Young Professionals might decide to supplement their income for a variety of reasons. Whatever the goal, more opportunities exist than ever before. Gone are the days with clearly defined full- or part-time office roles. Work is increasingly flexible in terms of scope, hours, permanence, and location. People looking to earn extra income might find it’s easier than they think to get started.
Perhaps most important for busy young professionals, often with new families, is finding the right balance of work and life. Some may have “extra” assets they want to possibly put to better use. Others may have spare time that they’re willing to devote to additional income. In this article, we explain some common reasons for supplementing income and offer a few ways to do so by both passive and active means.
Three Reasons To Supplement Income
The most frequent motivator we hear from clients seeking additional income is simply to improve their personal balance sheets, for lack of a better term. This can take a number of different forms. The most pressing usually stems from younger clients who may have begun earning solid incomes only recently, so they have yet to really develop a plan to tackle their debts.
Supplementing income may assist in paying off those debts more quickly, and while each client’s financial picture is unique, we would usually advise paying down the highest interest debts first, such as credit cards. Depending on the situation, car payments, student loans, and even a mortgage can be the target for extra funds. Supplemental income directed towards debt repayment can accelerate the process of becoming debt-free.
Additional income may also help individuals achieve their major financial goals faster. Whether it’s saving for a down payment on a house, starting a business, funding higher education for children, or working toward general financial health or even financial independence, additional income may expedite one’s progress. It’s important, though, to keep major goals in perspective. Bonus contributions should be in addition to – not in place of – long-term goals that fill out your larger financial picture, such as contributing toward your retirement.
A final financial reason clients often seek supplemental income is to diversify their earnings. Relying solely on one income stream can be risky, particularly if there is only one breadwinner in the family. Supplementing income through multiple streams diversifies a family’s financial portfolio and reduces vulnerability to unexpected job loss, economic downturns, or industry-specific challenges.
A second motivator we hear for seeking additional earnings can be placed in the bucket of improving one’s lifestyle.
Often, it’s as straightforward as having more spending potential. Supplementing income can allow individuals to afford lifestyle upgrades without worrying as much about having to sacrifice in other areas. It can provide the means to pursue hobbies or indulge in experiences that may not have been possible on their primary income alone. Our popular blog on How to Save Money and Invest for Traveling guides readers through the process of the financial planning that can lead to taking the bucket-list vacation you’ve been putting off.
Another key lifestyle benefit is that added income can provide individuals with more flexibility and freedom in their professional or personal choices. It may offer the ability to take a career break, start a side business, or explore alternative career paths that align with passions and interests. It can be daunting to pivot mid-career since professionals feel like they’ve already invested so much time and social capital in their chosen field. But starting a new venture either while on sabbatical from your regular job or on nights & weekends could help reduce the risks and ease the transition.
3. Professional Development
Finally, some are motivated toward earning additional income partly because of the ancillary benefits the pursuit can provide. Engaging in ventures to increase income may provide opportunities to develop new skills or enhance underutilized ones. After a few years, many professionals may feel as if they’ve plateaued in their professional development, or that their expertise has made them a bit too specialized. Working on a side venture can not only provide financial benefits but allow one to dig deeper into an aspect of the profession that you don’t get to tap into as much as you might like in your 9-to-5.
Engaging in a second job can also introduce individuals to a different set of colleagues and industries. This potential to network can lead to valuable connections that may increase exposure both internal and external to your current role. Networking can also provide access to mentorship and put you a step ahead when it comes to future job openings.
Similarly, working in a different industry can provide individuals with exposure to different environments and processes. This experience can broaden your understanding of how your current company fits into the big picture. It can also enhance your adaptability and provide new perspectives that may be applicable to your primary career. It may also help to transition into a new field. As mentioned earlier, exploring with a second job can help not only diversify income streams but reduce the risk of a potential move into a new role, company, or even industry.
