Note: This is a guest post from John Suter of Money Saving Challenge

Busy modern lives leave us with little time for managing our finances and we often have to compromise on getting the best deals or completing tasks efficiently, simply because we don’t have enough time.

But in many cases, being time poor is just an excuse for procrastination and the reality is that we are either too lazy or too perfectionist to properly find deals and plan for the future.

In fact, the whole business of being time poor is big business and there are companies of all sizes making very good money out of people who don’t believe they have enough time to cook their own food, iron their own shirts, hunt around for cheaper insurance deals, move their money to higher-interest bank accounts or properly research their shopping purchases.

Worse than that, those who are too busy to spend time planning their financial future are more likely to end up poorer than those who pro-actively research the best pensions, mortgages, insurance polices and investments.

Getting Things Done

As a project manager, I’m in the business of getting things done. No matter the size of the task, if it needs doing then I am responsible for organising my team to understand the problem, putting together a plan and implementing the solution effectively.

In the business world, time is money and that requires tasks to be completed as quickly and efficiently as possible. Yet in my personal life, I have been equally guilty of financial procrastination, making do with the first quotes I was given and not planning for the future.

Why We Put Off Financial Tasks

To overcome procrastination, it is necessary to understand the factors that cause it. More often than not, it is a combination of the following factors:

• Lack of understanding – Tasks always become more challenging if it is not clear how to complete them. For example, many people don’t know where to start with setting up a pension, so it is no surprise this task gets put off for many years.
• Immensity of the task – It is easy to be over-awed by the size of some tasks and often in our minds molehills can quickly turn themselves into mountains. The bigger the task becomes, the less likely we are to start it.
• Afraid of not achieving perfection – Most people take pride in the things they do, but for many the fear of not doing a task perfectly prevents them from even starting it.
• Failure to see the importance / significance – This is more than just not understanding how to do a task; it is the failure to understand why the task is even necessary. For example: why do I need to set up my own pension when the government will provide one for me?

How To Beat Financial Task Procrastination

Here are some time management tips that I have applied to my personal life to beat my financial procrastination:

1. To-Do List

Whilst everyone knows that a to-do list is probably the simplest and most effective task management tool, it is surprising how many people fail to make one and continue to go about their lives, trying to keep track of all their tasks in their heads.

To-do lists not only help people with poor memories (like me), they also help us begin difficult tasks, as the simple act of writing things down on paper has the psychological benefit of making them seem less immense and more accomplishable.

There are plenty of apps and websites designed to help people manage their to-do list, but good old fashioned pen and paper works just as well, if not better.

2. Break Big Tasks Down Into Achievable Sub-Tasks

I’ve always found that the more simplistic the to-do list, the more effective it is (the same applies with project plans!). However, in some cases it is necessary to break big tasks down into smaller sub-tasks, making them achievable.

Setting up a pension is a relatively big task, but if you begin to break it down into the individual steps (e.g. research on internet, speak to financial advisor, choose the pension scheme, fill in application form, etc), it quickly becomes less daunting and helps you to understand how to complete the task.

3. Plan and Set Deadlines

One of the biggest blockers of progress is being overwhelmed by trying to complete too many tasks at once. Multi-tasking is just a modern day euphemism for being disorganised.

Better to concentrate on one task at a time and get it done properly, starting with the highest priority item and working down your list in that order.

But at the same time you need to impose deadlines to ensure a good flow of progress through your tasks. As I don’t like to waste too much time undertaking detailed planning, I simply set myself targets to complete a small number of tasks each month.

This is as simple as: By the end of April, I will have completed Task 1, Task 2 and Task 3.

The number of tasks you choose to target will depend on their size and complexity.

Maintaining a smaller target prevents me from being overwhelmed and allows me to work through an individual task effectively. If I meet my targets before the month-end I can simply pick up the next highest priority task on the list.

