The economic impact of the COVID-19 has been severe and devastating. Despite this, many of us still want to achieve some measure of income resilience during this period, and hope to spend our best years experiencing the best that the world can offer. The keys to income resilience are uncomplicated, well publicised, and remain applicable throughout a recession:
- Trade your time for money
- Spend less than you earn
- Invest your savings so they will grow without your active intervention
However, in a labor market where wage growth has been slow, it is no longer feasible to rely on the traditional full-time job as your only vehicle for income generation. As Jeff Rose, blogger at Good Financial Cents, advocates, more income streams equals more security. This diversifies your risk across your income-generating activities, and ensures that your family’s livelihood doesn’t depend just on a single job.
In this post, we explore 3 options that may help you on your way to creating multiple sources of income:
1. Create a side-income by monetizing your skills
Many among us have professional qualifications and skills, be it in computer programming, web design, teaching, accounting, or coaching a sport. These skills are not only useful for securing gainful employment in a company or institution, but also can serve as extremely valuable pillars that support a freelance business.
Freelancing allows you to work outside of your work hours, and generate extra income to pay down your current debts or to save for a rainy day. Most of us would be aware of the options to drive for Grab, or to ride for Deliveroo in their spare time. Platforms like Learnable are also ideal for freelance tutors and instructors to find jobs, manage their clients, and increase customer retention. With flexibility in-built into the system, as well as a lack of overheads (think car rental costs), and teaching only topics you’re familiar with (e.g. Primary 6 English, or Secondary 4 A-Math, etc.), Learnable could be an ideal way to start building a second income.
Given that a part-time tutor can charge upwards of, and often beyond, SGD $50 an hour, teaching a few students could provide you with ample capital for your regular investments (see Seedly for more in-depth discussions on investment strategy) and get you well on your way to financial security.
|Instructor||Number of students||Rate per hour||Hours per session||Earnings in 1 month||Earnings in 1 year||Earnings in 5 years|
[Illustration] How much additional income you could make as a freelance tutor or instructor
2. Start a passion project
We all have ideas of what we’d want to start if conditions were ideal. A passion project, or a “muse”, is defined as a low-maintenance business that generates income sufficient to support your ideal lifestyle (calculated based on your Target Monthly Income). Starting such a passion project could be a way for you to earn your financial freedom early. These could include selling your knits or designs on etsy, or making short films on YouTube.
Tim Ferriss of The 4-Hour Workweek writes about multiple good examples of how everyday people manage to create “muses” that provide them with a good lifestyle, as well as how-to guides that you should check out.
3. Diversify your investments
There are many opinions online on how you can invest a portion of your income. One of the prevailing views on how to build significant retirement savings is Warren’s Buffett’s advice to “[c]onsistently buy a … low-cost index fund” over the long run.
By periodically investing in an index fund, for example, the know-nothing investor can actually outperform most investment professionals. Paradoxically, when ‘dumb’ money acknowledges its limitations, it ceases to be dumb.Warren Buffett (1993)
Index funds are a vehicle for passive investing. They hold a representative basket of stocks in an index such as the Straits Times Index or S&P500, with low fees. Communities such as The Woke Salaryman or The Motley Fool provide good insights about personal finance and investments – do check out what they have to say about this too!
Are you a young person looking to build income for the future? Let us know if you have other suggestions below!