Ways To Earn Additional Income Leveraging Existing Assets
- Invest: Educate yourself about the stock market and the various investment opportunities. Our monthly stock market commentary is a great place to start learning about your options! Depending on your financial goals, a combination of varying investment types can potentially generate additional income. Your time horizon(s) will dictate the best course for you, but if your goal is immediate income now, consider investments that could pay regular income such as bonds and dividend stocks. A wealth professional can help guide you toward what makes the most sense for you
- Monetize Your Hobbies or Skills: For many, separating the workplace from the home is natural; we want two distinct spheres, one for earning income and the other for our passions. But it doesn’t have to be this way! Try to identify ways to monetize the hobbies that you’ve already cultivated through the years. For example, if you’re a skilled photographer, you can sell your photos online or offer photography services for events. Love sports? Consider coaching, refereeing, or a private instructor of some kind. Turn your passion into a revenue generator.
- Rent Existing Assets: Depending on the stage you’re at in life, you may have some underutilized assets. Perhaps you bought a bigger home because it was a good investment in the area but at present you have an unused room. Consider getting a roommate on a short-term lease, or even renting regularly through a platform such as Airbnb. We know of folks renting an underused parking space they have in their city home and even renting access to home gym equipment. Get creative with the things you already have – you might be surprised by the extra income you can generate.
- Invest In New Real Estate: If you’re a bit further along, consider investing in real estate properties as a way to generate passive income. Rental properties or real estate crowdfunding can both be options you can explore. Forbes has a great guide on how to get smarted with either a passive real estate investment plan.
Alternatively, if you’re already considering a vacation home for yourself, see if there’s a way you turn a cost into a gain. With smart financing in a popular vacation locale, you can often cash-flow payments on a second mortgage by renting out the property when your family is not using it. Just be sure to factor in all of the tax, cleaning, maintenance, and management costs when weighing your options.
Ways To Earn Additional Income Leveraging Your Expertise
- Freelancing or Consulting: While the above deal primarily with existing, tangible assets, at this point in your career you probably have also accumulated a lot of intellectual capital. To generate supplemental income, consider leveraging your expertise and skills by offering freelance services or consulting in your field. This can involve providing specialized knowledge, advice, or project-based work to clients or companies on a contract basis. The benefit of this approach is you can often take on as little or as much work as you want. Just be sure to check the terms of the contract you have with your primary employer to ensure that you aren’t violating any non-compete agreements you might have.
- Teaching or Tutoring: Similarly, you can also utilize your knowledge and expertise by offering tutoring or teaching services in your field. You can provide online tutoring sessions, teach courses on platforms like Udemy or Teachable, or even offer private coaching to individuals or groups. The more specialized the role, the greater the potential for income. Spend a little time exploring the going rate for your area of knowledge. For example, newer lawyers often find that they can earn a higher hourly rate tutoring or teaching LSAT-prep courses than they do at their full-time job.
- Public Speaking and Training: If you have public speaking skills and expertise in a specific area, you can offer your services as a speaker or trainer. This can involve delivering presentations, conducting workshops, or providing corporate training on topics related to your field. This can be as simple as repackaging what you do 1-on-1 with clients into more of an interactive group session. The approach could also lead to new business. Finally, explore academia! Many people think a terminal degree is required to teach in higher education, but most community and small local colleges rely on experts to round out their faculty each semester. Your hands-on, practical experience and exposure to the latest practices in a field can make you a valuable asset for students.
Whatever your reason for seeking to supplement your income, know that you’re not alone. Increasingly, young professionals are diversifying their income streams through passive income or side ventures – if not both. Particularly post-pandemic, more opportunities exist than ever before, largely because the divide between office and home has become permeable.
Start by inventorying your tangible and intellectual assets to see what you have to offer. You’ll be surprised by how much you know and by the underutilized assets you already have. Then, if it’s time you’ll be sacrificing, think about what you’re most passionate about doing. There’s only so much time in the day, so you might as well pursue something that interests you when you’re not working your regular job. If you can monetize something you really enjoy, you might find yourself devoting even more time to the new pursuit than you expected.
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