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Financial Independence (FI) can be achieved sooner with a little creative thinking. Increasing your income through earned and passive income can bring you years closer to achieving your FI goals.
The path to Financial Independence (FI) is broadly based on the following concepts:
Maximise your earnings
We earn money in different ways. When you go to an office or worksite and earn a salary you are ‘actively’ earning your money. To increase your earned income you can work towards getting a pay-rise or promotion. There are numerous resources on the inter-web explaining the best way to approach this. I, myself, have always been a bit rubbish at getting pay-rises, so I'll leave it to the experts.
Once you feel you're earning the most you can from your 9-5, you may want to consider taking on an additional job or a side-hustle.
The gig economy is opening up extra income opportunities in so many ways. How about doing a few hours of driving for Uber? Or if you're into fitness and live in a populated area, what about delivering meals on your bike via UberEATS or Deliveroo?
Alternatively, you can maximise your skills and become a freelancer through platforms such as PeoplePerHour, Fiverr and Upwork. You create your own profile and bid on jobs that are relevant to your skills and hourly rates. It's worth mentioning that if you're just starting out you shouldn't worry too much about under-pricing your skills for the first few jobs you do. Many people find that these initial jobs can lead to more lucrative work and repeat business. An excellent site to find a job you can do in your own hours, working from home, is RemoteOK.
If you like more hands-on work, you could find jobs through sites such as the cleaning services site Handy (currently London only) and Task Rabbit - in limited areas in UK.
The problem, however, with earned income is that the money coming in is (mostly) attributed to hours spent doing your work. Whilst there’s nothing wrong with this as such, it’s just not scalable. There are a finite amount of hours you can work in a week, so unless you’re in a rare and exceptionally well paid job, your ability to earn big bucks is curtailed. If you find this true of your situation, you may want to consider creating passive income.
Passive income is money that you earn that isn’t directly related to the hours you put in. The work ‘passive’ is a bit misleading, however, as most passive income does require at least some work, especially in the beginning.
The power of Passive Income is that you don’t have to be working at the job to be earning the income. Passive income allows you to make money when you're sleeping.
Real Estate – owning and renting out real estate isn’t for everyone, but for those who take an active interest and learn about the risks and rewards it can be a valuable source of additional income. No real estate investment is totally passive and there are varying levels of involvement you can pursue. Whilst you may enjoy meeting and vetting tenants, putting them in place and dealing with any issues that may arise – this also could be your idea of ruining a good day. So if being hands-off is more appealing, you’ll need to consider the extra costs of ongoing management. Fees from letting agencies can be an eye-watering 15%, and many add on extras as well. So weighing up the effort you put in versus you expected ROI is essential.
Hands-down the best UK property resource I've found is the Property Hub podcast by the affable duo Rob & Rob.
Rob Dix has written an excellent book The Complete Guide to Property Investment: How to survive and thrive in the new world of buy-to-let
The greatest learnings I found from this book is understanding the strategies available. Reading it was a real 'light bulb' moment for me, and has helped shape our future plans in property investing.
Rent a room
You may want to squeeze the most value out of your current property. If you have spare room you could consider a lodger, or renting it out on Airbnb. The UK tax implications can also be favourable. Currently the first £7,500 you earn each year from renting out a room in your own home is tax-free.
Everyone has some kind of passion – or at least interest – they know about and can share with others. If you can consistently publish information that adds value to an audience there are opportunities to monetise your efforts such as:
If you've got a way with words and have expertise in something, you could write an e-book and sell it online. Your barrier to entry is really just your time. This blog 20 Websites to Sell and Publish Your eBooks is a good starting point.
Whilst the initial input is quite significant, the passive returns can be very lucrative. There are loads of websites out there telling you how best to create online courses such as Pat Flynn's Create & Sell Online Courses.
You can use Amazon in a few ways to make money. One way is called 'retail arbitrage' where you find retail goods at a very low price from places such as outlet stores, TK Maxx and supermarkets such as Tescos and re-sell them on Amazon at a higher price. Amazon will hold the stock for you, and post it directly the buyer, removing the hassle of distribution. You will however be financially penalised if Amazon have to hold your stock for more than 6 months, so you want to chose your products carefully.
Another approach is to manufacture items and sell them on Amazon. Alibaba is a great resource for finding manufacturers. You can request samples be sent, and also have the products labelled with your own brand to differentiate your cheese grater from the other 100 on offer.
Selling on Amazon is both a art and science. There are tools to help you work out what sells and at how much such as Jungle Scout.
It's definitely worth investing hours of research if you intend on investing large amounts into products. If however you want to sell some a box set of books you found for a fiver in Tescos, you haven't got a lot to lose - and you may make a few quid in the process.
If you're crafty, you may want to set up a store and sell your wares on Etsy, Ebay or Amazon. Or if you have a flair for design, how about selling your creations on t-shirts through sites such as Teemill and Zazzle.
If you're a photographer, sites such as Shutterstock and istock can be useful places to sell your images and good prices.
I hope you've found this post useful. If you've got some interesting ways of making extra cash on the side in the UK, please let me know in the comments below. I'd love to hear from you.
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