The path to financial freedom usually comes from accelerating your investment plan – which usually starts by accelerating your INCOME.
There are many ways to increase your income (e.g. ask for a pay-rise, work longer hours, get a second job, send your spouse back to work, etc.) but the rewards are generally limited to the number of hours that you can put in … and simply working longer/harder can sap your emotional and physical energy.
There can be a better way!
For example, if you have a hobby – something that you willingly and happily spend time on anyway – why not look at ways to make some extra money from it?
Look at it this way: if you can earn at least some money from your hobby, rather than simply spending money on it, aren’t you already well ahead of the game?
Early Retirement Extreme writes on his blog about his hobby, which happens to be blogging!
It all started with the observation that all my expensive hobbies were a major drain on my finances …Let us consider personal finance blogging or maybe just personal finances in general. This is a valuable hobby (from the perspective of financial freedom). Even in its most passive form it does not cost much. In fact one may avoid a few mistakes.At slightly higher levels, one learns to do one’s own taxes and perhaps to invest for market returns without having to pay fund fees. (This is where I am).Getting slightly more active one can start a blog. Commit an hour a day to write a post and one can pick up an extra income within a month or two. This can be a very valuable hobby. Some bloggers have even replaced their day jobs e.g. Lazy Man and Money, Get Rich Slowly, The Simple Dollar.
Now, I’m not sure that blogging (except for the few … those who started early and treat it as a ‘serious business’) can earn all that much money for the average blogger, but I don’t advertise, so I can’t be certain.
But, the principle of earning money from your hobby is a wise one, indeed …
Here’s an example that I really like, courtesy of the Internet Marketing Center.
Preston overcame his mental illness and went on to start his very own Internet business selling wire sculpture jewelry tools, growing it to an impressive $50,000 in on-line sales… per MONTH! (To save you from running for your calculator, that’s over $600,000 a year.)
I have a friend who has a similar hobby, she designs interesting jewellery that is very quick, easy, and relatively cheap to make. A bit like beading, but her designs are unique and quicker/easier to make.
She has turned her hobby into a very small business, selling jewellery that she makes to friends and even to one or two stores.
She also lists some on her own home page and on craft-oriented web-sites like etsy.com.
Now, I can’t let an opportunity like this go begging, so this is what I have suggested to her:
1. Buy a video camera and film herself making (and, explaining how to make) some of her designs. Package these videos as an ‘eCourse’ for download off her web-site for $49 each.
2. Buy wholesale lots of the tools and bits and pieces that she uses, to create a Jewellery Start Up Kit that she can package with her videos and sell the combined ‘advanced start-up package’ at $149 each from her web-site.
3. Create / photograph (and/or video) new designs and sell these (with the bits required to make them as kits on her web-site from $9.95 each to $29.95 each.
Now, she may do some, none, or all of these things … that’s the wonderful thing about hobby/businesses – you enjoy doing them anyway, so an improved financial outcome is a bonus!
For example, I’ve mentioned my 13 y.o. son’s hobby before: he has taken a liking to everything-eBay.
Now, he sells products on eBay, which he packages and ships himself (every day, there’s a parcel of two sitting on the front door-step for the mailman to collect and deliver) and makes a cool $30/week.
The moral: you don’t have to be big to benefit …
So, if you have a hobby, think about how you can use your creativity to move you closer to your financial dreams:
i) If you can EARN money from your hobby instead of just SPENDING it, you are twice as well off than you are today
ii) If you commit to saving at least 50% of the excess income that the hobby produces, then you can accelerate your Investment Plan
iii) If you are extremely lucky … and work very hard at it … the ‘hobby’ could eventually become a fully-fledged business, perhaps even allowing you to quit your day job.
Let me know how you plan on turning your hobby into cash?!