Liz Pulliam Weston's article on twenty ways to make $100 more a month presents food for thought on how to increase your income. Increasing your income accomplishes the same end as reducing your expenses; the amount that you save each month goes up. The advantage of increasing your income over reducing your expenses is that you reducing your expenses has a limit, but increasing your income is virtually without limit.
I'm all for increasing income. There is (usually) quite a bit of time each week that can be spent, or invested, profitably. Whether that's done or not is up to the individual. But there are a couple of ways, in general, to accomplish this. The easier, and more immediately profitable, way is to work for someone else. The harder, but ultimately more profitable, way is to work for yourself.
Most of the ways mentioned in Ms. Weston's article involve working for someone else (or at least the easier way is to work for someone else). In this case one is trading one's time for money. You could be the best mystery shopper in the world and give exactly the kind of feedback the client is looking for, but the firm that acts as the middleman for your mystery shopping services gets all of the repeat business and a portion of your efforts. It's the same with tutoring or any other job.
It's much better in the long run to build your own business, build your own list of contact, employ others to work for you, control the fruits of your labor, but this path doesn't usually mean an instant paycheck. The revenue comes later.
So if it's otherwise a clear choice to start one's own business instead of working for someone else, why would someone choose the latter? The main reason is urgency. If you need an extra $100 per month right now, you're going to go out to get a part-time job because once you're hired, the paychecks usually come in. If you don't need an extra $100 per month right this moment to cover your current expenses, but instead want to improve your income and diversify your revenue streams, then it will likely be more profitable to build a business yourself than to support and build someone else's business. This is the track you can take if you don't need the extra income urgently.
Another relatively important reason why you might take a job rather than start a business is security. It would seem to me that this reason is a red herring because it's clear to me that depending on one employer for income is far less secure than depending on dozens, hundreds, or even thousands of clients for income. If clients leave, you can replace them while others still pay you for your service, but if your employer decides to end the relationship, you're without income until you find another.
To get back to Ms. Weston's article, there isn't a thing wrong with most of the opportunities she presents to make an extra $100 per month, if you need the money right now. If you don't really need it right now, try starting your own business and build equity in that. It will be more profitable and secure in the long run.
The key is to make that additional income passive. That way your time isn't directly tied to the alternate source of money. When you free your time from the cash flow you can go and create a new income stream, thats how you get an income with virtually no limit (like you said above).
I agree with Ms. Weston's sentiment – but it also depends if you have made an investment in your own business too – or even more tricky – if you have had to borrow money from the Bank to do start up. In this case you haven't got endless time to wait for things to take off.
However, good advice if you are looking at short, medium and long-term goals.
Hopefully that side job soon becomes a full blow career. Passive income can easily become pro-active income, with the stakes upped accordingly.
Thanks a lot, great inspiring post,
Tracy Ho
wisdomgettingloaded
The more you can make a side gig run on its own (automation, contracting out, etc.), the better off things will be in the long run. Having additional streams of income are crucial to giving yourself some insurance of a solid financial future. The regular 9-5 job doesn't always get it done any more!
"Another relatively important reason why you might take a job rather than start a business is security. It would seem to me that this reason is a red herring because it’s clear to me that depending on one employer for income is far less secure than depending on dozens, hundreds, or even thousands of clients for income."
Totally agree with this. Most people think that being employed is much more secure than having a business. As you've said, having a job means getting an instant paycheck, while starting a business does not.
It's always good to have a side business, in case you're uncomfortable leaving your job. That way, you'll have two sources of income. And you won't feel threatened unlike having one source of income.
For me, I prefer applying to another job instead of venturing into business. The fact that you really need adequate funds for a business, you will never be secured unless the business is actually earning its profit.