Don’t Save Money. Make More!

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Earlier this year I read a great blog post from Ramit Sethi about how people often focus on the wrong side of the personal finance equation: we’re often told to save money, be more frugal, stop drinking so many lattes, etc. but few people ever try to earn more money. Instead of saving money, maybe people should try to make more money.

I have experienced this conundrum in my own life. 3 years ago, my wife and I were new parents to a 6-month-old baby boy, and we were living on one income from my job in corporate America. Although we were making ends meet, I was not totally comfortable with our monthly income-and-outflow; sometimes we didn’t have enough money left at the end of the month, and sometimes we had to dip into savings to make it till payday.

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Instead of waiting around for a pay raise at my corporate job (which wouldn’t have been much – the entire company was in a semi-salary freeze at that time), I decided to see what I could do to make extra money on the side. So I started freelancing. I took on some side projects as a freelance writer, working from home a few extra hours a week at nights and on weekends, and before I knew it, I was making more than enough extra money to cover our needs.

Here are few ideas on how people can create a lucrative side business that can make you some extra money.

  • Use your existing skills: You don’t need to reinvent the wheel or learn a dramatically different skill set to earn extra money. Most people probably already have some skills that could be converted into a lucrative side business. For example, I used my skills as a writer to start making money on the side. Ramit Sethi wrote about a client of his named Dean who worked full time in information technology, and then used those skills to start earning $150 per hour on the side as an IT consultant.
  • Make life easier for others: Even if your day job skills aren’t a good fit for a side business, look deeper into what you know how to do that can take an unwanted task off someone else’s to-do list. Do you know how to fix stuff around the house? Offer handyman (or “handywoman” services) to your friends and neighbors. (I am always in the market for a good handyperson because I am pathetic and helpless at home improvement. Chances are there are lots of people like me in your area.) I have hired a father-and-son team to clean our house’s gutters – they’re fast, efficient, professional and they get paid good money, in cash. Could you mow lawns or do snow removal? Could you show people how to fix their personal computers or rig up their wireless networks? Anything that you know how to do (especially if not many other people know how to do it) could be turned into a decent side business to bring in some extra money.
  • Charge a lot: If you’re running a side business, you need to make sure the work is worth your time – and make sure you’re earning enough to cover the extra taxes that you’ll owe. So charge a lot more per hour than you make at your day job. A good rule of thumb is to charge at least 3 times as much as you make per hour in your day job salary. So if you make $50,000 per year at your day job, your hourly rate is about $25 per hour – so for a side business, you should charge at least $75 per hour.
  • Make the trade-offs: It can be hard to commit to working on a side business when you’re already employed full-time. Decide how much leisure time and family time you’re willing to sacrifice. How many hours per week do you want to work? You have to strike a balance that is right for you – otherwise you’ll end up resenting your side gig, and your family life and day-job life will suffer as well.
  • Market yourself to your loved ones: Many people wonder, “How will I find customers for my side business?” It’s best to start with the people who know you and love you best: your immediate network of friends, family, former co-workers. Contact these people and explain to them the value that you offer, and ask for business and for referrals. The people who know and love you best will be able to point you toward opportunities.

Running a side business can be stressful and tiring, but it can also be exhilarating and lucrative. I really enjoyed running a side business – I loved the feeling of empowerment that I got from being able to support my family and earn as much money as we needed. Eventually my side business grew to the point that I quit my job and started working as a freelancer full time.

So if you’re having trouble making ends meet, consider starting a side business to earn more money. If you’re willing to part with a few extra hours of your personal time, you can turn it into money – and keep drinking those lattes.

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