Whilst current “inflation” rates may be low (according to the experts ), for those that purchase typical household groceries or have power and utilities bills know that prices have gone up and continue to go up. Long story short it’s getting very expensive to live, particularly in major cities around the world.
It’s not just groceries or household expenses that have gone up. Housing prices have skyrocketed in many cities around the world such as Vancouver, Sydney, London and the US just to name a few. As a consequence of these sky high prices, it now takes a lot more time for non home owners to save money to enter the property market.
Costs are only going to go higher and it’s only going to get harder to get ahead!
So what do we do about this? You could (and should) review your expenses, see if you can reduce your highest expenses (usually housing or car) such as getting any home or car loans market reviewed, look to see if you can lower your utilities or other regular bills, however your financial success will be determined by increasing household income.
How do we do this?
Pay rise
If you don’t ask you don’t get. If you genuinely feel (and it appears a possibility with your employer) you deserve a pay rise, then make your case and ask for one. Do your research regarding the typical market rate for someone at your position/skills and after you’ve prepared your case then start the process by going through the usual process regarding pay reviews in your organisation.
Ramit Sethi from iwillteachyoutoberich.com has a great guide to asking for a raise or pay rise.
Promotion or New job
Another way to get a boost to your household income is to go for a job promotion or apply for a higher paying job with a new employer. You may need to undertake additional education or training to reach the pre requisites that the job requires. Online training sites such as Udemy or Teachable could be suitable for this type of additional training.
Alternatively you may want a complete change in career or position which may need more formal education such as a university degree or a master’s degree to enter into a role or industry you don’t currently have the qualifications for.
Figure out if the extra cost/time needed for the studies is worth it for the job you are looking to apply for.
Second/additional job
For those that have the time and skills to take on a second job this is a great way of building some extra household income and is a good start to beginning a side hustle. There are many options to look at when choosing your 2nd job, this could be something simple such as offering your services for a driving, cleaning or gardening role, through to something more skill based such as teaching/tutoring (i.e. if you know another language or know how to play a musical instrument), industry specific writing or something around your current career such as graphic design or programming.
For the more basic roles look for places such as Air Tasker, Gumtree or Craigslist or for driving options look at somewhere like Uber or Lyft, Deliveroo or Uber Eats.
For a more specialised role, look for websites such as Fiverr, Upwork, Freelancer or even search Facebook groups or niche specific websites for opportunities.
If possible (and depending on your skill set) look to take on a job that you have skills in, there is money to be made and importantly you can build a business around (we will go into this in more detail later in this post).
Investing
Some of you might be lucky or savvy enough to have accumulated a niche bank account balance that has exceeded your emergency fund levels to a level where you can (and should) be investing.
There may be some of you who have experience in investing in the stock market, for other you may be ready to expand your investments.
So where to start on your investment journey?
Look at what you are comfortable with and start small. For some this may be property for others this may be shares or even something like collectibles (stamps, coins, etc.).
Stocks/Shares
Nerdwallet describes stocks as “an investment in a company and that company’s profits. They are an investment that means you own a share in the company that issued the stock”
For most people stocks refers to the listed securities such as those listed on the New York Stock Exchange or the Nasdaq, with these stocks bought or sold via a broker. You can buy small parcels of shares or larger parcels. You can lose part (or all) of your stock investment and you may have to pay tax on any income or gain derived from your holdings.
For those of you wanting some more information about stocks, Investopedia has a how to guide that goes into more detail.
Property
Depending on the country you live may determine your stance on investing in property. In some countries property ownership (at least for your residence) is seen as a rite of passage, where in some countries only people of a certain financial standing enter into property ownership. For some their first foray into real estate investing was through the purchase of their home, for others they may have partial ownership of factories, office blocks or real estate trusts.
