What is your idea about passive income? For most people, passive income provides an opportunity for freedom and independence. It gives an escape from our 9-5 jobs that occupy most of our week.
There are different ways to generate income while you are “sleeping”, here are just some of them:
START A BLOG
If playing with words comes naturally to you, you may find passion in writing. Establishing your own blog is quick and easy to do. Simply purchase your own domain or create your own website at no-cost thru website builders such as Wix.
Equipped with your glistening blog, you can either sell your stuff or share your expertise to earn some legitimate cash on the side.
CONSIDER P2P LENDING
Let’s face it! Banks do not lend money out of sheer kindness. They do it because it is profitable. Get a taste of the action by joining P2P websites, which allow companies from around the world to loan money from private people.
P2P Lending is highly attractive to both the borrowers and the lenders. Firstly, P2P Lending loan qualifications are more relaxed than that of given by the banks. On the flip-side, lenders can reap the benefits of up to 20% per annum.
INVEST YOUR MONEY
If you have money to spare, consider investing your funds to grow your nest. Let the company work for you as you receive dividends from them. Directly owning a stock in a company or through a fund enables you to receive dividends. A dividend is a cut of a portion from a company’s profits.
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The amount of money you receive depends on how much stock you own and how much profit there is to divide. Ultimately, the rewards that you will receive are decided by the board of directors. Do prior research before committing to a company.
Like most people, you are searching for the best way to fall on the right money management track. Falling behind your money-saving goals can feel discouraging, but it’s never too late to start learning some money-saving strategies. Throughout our lives, the relationship we have to money is dynamic. We have different needs and different spending habits. If you were never paying attention to your money-making and money-spending habits, this is the right time to start.
To organize your strategy, follow the tips below. They have been tested and proven to work on multiple occasions.
Keep a closer eye on your expenses
You know how much money enters your accounts monthly, but are you fully aware of how much you spend? Keeping a closer eye on your expenses will help you identify areas where the money is spent unnecessarily. You want to know how much money you spend monthly, and you want to keep tabs of your expenses. If you’re reluctant to keeping tabs manually, consider downloading one of the numerous expense trackers online. Alternatively, you can create your own expense spreadsheet.
Still, tools like Mint.com or Tink are amazing starting points in your expense tracking journey. Some apps can even offer you small synopsis of your spending patterns. With all that information, you will be able to make better money-management decisions in the future.
Once you get deeper insights on your money spending habits, you can start to outline a budget plan. Monthly budget plans will offer you a clearer idea of how your financial situation will look like in different stages of the month. When you notice discrepancies between your plan and actual budget, adjust the first. This will ensure you are in touch with the financial reality of your household, not the theory in your plan.
To outline an accurate budget plan, include your fixed monthly expenses: utilities, cell phone bills, car insurance, rent, or mortgage payments, and so on.
Take into account variable expenses, as well. Things like gas, personal care items, and one-time expenses are also important when creating a monthly budget plan.
Don’t forget about your savings account! If you don’t have one, this might be the perfect time to open one!
Establish a clear list of financial goals
Without clear financial goals you want to achieve by creating better financial habits, you are unlikely to work things out. Your financial goals can be anything, from saving up for a home down payment to paying off a debt, to saving up for a car or for a retirement fund.
Maintaining a clear list of goals will make you focus more on achieving them. It will also help you handle your finances more carefully. Being fully aware of your financial goals will also contribute to making better financial decisions. You will be more balanced between your spending and saving habits, and you will be more motivated to find extra income streams.
Invest
Investing is a clear way of making extra money. When the money coming from a single income source is not enough to pay your monthly expenses and saving, additional streams of income can help. Financial advisors come with several investment suggestions that are proven to work. The most efficient seems to be Forex trading. Before starting your trading journey, research Forex low spread brokers. As expert traders explain, they are the most advantageous for rookie traders. Low-spread brokers are those offering the smallest difference between the Bid and Ask price. This means you can buy currencies at lower prices and sell them for higher amounts. The benefit of choosing such brokers is obvious here. Your profits will be higher, in this scenario.
