If given a choice, you definitely want to save more funds to help you prepare for the future. It can be for your retirement were saving as much as you can as early as you can have been proven to be a potent formula. This can help you increase your retirement nest egg much quicker thanks to compounding interest.
It is also possible that you want to save more money so you can increase your reserve funds and make it more dependable. This fund covers your emergency and rainy day fund both meant to help you address unexpected financial emergencies in life. The bigger the fund is, the more it can help you with emergencies. It can be anything from a job loss, a medical expense or simply a busted tail light.
On the opposite side of saving is getting debt and even worse, having problems with debt payments. One thing you need to understand with debt is that it can help you reach for your dreams. If you want a better shot at a stellar career, higher education can pave that way for you. This would usually mean student loans to pay for the cost of attendance. You want a house, you take out a mortgage loan. The same with a car where auto loans are the usual answer.
The problem with debt is when people start to miss their payments. This creates a snowball effect where it ripples out to several areas in your finances. You start to miss payments then default and later on, you deal with collections. The sad part is that according to Marketwatch.com, over 20% of the working class are having a hard time-saving money.
This is where hobbies can come in and play a significant role not only as a filler in your spare time but as an income generating pastime. As you try to understand how it can help you better, how do you separate a side business from a hobby?
Side business versus a hobby
When your hobby is bringing in money into your budget, you refer to it as an income-positive venture. On the other, when you see yourself spending for the hobby more than the amount it brings in, that is an income-negative pastime. Now that you understand the difference, how then do you differentiate an income-positive hobby from a side business?
When you find yourself all too consumed with the income and you are trapped in a repetitive task then that could be a side business. However, when you see yourself doing the activity even if you do not earn from it then that can be considered a hobby. It becomes income-positive once you start earning from it. With this in mind, how can you save more by focusing on your hobbies? Here are a few things to consider.
Find something that you love doing
A hobby stems from doing something that you love or enjoy. It can range from a variety of things from knitting to baking to woodwork or even photography. You might even find designing or writing articles something you love to do. The important thing in exploring income-positive hobbies is to identify the things that you love to do.
From there, you can increase your earning potential by focusing on that hobby and looking for a way to earn off of it. You can bake on weekends and sell them in your local market. It is also possible to create arts and crafts over the weekend and sell them online. You can even offer your services such as photography to family and friends.
Find a way to put value where people would pay you for
The way to earn more and save more with income-positive hobbies is to find something of value that people would pay for. This takes a lot of insight as value is perceived differently by people. The first step is understanding what you have to offer. You then have to look at who would be interested in your services.
Just like what USAToday.com shares where software development jobs will be in demand by 2020. If you love computers then pursuing a hobby that revolves around in-demand skills can be a great income-positive craft. As you understand what you have to offer, take a look as well at what people are looking for so you can match the need.
Find an outlet on how to reach out to people
Once you determine who you need to reach out to in order to generate income on your hobby, you must find the best channel to communicate with them. In the past, it used to be simply word of mouth and door to door offers. At this day and age, you get to have a variety of online and social channels to choose from when you want to talk to specific groups of people.
After you have exhausted your initial and most immediate network which normally consists of family and close friends, you reach out to a bigger audience. Technology has made it easier to communicate with a lot of people. They can even help you in picking out the best group or audience to send messages out to.
Look into your initial costs
As you try to save more funds by exploring income-positive hobbies, understand that you will have initial costs to make that happen. If you want to bake, you would need to buy ingredients and even the oven to bake. If you are looking at photography, you have to invest on equipment and lessons before you can produce amazing photographs.
Just like how a business venture would have an initial capital expense, so would you. It can be money or even time. The idea is to make sure that you are able to recoup your investment and earn off of it once you start offering your skills to other people.
Make use of proper time management
As you start earning from your hobbies, you need to be able to manage your time properly. Time management can be a tremendous help in money management. For one, you should be able to properly allocate your time between your hobby as well as your main source of income. You wouldn’t want to over exert yourself with your hobby putting your day job on the line.
Manage your time by giving yourself a schedule to follow. You might have a few hours a day to devote to you your hobby on weekdays and more on weekends. If you have orders for your baking on certain days then you can add more time. The idea is to manage your resources wisely so you do not lose your desire for your hobby.
If you are able to monetize your hobby then you have a bigger chance to save more for the future. You can increase your retirement nest egg so you can do it earlier. You can also strengthen your reserve funds. Doing so can give you a little freedom to take on riskier investments for greater gain. It can also give you that peace of mind in knowing that if any emergencies happen tomorrow, you have the funds to cover your expenses when you wake up.