4. 80% Rule of Quality

You’ve probably heard of the 80/20 rule – a rule of thumb where 80% of your output comes from 20% of your effort. Well, a variation of this rule also applies to the quality of your tasks.

In many cases it is better to complete a task at 80% quality level, than never actually starting it because you are scared of not getting it 100% right first time.

Better to have a pension set up and working to build your future wealth than have nothing set up at all. The pension may not be 100% finely-tuned to take advantages of the rises and falls of world commerce, but at least it is doing something and you can always modify your fund at a later date.

5. Just Do It

Often in large organisations, the bureaucracy involved in carrying out tasks can be mind numbingly dull and painful, with employees crying out in despair that they just want to get the job done quickly in the same way that small, entrepreneurial businesses do.

If you feel that your personal task management process is growing into an uncontrollable monster or that you are spending too long trying to do the task perfectly, just remember the concept of Just Do it – JDI.

The concept is simple and straightforward – stop procrastinating and just get the job done.

Why wait till next weekend to research cheaper car insurance deals? Instead start looking tonight after work, whilst you are watching television.

Need to sort out all your files or update you budget – just do it now whilst the thought is fresh in your mind.

The point is that we all need to make time to get these tasks done. Don’t let your busy schedule fool you into thinking you can’t do them for a week – everyone has 24 hours a day and it is up to us as individuals to make the best use of that time possible.

John Suter writes for www.moneysavingchallenge.com and challenges his readers to make savings of £250 per month with a range of great money saving ideas. You can also follow him at http://twitter.com/MoneySavingPig – The Times Money Central No. 1 Twitter Account for saving you money.

Photo by Tax_Rebate and taxfix.co.uk

There is a sad fact in this world we live in. Many people live overloaded lives. They have so many activities and responsibilities that they often feel exhausted. They live from paycheck to paycheck with no room for unexpected expenses. And they keep spending their emotional and physical energy with little or no time to restore it.

There’s a book related to it entitled Margin. The book argues that many people fill their lives up to the capacity, be it in term of energy, finance, or time. As a result, their lives are no longer in balance. They might seem "productive" in one or two areas of their lives, but the other areas of their lives suffer. They might have a good career, for instance, but their health and relationships suffer.

This, of course, is not a good way to live. So what can we do to avoid such a situation? What can we do to keep our lives in balance? I agree with the book’s advice here:

Give margin to your life in the form of emotional, physical, financial and time reserves

Don’t fill your life up to the capacity. Give yourself margin. Give yourself space to breath. You might not achieve as much as other people in the short term, but you will live a happier and more enjoyable life in the long term.

Here are eight things you can do to give margin to your life:

1. Trim your commitments

You might want to do many things, but the fact is you can’t do everything you want. Trying to do too much will only deplete your physical and mental energy. Not only that, it might also take time away from your relationships.

So, instead of taking everything that comes your way, use the 80/20 rule to choose only the most essential ones. If you already have too many commitments, go over them and trim the non-essential ones. Learn to say no without feeling guilty.

2. Set boundaries

Don’t fill up your time with work. Set boundaries. For example, you might decide not to touch your work above 6 p.m. so that you can focus on your family. Or you might decide to take one or two days off every week. Everyone has different situations, so set the boundaries that work for you.

3. Spend less than you earn

This is a basic principle of personal finance but it’s an easy one to forget, especially in this age of credit cards. Credit cards make it easy for people to spend money they don’t have. As a result, many people fall into financial troubles.

The first thing you need to do is tracking your spending. The reason is that it can give you understanding of how you actually spend your money.

After that, you can take action to control your expenses. Remove unnecessary expenses. Find cheaper ways to do things. This requires sacrifices but it’s good for you in the long term.

4. Build an emergency fund

Again, this is a basic principle of personal finance. You need to build an emergency fund for unexpected situations so that you can handle them when they come.

There are different opinions about how big an emergency fund should be, but make it at least three months’ worth of your (and your family’s) living expenses.