Have an emergency fund
Financial emergencies are not pleasant, but they can appear at all times. Having an emergency fund for such situations will help you keep your savings untouched. Medical visits or car emergencies involve huge amounts of money.
Establish how much you want to put in your emergency fund. This will only depend on you and your financial abilities. However, the more you put in this account, the better. According to financial advisors, those who still struggle with debt should aim to have at least $1,000 in their emergency fund. Others claim that you should have at least 3 to 6 months of your living expenses in your emergency fund. It mainly depends on your ability to save so much or not.
Try to figure out how much your household is comfortable with saving for this purpose. Saving something, no matter how little, is better than finding yourself without any money in emergency situations. For the beginning, set aside $5 or $10 for emergencies, weekly. If you’re comfortable with it, increase the amount periodically.
Prioritize expenses
All people have to prioritize their expense. Ideally, your spending habits should align with your values. Do you care more about buying a new kitchen appliance, or about your summer vacation? Pick between the two. Apply the same principle to all your expenses, and you will be more likely to save money, in the long run. Apparently, financially well-off people seem to value more experiences over physical things. You could try to implement the same strategy. Because new physical things appear frequently today, obsessing over them will only lead to higher expenses. Prioritizing experiences and things that bring happiness, in the long run, is more rewarding and less expensive.
These are the basic ideas and tips recommended for people who want to save some money but are not as experienced in the matter. Your money-saving journey can begin today. It’s never too late to pick up healthy money management habits. Go at your own pace and you will be more likely to succeed. Avoid letting external pressure guide your decisions and only make those moves you are comfortable with. Of course, the rest of your family should follow your lead. Saving money as a family is more effective but it can also be more difficult to manage.
As a parent, you must guide your children’s path to financial independence. Fortunately for you, there are available online tools that can help. Start knowing your teen’s financial personality through the Financial Identity Quiz. It is a research-based tool for teens and young adults aged 16 to 24.
After determining your child’s designated identity, you must discuss its advantages and disadvantages. Give some scenarios to help them decide better.
IDENTITY 1: THE PATHFINDER
As the name suggests, Pathfinders are committed to explore their own financial paths. This does nor mean that they do not need your guidance! From time to time, you must encourage thoughtful discussions about their financial goals. Where are they headed?
To give a distinct financial path, you must challenge your child to look for a positive financial model. It can be a professor, a blogger, an author, and so on. Discuss the steps taken by your child’s financial model. How does he or she plan to achieve the same path? Start by applying similar money principles as your financial model.
IDENTITY 2: THE NOMAD
Some people know their direct paths to success and others are still exploring. Not all those who wonder are lost, but the Nomad needs a little structure in his or her financial life. Help shape your child’s financial habits by finding an ideal financial path together.
Ask your child to do his or her research on a regular basis. You can train this by giving scenarios. For instance, ask what he will do if he showed up to an event without enough cash. Will he panic when faced with late fees via a credit card billing statement? Will he ask for your help when he missed a deadline for a school activity? Also, where will he buy gas when all the petrol stations are closed? These experiences can turn to teachable moments about financial obligations.
IDENTITY 3: TENDERFOOT
You may know a friend or two who has a Tenderfoot approach to money. A Tenderfoot has the most to learn when it comes to making financial decisions. You see, this type is so careful and conservative. This can be a good thing! However, being too careful can make you miss out on other opportunities. You need to take necessary and responsible risks along the way!
Help your children make their own financial decisions by asking what they will do when they are living on their own. Will they have a roommate or live with each other? What if they had an unforeseen medical bill or job loss? How will they raise enough money to survive? Discuss what they will do when help from a parent or a guardian is hard to reach. They have to take risks on their own.
