Why do people really want more money? 

You might think the answer is a no-brainer, but there are actually many reasons: to buy things you normally cannot afford, or so you don’t have to work as hard or as much, for example.

Financial independence is a goal for many.  For most people, this means not being dependent on a typical 9-to-5 job, and to have sources of income that allow you to become self-sufficient —usually many sources in order to provide even more security. If one is not doing well, others can pick up the slack.

Imagine sitting back and watching your current income level roll in.  This may seem like a dream, but it can be a reality when the right steps are taken.  The problem is most of us are looking for the get-rich-quick schemes.  The only one who gets rich with these schemes is the person who sells their “secrets” to making money. 

In our world today, everyone wants things right away, without putting in the required time to get them.  But let me ask you this: if you were guaranteed financial independence, would you be willing to spend the time needed to achieve it?
Sources of More Money

There are no easy ways to make money overnight. The faster you want to make money, the higher the risk you will fail.  This is evident in stock trading: you could let all your savings ride on one stock, hoping it will make you rich, but it could just as easily make you poor.

However, there are tried-and-true ways to become financially independent, methods that don’t require you to be a rocket scientist or to have a pile of money to begin with.  Then once you get one new income source off the ground, it can fund another.

This brings up a common obstacle on the path to financial independence.  We frequently come upon extra money — from an inheritance, a tax return, a holiday bonus, or an injury settlement, to name a few — and then throw it away on material goods.  While it’s not wrong to splurge occasionally, spending sprees should be kept to a minimum during our journey to financial freedom. 

Some people have their tax return spent before they even get it, for example.  But combined with some savings accrued throughout the year, it could be enough to get a new source of cash flow started. 

Imagine the money other people spend as a giant lake. What you want to do is channel some of that cash your way.  If you don’t, it will simply go to someone else.  In fact, you want to get many channels of income flowing toward you.  That way, if one dries up due to things out of your control, the others will continue to provide you with the cash you need.

The more channels you can establish, the more secure your financial status will be.  Then once these channels are established, you can look for ways to widen them, allowing even more cash to flow to you.  The key is to create these channels while keeping your current job.  Later, as your income increases from these new sources of cash flow, you can consider your options. 

One option is to quit your day job to focus full-time on the new income.  A second option is to work part-time while focusing more on your alternative income.  A third is to keep your full-time day job while looking to either widen your channels or create more of them. 

The option you choose will depend on your risk tolerance and overall goals.  Many people feel safest keeping their day job until they are absolutely sure their new channels of cash flow are sufficient.

So where are these channels of cash flow going to come from? There are four main ones: real estate, stocks, intellectual property, and what is called info-media — a way of earning money via the Internet.  These are all tested paths to financial independence.  Each channel can also have several sub-channels, which will bring in even more money. 

We will first look at your current income and saving techniques, and then analyze each of these channels one at a time. 
Evaluating your Income

Let’s start with something most of us can relate to: our own 9-to-5 jobs.  How can you make more money from your current job?  The answer is to make your current job your past job — in other words, trade up. 

Some people get too comfortable in their jobs.  They can’t wait to get a raise, but when they do, they are disappointed.  Some people are just happy to have a job.  Others feel they have to work their whole lives at one place like their parents did.

If you don’t see yourself being promoted in your current job anytime soon, you should look elsewhere.  It doesn’t hurt to conduct a job search, as long as you keep it private.  And, when you have another job in place, sometimes telling your company you are moving on is enough to inspire them to re-evaluate your worth. The bottom line is to always be looking at the job market.

You might be more comfortable with the security of a regular paycheck, but make sure you maximize your potential.  You should always know your market value.  Maybe you don’t think you’re getting paid enough and will find out you are right where you should be.  On the other hand, you may be surprised what someone with your skills could be making. 

Your job situation will not change until you make it change.  Looking for a new job is certainly not fun, and in many cases it can be stressful.  This is why most of us never get beyond just thinking about it.  You may not even know where to start.