5. Make time to exercise

Exercise can boost your personal energy and keep your energy level high throughout the day. So make it a habit to exercise, either by yourself or with a friend. You will be more productive and less stressed as a result.

6. Have enough rest

Your body needs enough rest to function properly. Therefore don’t sacrifice your sleep time for work or any other activities. Make sure that you get 6 to 8 hours of sleep every night.

7. Pray or meditate

Doing this can boost your mental energy and give you peace of mind. You can then think more clearly and stay calm throughout the day.

8. Make quality time for relationships

Your relationships are great source of mental energy. Not only should you make time for them, but also you should make sure that it’s quality time. Give your full attention to the people you are with. Let them feel that you appreciate them.

***

What do you think? Do you have other tips to give margin to someone’s life?

For updates and interesting links, please follow me on Twitter.

Photo by pshutterbug

Note: This is a guest post from Mark Hooson of Moneysupermarket.com

By failing to prepare, you are preparing to fail
Benjamin Franklin

The frustrating thing about money is that it is inconsiderate. Money doesn’t care whether you’re struggling financially, so you can be hit with surprise expenses whether you have the money to pay for them or not.

When it comes to personal growth, your personal finances is not the most inspiring of subjects, but planning for the future is an integral part of developing your maturity and ability to cope with life.

The truth is, most of us have less in savings than we ought to in order to cope with life’s surprises.

What follows are five examples of potential financial surprise that could make things difficult for your bank balance, if you were to find yourself unprepared.

1. Car repair bills / Car accidents

Every single time I have been forced to spend money on a car, whether it was simply new tyres after a puncture or a new oil sump for my rusty first car, the expense always seemed to come at a time when my pockets felt a little light. Every time I would end up putting the cost on a credit card, borrowing money or putting off repairs until I could afford them.

Of course, there were potential problems with all of these solutions, not least putting off repairs – which is a dangerous thing to do.

2. Losing your job

Losing your job through redundancy or by getting fired is not generally something you can foresee, and both circumstances could put a tremendous strain on your finances.

With the current state of the world economy, many firms are being forced to look at cost-cutting measures like compulsory redundancies.

3. Mortgage payment increases

We tend to have a general idea of our monthly outgoings as a fixed sum, but there are factors beyond our control which could see an expense like mortgage payments increasing.

Changes in interest rates could mean bigger monthly payments and less disposable income available to you. Would you have a savings account you could dip into should this happen?

4. Death of a loved one

Perhaps the worst surprise that life can throw at us is the death of a loved one.

A death in the family is obviously an emotionally distressing time, and you will likely have to deal with feelings and processes you have never experienced before, like planning a funeral. Unfortunately these things incur costs that you can’t really account for.

5. Long-term illness

Our health tends to be completely unpredictable too. If you found yourself unable to work because of an extended period of illness then you could be hit financially, depending on your employer’s policy on sickness leave.

Being prepared

These are just five examples, and as most of us know there is any number of other nasty surprises waiting to hit your wallet.

Received wisdom indicates that you should ideally have six months’ of your current salary put aside in case you lose your job.

For most of us, this is a huge amount of money to have to start building up. It cannot be achieved by simply trying to keep some money aside every month from your disposable income. Instead you might think about opening a savings account with a high interest rate to earn money back on the cash you invest, hopefully helping you amass this kind of emergency fund much quicker.

Although it may go against the grain when it comes to personal growth, personal finance may be an area in which it pays to be a pessimist. At least, by planning for the worst you can hope for the best.

Mark Hooson is a journalist who currently writes about financial issues, including savings accounts, credit and debt at Moneysupermarket.com.

Photo by Andres Rueda

It’s an important question to answer. Tracking your spending may seem simple, but it can make a big difference in your personal finance. The sad truth is that many people don’t realize they are having financial problems until it’s too late. The simple habit of tracking your spending can help you avoid such a situation.

