Ways to Earn Income
Broadly speaking, there are four (4) sources of income in this world:
1. Social Security income payments
2. Salary and wages received working for a boss
3. Self-employment income generated by working for yourself
4. Passive income you generate by building a business that employs other
people; by leveraging off resources other than personal exertion
Before making any decisions about how you earn your income, you first need to assess your personal interests, skills and abilities, and determine your career goals. Whether you work for yourself or someone else is a matter of your choice but the two are quite different.
Many people delude themselves into believing that they are cut out for business just because they manage fifty staff, wield a sizeable budget and their employer gives them a fancy title.
Only people who have been in business and have had to truly fend for themselves know what it’s like to be in business.
1. Social Security Income
These are fixed payments legislated by government and paid to you in the event that you are unable to earn an income. To receive such payments, you must meet a number of eligibility criteria but, in general, social security payments in Australia are restricted to young people undertaking tertiary study, the temporarily unemployed, permanently disabled, or those over 65 years.
2. Employment Income
There are a number of trades and professions where it is simply not possible to begin self-employment until you have been through the required tertiary education and on-the-job experience.
Regardless of your preferences, it helps if there are plenty of job opportunities available for your skill set. If there’s not, you will be in a position of having to compete with a lot of other people for very few jobs.
Good examples are graphic design, gaming design and other artistic related professions. My own son achieved a Master’s degree in Digital Design, only to find that job opportunities in Australia are few and far between. This is quite common. A lot of people spend years gaining qualifications and then can’t get a job in their first choice career. So I would urge you to check out the job market first and see where the jobs are.
The other point to note here is that salary and wages are generally subject to a fixed scale or award (e.g. government or unionised industry) or negotiation upon employment (e.g. private company). Whilst there is opportunity to increase income by bonuses, promotion or job-hopping, by and large your income will have an upper limit.
3. Self-employment Income
When you are self-employed, you could be a sole trader or a contractor. Typically, you are either selling your time and skill, or spending your time making a product or service to sell. In either case, you go to work every day.
In effect, it is not a lot different to working for a boss except the boss is you and you take on all of the risks of running your own enterprise.
While there can definitely be positives to self-employment, one of the major drawbacks is that the business depends on you for its existence until such time as it grows to a size that it can run without you. This means you are the business. You can’t afford to be away from the business or get sick.
In my opinion, the number one criteria in determining the likelihood of self-employment success is whether you have something of value to sell that a customer actually wants to buy. The test is whether there is real demand for you and the service or product you can provide?
If there is, you still have to ask yourself “What is so different about me that would attract people to buy from me or use my services as opposed to everyone else offering much the same thing?”
Tread carefully and do your research before you quit your job and commit money to self-employment.
4. Passive Income
Passive income means earning money while you sleep. It is recurring income that does not require your direct time input. Most people stay poor because they merely sell their time and do no more to supplement their income. Time-based income will always be limited because you only have 24 hours in a day, 7 days in a week and 52 weeks in a year to sell.
To remove the limits on your income potential, you must disconnect your income from the amount of hours in a day you have for sale. The key to earning income while you sleep is leveraging. This means leveraging off other people’s time, money and products, as well as investment assets, technology and intellectual property.
There are many ways to make money while you sleep. It is all about setting up a number of income-generating systems and then allowing each to do its work.
Recurring income streams can be generated both online and offline. The goal is to diversify so you should set up many different recurring income streams so that if a problem occurs with one, the others will still be working for you. That removes a great deal of the risk from your overall future income earning ability.
Online income streams usually take some time and effort to set up but they are a lot easier to automate, thereby requiring minimal input from you. Offline income streams generally require a higher level of input and maintenance because the offline world has fewer tools to automate the process.
Here are a few examples:
Leverage off employees or outsource externally to your business
Investing in income producing assets
Attract affiliate marketers to sell your products on a commission basis
Join an affiliate program and sell other people’s products for
Publish online – make once, sell over and over
Create copyright material and allow others to use it under an
Earn recurring sales commission & brokerage on past sales
Operate a subscription service
Important … please read this!
What we presenting in this article is educational information only. Our aim is to empower you to manage your own money and make better financial decisions. The factual information presented here should not be regarded as advice. All users of our services should seek their own independent advice about their personal circumstances.