One of the best places is an employment agency.  They will work to find you a better job, especially if you have experience.  The competition among job placement agencies can only help you more.  They will help you get your resume in order and can give you interview experience and tips as well. 

While they are helping you, ask a lot of questions about your job industry, such as:
* What skills are hot now? 
* Where do you see the industry going? 
* What certifications or coursework could help me? 

The answers to these questions are invaluable, and employment agencies know them better than anyone.  They know what employers are asking for, what skills these companies need, and which skills are most valuable.  Doing this research yourself could take 10 times longer than the 15-minute conversation you could have with them. 

If you have a career in the professional or technical service industry, you have even more options.  The fast expansion of the Internet has opened many new doors, allowing you to supply your services to a potentially worldwide market.  Providing your services to the online community can cause a huge increase in your salary — even two to three times what you’re currently earning. 

You may even be able to quit your day job and work for yourself, deciding when you want to work, how many hours you want to work, and what you want to charge for your services. You may even get more work than you can handle.

Maybe you are not a professional, but a store clerk who does woodworking as a hobby.  The Internet is a great way to turn your hobby into a potential source of income.  There are numerous places to sell your products at a minimal cost to you.  If you see a high demand for your products, you may even want to start your own website and hire a helper.

If you do decide to market your products or services on the Internet, it’s not too expensive and you do not need web skills.  There are thousands of web design and hosting offerings.  You can get a six-page web site — plenty to advertise your services — custom designed for as little as $600, and hosted for under $100 a year. 

If you feel ambitious, most web hosts also provide tools for $100 or less per year to help you easily create your own site.  Find a reputable company with good tech support to help you along the way.  You can even hire a company to help market your site to get even more exposure.  With a little research, you will find that it’s not as difficult or expensive as you might think. 

Working for yourself is a lot like buying a product wholesale: you are cutting out the middleman, so you won’t incur a lot of the expenses of a large company.  As a result, you can make more profit doing the same line of work.
Saving Money

Maybe making money is not a problem for you.  You could have a decent salary, or few expenses to drain your income.  But you might find yourself wondering why you are still living paycheck to paycheck. 

Ideally, you want to have at least three months of expenses in an emergency fund.  This might not seem possible — even when your account starts to grow, some large expenses pop up and bring it back down to near zero.  So how do you get yourself to save?  The easiest way is to have money directly withdrawn from your paycheck into a money market or savings account.  If you never see it, you won’t miss it. 

Start small; maybe withdraw 3% each week or month.  After six months, bump it up another one or two percentage points.  Combine this with direct withdrawals for your 401(k), and you will be saving a large percentage of your paycheck with ease.  The key is to not burden yourself by trying to have too much taken out.

The best way to find out where your money is going is to keep track of it.  Write down all of your expenses during an entire month.  After that, write down your yearly expenses, like car or health insurance. Calculate your per month cost by taking the average of these.

You might be surprised where your money is going. Going out to lunch or buying a cup of coffee can really add up, especially when done on a daily or weekly basis. 

Go through each expense and decide if it can be reduced at all.  Do you need all the phone features you currently have?  Do you need all the TV channels you subscribe to?  Have you shopped for cheaper car insurance?  Is it worth it to refinance your mortgage? 

The idea is not to deny yourself a comfortable living.  It is to reduce waste, especially those month-after-month expenses you can do without.  With each expense, ask yourself if you need it or if you have shopped for a better rate lately.

Following a budget can be a good idea as well, as long as it is not too restrictive.  Your expenses can change over time, and you need to allow for that.  A good example is auto maintenance.  Don’t just add up what you pay for gas and oil changes, but also calculate all your car expenses and repairs for last year.  Your car is a year older, and more problems may arise, so add 10% to that amount and divide it by 12 to get your ballpark monthly car expenses.  Obviously this formula may not work if you had a major repair the previous year.  You might then want to get an average of the past few years.

A budget should be a guideline to help you restrict some expenses, but the biggest value is the time spent in creating it, since this is when you look at your whole income and expense picture.  If you do want to create a budget, follow the steps described above — write down every expense that occurs over the next month — and make the budget based on those numbers. 

