Posts tagged "income"

A Second Income

There is no real point to this post, just general / random musings 🙂

Being quite an independent minded kind of person, when it comes to making money, I always like to be in control of how much I earn. This can be very good, but if you are relying on your own efforts and you become lazy, you can fall flat on your face, err, as I found out…oops!

This is why I currently like the concept of having a job where your salary meets your basic living and lifestyle needs and the second income allows you to easily cover any one off expenses without getting in to debt or allows you to save some money – which far too many us don’t do!

I do believe that the days of staying with one job are well and truly over – we live in a much more fluid kind of business world. The older generation, the kids of the 50’s and 60’s, were always taught to find a good stable job with a large employer, keep your head down, work hard for 40 years or so and retire for a quiet life.

This was all very well when the large industrial companies were growing and trade unions had seemingly unlimited power to prevent any layoffs. It was also very well when society expected you to conform to certain rules and norms such as getting married in your early twenties, having 2.4 kids, buying your home, taking a single vacation per year etc. etc.

Nowadays things are a whole lot more flexible. Tying yourself down to one particular role or job could be damaging in the longer term because as soon as we hit uncertain times like we have now, the large company you sought out for stability doesn’t consider the personal impact when it cuts 5,000 jobs.

Society has also changed to a more self-centered one where we look to buy the latest gadgets, go on expensive foreign holidays, take weekend city breaks to various places on the continent, being less frugal with money, spending more and saving less.

Ever since I first started out on the internet, I believed that it could provide a good second income. At times it provided an incredible income to me.

However, I now think it’s more important than ever that people look to create a second income to build up a nestegg. Salaries barely cover our lifestyle choices so there is very little left over to save. A second income can help supplement any savings you might be able to make.

I personally run a couple of websites which have earned a small, regular income for the last 6 months or so. I spend less than an hour a week on them, yet they continue to make money on autopilot, allowing me to build up savings back in the UK.

Having the second income also means that when you are a bit more extravagant that you should have been (and some of us just can’t help but spend money when we get it), it is offset by your second income.

For example, yesterday I went shopping to buy a ‘smart’ collection of clothes for any work meetings and occasions. In total it came to £100, which is a bit crazy (I do live in India!), but included shoes, shirts and trousers. This is way more than my salary will allow me to spend, but my second income offset it because in the last week I earned £100 and didn’t work a single hour to make that money!

The second income has allowed me to make some investments back in England (albeit at shockingly bad interest rates) and enables me to be a bit extravagant now and then without putting the income from my salary under pressure.

The internet makes it possible for anyone to earn some additional money, but it needs to be approached with an open mind and with the right mindset. Some people, who are very close to me, could easily be earning $1,000 or more a week if they chose to make money for themselves, but instead their mindset believes that they should be working for a salary from a company – extremely frustrating for me when they have such a wealth of talent.

You should also be careful that generating money for your second income doesn’t end up taking more time than your actual job! Another area to be careful with is that you are not compromising your work position, if you are a logo designer and offer freelance logo design services this creates a conflict of interest that most companies will not accept!

Another point to consider is that you should probably be looking to supplement your income, not replace your income. Even if you are only able to generate $50 a week, that’s $2,600 from (hopefully) very little work, if you can save that, over the years it builds up savings that you wouldn’t otherwise have.

Important: Obviously if you do create a second income, you should be reporting this to your tax authorities. I have no idea how this works in other countries, but I fill out my tax return each year online! Don’t be cute and try to avoid taxes! In England the tax threshold is around £6,000 a year, which will be taken up by your salary (and, err, if it doesn’t, might want to pop down to the job centre!), but even if you earn less than this, you need to declare it!