Other factors to look at with real estate investing includes your investment capital, the potential for borrowings, the location you are looking to invest in, what style of property you are looking to invest in as well as the type of return you are looking to achieve from your investment (such as whether you are focus on capital gains, income or both). As with all your investments do your research, speak to local experts and do your numbers on worst case scenarios and if you can afford the investment in the worst case scenario any issues won’t affect the rest of your financial situation.
For those of you wanting some more information about property investing, Roofstock (US), Money (UK) and Domain (Aus.) have articles & guides that go into more detail on this topic.
Financial Derivatives (Options, CFD’s ,etc.)
Wikipedia describes derivatives as “a product whose value is derived from the value of one or more underlying entity. The underlying entity can be an asset, index or interest rate.”
For most people familiar with derivatives, the most popular of these is an option (the right not the obligation to purchase/sell an underlying security). These have come to prominence in recent times during the COVID lock downs where popular options traded have included Tesla, GameStop and AMC.
The more popular derivatives tend to be the ones where there is access to larger amounts of leverage (i.e. options or CFD’s). Remember though that any access to leverage can be very, very risky and before looking at investing in these types of investments do plenty of research and know what you are doing.
For those of you wanting some more information about investing in derivatives, Investopedia has a how to guide that goes into more detail.
Collectibles (Art, Stamps, Coins, etc.)
How many of you collected coins, stamps or even comics as a child? Well some keep collecting as adults and amass a valuable collection in there chosen area. From basketball cards to first print comics, there can be a lot of value in collectibles.
When looking to invest in this area, always do your homework as there can be a large amount of forgery and many millions of dollars are swindled from unsuspecting investors. Reach out to specialists, to experts in the area you are looking at before parting with any of your hard earned money. Look for investment trends or at recent auctions, try and spot a trend before it becomes popular though always look for proof of authenticity with these investments.
For those of you wanting some more information about collectibles, Investopedia has a how to guide that goes into more detail.
A Word of Caution
How much can you invest and most importantly how much can you afford to lose if the investment goes bad. This is why I talk about emergency funds and having an initial financial goal of having several months of lifestyle expenses saved in your bank account.
As with all your investments do your research, speak to local experts and do your numbers on worst case scenarios (i.e. stock price goes down or doesn’t pay a dividend or your investment property needs a new water heater or new roof or doesn’t have tenants for a year), if you can afford the investment in the worst case scenario any issues with the investment won’t affect the rest of your financial situation.
Below we get into the main focus of this website, online businesses; however there is nothing wrong with focusing on any of the above. We will always suggest that you diversify income streams not just between various websites or online businesses but also between cash, bonds/fixed interest, stocks, property, commodities (Inc. gold, silver) or even exotics investments such as art, collectibles, infrastructure or even cryptocurrencies. Though the more exotic your investment the less this investment should make up of your whole financial portfolio.
Creating your own business, i.e. online business
This is the preferred option to build wealth though the income usually takes longer to come in under this method. Ideally you would look at the second/additional job idea to build your surplus household income and look to turn this into a regular side hustle, one that can be built into a thriving online business.
We favour online businesses as opposed to bricks and mortar businesses due to the smaller overheads and ability to scale, however if you see an opportunity in this area then by all means go for it. There is also no reason why you can’t (and shouldn’t) combine your bricks and mortar business with an online component.
So what are the steps to build an online business?
Looking into more detail with the second/additional job option we discussed previously, there may be an option that you have lucked into where you are making a nice additional income from and have the ability to scale this into an online business.
If you this idea hasn’t come to you yet don’t worry, have a look at your life and see if there are any ideas that you can build an idea around.
Look at the Nothing to Niche post Finding and Testing Your Idea for other ideas to build an online business around. Whatever you select, you don’t need to be in love with this topic though it will help particularly when it’s late at night and you are trying to churn out content for your website that isn’t producing any income yet and there are no visitors to your site.
Once you’ve found your idea and tested this, the post How To Build a Blog or Website will put you on the path to build your online business one that hopefully becomes a passive income producing asset!