Extra money is great. At a minimum, extra income is more change in your pocket. Beyond that, it can diversify your income sources and make your finances less vulnerable to a disruption.
There are many types of non-salary income, but one way they’re often divided up is passive versus non-passive. Consider these 12 sources of additional income.
Passive income tends to be investment income: Money you get for letting someone use your money or your stuff. Here are the classic categories of passive income. (By and large, this whole category is only available if you have money to invest.)
Interest is money you get from something like a bond, CD, or savings account, where someone pays you to use your money.
Not so long ago — before the financial crisis — there were plenty of reasonably safe interest-bearing investments that paid 3%, 4%, or even 5% over inflation. Those days are long gone. Now, CDs or bonds can barely beat inflation, and that’s only if you’re willing to tie your money up for a long time. Still, interest income can serve as a secondary income stream, and the opportunities are likely to get better in the near the future. (So, be careful about locking up your money for the long term at current rates.)
Dividends are your share of the income earned by companies in which you own stock, and are also earned from baskets of investments that hold stocks, such as ETFs or mutual funds. Unlike the interest earned on a bond or CD, dividends can rise or fall unpredictably, depending on the success of the firm or the fund. Although some risky companies can pay high dividends, stable companies tend to offer modest returns, typically under 5%.
In theory, rents can be pure investment income, like interest and dividends, but in practice, being a landlord is more like taking on a second job — you have to find tenants, accept rent payments, keep the building maintained, deal with broken appliances, and so on. You can hire a management company to do that work, but that’s an extra expense — and the income still isn’t purely passive, because you still have the work of managing your relationship with the management company.
Still, rental income can be an incredibly flexible second income stream. Airbnb, RelayRides, and similar companies now enable individuals to rent out things like spare bedrooms, vehicles not in use, and earn extra income with less effort.
Royalties are money that you get for letting someone make more limited use of something that you own. If an oil company operates a well on your land, they’ll pay royalties. If a publisher sells a book that you wrote, they’ll pay royalties. The possibilities are vast, and in essence include anything people can use — land, books, photos, patents, trademarks, etc.
It’s worth noting that most people who sit down to write a book don’t end up getting any significant income from it. That’s probably even more true of people who sit down to invent something. Still, books, online stock photography, and even less-successful inventions can all generate extra income and diversify your earnings.
Non-passive means you have to get out there and hustle up this extra income in your spare time. Some take a lot of hustle.
5. Working Another Regular Job
For someone working for wages, a second (or third or fourth) job is a classic source of extra income. If you’re working for a salary, you’d probably be breaking your employment agreement to work another job, but there are ways to work for pay without breaking the rules. Check with your employer to determine your company’s specific policies.
6. Working at an Irregular Job
Not all jobs require a regular time commitment. Some can be done on an ad-hoc fashion, such as:
- Casual labor, like a handyman, house painter, gardener, house cleaner, or dog walker.
- Freelance work (usually skilled or semiskilled labor done outside the range of regular employment), such as a web designer, photographer, adult education instructor, bicycle messenger, etc. Many occupations that fall into this category require special training, certification, or even licensing.
- Seasonal work, such as a department store Santa, sheep shearer, etc.
7. Service Something That Makes Money
The classic option here is a vending machine. Your investment is modest — the cost of the machine, and the cost to stock the machine the first time. Your labor is modest — visiting the machine to restock it and remove the cash.
Vending machines used to be a great way to make a modest amount of money, especially if you knew someone who would let you put a machine in a reasonably high-traffic area either for free, or for a piece of the action. You could start small and then buy more machines. Back in the day when coin-operated video games were a thing there wasn’t even any restocking needed — you just went as often as necessary to take out the money.
8. Running a Small Business
Running a small business can be a great way to make money from a source other than your salary. The range of options for small business are infinite. Just for starters, virtually all the “irregular job” items from the previous section could be just as easily arranged as a small business. Instead of painting houses or walking dogs, you start a house painting or dog walking business. Plus, running a business may confer certain tax advantages (deductions, anyone?) which can make it an even healthier secondary income source. The next two ideas can also be structured as small businesses.