Make no mistake: even if you earn much, not tracking your spending could easily lead you into financial trouble. One example is Michael Jackson. He was a great artist and left a great music legacy. We can all learn from his passion and dedication.  But, just as with me and other people, there are also things from his life that we should learn not to do. One of them is in personal finance. Here is what The New York Times wrote about it:

“It’s all a mess,” said one executive involved in Mr. Jackson’s financial affairs who spoke on the condition of anonymity out of respect for the entertainer’s family. “No one really knows what is going on, but these are early days.”

It’s estimated that he had between $400 million to $500 million in debts.

But why did it happen? How could someone who earned so much have such a big debt? The New York Times article explained why:

“He never kept track of what he was spending. He would indiscriminately charter jets. He would buy paintings for $1.5 million. You couldn’t do that every other week and expect your books to balance.”

This is an important lesson for all of us. No matter how much you earn, if you don’t track your spending then your personal finance would be out of control. Tracking your spending is essential because it gives you awareness of your financial situation. It helps you see whether or not you spend less than you earn which is arguably the most important rule to follow in personal finance.

So, if you haven’t tracked your spending, today is the best day to start. You can use a spreadsheet or a personal finance application like Mint and Quicken. It does take some effort, but the financial awareness and control it brings far outweigh the effort. Furthermore, getting your financial life in order is a good way to also get other aspects of your life in order. Why? Because not only having good financial habits frees you from financial worries, but also it can develop positive attitudes like discipline and responsibility. These attitudes will affect other areas of your life beyond personal finance.

Photo by Andres Rueda

Note: This is a guest post from Tory McBroom of Low-CalorieDiet.com

The greatest wealth is health – Virgil

The benefits of a healthy diet are undeniable. Unfortunately, following such a diet can be costly.

But for us frugal folk who seek a healthy lifestyle there is hope.  With a few tips we can effectively stock our pantries with high quality, healthy foods without breaking the bank.

Before we get started, however, let’s take a look at what eating healthy consists of:

• Keep your intake of heavily processed and junk foods to a minimum.
• Be aware of the amount of calories you intake.  Not saying you need to count every calorie, but ultimately it’s calories in versus calories out that determines weight gain/loss.
• Drink plenty of water.
• Limit foods high in refined sugars and saturated fats (avoid trans fats at all costs).
• Eat a balanced diet meaning get a good variety of all the food groups, especially vegetables and fruits.

Ok, so you’ve got a general idea of how to eat healthy.  Now, let’s get right to it and learn how to eat healthy on a budget.

1. Plan your meals

Plan out your dinners and lunches at least a week in advance and write out a grocery list.  Don’t forget to include healthy snacks to the list as well.  Preparing your own meals is a great way to save money and since you control what goes in the food it makes it easier to eat healthy.

2. Frozen vs. fresh

Frozen fruits and vegetables are usually a lot cheaper than any produce you’ll find in the fresh section of your supermarket.  And contrary to popular belief, frozen fruits and veggies are just as healthy as their fresh counterparts.  Furthermore, since their shelf life is a lot longer you typically won’t be throwing away as much either.

3. Pass the salt

A diet high in sodium can lead to a host of health problems later in life. Limit the amount of salt you intake by purchasing low-sodium and no-salt-added food items, which generally don’t cost anymore than regular items.  And pass on the salt completely when preparing your own dishes.

4. Make extra

If you find it hard to find time to cook then try making double when you do cook and freeze half for a quick meal at a later date.  You may even save some money if you can quickly reheat a meal as opposed to running to the nearest fast-food restaurant.

5. Growing your own

Drastically cut your produce prices by growing your own.  Start a garden or plant your favorite produce items in pots on your patio for an inexpensive way to eat healthy all season long.  You can even take it a step further and plant your favorite herbs in small pots in your kitchen window.

6. Look low for inexpensive items

I mean this literally. Many grocery stores purposely put the more expensive items at eye-level.  So, look a little lower for the cheaper or generic brands and save a little money.  Most stores also post the cost per unit on the shelf so look closely at this and see what the best deals are.

