestion is…don't get a job. Get paid to do something you love and life will be much sweeter.
Thanks for this article – I really enjoyed it and I think it has renewed my inspiration. I have been struggling for the past few months as far as my business is concerned, and am working on several different income sources. Thank you for putting it all together in such an eloquent manner.
…”extra work isn’t what anyone wants.”
You can say that again, that's what keep middle class middle class
@Moneymonk – “extra work” in the sense of “unnecessary work” isn't what keeps middle class middle class, at least in my opinion.
Loved the post, Steve. I liked your point about making debt payoff quicker. Dave Ramsey talks much about beans and rice, but you don't have to think like that like you say. Flip it on its head and start bringing in some more money. I've also been able to do it with my blog and I'm getting ready to pay off our student loans. A debt we'd never considered paying early until the secondary income started coming in. Alternative streams help you do things you once thought weren't possible. I love mine.
I love this article! Plan to bookmark it to save for the future. I especially love the point about not sneering at a $10/month stream. So true!
I totally agree that increasing income is important. But I think people might be misled by the assertion “spend less than you earn is the wrong way to think!” You still have to spend less than you earn, or you're in trouble! Thanks for sharing such a nice post.
@Tiranga: In all honesty, the “spend less than you earn is the wrong
way to think” is a bit of blog showmanship – I'm writing a “WHAT DID HE
SAY?!?!” headline and then explaining it. Of course you have to spend
less than you earn, but many people would argue that there are cases
when you shouldn't. Good example? Taking out student loans to get an
education, or getting a loan to start a business.
I'm glad you enjoyed the post!
@Tiranga: In all honesty, the “spend less than you earn is the wrong
way to think” is a bit of blog showmanship – I'm writing a “WHAT DID HE
SAY?!?!” headline and then explaining it. Of course you have to spend
less than you earn, but many people would argue that there are cases
when you shouldn't. Good example? Taking out student loans to get an
education, or getting a loan to start a business.
I'm glad you enjoyed the post!