Create your list as expenses occur. If you try to remember expenses from previous months, you are more likely to forget one that might be a major drain on your income. 
Real Estate

Real estate is probably one of the safest investments available, particularly when compared to the volatility of the stock market.  There are many books and products available to help you through a real estate investment every step of the way, even with no money down or by using other people’s money. 

Another option is to borrow money from what is called a “hard moneylender,” but that can result in very high interest payments if the loan is not repaid promptly.  There are also some mentoring programs available. 

Be careful of any advice to use your credit cards for down payments.  What if you buy a house and have a difficult time selling it?  You could be paying very high credit card interest payments or risk selling the house at a loss.

Two common ways to buy and sell houses for profit are through fixer-uppers and flipping.  Fixer-uppers entail finding a house that needs cosmetic improvements, fixing it to make it more appealing, and trying to sell it for a profit of at least $10,000.  Flipping is finding a bargain house and immediately selling it to either a buyer or another investor.  This is usually done with foreclosures and auctions, but occasionally a house on a regular real estate listing can be flipped for a profit if the timing is right.

Instead of buying and selling houses, you could also buy a house or apartment to rent out.  This would only be an option if your total costs are less than what you receive in rent payments.  You also have to be sure you will not have to put a lot of money into the house, since you may not make that money back.  However, even if your rental income brings in only a few hundred dollars a month, it may be worth the effort. 

If you can’t face the thought of having tenants call you at all hours for repairs, a rental management company can manage your properties for a percentage of the rent or sometimes a flat monthly fee.

Not only does rental property give you a small income source, but when the property has appreciated in a few years, you can sell it for a profit. 

As you can see, there are several ways to make real estate work for you.
Stocks and Investments

These days, people have to know more and more about investing due to the sharp decline in the number of companies offering pension plans and moving to 401(k) plans.  With these plans, the employee is often expected to choose the funds without the guidance needed to make informed decisions.

Because of this, you should know the difference between small and large cap mutual funds, or value versus growth funds.  You also must decide how much of your paycheck you want to contribute. 

Many employees elect to contribute very little — or worse yet, not at all — because they think they cannot afford to get money taken out of their paycheck.  However, they don’t realize that they are actually throwing money away to higher taxes.

Example:
Gross annual salary: $40,000
401(k) contribution: 15%
Combined federal and state income tax rate: 34%

Investing in a 401(k) instead of receiving the money as taxable salary would cut the annual income tax by $2,040 in this example —  a tremendous tax savings when it is compiled year after year.

In addition to maximizing your 401(k) contributions, you can contribute up to $3,000 per year to a Roth IRA. You don’t pay income tax on qualified withdrawals or even on the gains, dividends, and interest that build up. You can’t deduct a Roth IRA contribution from your taxable income, but it’s an excellent choice for future tax savings.

On average over the very long term, you can expect stock funds to appreciate about 10% a year.  This may not seem like much, but compared to bonds and other investments, it is a wise choice.

Where a lot of money can be lost or gained very quickly is through trading individual stocks, options, or commodities. Some think of it as essentially gambling, but that’s only true if you enter into it without the proper preparation.  A common suggestion is to put no more than 5% of your investment income towards individual stocks.  For a person making $40,000, this might be around $500 annually.

A person who wants to make money more quickly — which also makes it more of a risk — may want to start with a higher percentage. A good starting point is at least $3,000 for stocks.  Remember, a tax return combined with some savings accumulated throughout the year allows us to start a channel of income. 

The nice part about stock trading is you can ease into it.  If you don’t know anything about trading stocks, there are many good books, newsletters, and services available to choose from to get started.  One great way is to “paper trade” — trading without actually sending the transaction to a broker.  There are also software programs that simulate trading to help prepare you.

The returns from trading can be immense.  The key is to not be greedy and to take what the market gives you.  At the end of this ebook are links to our website that can help you get started in stock trading.