A few quick tips:

1. Buy in bulk
2. Use cheaper varieties of meats when preparing stews
3. Look out for the day-old bakery cart and clearance bins
4. When you must eat out, eat half and take the rest home for a quick meal later
5. Don’t buy pre-cut veggies, instead cut them yourself

These are just a few ways to get the most bang for your buck so to speak.  But, here’s another way you will be saving money by eating healthy – future healthcare costs! Taking care of yourself now through proper diet and exercise may prevent cardiovascular and heart disease, diabetes and cancer which are four of America’s biggest killers.

Tory McBroom is a health and fitness blogger who runs a low calorie diet website and offers a free low calorie diet plan to newsletter subscribers.

Photo by DarioMilano

Note: This is a guest post from John Suter of Money Saving Challenge

Every now and again the media goes crazy when a new fad diet arrives onto the scene and regardless of whether it is the Atkins Diet, the Scarsdale Diet or the South Beach Diet, each one seems to represent a desperate attempt to very quickly lose weight and obtain the ideal body.

Unfortunately the effects of these diets are often very negative and fad dieters tend to lose enthusiasm as the initial weight loss caused by the extreme diet begins to level out and the cravings for decent food settle in.

Disappointed with the results, most fad dieters return to their old eating habits and often end up putting on more weight than when they started.

Now I am sure you are asking what all this has to do with personal finance? Well, in the same way that extreme dieting can hurt your health, extreme saving can have an equally negative impact on the health of your finances.

Extreme Saving

To me, extreme saving is the financial equivalent of a crash diet and extreme savers will do anything they can to cut out every non-essential cost from their monthly spending, even if it means living a miserly existence.

This means eating the cheapest of cheap foods, not socialising with their friends, wearing their clothes until they are threadbare and giving up on any other little luxuries or hobbies.

The main problem with extreme saving is that it is very difficult to sustain this way of life over a long period of time. Monotony and boredom can easily niggle away at the best intentions of any extreme saver and drive them back to their old spending habits, in the same way that a fad dieter will go back to eating their favourite treats with a vengeance.

Create a Healthy, Balanced Savings Diet

Rather than following fad diets, most health experts advocate that the best approach to weight loss is a healthy and balanced diet, combined with plenty of exercise, and those same principles apply to successful saving.

Let’s face it, eating beans on toast for dinner every day may be cheap, but it is going to make you miserable. So too will staying in all month whilst your friends are out partying and having a good time.

The best approach then is to create a healthy, balanced savings diet where you review your spending, identify areas of high expenditure and find ways to make savings, without necessarily having to cut back completely on everything. This might mean just going out with your friends twice a month, rather than every week or supplementing some expensive dinners with cheaper dinners in your weekly shopping.

By balancing your savings against your spending, you do not then deprive yourself completely, making it much easier to continue saving in the long-term.

Creating a Sustainable Savings Plan That Will Grow Your Wealth

Whilst the secret to weight loss is to consume less calories than you burn, the secret to wealth building is to spend less money than you earn. You can maximise the amount you save by following these three steps:

• Decide on your savings objectives – For example are you saving to get out of debt, to buy a new home, to go on holiday, to pay for a wedding or to pay for your children’s education?
• Understand your current situation – Create a budget to show how much money you earn, how much you have in savings, how much you owe, how much you spend and where you spend it.
• Identify savings – Review your spending and earnings to see where you can make cut backs and try to identify any opportunities to increase your income.

If your objective is to save £10,000 for a deposit on a new home, you can begin to break that down to identify a monthly savings target. So £10,000 divided by 36 months will give you a monthly savings target of £277.

By finding cheaper alternatives for essential spending and reducing your non-essential spending, you can ensure that you are able to pay £277 into your savings account each month. And because you are not completely cutting out all fun spending items and know that you will be able to meet your goal of buying a house in three years time, it makes saving much less painful.