9. Sell Something You Make
The list of things you can make and sell is endless — jellies and jams, soaps, jewelry, garden produce, baked goods, maple syrup, pottery, scarves, etc. I wrote a bit about the line between hobby and small business in my post Make Your Hobby Pay Its Way.
10. Sell Copies of Something You Made
This is a variation on the point above about royalties. Instead of letting another company sell copies of something that you’ve created in return for royalties, you can sell the copies yourself.
The classic case is self-publishing a book, but there are a lot of other possibilities that fall into this category. For example, If you know how to do something, you could create a video teaching how to do it, and then sell it on DVD.
This option really lends itself to digital sales, because the cost of production is zero — ebooks, online video courses, phone apps, etc.
It’s tough to make much money this way, because there’s so much stuff out there already, often for free. Sales are likely to be low, and unless you have a very narrow, very focused niche, you’re going to face a lot of competition.
Still, this can be a win, especially if you want to create something for your own reasons — a phone app that does something you want a phone app to do, a drawing that speaks to you, etc. If you’re making the thing because you want to, the extra effort to sell copies is quite small, and will probably bring in a little money.
11. Sell Something You Gather
There are still places where it’s legal to collect things and sell them — mushrooms, pine boughs, sea shells, rocks, insects, etc. Success requires access to a place where you can collect, and usually requires more than a little skill in knowing what’s worth collecting, and how to sell it.
12. Sell Something You Buy
If you can buy something cheap and sell it for more than it cost, you can make money on the markup. To make a reasonable profit, you usually have to add value in some way. The two classic ways are: Import the item, or repackage a cheap, bulky item into smaller units.
Importation: Say you find something sold overseas that you really like — a clothing item or a gadget or a tool — that just isn’t a thing in the U.S. You can find the manufacturer, buy a modest quantity at wholesale, import them into the US, and sell them at a markup. Your added value is the capital to buy the stock and the effort handling the complexities of importation.
Repackaging: Almost anything is cheaper in bulk, sometimes a lot cheaper. My wife buys a brand of quilt soap that’s good for washing wool. She can get it in 8-ounce bottles for $8 or $9 dollars — about $17 a pound. The stuff has a single ingredient: sodium lauryl sulfate, the detergent in baby shampoo. If you buy by the barrel, sodium lauryl sulfate costs less than $1 a pound — highly profitable, even after paying for bottles. Anybody can do the same thing with anything that’s cheap in bulk but can be sold for more in reasonable quantities.
13. Teach a Class
If you have some skill — and if you also have some skill at teaching — you can make money offering classes. Where I live, people can arrange to teach classes through the park district, recreation center, the local library, YMCA, community college, and at least two different senior organizations. Many of the stores that sell arts or craft supplies also offer classes with local artists and craftspeople as teachers. And if you’re adequately entrepreneurial, you don’t need to teach under the auspices of some other organization at all. You can find your own students and teach out of a location of your choice.
14. Put Ads on a Website
Creating a blog or static website and putting Google Ads (or other affiliate programs) on it can generate extra income — just how much depends on the traffic and ad clicks your site generates. It’s a competitive space, but if you can produce a quality site with adequate traffic, it may provide a regular source of additional income.
If you have some sales skills, you can also market your site to individual companies and get them to buy ads for a lot more money. That’s another piece of work, however. It would make your income a little less passive, because now you’re a salesman on top of everything else.
15. Create a YouTube Channel or Podcast
If you like making videos, this can be a source of modest income. If making videos seems like a lot of work, you’re going to quit before you make any money from Google Ads on your YouTube channel. Still, if you make videos that go viral, there’s the potential to make quite a bit of money. Some YouTube stars derive significant income from their videos.
Podcasts are a little more complex to monetize, because you don’t have the option of just putting ads on the page somewhere; you actually have to include the ad in the podcast itself. On the other hand, the ads are worth more, because the listener is pretty much stuck listening to the ad from beginning to end.
There are podcast networks that offer tools to help with creating and making them easy for listeners to find. Some of them also have ad networks, although you’d probably make more money if you did the work of selling your podcast to sponsors.
How do you earn extra income?