Establishing your own proprietary income streams can speed your financial progress. Here are a few ideas to build your own income streams through side projects, as well as which side projects are more lucrative.
If you’ve spent any amount of time reading personal finance blogs, you’ve probably come across the concept of a side project or side hustle. Side hustles are activities you can engage in to generate more income, speeding you along more quickly to your financial goals. What gets talked about a lot less is the two distinct types of side hustles you can build: active and passive.
Active Profit Streams
Active side hustles are about trading your time directly for money. They are generally easier to start. This may be a business that mows people’s lawns, consulting, contract design work, or selling handmade quilts on Etsy.
These can be very lucrative activities, particularly if you have a skill in very high demand like coding. The limiter, however, is your own time. Even if you can bill yourself at $200 an hour, you only have so many extra hours to devote to the task. This may still be your category of choice if you want low barriers to entry and low start-up time. One of the dogsitters I use on Rover said she typically has about 1-2 dogs a week at her apartment. She makes an average of $35 a night and gets about 6 nights of business (two dogs at three nights) each week, which is $210 a month or $840 a month. Since she’s so active, her positive reviews keep piling up which elevates her on the platform.
I recently stayed at an AirBnb in Philadelphia. The hosts have signed leases on three units on the same block and manage AirBnB bookings out of them in addition to their full-time jobs. Apparently that’s a lucrative pastime in their city; after paying the lease on the units, the net about $1200-$1800 per unit per month in profit, depending on whether it’s the busy season.
If you’re interested in trading your time for money, Sidehusl.com will point you to the appropriate online marketplaces where you can ply your trade. Cooking, driving, teaching, constructing, and acting are a few interesting ones I looked into while perusing the site.
Passive Profit Streams
My favorite side hustles are those that have the potential to be passive or semi-passive. These ideas require work to set up – often more work than the services that generally make up the Active ecosphere – but then they throw off cash well into the future without much involvement from you.
These sorts of automated streams are in my opinion where the real money is. They come in two flavors.
The first is a to create a product that can be consumed hundreds or thousands of times with no extra work from you. Most digital goods fall into this category. A blog does this by monetizing its articles with ads or affiliate commissions. Ebooks, ecourses, digital art sold on Etsy, photos…they all fit the bill as well. Your work upfront is heavy in creating the product, but each additional sale requires no additional work from you to deliver the product desired.
You might think you have no expertise that can be monetized, but there are successful case studies from all walks of life. A couple of Kentucky schoolteachers – Shane and Jocelyn Sams – went with their background and started a site focused on selling librarian lesson plans aligned to state standards. That site generates more than $36,000 a month, and they have two others including one focused on US History lessons. Obviously that’s an extreme outlier on the success scale, but if you’re aiming for a few thousand a month, there are plenty of us smaller fish who are quietly generating that level of cash without making the news about it. Here is an account from a writer who earned $45k last year through 10 ebooks. This walk-through is from an artist who makes several thousand dollars selling her digital designs.
The other flavor involves automating a system to deliver a product. Setting up a storefront on Amazon’s marketplace with drop-ship relationships to fulfill the orders would fall into this category. Domain name buying and selling may be another. The value lies mostly in the complex systems and processes you’ve set up. Then you can sit back and reap the rewards. I’m less familiar with these businesses because they don’t really appeal to me.
My Favorite Passive Income Stream
My favorite semi-passive idea is blogging. While I started blogging just for fun, it has become its own healthy income stream. During February, March, and April I was able to devote basically zero hours to the site because of the arrival of Money Habit Jr.
During that time, the site earned $14,065.
$14k earned while I was spilling milk all over myself, dealing with diaper explosions, and figuring out what arcane rocking-dancing jig would get the baby to fall asleep and stay asleep for at least an hour at a time. $14k I could add to our existing stash or spend on ridiculous luxuries like sleep.
Prior to my three month break, I had been working on the site for just five hours a week for a little over a year and made $62,326. It was a lot of fun (you get to write about exactly the subject you have a deep interest in) and it didn’t take an insane amount of time to start generating a modest income stream. To be clear, it did still take work and not all of it was the fun writing part. But the rewards more than made it worth it. And when the time came that I needed a break, I was able to pre-schedule a weekly post to keep the content fresh and go about my life uninterrupted. Many bloggers do the same when they want to go on a month-long vacation with the family or just detox from the internet for a few weeks.
If you’re interested in getting started on your own blog, you can be up and running in less than 10 minutes. And if you want to see what the real potential income is for the truly successful as opposed to my lazy hobby-like approach, you can check out how much bloggers actually make. The hardest part is just pulling the trigger and getting yourself started. I wish I hadn’t delayed as long as I did, but I completely understand how scary it can be to start.
If blogging is not for you, there are plenty of other ways to develop passive income streams. Bengu has a pretty decent list for inspiration. There are also some interesting case studies from Tim Ferriss’s 4-Hour Work Week empire, though I would caution that many of those ideas are not replicable. The ideas also skew pretty heavily towards physical products, and the cost of building inventory for an untested product could just as easily cause the venture to be a net negative financial decision as it could be a money maker.
You will never have more energy than you do now. If you have a few hours a week, you can build your own income stream outside of a traditional job. That side hustle may allow you to quit your full-time job or just add extra savings to your pile every year while you get to enjoy calling the shots and working on something you’re interested in.
Do you have an idea for a side project you’ve been meaning to get off the ground? Do you already have a business and is it generating income of its own? Would love to hear how it’s going for you!