Monitor Your Progress

One of the biggest problems that dieters have is staying on track, so many people weigh themselves on a regular basis to monitor their progress. If they have slipped, then they can increase the amount of exercise or decrease the size of their food portions to try and get back on track.

The same approach needs to be taken with your spending to ensure you are not over-spending and missing your monthly savings target. Ideally you should review your bank balance and spending at least twice a month, if not more, and if it looks like you have overspent in one area then you will see that you need to cut back in other areas.

Sustainable Vs Fad

So whether you are slimming or saving (or maybe both!), selecting a sustainable and balanced approach should help you become much more successful in meeting your goal.

John Suter writes for moneysavingchallenge.com and challenges his readers to save up to £250 a month without compromising their current standard of living. Visit www.moneysavingchallenge.com for money saving ideas and advice on clearing your debts and growing your wealth.

Photo by annia316

A few months ago I wrote a post on personal analytics. There I discussed how more and more people make their life decisions based on numbers. They don’t make their decisions based on what they feel but based on facts. This way their decisions are well-informed and based on strong foundations.

How can we apply personal analytics to our lives? The key is to track your life metrics. Only by tracking them can you get the numbers upon which to make informed decisions.

Unfortunately, the tracking process is still mostly manual these days (with a few exceptions like Nike+ that can automatically track your running speed and distance). Because of that, if you track too many metrics you risk spending too much time on the tracking process at the expense of doing real work.

So the best thing to do is to track just a few important metrics. This way you can get the benefits without spending too much time on the tracking process. Here are three essential things you should track:

1. Income and expenses

You should know how much money you make and how much money you spend on different things. Many people aren’t aware that they have financial problems until everything is too late. Or perhaps they’re aware, but they don’t know how it happened. Consequently, they have no idea how to solve it.

That’s why it’s important that you take note of your income and expenses. Doing that helps you spot the weak areas in your personal finance so that you can take the necessary actions.

To track your income and expenses, you can use a spreadsheet or a personal finance application. Here are a few personal finance applications you can use:

• Quicken
• Mint
• Wesabe
• GnuCash

One simple rule on money management that I find useful is to spend your money to buy assets whenever possible.

2. Time

Have you ever had days where you wondered why you’ve accomplished so little? That’s one reason why you need to track your time. You need to know where your time went.

There are many ways to do this. You can create a time log where you record all your activities during the day along with the time and duration. This could be burdensome though. A simpler way is to just track how many productive sessions you have in a day. The Now Habit (here is my review) suggests a session to be thirty minutes long but it’s up to you. The important thing is to make sure that the productive session is indeed productive. Reading e-mails and random browsing don’t count. Alternatively, you can track your time indirectly by tracking your goals for the day or week. If you achieve your desired goals then you know that you’ve used your time productively.

To track your time, you can use a timer and spreadsheet or use a dedicated time tracking application like Klok and RescueTime. If you choose to track your goals, you can use a to-do list application like Remember the Milk or even just a text file.

3. Habits

Do you have a good habit that you want to build or a bad habit that you want to break? As Peter Drucker said, what get measured get managed. So tracking it is a good way to reach your goal.

You can do it simply by taking notes of how many times you do the habit in a certain period of time. You can then see how your score is for that period of time. With good habit, the goal is to maximize the score while with bad habit the goal is to minimize it. If you want to, you can reward yourself whenever you make an improvement. A spreadsheet or a text file is enough for tracking your habits.

***

The first and second metrics deal with your personal resources: money and time. They are limited so you must make sure that you use them wisely. There’s still one more important resource actually, which is your energy, but I don’t know how to track it (any idea?). The third metric deals with your habits which, of course, are essential for an effective life.

By tracking your personal finance, time, and habits, you increase your awareness of your life. This helps you not only to figure out what problems you might have but also to take the necessary actions to solve them.

