Becoming debt-free can be painstaking and achieved way too late in life provided you only know about one form of income. Sadly, it is true that most people work hourly, have their government take a huge chunk, and keep the small remainder for expenses.
Living this way makes it much harder to progress in life because your hard-earned money is instantly gone. Stop feeling like you are working for free and start learning about more ways to make money in order to be financially happier.
If do not already have a side hustle, now is the time to explore options and seek out opportunities. Making extra money can also be done alongside hourly pay if that is how you currently receive income. Hourly pay seems easy but the reality is you never get paid your value.
The problem with most companies is that they do not pay their employees what their value is. Plenty of people do the work of two employees, yet still get paid for the work of one. A position like this should force you to see other opportunities and jobs that will pay you what you are worth.
Avoid hourly paying jobs if you are able and concentrate on other, smarter ways to generate income. Use your brain to think about creative ways to make money. This is where most people give up and opt for the easy route of hourly pay.
There are various ways to make money however, the three forms of income are essentially earned, portfolio, and passive. Knowing the difference between these three will help improve your financial intelligence and give you a head start on what most people are not aware of.
Earned Income
The easiest and most common form of income is earned per hour. Hourly pay is exactly how it sounds, getting a certain amount of money per hour.
After working a certain amount of hours, normally 40, then overtime pay may kick in. This overtime pay now becomes pay-and-a-half per hour. Overtime pay is usually beneficial up until a certain amount of hours worked.
Some companies will even offer more incentives to keep you motivated just enough to push through those extra hours. Receiving a cash bonus is always best but most companies enjoy giving employees free junk from a catalog.
When receiving a paycheck, you may notice where it says gross income and net income. Gross income is the total amount you make before taxes are taken out. You can easily find this by taking your hourly pay and multiplying it by number of hours worked.
Net income is what you profit after the government takes its share. Many new to working always think they are getting underpaid but never take taxes into consideration. You lose a LOT of money after taxes and that can be discouraging.
Salary is mentioned as a yearly number regardless of how many hours you work or not. For example, teachers are generally salaried because of all the prep work it involves outside of teaching in the classroom. It all depends on your field and how it makes sense financially to get paid.
Regardless, if you are getting hourly pay and realize how undervalued you are, start looking elsewhere for work. Working for yourself is a great feeling and will allow you to get paid what you are worth. Service work is always an excellent idea to ponder.
Give Thought to Service Work
Getting paid for a service is also a great idea depending on the market you are working in. Mechanic work is a great example of getting paid per service. People are always overwhelmed when it comes to anything mechanical-related, which is why making money in service work can be beneficial.
Imagine getting paid $50 for changing two headlights simply because the owner had no idea how to even open the hood. You could charge $45 an hour to change a lightbulb but it makes more sense to just charge that for the complete job.
You could easily do several jobs like that within an hour’s time limit. The idea is that sometimes it makes more sense to get paid for a service.
Another great example if you are tech savvy would be building websites. A lot of people have great ideas for a website but would much rather pay a pro to take care of it. If you feel comfortable with website design and think you could help others, then give it a try.
Anything related to cosmetology is a nice way to make extra money, too. Have your own clients that come to you every month for care and treatment of their nails, hair, skin, etc. Offer in-home services so your clients never need to leave their homes and charge a premium.
Most people consider running a lawn care business because it seems easy, but the reality is it is too competitive and everyone is doing it.
Instead, focus on other tasks people hate doing, like cleaning gutters or washing windows. Go door-to-door in your neighborhood for marketing to create a buzz and it can only expand from there.
Portfolio Income
Having an impressive portfolio is something that can be very important for your financial success. The concept of having a portfolio seems overwhelming and somewhat impossible to grasp the concept but is much easier to understand than you think.
A portfolio is a collection of your financial assets, such as stocks, bonds, cash, and real estate. By diversifying your portfolio and investing wisely, you can increase your chances of reaching your financial goals.
One example of a portfolio may include a hotel, condo, two rental properties, maybe an Arby’s, stocks, and bonds. You could then purchase this portfolio from somebody and continue maintaining everything just as they were, as opposed to building one from scratch.
Think of purchasing a portfolio being the same as buying a model plane already put together. You could buy the model plane yourself and spend countless hours gluing the pieces together or buy one already together and allow it to make you money immediately.
Portfolios this large usually cost millions of dollars to purchase outright so this may not be ideal from the start. Consider spending years building your own portfolio and selling it to make a nice profit. It will be well worth the investment both for education and profit.
There are many ways to achieve a first-class portfolio, it just comes down to knowing all that is available. Talking to people with a well-established portfolio is the best way to see how it really works. You must also know the types of assets included in a portfolio.
Common Types of Assets Included in a Portfolio:
- Stocks. Stocks represent ownership in a company. When you buy a stock, you are buying a piece of that company. Stocks have the potential to generate high returns, but they also come with a higher degree of risk.
- Bonds. Bonds are essentially loans that you make to governments or corporations. In exchange, the borrower commits to repaying you a predetermined sum along with interest over a set duration. Bonds are typically less risky in comparison to stocks, although they tend to yield lower returns.
- Cash. Cash stands as the most readily convertible asset, signifying its ease of transformation into other assets. Cash can be maintained in diverse forms, including checking accounts, savings accounts, and money market accounts.
- Real Estate. Real estate is an appealing investment option for individuals seeking enduring growth and income. Nonetheless, real estate also qualifies as an asset with low liquidity, indicating the challenge of selling it quickly.
- Alternative Investments. Alternative investments are a variety of investments that fall outside of the traditional categories of stocks, bonds, and cash. Some examples of alternative investments include private equity, hedge funds, and venture capital.
It is crucial to recognize that a universal portfolio solution does not exist. The most suitable portfolio for you hinges on your unique situation. Seeking guidance from a financial advisor is a must for crafting a portfolio tailored to your financial objectives and risk tolerance.
Passive Income
This is arguably the best form of income because your money straight-up works for you. You could sit back with your feet kicked up and generate plenty of passive income to live off. Knowing how to do such a thing is key and takes plenty of research.
A 24-hour self-car wash is a great way to make passive income because you do not need to be present. The customer puts their money in to use the facility and does all the work themselves. You simply collect what is leftover minus the expenses (water, chemicals, etc.) and do very little.
Other good ideas could be related to online, such as a store or blog. Popular blogs and sites are littered with ads because a company will pay them a fee. Simply writing a blog that generates enough traffic could easily pay for some monthly expenses.
Look around and start thinking about some ways that you could generate passive income. Plenty of people are making more passive income than their actual day job. If they lost their day job at least having a passive income would cover some or all expenses.
Even making an extra $100 a month from passive income is a great start to creating a mindset that money can work for you. Stop working too hard for money and getting paid last. Learning how to make money work for you is the best way to get ahead financially.
Live a more stress-free lifestyle knowing you are in control of finances. Feel comfortable knowing your money is working for you and not the other way around. Get away from hourly paying jobs at a company that just treats you as a number and use other ways to generate income.
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- Featured Image Courtesy of Free Stock photos by Vecteezy