Intellectual Property

Intellectual property is an invention, trademark, original design, or the practical application of a good idea.  There are a few ways to make money with an idea or invention. 

Once you get a patent issued on your invention, you can have the product manufactured and try to sell it on your own.  This is obviously a lot of work, but if your invention has a good market, this option could make you the most money of any other method. 

A second option is to have another company (or several) license your product, which means they would pay you for the right to make and sell it. 

A third option is to sell your patent outright to another company. 

A final option is to sell your idea to an invention company before you file for a patent.  This would give you the lowest return, but requires the least amount of effort on your part.

Licensing your product is the most popular choice.  It usually takes about two to three years before you are issued a patent, and then about another two to five years to market the idea to an industry, so it might very well be seven to 10 years before it starts making you money. 

Another thing to keep in mind is that 95 percent of all inventions fail to even earn back the cost of the patent, much less make money.  This may cause a lot of people to shy away from pursuing the idea. 

The key is to spend some money early on for a marketability study of your product.  You can also do a lot of research on your own to determine if it could be profitable. 

In fact, you should do as much research as possible before you file a patent. The Internet is indispensable for this chore.  Finding similar products and their manufacturers will help you determine your idea’s potential, and you can check the financial situation of these companies as well.

If you have done your research and think you have a great idea, then go for it.  If you are able to get a patent and a licensing deal, you are well on your way to getting a fantastic source of income that makes you money on its own.

This income source is best started after you have others, so you have some extra money for it.  The good news is that you are putting money into it over time rather than all at once.
Internet/Information

The Internet has expanded the possibilities for creating new income sources.  In fact, if there is anything close to a get-rich tactic, the Internet can deliver.  Web-based techniques can become truly a self-sustaining income source in a short period of time. 

The reason for this is the worldwide audience and the fact that it is possible to sell a product and make thousands of dollars without even advertising. A website can be up and making money in a matter of days. 

It has become very popular to create a two- or three-page website specifically to sell a product. Since just a few wording changes can have a dramatic effect on your sales, you will want to test your site and then make sure it is as visible as possible. Let’s look at how to get Internet exposure, and then talk about some products you could easily sell over the Internet.

Search Engine Optimization

The first step involves getting your website ranked high on Internet search engines — a technique called search engine optimization (SEO).  This is a whole industry in itself; there are hundreds of companies claiming they will get you to the top.  Unfortunately, most just take your money.  You’ll find the biggest help is in discussion forums. 

There are also software programs that help optimize your website so it is picked up by the search engines and ranked as high as possible.  If you choose to try this, always remember that incoming links are one of the most important considerations to getting a high ranking.  You need to get quality websites linking to you.
Pay-Per-Click Advertising

Another option is to use pay-per-click (PPC) advertisements.  These ads allow you to get immediate exposure. You pay a small fee each time someone clicks on the ad to reach your website. The key is to convert those clicks into sales. 

This method has become especially popular because of the constantly changing ranking criteria of the major search engines.  What worked six months ago to get a high ranking does not always work now.  Through trial and error, you will learn what ads and keywords work best, and can improve your website’s performance with that knowledge.
Affiliate Programs

Another way to sell your product is through an affiliate program. Other websites sign up to be your affiliate, and when they send a customer your way and a sale is made, you pay them a commission.  Some companies also pay for leads, which is especially valuable if you are offering a service.

Affiliate programs can be very profitable for everyone involved, but you need to be as generous as possible when paying commissions or no one will join yours.  But if done correctly, your sales will skyrocket and your leads could number more than you can handle.
What to Sell

If you don’t already have a product to sell, you can either create one, buy rights to sell someone else’s product, or join affiliate programs and sell for many companies.  Let’s look at each of these in order.

Creating a product is not as hard as it may seem.  Writing an ebook on a subject you are familiar with means you don’t have to deal with inventory and shipping — customers simply download the product after making payment. 

If you don’t have an idea for your ebook subject, surf the Internet for existing ones that might trigger you to think: “That’s a good idea, but this would be better….” There are numerous subjects to write about — you just have to have some passion for the subject.  If you try one that doesn’t work, write about something else. 