IDENTITY 4: TROOPER
Last but not the least is the personality that echoes you the most – the Trooper. It is flattering to have your child follow in your footsteps. However, you also want to guide your beloved to make his or her own mark. What would be right for you might not be right for your child. Help your child to take ownership in money matters through discussions.
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Ask your child about the last time when he or she acted independently. How did it turn out? What was the problem and solution? How did he or she felt after taking the bold action alone? Then, make your child write down a list of personal priorities that he or she would accomplish alone. These priorities will be best accompanied by research. Help your child know which decision is the best one.
“You can only become truly accomplished at something you love. Don’t make money your goal. Instead, pursue the things you love doing, and then do them so well that people can’t take their eyes off you.”
– Maya Angelou
Maya Angelou is right. Sprinkling love in what you do attracts accomplishments and money. Our attitudes towards money play an important part in either attracting it or driving it away.
Growing in a supportive environment where you can talk about money matters openly will enable you to attract money in various ways. On the flip side,it can be more difficult to attract money if you are underestimating your skills. Moreover, dark attitudes toward money can contribute to the lack of self-esteem and motivation.
Having a negative attitude towards money will hinder you from tackling opportunities and will steer you to make errors in your judgement. These may cause you to lose money in the process. Hence, it is important to identify your money attitudes.
Here are just some negative attitudes that you should stop:
I DO NOT DESERVE MONEY
Believing that you do not deserve money or that money is the root of evil causes you to avoid money. For people with this attitude, money can evoke feelings of anxiety and disgust.
I PRAISE MONEY
Believing that money can solve all your problems is a bad attitude to have. People who are trapped by this “money worship” attitude can carry an outstanding debt. Greed can course through your veins when you worship money too much.
I AM DEFINE BY MY WEALTH
Believing that self-worth is tied to your net worth is unhealthy. You can keep up with others as much as you want, but you cannot be fully satisfied.
I AM SECRETIVE ABOUT MY FINANCES
Lack of openness in one’s finances can potentially brew an issue between couples. While people with this attitude are often financially stable, they often do not allow themselves to enjoy the benefits of having money. Extreme cases of having this attitude can lead to under-spending and hoarding. Talk about extreme cheapskate!
With the surge of expenses from left to right, many find it difficult to save money on the side. The difficulty arises not only due to the lack of self-control, but also due to our perception. Harvard Economics Professor Sendhil Mullainathan tells CNN Money that “it is human nature not to save, but we can get better at it”.
#1: ACCEPTANCE
The first step to building your savings is acceptance. Accept your current financial situation and today’s economy. Whether you admit it or not, saving money is harder than ever. As prices in Singapore increase, we have less “disposable” income that we can allocate to our financial goals.
Acceptance of these will enable you to focus on the future priorities rather than focusing on the urgent expenses. You can automate your savings and allocate it to your retirement or education funds. I suggest you start small with the “52 Week Money Challenge”. This challenge encourages a slow and steady approach to saving money.
#2: REMOVAL
The second step to building your savings is to remove unnecessary elements such as your multiple credit cards. It is no surprise that saving money is hindered by the accessibility of credit. You see, our cashless society diminishes our appreciation for every dollar that we spend. Credit cards enable us to spend money before we save. And, there is no going back!
Not to mention, credit cards enable us to subscribe to monthly services such as video and music streaming. Our subscriptions add up! Every dollar you spend on meal delivery or Taobao delivery add up. What’s more? It can be difficult to cancel a monthly service that you forgot to sign up for. Just take caution with your plastics!
#3: RESET
The last piece of the puzzle is our perception towards savings. Many Singaporeans think that saving is challenging because it requires a heroic feat of tightening one’s budget. In reality, saving money can be done gradually. It should not be driven by sacrifice. Instead, it should be driven by opportunities harnessed by self-control.
For instance, you may save money without being conscious about it all the time through automation. You can automate a specific amount of your salary for it to go straight to your savings account. You cannot spend what you cannot see!
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Reset your perceptions about saving money. There are benefits to moving forward. And, moving forward you must do!