Photo by Pink Sherbet Photography

I’m currently reading Hot, Flat, and Crowded 2.0 by Thomas Friedman. The book mainly discusses the ecological crisis we are facing, but the first three chapters also discusses the 2008 financial crisis. Ecological crisis and financial crisis may seem unrelated to each other, but Friedman argues that they actually have the same cause:

The way we were creating wealth had built up so many toxic assets in both the financial world and the natural world that by 2008/9 it shook the very foundation of our markets and ecosystems. That’s right, while they might not appear on the surface to have been related, the destabilization of both the Market and Mother Nature had the same root causes… The same recklessness undermined all of them.

Friedman explains the causes in more details, but they actually come down to just one thing: greed – the desire to get as much as possible for oneself without thinking about how things would be for other people or future generations.

Greed is the reason why people made irrationally risky investment in subprime mortgage assets. Greed is also the reason why people are depleting natural resources at an unprecedented rate. They want to increase their quality of life without thinking about whether or not they do it in a sustainable way.

The problem is people usually aren’t aware of the coming danger until everything is too late. Greed blinds them. Here’s what they might think:

1. Nothing could go wrong. We have done this for years and nothing negative happens. Besides, the probability that things could go wrong is small so there’s no reason to stop doing it.
2. Everyone is doing it. If I didn’t do it, I wouldn’t enjoy the rewards that everyone else is enjoying.

The scary thing here is this kind of thinking also caused the collapse of many civilizations throughout the history. The book Collapse by Jared Diamond has many such stories. Here’s one of them:

The overall picture for Easter is the most extreme example of forest destruction in the Pacific, and among the most extreme in the world: the whole forest gone, and all of its tree species extinct… The further consequences start with starvation, a population crash, and a descent into cannibalism.

But why did the deforestation happen? Here it is:

… competition between clans and chiefs driving the erection of bigger statues requiring more wood, rope, and food.

This, again, is greed at play. Greed made the people exhaust their resources despite the apparent danger. Didn’t they realize that exhausting their resources would cause their civilization to collapse? Greed had blinded them, obviously.

The same thing applies to individuals. A greedy person may become obsessed with money or prestige at the expense of his health or relationships. Greed blinds him to the coming danger until everything is too late.

This is an important reminder for all of us. Beware of greed. Here is a simple rule:

Where there is greed, there is a silent danger.

Photo by NeoGaboX

Do you want to make extra money? I believe knowing a few ways to supplement your income won’t hurt. You might not need them now, but when you needed them it’s nice to know the available options.

There are many ways to earn extra income, but here I make a few restrictions to prevent this post from being too broad:

1. I only cover how to make extra money online. This way you can work wherever you are in your spare time.
2. I only cover ways to make money in relatively short time. I don’t include anything that takes weeks or months to get results. That’s why I don’t cover things like blogging or revenue sharing with article sites (because building the necessary traffic could take a long time). On the flip side, most of the ways I discuss here won’t give you passive income. They require you to actively work to earn.

For each of the ways I’m about to share, I list some relevant web sites you can use. I don’t test all of them, so please read their terms before you decide to use them.

Without further ado, here are 9 ways to make extra money online:

1. Writing

Writing is a popular way to earn side income. The world is always hungry for good content and if you have writing skills you will find many opportunities online. Here are some sites that offer article writing jobs:

• Associated Content
• Demand Studios
• TextBroker
• Constant Content

You can also write tutorials. Tutorials are more difficult to write than ordinary articles since they contain step-by-step guide on a topic. But they also pay more. The sites below pay between $150 to $300 for each published tutorial:

• Tutorial9 (design and blogging)
• Tuts+ (design, photography, web development)
• Gomedia (design)

2. Designing

Graphic design skill has a lot of demand these days. You could design logos, posters, or even entire web sites. Browse the sites below to find design jobs:

• Envato Marketplaces
• Graphic Leftovers
• 99Designs

3. Programming

Do you know how to program? Then what about taking some programming jobs online? You can find them at:

• Rent A Coder
• ScriptLance

4. Tutoring

If you liked to teach then online tutoring is perhaps the way to go. The nice thing here is you don’t need to physically go to a certain place to tutor. You can do it in the comfort of your home. Here are some web sites that offer the opportunity:

• Tutor.com
• TutorVista
• TransWebTutors

5. Selling stock photos

Many people like photography. If you happen to be one of them, why don’t you sell your photos for profit? These sites help you sell your photos:

• iStockPhoto
• Fotolia
• Shutterstock
• Dreamstime

6. Microworking

With microworking, you make money by doing simple tasks that you can usually finish in a few minutes. They pay you a little for each completed task, but because the tasks are simple, you could complete a lot of tasks in a day. Here are two sites for microworking:

• Amazon Mechanical Turk
• Microworkers

7. Selling stuff

Obviously, you can make money by selling stuff. Do you have items in your home you no longer need? Other people may want to buy them from you. Just list them at:

• eBay
• Craigslist

On the other hand, you can also sell your own creations. They could be T-shirts, post cards, bags, and pretty much anything you can imagine. Here are some places to sell them:

• Etsy
• CafePress
• RedBubble

8. Website flipping

If you’re good at making web sites, you can sell them for profit. It could make you more than $100 for a few hours of work. Here are two popular places for website flipping:

• Flippa
• Digital Point

9. Translating

Do you master foreign languages? If you do then translating is something you might want to consider. There are a lot of translation jobs online. Here are some sites that offer them:

• ProZ
• TranslatorsCafe
• Translatorsbase

***

In addition to the specialized sites listed above, there are sites that offer opportunities in more than one category. Browse them to find various opportunities:

• Guru
• Elance
• Freelancer

Do you know other ways to make extra money online? Feel free to share them in the comments.

Photo by Don Hankins

What is your favorite way to make money? Obviously, there are many ways to make money. You can work for a company or have your own business. You can earn money from salary, dividend, commission, bonus, and many others.

My favorite way is to earn passive income. I’m sure this is not new to you. I’ve heard about it for years but only recently did I begin to understand its nature. I’m not saying that this is the best way or that everyone should do this. This is just the way I like most.

The main reason I love passive income is freedom. With passive income, I don’t need to be actively involved to make money. I do need to work hard to build the system in the beginning, but once it works I can leave it alone and the system will continue earning me money. All I need to do is checking it every now and then to make sure that nothing goes wrong. I can improve the system if I want to, but that’s optional. I can spend my time on a hobby or a new project.

Differences Between Active and Passive Income

To better understand the nature of passive income, here are some differences between active income (income that requires your active participation) and passive income:

• With active income, you can quickly get full-time income. For example, if you receive monthly paycheck then you will get full-time income within one month. With passive income, it may take a long time before you get it.
• With active income, when you stop working your income drops to zero or near zero. When you work you maintain your income level or slightly increase it. With passive income, when you stop working your income stays at the same level. When you work, you increase your income level.

From these two differences, you can see that building passive income is long and difficult. But once you make it, you will get the big reward of financial freedom.

Steps to Build Passive Income

From the characteristics above, here are the steps you should follow to build passive income:

1. Build a side business. Since it takes a long time to reach full-time level with passive income, don’t leave your day job. The active income from your day job will cover your expenses. At the same time, you should start building your passive income through a side business. Start early because it will take time. These passive income resources might give you some ideas.

2. Focus. It’s important that you focus on just one business and make it successful. Don’t be all over the place. There’s a price to pay for something to be successful and only with focus can you pay the price before you burn out.

3. Leave your day job. Once your passive income reaches full-time level, you can leave your day job. This is where you start enjoying your financial freedom.

4. Diversify. Now that you have more time, you need to diversify your sources of passive income. Work on new income sources. This way when something goes wrong with one source you still have other sources to cover you. This also is a good way to increase your income over time.

Photo by schoschie