You could get a group of friends or colleagues together to write an ebook and split the profits.  For example, a group of teachers might get together to write about teaching difficult topics for a particular subject.  The book could consist of lesson plans from each teacher for each grade level or subject. Even though there are many lesson plan websites, if yours is unique, it will sell.  You could write about how to deal with difficult or shy kids in the classroom, or gather several different topics to make a “survival guide for new teachers.” 

Another idea is to compile information about a topic.  If you take information from one person, it is plagiarism; if you compile from many, it is research. You just need to approach the topic from a slightly different angle.  New ideas are really 90% old material and 10% new.  This holds true for books, TV, movies, inventions, and products. 

Look at your hobbies and see if there is something there to write about.  It could end up being fun and make you money.

If you have created a successful ebook, you are very close having a completed book.  The Internet has made publishing a book easier and cheaper:
* Self-publish and find an editor online to proofread it for you
* Find a company online to print your book on demand 
* Get an ISBN number and sell the book on Amazon.com

You should be sure you have a good topic, and testing it by writing an ebook first is a good idea.  You can ask your ebook customers for feedback, then revise as needed. 

When you have a book published, you gain credentials as an author.  Using the phrase “Author of the book …” when trying to sell future books or ebooks will help your sales.

Buying the rights to resell an ebook or other product saves time, but your product will not be unique.  It is far better to join affiliate programs and sell products indirectly than to try to resell directly, because then you won’t have to deal with  charge backs or customer service. 

Perhaps the quickest way to make money on the Internet is by becoming an affiliate and using PPC advertisements.  The most popular is Google AdWords.  You don’t even need a website, and the cost of starting up can be as low as you want — you can be making money in literally minutes. 

Most people try to be affiliates for as many sites as possible, but it is better to spend your time analyzing and tweaking a stable of good affiliates than to constantly find new ones.  When an affiliate is not profitable,  I drop their program and start another one.

Which Money Channel Should I Start With?

This is a common question in the pursuit of more money.  The answer depends on how much startup money you have and what interests you the most.

If you don’t have much money to invest, I would start with making money on the Internet.  Even if you do not have any web skills and want to put up a website, you can have it designed and hosted for under $700. 

If you want to be an affiliate for companies, you can start with as little as $10 per day and see how you do.  Becoming an affiliate and using Google AdWords is probably the easiest and cheapest way to ease into making money on the Internet.  Be sure to do your homework and you will pick it up quickly. 

Once AdWords start making you money, you can use it to build a web site.  Now you will have two new income sources, neither of which will require a lot of your spare time.

If you are not interested in the Internet, you should consider going into stocks.  You can start off with a few thousand dollars, and you might want to begin with a well-known stock picking service.  You can also subscribe to periodicals such as Barron’s or Investor’s Business Daily to get up-to-date information.

Another option is to stick with real estate — many wealthy people made their fortunes this way.  Anyone who has bought and sold a home is already familiar with the process, and it’s even easier when you don’t have emotional ties to the transaction since you are not buying it as your home.

There are numerous books and products on real estate, stock investing, and making money on the Internet. In fact, there are many books on making money in general.  But be sure to research books before you buy . Some don’t give examples on what to do, instead giving background information and different philosophies on investing. Read reviews and newsgroups to get the inside scoop.
Forming a Business

When you start making more money than you have now, you are going to want to protect it. Otherwise, the government will take a large chunk of your new income.

Forming a business allows you to deduct business expenses such as  rent, utilities, vehicle expenses, computer costs, and home insurance and repairs.  Forming a business can also provide protection against liability. 

Even if you are the sole business owner, you can form a Limited Liability Company (LLC).  It is not as hard as you would imagine, and in many cases you do not need to hire an expensive lawyer or tax accountant. 

Creating an LLC can be perfect for a home-based business.  There are a few great companies on the Internet to help you through the process with online tools as well as books.  You should at least read up on them and the many tax benefits you can receive.